There are several views on what exactly constitutes the optimal structure for a junior exploration company, but one clear contender has to be the way Kodal Minerals PLC (LON:KOD) has set out its stall following the acquisition of a suite of West African assets from ASX-quoted Taruga Mining (ASX:TAR).
The assets came in with joint venture deals intact and very robust they look too.
First off, Kodal’s Dabakala project in Cote D’Ivoire is joint-ventured with billion dollar Australian behemoth Newcrest Mining (ASX:NCM), which holds adjacent ground. Newcrest has undertaken to spend a minimum of US$750,000 on the project and will need to spend a full US$1.7 mln to take it to 75%.
At that point, it ought to be pretty clear what the future holds for Dabakala, although how much value it will have generated for Kodal will be up to the market to establish, or to be laid out in any negotiations that may follow Newcrest’s assumption of its 75%.
Meanwhile, Kodal is also in joint venture with another big name in Australian gold, Resolute Mining (ASX:RSG) in regard to the Nielle and Tiebissou concessions and the M’Baihaikro concession application. Under the terms of this agreement Resolute can earn a75% interest in the three properties in return for spending US$3 mln over four years.
That adds up to nearly US$5 mln of spend across four of Kodal’s properties without the company itself having to raise a dime.
How has the company managed to get itself into such a strong position?
The answer is West African expertise.
“I’m an Australian geologist,” says Kodal chief Bernard Aylward by way of a simple introduction. But there’s more to it than that. For some years he was the general manager of Azumah (ASX:AZM), a well-known Australian West African specialist with projects in the north-west of Ghana, right up against the Cote D’Ivoire border, followed by a role with International Goldfields developing its exploration portfolio.
Following these roles, Aylward managed to acquire a series of projects in West Africa and founded Taruga which listed on the ASX in 2012.
“I’m attached to West Africa,” he says. “I keep coming with the assets.”
He knows his way round West Africa more like, and knows moreover that Cote D’Ivoire in particular remains relatively underexplored because during the last mining boom it was still recovering from the aftereffects of a particularly nasty civil war.
As an illustration of the potential, Aylward has inserted a slide in the Kodal presentation which details how much of each relevant West African country’s surface area is accounted for by the Birimian greenstone, the geological formation that has historically yielded most of the region’s gold.
In Cote D’Ivoire’s case it’s 35%, but its gold production levels are nowhere near commensurate with those of other better established producers, like Ghana.
Early stage exploration work will be undertaken on the Korhogo and Boundiali projects this summer, to follow up on earlier geochemical sampling.
Meanwhile, across the way in Mali, Kodal is working up its Nangalasso project, where drilling is expected later in the year. Resolute blazed a trail in this area with the famous Syama project not far away, once written off by many for the refractory nature of its ore and now a well-established producer.
In fact, Nangalasso lies on a different trend, so the ore could be more amenable, and Aylward is confident of being able to demonstrate “significant mineralisation” there.
The results from this summer’s work will make for interesting reading.