Roscan Gold (ROS) – Gold Play in Mali Battling Jurisdictional Concerns

Roscan Gold Corp.
  • TSX-V: ROS
  • Shares Outstanding: 245M
  • Share price C$0.39 (02.09.2020)
  • Market Cap: C$95M

Interview with Nana Bompeh Sangmuah, President & CEO of Roscan Gold (TSX-V: ROS).

As many of our Crux Investor viewers and readers will already know, the Sahel (West Africa) has been struggling with a perilous security situation in recent years because of terrorist incursions and unrest. If you haven’t seen some of the articles on the platform about it, feel free to check them out.

Mali has been one of the most severely affected areas, and that is exactly where gold-developer Roscan Gold is based. We’ve spoken to several CEOs of West African mining companies in the last few months, and the situation does not appear to be hampering operations. The presence of French, US and British troops combined with regional co-operation had started to make the region a little more secure.

However, on the 18th of August 2020, elements of the Malian Armed Forces began a mutiny. Corruption is rife in the country, and the average national has been suffering because of wealthy politicians self-enriching themselves to the detriment of the people that elected them. The African status quo continues in perpetuity, but occasionally, the people fight back. The military coup has created concerns around the region, and this has been clearly reflected in Roscan Gold’s share price. After what had been a solid year in which the company appeared to be capitalising on the gold bull environment, the last few weeks has seen shares fall off a cliff edge. Roscan Gold appears confident that the current situation can be resolved without unnecessary western involvement, and this week’s talks between the military leaders and the Economic Community of West African States suggest that his confidence is well founded.

Matthew Gordon talks to Nana Bompeh Sangmuah, August 2020

In terms of the terroristic threat, Sangmuah insists that the threat is concentrated 700-800km away, in the north of the country, and the French military provides the company with ample protection. He states that there has been no impact to Roscan Gold operations or business arrangements as a consequence of terrorist activity. Will this quash the concerns of investors?

We really appreciated Sangmuah’s candour on this topic. It is not always common; plenty of CEOs shy away from openly discussing issues like this. He didn’t hold any punches and was keen to clearly articulate the current geopolitical circumstances that surround the company alongside its business model.

Roscan Gold does indeed appear to be coping well in West Mali, at least in an operational sense. The company’s exploration programme on its Kandiolé Project has actually been ramped up if anything, with a 5th drill rig being allocated to test exploration targets. The programme hasn’t been impaired whatsoever if the company is to be believed, and the company is ‘comfortably’ on target to achieve its 45,000m drill programme target for 2020. 

Let’s start by digging into the asset a little. Kandiolé is geologically prospective; there is little doubt about that. The project is situated 25km east of B2Gold’s 7Moz Fekola Mine and IAMGOLD’s Boto and Diakha deposits and north of the IAMGOLD Siribaya Deposit. Is this really the most productive greenstone gold belt on the continent?

All in all, Kandiolé looks like an asset that is located within a +50Moz gold camp: the Birmian of West Mali. It has good transportation infrastructure and is road accessible from Bamako, 400km or a 6-hour drive away. There are a further operating mines in the region, 7 in fact.

Roscan has the option to acquire up to 100% interest in a 254km2 contiguous land package within this prolific region. The company has now established a pipeline of additional priority targets and has already made 2 high-grade discoveries at surface, one at Mankouke South and one at Central Mankouke. Both lie along the 7km trend line.

The company set out to acquire one of the prime exploration estates in Africa. Whilst it is having conversations with strategic partners, Roscan’s focus is on adding value through the drill bit by making as many discoveries as possible. As the company begins to receive a revaluation, it will have the capital available to do some “interesting things” that will be a value add for shareholders. Is M&A on the horizon? I like that Roscan can pull the trigger immediately, standing on its own two feet, whenever it finds something that might create accretive value. Most juniors are left twiddling their thumbs, waiting for a strategic partner to come in and ignite the fuse.

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Roscan has around $20M in the treasury, and Sangmuah feels this well-funded nature appositely represents the trust the market has in the team. The company is fully funded for its imminent drill campaign and expects another $10M to come in from warrants in March and December, 2021. Before Sangmuah came into the fold, he suspects the company had previously raised around $10M in total.

The value proposition is being delivered by a fairly impressive team. Sangmuah himself has 20 years of international mining experience with plenty of commercial expertise too. Executive Vice-Chairman, Greg Isenor, is a member of the Association of Professional Geologists of Nova Scotia and has a geology degree from Acadia University. He has previously plied his trade at companies like Merrex Gold Inc. and Jilbey Gold Exploration, both of which were eventually taken out. CFO, Mark McMurdie, has over 30 years of senior leadership experience in both public and private companies. Chairman, Sir Samuel Jonah, became the first Ghanaian to be knighted in this century. This is a team with a strong track record of developing and de-risking assets before eventually selling them and returning value to shareholders. All very comforting when doing business in Africa, coup or no coup.

Having coped with COVID-19, the wet season and the military coup effectively, Roscan Gold now needs to use its c. $20M intelligently. It should see the company through until its next tranche of warrants in March (another $5M). A helicopter airborne survey has been initiated to aid the identification of deeper-seating targets. Will this 45,000m campaign “connect the dots” and expand the regional footprint of Kandiolé? Gold investors will be hoping so.

When quizzed on the company’s exit strategy, Sangmuah wasn’t totally clear, but he did vaguely indicate that exploration and development are the company’s areas of expertise rather than mine building. Again, it is important to be clear what type of company you are investing in.

The next year could offer up plenty of catalyst moments for the market, and the management team has not yet exhibited anything that would make me doubt its proficiency to hit deliverables and add value through ounces in the ground.

What did you make of Nana Bompeh Sangmuah and Roscan Gold? Comment below and we will respond.

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