🕐17.12.12 - 11:27 Uhr

INVESTEC: AAA RATED!




In this note we initiate coverage on two evolving West African gold miners/developers, Amara Mining and Avocet Mining, and update our view on Aureus Mining.

The companies together offer exposure to multiple geographies and varying stages of project development, thereby presenting a range of risk profiles.
* Amara Mining (AMA) has a relatively diverse portfolio, with its current operating Kalsaka Mine in Burkina Faso providing a healthy cashflow despite the limited mine life.

Management has successfully completed the Sega transaction which adds almost two years of higher grade production.

There could also be other nearby ore sources that would continue to support this 60-70kozpa mine.

However, the longer-term investment case for AMA is the Baomahun asset in Sierra Leone, with a feasibility study underway to delineate a 120-150kozpa operation.

The current capex estimate is around US$250m (including mining fleet), and with Kalsaka generating cash we envisage equity financing of around US$80m supported by US$150m in debt.

However, this is subject to considerable change and with cashflow from an operating mine, AMA has flexibility as to when it can seek financing. * Aureus Mining (AUE) is developing its New Liberty project in Liberia and has taken a significant step towards project development with US$80m of equity already raised and permits in place.

The company is working to optimise and improve the project economics prior to undertaking significant development and securing debt.

The development of New Liberty could also provide the platform to develop other assets within the extensive and prospective land package surrounding the proposed mine, with exploration underway at several targets. * Avocet Mining (AVM) is the most established of the three producers reviewed in this note.

Its significant Inata Mine in Burkina Faso is set to produce around 120-150kozpa (we forecast 136koz this year).

The company, however, has seen its share price fall sharply in recent months due to metallurgical issues and constraints at the mine.

We feel that the correction has been excessive and that it should gradually re-rate as the company demonstrates improvements in the months ahead.

AVM also has a very sizeable resource base at and around Inata that could support an extended mine life and improve the economics.

In addition, the company has a sizeable resource base in Guinea where feasibility work is underway.
To access the full note please click here Analysts: Europe: Hunter Hillcoat +44 (0)20 7597 5182 South Africa: Albert Minassian +27 21 416 1454 Australia: Tim Gerrard +61 2 9293 2168
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