The prime example in my gold coverage universe is
Volta Resources Inc. (VTR:TSX). It's a very large deposit, the largest single undeveloped gold project in West Africa at almost 5 million ounces of Measured and Indicated, and all those ounces are located in a single pit. As an investor, if you believe the price of gold is going up, this is a project that will, on a percentage level, give you the most leverage to gold price increases. Normally, a higher-cost project is sensitive to gold prices going up, but the flip side is that the same project is sensitive to gold prices going down. In Volta's case, there is a cushion against a fall in the value of the company due to its non-core asset portfolio, which we value at a level that exceeds its current market capitalization. Another way to look at it is investors get the flagship property, Kiaka, for free.
TGR: How far along is Kiaka?
DH: It has a prefeasibility study and Volta is working on a bankable feasibility study. The company recently came out with a revised resource estimate based on a staged capex and a selective mining scenario in which it demonstrated that it can produce gold from a smaller plant initially and use the project's free cash flow to fund expansion. This decreases upfront capex to about $400M from the $610M that was estimated in the prefeasibility study. The $400M is still very high compared to Volta's market capitalization. The company is being quite creative in its investigations as to how to finance that. With the abundance of alternative financiers around, I think that it will be able to cobble together something that works.