Newcomer gold junior Mako Gold (ASX: MKG) touches down on the ASX today with shares expected to start trading at 11:00 am AEST, as the allure of resilient gold prices amidst resurgent metals mining activity sets the stage for a successful listing.
Mako is seeking to develop several low-cost projects in Burkina Faso and the Ivory Coast over the coming years, alongside a renewed interest in Australian gold miners on world markets.
“We are thrilled to have closed our IPO oversubscribed and achieved an ASX listing. The strong support from our shareholders is appreciated and we are eager to reward their enthusiasm,” said Peter Ledwidge, managing director of Mako.
The listing means Mako will become one of many new gold miners to list on the ASX to secure a strong high-grade resource outside of Australia.
Following the issue of 30 million shares under the IPO offer, there will be a total of 63,250,100 shares on issue, resulting in an undiluted market capitalisation of A$12.7 million at the offer price of A$0.20 per share.
Australia’s largest gold majors such as companies including Evolution Mining and Northern Star have not been shy venturing overseas for new projects and new sources of high-grade gold.
The reason for the strong push into gold mining is to some degree related to the strong outperformance of Australian gold explorers since 2014.
Since the start of last year, gold prices have risen by around 18% and spot prices currently stand at around US$1,350/oz. For junior hopefuls like Mako, the opportunity is to seek out low-cost sources of gold and generate strong margins on the back of resilient gold prices.
“We can now focus 100% of our attention on the planned exploration programs, particularly the upcoming maiden drilling programs, in the hope of delivering positive news flow to our shareholders in the near future,” said Mr Ledwidge.
To facilitate its ASX-listing, Mako secured a A$2 million cornerstone investment from Resolute Mining Limited (ASX: RSG) as part of Mako Gold’s IPO on the ASX and raising A$6 million as part of an “oversubscribed” capital raising.
According to Mako, its first priority is to conduct exploration at two of its three projects in West Africa, now made possible by the capital raised as part of the IPO process.
According to Mako, its field crews are preparing to commence planned drilling programs at the Napié project in the Ivory Coast and the Tangora project in Burkina Faso. Mako said that it has secured drill rigs for both programs which are scheduled to “in the coming weeks”.
Commercial opportunity in West Africa
Burkina Faso is an attractive investment destination with strong government support for mining, a modern mining code and gold resources of over 50 million ounces with 10 new gold mines constructed and operating in the last 12 years.
Mako has secured two gold projects in highly mineralised terrain in Burkina Faso, that have no known drilling, but very importantly, contain “extensive artisanal workings” indicative of gold mineralisation.
In Burkina Faso, Mako is working with Perseus Mining Ivory Coast subsidiary, Occidental Gold SARL, with which Mako signed an agreement in September last year.
Mako has the right to earn 51% in to the Napié permit spanning 300 square kilometres, by spending at least US$1.5 million (A$1.9 million) over the coming three years and is able to secure a 75% stake in the joint venture by funding the completion of feasibility studies that are typically required to obtain substantial bank funding and establish major production activities.
In the Ivory Coast, Mako acquired two permits in 2016 via a 3-year option that will eventually secure whole ownership. According to Mako, the “option agreements were structured with low up-front payments with increasing back-ended payments” and says that it can “withdraw at any time” if required.
It is thought that the Ivory Coast contains substantial gold deposits, yet only 20moz of gold resources have been found to date, making it an ideal location for future gold discoveries.
Mako has signed a “farm-in” agreement on the Napié permit in the Ivory Coast and says its geology team is already on the ground waiting to commence exploration by “drill-testing multiple gold targets immediately post-listing”.