Gold has had a momentous 2019, with the prices appreciating by over 15% on a year to date basis, in USD terms. The gold prices have been on an upward trajectory in the past few years aided by multiple macro events such as quantitative easing, popularly known as QE, geopolitical tensions.
Gold Daily Chart (Source: Thomson Reuters)
The rise in the prices of gold over the last few years has put a spotlight on various gold explorers and producers. In this scenario, one ASX-listed small-cap company, Bassari Resources Limited (ASX: BSR), is in the process of transitioning into a gold producer.
Currently trading at a market cap of around $33 million, this ASX-listed gold company is focused on discovering and developing multi-million-ounce gold deposits in the Birimian Gold Belt, Senegal, West Africa.
Bassari Resources was incorporated then listed on the Australian Securities Exchange (ASX) in the year 2008 with an objective to explore and bring into production gold discoveries made in its gold exploration permits in Senegal, West Africa. Bassari Resources’ senior management had a long record of discovering and developing mining projects in Senegal; thus, they chose this country as the area of their main operations. Additionally, Senegal has a stable, democratically elected government making it an attractive county for gold exploration.
Following its incorporation, Bassari conducted substantial exploration work on its permits, consisting of surface geo chem, termite sampling, aeromagnetic surveys and RAB and RC drilling, totaling some $50 million.
Future Objectives- Bassari’s Transition to Gold Producer
Through its successful exploration program, Bassari intends to develop its numerous gold assets, particularly the Makabingui Gold Project in Senegal, West Africa, to become a major gold producing company.
Bassari plans to become a major gold producer by:
- Generating significant cash flow by bringing into production the 4 high grade pits containing proven gold reserves contained within the one million-ounce Makabingui gold resource. The company intends to achieve this by upgrading its current processing plant, camp and infrastructure;
- Using the significant cash flow expected to be generated, supplemented by investors to:
- Convert more of the one-million-ounce gold resource at Makabingui into economic mineable reserves
- Convert the new gold discoveries into economic mineable reserves wherever possible
Accordingly, the company has planned the drilling programs for:
- the Makabingui resource extensions discovered directly to the East, North and South;
- the 12 km strike at Makabingui South
- the Douta Gold Corridor
- follow up of the different anomalous areas
- the Konkouto Hill and Konkouto North gold deposits on the Moura Permit.
The development of the Makabingui Gold Project is well advanced, as the company has already constructed a 300,000 TPA plant, mining camp, water dam, roads etc.
The company is striving to get Makabingui Project into production this year. It should be noted that Bassari will be firstly reimbursed more than $50 million from the Makabingui cash flow for past exploration and development costs.
It is expected that these funds will enable Bassari to extend the resources at Makabingui to a significantly larger deposit by:
- Further infill drilling at the Makabingui deposit and its extensions
- Completing the drilling of the Pits 3 and 4 areas
- Drilling of the major NE/ENE cross structural corridor and particularly, the recently discovered gold mineralisation 800 metres to the east of Makabingui
- Infill drilling of the eight kilometres strike of gold mineralisation directly to the south of Makabingui
- Drilling to expand the highly prospective gold deposit at Konkoutou
Progress Towards Objectives
During the September quarter, the company raised $257,000, via a placement, to be used for working capital. Recently the company had raised a further $602,000 before costs for the same purpose. In this quarter, the company spent around $1.36 million on development activities and expects to expend an additional $1.5 million on development activities in the December quarter.
With substantial progress made in relation to the development of Makabingui Gold Project, Bassari Resources is now on the verge of becoming a gold producer.
On 7 November 2019, Bassari’s stock was trading at a price of $0.015 with 2.35 billion outstanding shares and a market cap of ~$33 million (AEST: 2:10 PM).
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