Ghana gold mining opportunity Blue Gold International, a private UK company, is understood to be preparing for an IPO later this year, according to broker Fox Davies Capital. The gold miner is currently seeking to raise £8m, with up to £30m from convertible loans so that it can scale up production from around 40k ounces per year to 80k ounces by the end of this year.
Blue Gold International reckons it can even take production at the site past 120k ounces next year (2024). Currently it has plans to list on the London Stock Exchange in Q3 this year.
The company owns the Bogoso / Prestea gold mine in Ghana. It acquired the operating company from Golden Star Resources in 2020. Historical production from the mine has been in excess of 9m ounces. The mine has 4.07m ounces of Measured and Indicated resources grading at 2.28 g/t Au.
Fox Davies Capital reported that the offered CLN is priced at the lower end of £81.4m at a valuation which is 30% lower than the expected IPO asking price. Interest – payable in kind – will be 8% per annum.
The mine is situated in the world famous Ashanti gold belt in SW Ghana. It has adjoining concessions with an 80km strike bounded to the north and south. Internal non-code estimates are for an additional 371k ounces of contained gold in tailings at an average grade of 0.9 g/t. It should be noted that the historic production figure cited above is for the last 100 years, initially underground but more recently from a series of open pit operations mining both oxide and refractory material. The mine has been suffering from a lack of re-investment.
Mine is fully operational
The mine looks like a ready to go project, with existing facilities and work force. It is nowhere near as speculative as a junior explorer, hence the confidence in issuing the CLN with a punchy interest rate. Blue Gold projects estimated project NPV of US$356m using a US$ 1700 gold price.
Blue Gold has a 90% stake in the project with 10% owned by the government of Ghana. The country remains one of the friendliest jurisdictions in Africa for mining operations.
In terms of ongoing operations, mining has only recently been undertaken from the open pits and underground from short term planning based on grade control sampling of identified areas, with potential for immediate access without the need for material mine development works. Future production is expected to be sourced from the Prestea underground operation as well as the expansion of historic open pits and reprocessing of historic tailings.
Gold mine should be very productive this year
Blue Gold has invested around US$23m to date for development work and conducting a detailed re-evaluation of the historic mine plan and mineral reserves estimates. It is now implementing a plan to restructure the existing operations, expand the current resource and increase production. The plan is to produce approximately 82k ounces this year and then ramp up production to a peak of 380k ounces. The projected life-of-mine all-in sustaining cost if around US$889/oz.
Fun fact: last summer Hawkeye Systems [OTC-QB:HWKE] entered into an LOI to acquire Blue Gold for $250m, as part of an RTO that would have taken Blue Gold public in the US via the OTC market. Blue Gold shareholders would have held 95% of Hawkeye post-acquisition. A US$6m funding arrangement was anticipated to be in place by October 2022. Hawkeye, which previously had been active in the PPE / pandemic-related technology space, killed the LOI as it could not agree terms with Blue Gold.
“We like the underlying value of the gold asset Blue Gold represents, unfortunately we could not reach terms that would be acceptable to our existing shareholders,” said Corby Marshall, CEO of Hawkeye Systems Inc.
