Northern Miner Article2 grams per ton for an open pit mine is considered to be high grade. Keep in mind the passendro orebody consists of soft rock and that 40% of the gold can be recovered using gravity processing. These are all further confirmations of a low cost gold mine in the making as was indicated in the BFS:
>The project has proven and probable reserves of 1.3 million oz of goldgrading 2.4 grams gold; measured and indicated resource of 2.03 millionoz grading 2 grams gold and an inferred resource of another 1.1 millionoz. grading 1.6 grams gold<
Northern Miner Article
Axmin back on track with CAR's support
Being the lone Western mining company in a developing country presents its share of challenges.
Witness Axmin (AXM-V), a company that holds the gold rich Passendro project in the Central African Republic (CAR).
Axmin's problems in the country have been well documented: a confluenceof the financial crisis and what the market deemed as unfriendlygovernment behaviour.
The latter had do to with the government stalling on granting a mininglicence and its removal of the company's rights to iron ore discoveredon a property adjacent to Passendro.
The situation was so dire that at the beginning of the year Axmin wasconsidering selling all of its shares to an un-named suitor for just4.5¢ per share - a remarkably low figure given that its shares had beentrading in the 90¢ to $1.00 range leading up to the crash of 2008.
But just as the price of gold climbs to new heights Axmin's fortunes have begun to turn around.
The key positive development came in August when the CAR government granted it the long awaited mining licence.
CAR's Minister of Mines, Lieutenant Colonel Sylvain Ndoutingai, who wasin Toronto on Oct. 5 to meet with the investment community, told thegathering that the mining permit is the final document the company needsto proceed all the way into production.
What is more, Ndoutingai stressed, is that the government is committed to seeing Axmin turn Passendro into a successful mine.
If investors weren't convinced of such commitment by Ndoutingai's longjourney to Toronto on behalf of the company, perhaps they will bepersuaded by its stake in Axmin itself.
In contrast to many other sub-Saharan African countries, the new miningagreement does not include a 10% free carry interest in the project.
Instead, Axmin's chief executive George Roach, shrewdly negotiated forthe government to take a combination of shares and warrants in Axmin. Ifall the warrants are exercised the government would have a 10% stake inAxmin at its current level of common equity.
"My view was that if the state became a common shareholder then it wouldshare in the wealth creation of every other shareholder," Roach says."They have the same common interest as other shareholders and it's areal and tangible interest right now, not something that is a 10%pie-in-the-sky figure out in the future. It's a real thing."
Roach's last point refers to the fact that under the previous 10%free-carry interest arrangement the government would only begin to seerevenue flow into its coffers after the mine had been built andproducing gold for some five years.
Still, investors attending the meeting had concerns over the country'smining code - in particular that it requires companies to apply forpermits specific to a given medal.
While that process may seem cumbersome to exploration juniors,Ndoutingai explained that it was put in place due to the state's poorgeological knowledge.
Because CAR doesn't yet have a handle on what resources lie under itssoil, Ndoutingai argued, it hopes the mining legislation will encouragecompanies to explore, report what they have found to the government,apply for permits on the minerals they find most desirable and leave theother minerals open to exploitation by other companies.
Further, Ndoutingai said, in granting the mining permit to Axmin, thegovernment has shown that it will stand by its prior commitments even ifthe mining law changes. This is in reference to the fact that thecountry overhauled its mining code last year, but allowed Axmin to begrandfathered in.
Axmin now must hope that such support from the government translatesinto an upward revaluation from the market. While most of its peers havelong since recaptured much of the market cap lost in the doldrums of2008, Axmin shares have continued to languish, as evidenced by their11.5¢ close in Toronto on Oct. 5.
That low market cap exists despite the fact that the company holds aproject that can turn out 200,000 oz. of gold per year over a 5.9 yearmine life at average cash costs of US$379. Those numbers came out of a2008 feasibility study that used a US$750 oz. gold price. Axmin plans tohave an updated study out using more current metrics for the beginningof next year.
The project has proven and probable reserves of 1.3 million oz of goldgrading 2.4 grams gold; measured and indicated resource of 2.03 millionoz grading 2 grams gold and an inferred resource of another 1.1 millionoz. grading 1.6 grams gold.
As of June 30th Axmin had $7.8 million in cash and cash equivalents. Itwill look to raise the funds necessary to develop Passendro through acombination of debt and equity.
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