The early exercise of warrants by International Finance Corp. (IFC) gives Roxgold (TSXV: ROG) US$9 million to add to the US$33.8 million it already has in the bank.
With another US$14.2 million in receivables from gold sales and gold bullion inventory in June, the Burkina Faso-focused mining company doesn’t appear to suffer from a lack of funds — or confidence.
The news comes just days after Roxgold announced second-quarter production results for its Yaramoko mine. After pouring its first gold on May 17, the high-grade underground operation produced 14,482 oz. gold in the three months ended June 30. (Nearly three times Haywood Securities’ 5,000 oz. estimate.)
Equally impressive, the company says, is that the 40,339 tonnes of ore milled at the processing facility at an average 761 tonnes per day was above the nameplate capacity of 750 tonnes per day outlined in the feasibility study.
“It’s all happening here at Roxgold,” John Dorward, the company’s president and CEO, jokes lightheartedly in a telephone interview. “We try to put a few runs on the board.
“If you expected the ramp-up would go slowly, you’ve had a positive surprise,” he continues. “Because the project came in early — we came in about six weeks ahead of schedule, in terms of putting ore through the production plant — and because the ramp-up went smoothly, it caught everyone by surprise, so we ended up producing more gold in the June quarter than people anticipated.”
The seasoned Australian mining executive also says Roxgold is on track for declaring commercial production before the end of September.
Meanwhile, the funds from IFC’s warrant exercise will give the company the financial flexibility to accelerate exploration at the 55 Zone, Bagassi South and regionally.
“The IFC obviously has been a supportive shareholder, so their exercise of warrants early has given us additional capacity to bring forward our exploration plans,” he says. “We plan to refine our program over the summer and put out a more detailed exploration plan late in the third quarter.
“Over the last few years we’ve done little in the way of exploration because we’ve focused on delivering the project, so now, to have a balance sheet and cash flow behind us, we can start to unlock the secrets of the regional land package.”
The exploration plan will likely include: expansion drilling at the 55 Zone to delineate potential extensions to strike underneath the current mine plan at 430 metres; more drilling at the QV1 and QV zones at Bagassi South; structural studies and analysis to identify prospective horizons for more zones close to the 55 Zone, and other targets next to the Boni Shear zone; and more auger and soil geochemistry on the southern part of the Yaramoko concession to extend the Kaho zone.
The company also plans to release exploration results from an 11,000-metre advanced definition and expansion drill program at the 55 Zone. “We’re looking forward to releasing those next month,” Dorward says, “so there is a little powder left in the can for us.”
The 55 Zone remains open for expansion.
As for the IFC, the group exercised 12.9 million warrants issued on Sept. 9, 2015, exercisable for one more share of the company, at a conversion price equal to 90¢ per share. The warrants were set to expire on Sept. 9, 2017.
At press time, Roxgold’s shares traded at $1.56 apiece for a $570-million market capitalization.
Over the last year the company’s stock has traded in a price range of 54¢ to $1.73 per share.
The company has project debt of US$75 million.
At US$1,200 per oz. gold, total cash costs over Yaramoko’s mine life would come in at US$467 per oz., with all-in-sustaining costs of US$590 per oz. gold.
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