Resolute Mining Backs Mako Gold IPO
Mako is embarking on a journey to find Africa’s ‘next big thing’ and has secured strong investor support including a $2 million cornerstone investment from Resolute Mining (ASX:RSG).
In 2015 ASX-listed Orbis Gold Limited, owner of several high-grade gold projects in West Africa, was taken over by Toronto Stock Exchange-listed Semafo for $178 million. Orbis had discovered 2.6 million ounces of high-grade gold across two discoveries in Burkina Faso. Semafo paid almost twice Orbis’ market price at a time when gold prices were depressed and small resource companies struggled to secure project funding.
Peter and Ann Ledwidge - geologists with over 50 years’ combined experience in mineral exploration - were instrumental to the success and subsequent takeover of Orbis Gold Limited including advancing the projects to the resource estimation stage. The husband and wife team seeks to replicate the success with yet another African focused gold exploration company, Mako Gold Limited, which is expected to list on the ASX later this month.
Mako is embarking on a journey to find Africa’s ‘next big thing’ and has secured strong investor support including a $2 million cornerstone investment from Resolute Mining (ASX:RSG). Mako has raised $6 million in an oversubscribed Initial Public Offering to advance exploration at three gold projects in Côte D’Ivoire and Burkina Faso.
Systematic drilling of structural and geochemical anomalous targets is expected to commence immediately after listing. Mako’s tenements are located in the well-known West African Birimian greenstone belt, one of the most productive gold belts on the continent. West Africa’s known amount of gold ore in the ground is increasing faster than it can be mined, as opposed to developed countries like Australia or the USA where gold ore reserves stagnate or decline.
Nevertheless, investing in an early stage exploration company is highly speculative and there is no guarantee that further exploration can yield an economic gold deposit Mineral exploration is subject to a high degree of fixed costs and considerable further capital and technical investigations may be required to advance Mako’s projects.
Listing at a pre-money valuation of less than $7 million, Mako’s market value is undemanding and the strategic cornerstone investment of Resolute Mining is a validation of the company’s experienced leadership team. IPO investors require a long-term speculative appetite, but the overall investment composition is compelling.
Author: Simon Herrmann
Apr 10, 2018
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.