Roxgold (TSX: ROXG; US-OTC: ROGFF) is purchasing from Newcrest Mining (ASX: NCM) a large and carefully assembled land package in Cote d’Ivoire that includes the Seguela gold project and its near-surface Antenna deposit.
The portfolio of eleven exploration permits included in the deal covers 3,298 sq. km across the Birimian greenstone belt and hosts multiple exploration targets within 15 km of the Antenna deposit, which currently contains an inferred resource of 430,000 oz. gold within 5.8 million tonnes grading 2.23 grams gold per tonne.
The junior is acquiring the property for US$20 million in cash and another US$10 million upon first gold production.
Newcrest discovered the Antenna deposit in 2016 but has been operating in Cote d’Ivoire since 2010. It has spent about US$21 million on exploration and drilled about 117,000 metres on the tenements, which gives Roxgold a significant amount of data to work with.
Exploration results from Newcrest’s satellite targets close to Antenna have returned high-grade intercepts that could one day add ounces to the resource base.
Notable intercepts include 9 metres grading 16.9 grams gold from 145 metres in drill hole SGRD162 and 7 metres of 9.1 grams gold from 18 metres in SGRC161 from the Boulder target. Assays from the Ancien target include 16 metres of 9.3 grams gold from 37 metres in SGRC172, while drilling at the Agouti target returned 14 metres of 58.1 grams gold from surface in SGAC5021; 20.4 grams gold over 5 metres from 44 metres downhole in SGRC152; and 11 metres of 5.1 grams gold from 21 metres in SGRC187.
Seguela is about 240 km northwest of Yamoussoukro, Cote d’Ivoire’s political capital, and about 480 km northwest of Abidjan, the country’s commercial capital.
The acquisition gives Roxgold a second asset in West Africa and diversifies it out of Burkina Faso, where it is operating its Yaramoko mine.
“Diversifying asset jurisdictions is key, especially given the increased threat posed by Jihadist militants in Burkina Faso,” analysts at Macquarie commented in a research note on the deal. “We view Cote d’Ivoire as being relatively well shielded from this threat. Its robust 2014 mining code, strong infrastructure growth and Birimian Greenstone geological endowment also positions Cote d’Ivoire as an attractive mining jurisdiction.”
The analysts also estimated that the company will generate an average of more than US$65 million a year in free cash flow in 2019-2021 at spot prices.
Macquarie has a target price of $2.00 per share on Roxgold’s stock and an outperform rating.
At press time in Toronto Roxgold was trading at 86¢ per share within a 52-week range of 72¢ and $1.35 per share.
The company has 375 million common shares outstanding for a market cap of $322 million.