Exore Resources (ASX: ERX) – Ivory Coast Gold Play With Lithium Exploration Leases

Exore Resources Ltd
  • ASX: ERX
  • Shares Outstanding: 589M
  • Share price A$0.05 (29.04.2020)
  • Market Cap: A$27M

Crux Investor recently interviewed Justin Tremain, Managing Director of gold explorer, Exore Resources (ASX: ERX)

A screenshot of the popular 'Gold Miner' game.

Gold, Gold, Gold

Gold had a good year in 2019.

Rising prices led to good market performance for gold producers, but not every gold junior was so fortunate. We think it is important to investigate why the macro story of a sector can fail to correlate with the individual market performance of certain mining companies.

One such company this is true of is Exore Resources, formerly Oroya Mining Limited, an Australian-based gold exploration and development company listed on the ASX. Exore Resources was founded in 1985 and also has lithium exploration leases covering properties of 126km2 in Sweden and 391km2 in Portugal.

Compelling Gold Exploration?

Exore Resources recently acquired what it claims to be ‘some of the most compelling gold exploration ground in northern Cote d’Ivoire, covering 1,345km2, located along strike from Randgold’s 4.2Moz Tongon Gold Mine and Perseus’s Sissingue Gold Mine.’

Ivory Coast?

Exore Resources claims that Côte d’Ivoire is an ‘established and proven jurisdiction for exploration, permitting, and mine development, with an attractive fiscal regime and mining code.’

The Ivory Coast flag against the backdrop of a blue sky on a sunny, mildly cloudy day

There have been 5 gold mines developed over the past 10-years in Côte d’Ivoire, with several recent additional +1Moz gold discoveries at resource definition/feasibility stage. However, Crux Investor was keen to ask about the current operational environment; specifically, the surge of terrorist activity regarded by the UN as ‘unprecedented terrorist violence‘ in the Sahel (West Africa), particularly in the neighbouring countries of Mali and Burkino Faso. Is this really an investable jurisdiction right now? This is a hot topic on the minds of investors, and we have had several recent contributor articles that have shed light on the important subject.

Exore Resources’ flagship asset is right on the border with Burkina Faso, a country that has descended into chaos, with hundreds dead and around 650,000 citizens displaced at the hands of ISGS, Ansar ul-Islam, Boko Haram and al Qaeda amongst others.

Despite the obvious worries and risk, Tremain was adamant that while this is a situation they are monitoring “very closely,” it is not one that will affect their operations. We appreciated Tremain forthright approach when answering this question. Several companies have been rather more evasive. However, we knew investors would want some hard evidence that Exore Resources isn’t at risk. Tremain pointed to the statistical inexistence of terrorist attacks in the Côte d’Ivoire, in addition to the strong government as reasons for investors to feel reassured. He also touched on the heavy local military presence in the area, supported by the French government. As a consequence of Tremain’s confidence, Exore Resources itself does not employ security. Investors might be reassured by this answer, but this is a relevant risk that no company is truly immune from. Let’s keep a watchful eye on how the situation develops.

Business Strategy – A Change Of Plan?

Exore Resources stated it would deliver a Maiden Resource of c. 400,000oz – 500,000oz in September, 2019 to show analysts the company is progressing.

We questioned the benefit of doing so at the time: would the market exhibit much interest? In the end, Exore Resources didn’t deliver a Maiden Resource.

Tremain explains that while the company didn’t deliver on their commitment, the team at Exore Resources has been busy at work. The new intention it appears is to make the Maiden Resource larger after conducting additional drilling.  Tremain claims shareholder feedback was a big factor behind this decision, with shareholders allegedly saying they were very pleased with drilling results and wanted to see continued drilling. The overall strategy is to define a +2Moz resource. Tremain claims the Maiden Resource would have been an interim step rather than a true reflection of Exore Resources’ potential.

Coarse gold

How has the market responded to this strategy? The share price was A$0.07 this time last year, but now sits at A$.06. Has all this drilling actually added value? The market cap stands at A$36M. Tremain has major work to do. Regardless of what he says, we remain very sceptical about Exore Resources’ decision-making processes. Will an expanded Maiden Resource really be the key to getting the market to stand up and take notice? We have no doubt investors will have a lot to say about this. Make your comments down below!

While Exore Resources’ recent drill results were promising, there are question marks elsewhere: does the management team have the technical proficiency or competence to get this gold resource out of the ground economically? Tremain’s “surprise” at the falling share price speaks volumes. Is this team really in control? We will keep a watchful eye over proceedings, but for now, we’re on the fence.


Exore Resources recently went to market towards the end of 2019, raising A$10M at A$0.085. Around 80% of this investment came from institutional gold investors: is this the sign of informed interest or speculative option money?

Exore Resources has spent AS$8M in Côte d’Ivoire. How much has actually gone into the ground? Tremain says 90%, so why hasn’t the share price gone up? Once again, Tremain is left scratching his head, given the strong drill results. Management who don’t know what’s going wrong? This is often a red flag in our books.

Regardless of how Tremain tries to dress up this new strategy, it is simply more drilling. Is this the same old story? What is the end game? Tremain states he intends Exore Resources to develop a mine and go into production on a large scale, standalone Resource. This is some way off. Exore Resources has a huge amount of work to do.

The quality of the resource isn’t in doubt, but there are lots of moving pieces to this story: a worrying jurisdiction, an ever-changing business strategy, high-quality drill results, and an evolving shareholder base. Exore Resources is worthy of attention but needs to be clearer to the market about where it is going.

Company Website: https://exoreresources.com.au/

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

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