Adamus Resources: XX on the ASX

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Adamus Gets Closer, Ever Closer, To Gold Production in Ghana

 

Minesite excerpt : By "Our Man In Oz"

 

Making the transition from explorer to producer can be a painfully slow process, as some shareholders in Adamus Resources have been heard to mutter. But, a fresh look at the Australian-based company, which has been working-up a highly promising gold project in Ghana, shows that the changeover is a lot closer than impatient investors imagine. Just how close will become somewhat clearer in a few weeks when Adamus releases an update to its scoping study of the Southern Ashanti project -- and will be staring the critics in the face in April when the bankable feasibility into a 100,000 ounce-a-year development is scheduled for release. By then, the outside world should have developed a much greater confidence level in Adamus and Southern Ashanti which promises to be a very profitable mine, and almost certainly the start of a long-term project with capacity to expand as both an openpit operation, and a future possible underground phase.

 

The uncertain mood of the market towards Adamus can be easily tracked in the company’s share price, and is probably linked to delays in the feasibility study. After a surge up to A95 cents last May the stock bobbled along in the mid-60 cent range for much of the rest of 2006 as the feasibility study, and associated reserve and resource drilling continued. But, as the gold price firms and the project go-ahead gets closer Adamus is rapidly becoming a stock to put on a watch list. The updated scoping study will be the first trigger point for a potential re-rating of the company which is currently capitalised at a modest A$76 million. The full feasibility in April will be second trigger, and while those events are working to a schedule there is on-going news flow from a drilling program designed to add to the existing reserve of 630,000 ounces of gold, in total resource of 1.5 million ounces contained in 22 million tonnes of ore averaging 2.1 grams a tonne.

 

“The bankable study is late, as is just about every mining project in the world today,” Adamus chief executive, Hamish Halliday, told Minesite. “But even if it’s running a little over time we are getting very confident that we’re going to get a nice reserve number and we’ll push the button shortly after.” When the go button is pushed Adamus expects to spend around US$60 million on a mine which will process around 1.3 million tonnes of ore a year to produce gold at a cost of around US$300 an ounce. With gold climbing steadily higher after a slow start to the year that rough guide to costs implies a gross profit margin to Adamus of US$330/oz, sufficient to leave the accountants with US$33 million a year to play with, and more than enough to fund an expanded exploration effort. “Our net present value is looking pretty good,” Halliday said. “At these sort of prices were looking at generating between A$150 million and A$200 million in net free cash flow over the first stage of the project.”

 

...more, in MS story: http://www.minesite.com/minews/singlenews/...n-ghana/41.html