Highlights from Precious Metals Summit, Part I

Over the next to days The Northern Miner will look back at some of the stand-out presentations from the Precious Metals Summit, which took place in Vail, Colorado in mid-September.

Today’s segment will look at presentations made by the chief executives of Axmin (AXM-V), Malbex (MBG-V) and CB Gold (CBJ-V).

AXMIN

George Roach took the reigns at Axmin over a year ago, and has been trying to drive the company’s Passendro gold project in the Central African Republic (CAR) into production ever since.

The robustness of the project has been confirmed by two feasibility studies, but despite that the market has been slow to warm to the story.

Much of that may be attributed to a “political risk over-hang”, Steve King, an analyst with BMO Capital Markets says.

That overhang is connected to the CAR government revoking permits a few years back. Since then, however, Roach has arrived on the scene, patched up relations with the government, brought them on board as a shareholder in Axmin, had the mining licence issued and even had the minister of mines make a visit to Toronto last year to speak with investors.

Despite all that progress it looks like Axmin will only win back investor enthusiasm once it shows it can build a mine, and to do that it will need to raise some significant capital.

Towards that end Roach says the company is in the middle of negotiations on the final installment of debt financing.

When and if that is secured it will be on top of the $100 million Axmin has already secured from the Standard Bank of South Africa.

In total Axmin will need to find $300 million to build Passendro, and the company wants two thirds of that capital to come from debt.

“We are very close to finalizing remaining portion of debt financing,” Roach told the audience.

He also added that debt financing in the CAR is dependent on getting political risk insurance and at this point such insurance “has effectively been assured.”

With 791 million shares outstanding look for Axmin to do a share rollback in the neighborhood of ten to one. That will give it a tighter capital structure and make the company more appealing to institutional investors when it looks to raise equity in the future.

Roach says it was prior difficulties with the government that resulted in the large amount of shares issued, as the company struggled to stay afloat.

But with those days behind it Roach is intent on driving Passendro into production.

If he can do it, Axmin shareholders should have a very profitable mine on their hands as production is slated to come in at 200,000 oz. per year at cash cost of just US$437 per oz.

MALBEX

Another name to keep an eye on is Malbex Resources.

The company’s management is largely made up of former Aurelian Resources executives. Aurelian, of course, was sold to Kinross Gold (K-T, KGC-N) for $1.2 billion.

At the head of the management team is Tim Warman, who serves as president and chief executive, and was formerly vice president of corporate development at Aurelian.

After so much success in Ecuador, Warman has turned his attention to one of Argentina’s most prospective areas. Malbex’s Del Carmen project sits along the western edge of the San Juan province – an area that is no stranger to mining. Just 20-km west lies the past producing El Indio mine and to the north lies Barrick Gold’s Veladero and Pascua Lama mines.

As for Del Carman, the property is already known to host one shallow oxide gold discovery known as Rojo Grande. In fact the mineralization is so shallow that Warman says there would be no pre-strip at surface for any future mining.

The oxide nature of the deposit also means the ore leaches well and the company is expecting to mine at a low strip ratio of 2:1.

But Warman believes Rojo Grande to be just the beginning of the Malbex story as it is part of an alteration system that stretches out over 9 sq. km – making it one of largest in belt.

Despite its size the project was tossed aside by Barrick after it made the Pascua and Veladero discoveries. The robustness of those projects, and the intensive capital they required for development resulted in Del Carmen being seen as the “ugly third sister,” Warman says.

With $16 million in bank, Malbex has the money to prove that this sister has some hidden beauty.

The current inferred resource sits at 25.4 million tonnes grading 1 gram gold and 13.3 grams silver for 816,600 oz. of gold and 10.8 million oz. of silver, or 1 million gold equivalent ounces.

That resource base was done on 4,000 metres of drilling in an area that covers less than 2% of the alteration system.

A new field season at the project begins in October and will run until the end of April. Warman points out that last years strong share price run coincided with the field work and hopes to repeat that scenario this time around.

Over the course of the program Warman says the company will spend $8 million on 15,000 metres of drilling with an eye towards expanding Rojo Grande’s resource and testing new zones such as Cerro Amarillo which was discovered in the spring with an assay of 27 metres grading 0.55 grams gold and 2 grams silver.

CB Gold

Staying in South America but moving north into the lush mountains of Colombia, CB Gold’s chief executive Fabio Capponi took to the stump to tell investors about the company’s Vetas Gold project.

Like Malbex’s Del Carmen, CB holds some prized gold real estate as Vetas sits just 10-km south of the former Ventana Gold’s giant La Bodega discovery. Ventana was taken over by billionaire Eike Batista’s EBX Group for $1.4 billion earlier this year.

Despite the large price tag, Batista’s purchase didn’t make EBX the dominant claims holder in the area – that distinction belongs to CB Gold.

The company plans to have its first resource estimate out on Vetas by early next year, and that estimate will likely include both high grade veins as well as a lower grade stockwork zone.

Doing business in Colombia can present its challenges, but CB benefits from having a well connected members on its team. Hernan Martinez is the country’s former minister of mines of Colombia and sits on its board and Serafino Iacono, who is one of the few businessman to get deals done successful in Venezuela and has also enjoyed immense success in Colombia through Pacific Rubiales (PRE-T), serves as an advisor to the company.

Capital usually follows such strong corporate leadership and CB Gold is no exception as the company is well positioned with $11.4 million in cash. It also can boast that it has the strong support of management with insiders holding roughly 23% of the company’s equity.

As for Vetas, much of the prospectiveness of the property will be uncovered over the coming year.

Early drill results were highlighted by 9.2 metres grading 11.62 grams gold and 1.5 metres grading 276 grams from the high-grade veins. The stockwork zone returned a highlight intercept of 4.5 metres grading 5.87 grams.

To date the company has reported 22 high-grade vein intercepts and has also hit mineralization in porphyry dikes.

That new porphyry discovery returned highlights of 220 metres grading 1.38 grams gold and 16 metres grading 1.88 grams of gold.

Capponi says the porphyry is analogous to AngloGold Ashanti’s (AU-N) La Colosa deposit, which is also in Colombia.

The property’s prospectiveness is also indicated by the presence of nine small mining operations.

Capponi explains that CB plans to put current production at the site on hold so that it can prolong the shelf-life of those mining permits.

Such a delay would allow it to focus on understanding the deposit without worrying about a ticking clock.

Another area of interest for the company is its Norte de Santander project, which is a pure Greenfield project t
hat sits 400-km north of Bogota.

“It is in an area where there was formerly FARC activity,” Capponi explains. “In the past two years the situation has improved and we are first movers there with large packages of land.”

He estimates it will take one and half years until the company gets meaningful results.