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Sarama Resources Ltd V.SWA

Alternate Symbol(s):  SRMMF

Sarama Resources Ltd. is an Australia-based gold explorer and developer. The Company is focused on establishing a new mining district in Burkina Faso. The Company’s Sanutura Project is located approximately 350 kilometers (km) southwest of Ouagadougou. The Project covers approximately 1,454 square kilometers (km2) of prospective greenstone terrane. The Company holds approximately 17.52% holding in Joint Venture BFI Inc., which holds the exploration and evaluation asset pertaining to the Karankasso Project in Burkina Faso. The Karankasso Project is situated 130 km southwest of Endeavour Mining’s Mana Mine, Fortuna Silver's Yaramoko Mine and approximately 60 km south of Endeavour Mining's Hounde Mine. The Company also has an 80 % interest in the Cosmo Newbery Gold Project in Western Australia, and consists of seven contiguous exploration tenements covering approximately 580km2 in the Eastern Goldfields of Western Australia, 85km north-east of Laverton and 95km west Gruyere Gold Mine.


TSXV:SWA - Post by User

Bullboard Posts
Comment by MiningBookGuyon May 28, 2016 9:51pm
169 Views
Post# 24913541

RE:RE:RE:Latest news

RE:RE:RE:Latest newsHi siempre33,

This is a difficult question to answer because there are 2 'most likely' paths that Sarama can take. I don't have too much time right now, but will try to briefly describe them:

1. Acacia Earn-In continues through 2017-2018 for the full spend

In this case, it implies that Acacia is really interested in the 'home run' potential here. Even if not that much new is discovered in 2016 overall, we can assume Acacia expects the deposit to be 5M+ oz, and perhaps even 10M+ oz when combined with all the regional deposits that Acacia may or may not have a stake in. It means this is true district potential in the South Hounde Belt. And it means there's A LOT more exploration coming before development.

Keep in mind this is the best scenario...to really draw out the exploration, and not necessarily get into construction for 3-4 more years, and maybe not production until 2022 or later...that's a rough time-line I would put on this. It's very possible that Sarama would be fully acquired by Acacia at this point, or some other company want to bid. I am not saying this has a high probability of happening. But I think it's more than the market currently gives it credit for.

2. Acacia Earn-In ends at the end of 2016, and Sarama enters the development stage.

While not the ideal scenario, it's a far better situation than the market gives Sarama credit for. Importantly, Andrew & Paul at Sarama have significant experience developing Randgold's Kibali...when it was know as Moto Gold Mines in the mid-2000s. A lot of valuable work was done by these guys, and they are fully capable of developing this into a mine.

While there's more risk in this scenario (through both dilution and possibly the need for a different partner than Acacia), this Bondi acquisition really drives home the point that Tankoro can be the center of a multi-pit operation. After 2016 drilling is complete, there may already be enough for a modest heap-leach operation (maybe ~60k oz/year over 8-10 years), or even a mixed oxide/hard rock operation (closer to ~100k oz/year over 8-10 years). Bondi is very significant for either of these possibilities.

In this scenario, I could see immediate moves towards development/financing by early 2017, with some continued exploration. It's possible that construction could occur within 2-3 years, and production by 2020.

--------------

Ok, I threw out a lot of numbers and predictions here. Keep in mind some of these ideas come directly from the powerpoints and news releases. Some from speaking to management. Either way, we're looking at 4+ years until production.

BUT MOST IMPORTANTLY, either scenario can definitely work, and the 2nd scenario is far more realistic than is currently perceived.

I'm also going to add than people really need to start comparing Sarama to some of the more advanced companies...because Sarama is rapidly becoming more advanced. One that really deserves a direct comparison is West African Resources (WAF). I don't want to pick on WAF too much here. But really, you compare the 2 market caps, and see where Sarama will be after the Bondi acquisition is complete...and it provides further evidence of Sarama's incredibly low valuation relative to competitors.

I have to run, but hopefully this not only gives a better idea of production expectations, but also how Sarama can succeed in 2 very different scenarios which I consider the most likely at this point. Any errors here are all mine, as I don't have time to proof-read right now.

MBG
Bullboard Posts