Investors ‘regaining favour’ with mining exploration
Institutional investors are slowly regaining interest in mining exploration stories, according to the boss of a newly-listed gold explorer.
Jon Forster says he was impressed at the reaction to Cora Gold’s (CORA:AIM) IPO (initial public offering) marketing roadshow, given that the exploration side of the mining sector has been deeply unloved for the past four years.
Forster, who is CEO of Cora, admits that having a link to Hummingbird Resources (HUM:AIM) did help its cause when trying to raise cash ahead of its stock market debut on 9 October.
Cora secured £3.45m in new money to help advance a variety of prospects including assets previously owned by Hummingbird in West Africa.
Hummingbird is in the middle of building the Yanfolila gold mine in Mali. It recently decided to streamline its portfolio to primarily focus on development work and sold some exploration interests to Cora in exchange for becoming an investor in the business. Hummingbird now owns 33.85% of Cora.
Some of the exploration assets now in Cora’s portfolio could potentially become sources of ore to be processed at Yanfolila by Hummingbird. Initial drill work has found promising levels of gold and further drilling is required to better understand the ore body.
Coinciding with work on these prospects will be further drilling on Cora’s flagship property called Sanankoro in southern Mali.
FTSE 100 miner Randgold Resources (RRS) and South African producer Gold Fields have previously explored the property, providing Cora with substantial amounts of historical data although not enough to form a resource statement. Forster says Cora is hoping to prove up 1m ounces of gold across the four permits which make up Sanankoro.
The third leg to the Cora story involves two exploration projects called Diangounte and Madine Fulbe in Mali, near the border of Senegal. Forster believes Diangounte could be a future supply of ore for AngloGold Ashanti’s Sadiola gold mine which is located 6.5 kilometres away, should further exploration prove the asset is worth developing.
Madine Fulbe is a joint venture with SN Minerals which hasn’t complied with the terms of the exploration licence. The breaches of the legal and contractual obligations present a risk that SN loses the licence, says Cora.
It is also worth noting that many of Cora’s exploration licences are relatively short-term in nature and some have already expired and are awaiting renewal.
Shares in Cora fell by 3.8% to 15.88p on its first day on the stock market. We believe investment group Glenwick was behind the selling. It acquired Cora stock in the summer as settlement for costs associated with a cancelled reverse takeover of the mining business.