Nordgold takes stake in Cardinal Resources

Privately held Nordgold has taken a 19.9% stake in Cardinal Resources (TSX: CDV; ASX: CDV), which is advancing its Namdini gold project in Ghana.

The Russian gold miner, whose non-executive chairman is billionaire Alexey Mordashov, recently confirmed the acquisition of 98.44 million shares of the junior at A$0.44 per share, including 81.04 million shares purchased from a subsidiary of Gold Fields at a price of A$0.46 per share.

Nordgold has also submitted a non-binding and conditional proposal to acquire all of the remaining shares in Cardinal Resources that it does not already own at a price of A$0.46 per share.

In a press release, Nordgold said that its conditional proposal valued Cardinal at about A$227 million (US$143 million) on a 100% basis, and represented an 83% premium to Cardinal’s closing share price of A$0.25 on the Australian Stock Exchange on Mar. 13.

The Moscow-headquartered mining company also said it would finance any future acquisition with existing cash reserves and facilities and requested access to complete due diligence on Namdini before making any formal takeover proposal.

Nordgold CEO Nikolai Zelenski said its non-binding proposal represented “a substantial cash premium for Cardinal shareholders” and provided “an immediate opportunity to realize value without the associated risks of project development.”

Cardinal Resources has been looking for financing for Namdini since the first half of last year, Nordgold said.

The Russian mining company also emphasized that its management is “committed to operating in West Africa and has the proven development experience and balance sheet to bring Namdini into production to the benefit of the local community and all stakeholders.”

The Namdini project, 50 km southeast of the town of Bolgatanga in northern Ghana and about 60 km south of the country’s border with Burkina Faso, lies within the Nangodi Greenstone Belt, one of a series of southwest-northeast-trending granite-greenstone belts.

The gold project has measured and indicated resources of 182 million tonnes grading 1.1 grams gold per tonne for 6.5 million oz. contained gold. Inferred resources stand at 12 million tonnes grading 1.2 grams gold per tonne for 500,000 ounces. The resource estimate completed in March 2018 was based on a cut-off grade of 0.5 gram gold per tonne.

The deposit, discovered by Savannah Mining in 2013, is a structurally controlled, orogenic gold deposit. Namdini has a strike length of 1,150 metres and is up to 300 metres wide and 700 metres deep, the company says.

Workers in the core shack at the Namdini gold project. Credit: Cardinal Resources.

The gold mineralization is hosted in a mixture of altered meta-volcanic sediments, diorite and tonalite and is associated with quartz-carbonate veins and shares numerous features with similar deposits found elsewhere in late Proterozoic Birimian terranes of West Africa.

A preliminary economic assessment completed in February 2018 envisioned a single open-pit mine feeding a conventional flotation and CIL circuit and operated by contract miners. It was based on an earlier resource estimate released in September 2017. The study assumed the project would initially focus on a high-grade starter pit towards the north of the deposit.

Initial capital costs were forecast to range from US$275 million to US$426 million depending on the project’s scale. The study evaluated three development scenarios yielding 159,000, 211,000 and 333,000 oz. gold per year and annual throughput rates of 4.5 million tonnes, 7 million tonnes and 9.5 million tonnes.

Nordgold operates ten mines, four of which are in West Africa—three in Burkina Faso and one in Guinea.

Mordashov, Nordgold’s non-executive director, created Nordgold by spinning off the gold mining assets of Russian steel giant Severstal.

Mordashov was appointed CEO of Severstal in 1996 and elected chairman of Severstal’s board of directors in 2002. He resigned as Severstal’s CEO in 2015 after 19 years in the job and remains a majority shareholder in the company, according to Forbes.

The business magazine estimated Mordashov’s net worth in April-May 2019 at US$20.5 billion.