Letter to ShareholdersLets hope the debt facility is in place by the AGM scheduled for end of June. Following is exerpted from the AR posted on Sedar.
Interview with AXMIN’s President and Chief Executive Officer – George Roach
George, you took the helm of AXMIN this time last year – why was that such a good fit and
what did you bring to AXMIN in terms of your background?
The fit was excellent, based on my strong relationship with the Central African Republic. We succeeded in securing the 25-year Mining Licence for Passendro; an addendum that reinforced the terms and conditions of the 2006 Mining Convention; and, we were awarded two 3-year Exploration Licences that ring-fenced the Mining Licence. The strength of this partnership will go a long way to ensure the expeditious development of CAR’s first modern mine.
AXMIN also benefits from my years of working in Africa. Having negotiated tenure in both Francophone and Anglophone regions, I am at ease in this familiar environment. Most recently, as a founding Director and Managing Director Africa for UraMin Inc., I helped to build a successful uranium exploration business in several African countries that included CAR. I think I have a pretty unique relationship with the country and feel a special bond.
How would you characterize your performance to date; what were your key achievements and have you met your objectives?
Good question. When I joined AXMIN in June 2010, my key objectives were to obtain the Mining Licence for the Passendro project; revalidate the 2008 bankable feasibility study to reflect the current gold price and our increased reserves; and to secure the debt facility to build the project. I am pleased to report that we have all the necessary permits for Passendro and we now have a clear road ahead in which to develop the project. The results of the revalidated feasibility study were announced at the end of January 2011; and, shortly thereafter, the full report was published. The report demonstrates that the project is both technically and economically more robust and is well positioned to take advantage of this strong gold market. Its publication also gives us the documentation we need to secure lending arrangements to advance the project. However, I am not resting on my laurels just yet. Over the past four months, with the assistance of Endeavour Financial, we have been working diligently and extensively with several banking consortiums and export credit insurance agencies for the arrangement of a debt facility, potentially up to 66% of the capital costs required to develop Passendro. I am optimistic that in the near future we will be in a position to announce to the public our progress toward a debt facility agreement. Additionally, one of my goals has been to re-start exploration at Passendro and within our newly-awarded Bambari permits which combined with the Mining Licence cover 90 km of strike along the prolific Bambari greenstone belt. Francois Auclair, Vice President Exploration, and Denis Spector, our newly-appointed CAR Project Geologist, have outlined an aggressive drilling program with the intention of increasing reserves at Passendro, which will allow us to maintain the first three year
production rate of 205,000 ounces per annum for the life of mine.
AXMIN stock performance has been somewhat of a disappointment; can you give shareholders or potential investors a few reasons to hold their positions or to buy now?
Actually, since June 2010, our market capitalization has increased 32 percent. Having said that, and looking at the recent mergers and acquisitions with companies of comparable reserves and resources and in similar stages of development, our share price is significantly undervalued. I believe this will change dramatically once we secure the debt facility for Passendro, at which time we expect a significant re-rating of the stock. So why buy now? Frankly, we are extremely undervalued. As one of our Institutional shareholders commented, “AXMIN is priced to fail and not to succeed”. Considering this, once the debt facility has been secured a great deal of the project risk
will be removed and we anticipate that the compelling economics that were demonstrated in our revalidated feasibility study will steadily improve as the price of gold climbs. Management believes its current aggressive exploration program in CAR will not only increase resources and reserves at Passendro, but will signal to the market that we are not just sitting on one mine but controlling what could potentially be a mining camp.
What is your outlook for AXMIN going forward; what do you expect to be the hurdles; and how
do you see the Company overcoming them?
My number one objective going forward is to secure the lenders agreements to build the Passendro mine and I believe that we are well along the road to achieving that goal. As well, I have set several other goals for the Company as we progress forward in 2011, namely:
Build the mine team that will develop Passendro – In February 2011, Alex du Plessis was retained as an
Engineering Advisor and is assisting in strengthening AXMIN’s mine development expertise. We have recently
agreed to terms with a Chief Operating Officer, who has built and operated major mines in Africa and we expect to
announce his appointment in mid-May.
Price and cost optimizations – AXMIN’s Passendro project team is working with the engineering groups to identify
areas requiring optimization that potentially could result in lowering the capital and operating costs, such as mill
throughput optimization, contract mining and over-the-fence power supply agreements.
Monetise assets for which we were receiving no value in our market capitalisation – In February 2011, we
announced the spin-off of our Sierra Leone assets into a publicly trading vehicle of which AXMIN would retain a
significant interest. This transaction potentially could afford AXMIN the opportunity to monetize its Sierra Leone
assets within this calendar year.
Increase resources at Passendro – As I mentioned above, we are aiming to expand our reserve base at Passendro
with the next phase of drilling targeting untested strike and depth extensions that are situated within or at close
proximity to the newly defined reserve. As the program evolves, we plan to expand beyond the mine area to high
priorities first within the Mining Licence and then further along the belt.
Additionally, management will continue to assess and take advantage of any opportunities that will further develop the company’s growth.
Any last words?
Management and the Board are focused single-mindedly on building Passendro and we expect the year before us to further emphasize that sentiment. It is my hope that next year at this time I will be telling you that our peers feel they are undervalued compared to AXMIN! I would also like to extend my appreciation to the AXMIN team and Board of Directors for their support and guidance during my first year as AXMIN’s CEO and to you, our shareholders, for your continued confidence in our ability to unlock the tremendous value the Company holds in the development of Passendro.
“Signed”
George Roach
President, CEO and Director
April 27, 2011