Rambo Rain in West Africa: The Calandra Report

Thom Calandra
0 Comments|December 17, 2013

SAN FRANCISCO -- When it rains in west Africa, it's Rambo rain. Buckets and buckets.
 
Asanko Gold Inc.’s (TSX: T.AKG, Stock Forum) purchase of Ghana operator PMI Gold (TSX: T.PMV, Stock Forum) at a thick premium is well below the all-time high for PMI shares. For buyers of the shares at a buck, this takeover of PMI puts them under water.
 
Asanko is the former Keegan and is accelerating its gold mine at Esaase in Ghana. I've been to all of the properties in the area, numerous times. (For those who want the takeaway first, and desire their very own west Africa takeover stock, untouched yet by news, greed or good luck, take your pick: Xtra-Gold in Ghana; African Gold Group in Mali; True Gold in Burkina Faso. I own all three and have devoted via TCR, Ticker Trax, Stockhouse, Baby Bulls and other venues, 100,000-plus words of research since 2009.)
 
Asanko's next step almost surely will be to consider purchasing African Gold Group's Asankrangwa property, which sits inches away from one of the Esaase borders and within striking distance of PMI's Obotan.
 
When it rains, it Rambos. This makes three West Africa combinations in a month. TCR has been tracking cheap gold assets in Ghana/Burkina Faso/Mali/etc. since ... well, since before they were cheap. NOT THE BEST TIMING.
 
See some of the earliest coverage: likely takeovers.
 
When I wrote Ticker Trax, our previous service, we visited PMI's Obotan and came back with several reports, including West Africa Gold Rich & Mostly Ignored.
 
Danny Deadlock, who commands the console at Ticker Trax these days, was convinced Peter Breese's Asanko, formerly Keegan, would get a second shot at Obotan after a failed bid tied to a greedy Australia investment bank earlier this year. Bingo again for Mr. Deadlock, who resides for some reason near Calgary, Canada, where atrocious weather keeps him indoors studying balance sheets, enterprise values and the like. Congratulations, Danny. Again.
 
I bought PMI early, I believe in 2012, and sold it for a profit when it got in the $1 range. A sidebar takeaway on today's offer for PMI: purchase Asanko shares, which were hit hard. This gives you a possible receptacle for west Africa consolidation of TMGP, i.e., too many gold projects. 
 
Peter Breese, who runs Asanko, I keep getting told is just the fellow to handle all of this wheeling and dealing.
 
On that when-it-rain-it-Rambos theme, two other transactions hit the wire this autumn of 2013, a year that mostly cranks something awful in the way of west Africa resource mergers and takeovers: December 10 Centamin / Ampella (113% premium); October 28 B2Gold Corp. (TSX: T.BTO, Stock Forum)  / Volta Resources Inc. (TSX: T.VTR, Stock Forum) (106% premium).
 
This week, surprise -- west Africa resource companies are churning out reports. One of them, from True Gold's Karma project in Burkina Faso, shows a 1.4-year payback for the heap leach gold project. I own shares of True Gold, which is a sister company to our now horribly performing Pilot Gold, one of the TCR 8.
 
True Gold Mining Inc.'s (TSX: V.TGM, Stock Forum) money-study shows a 21% internal rate of return at $1,000 per-ounce gold for the Karma project. The required capital expenditure is about $150 million. Takeaway: heap leaches, when they work, offer flexibility in the event gold prices continue to head south. True Gold filed a solid report, perhaps one of the better ones of this entire 2013 in terms of proving economic durability. 
 
True Gold's Rambo deposit appears to hold the best gold grades within the Karma complex. The risk on True Gold shares is the same that holds for all west Africa governments: will mining officials change their rules on corporate taxes, royalties and other cash-linked requirements for overseas miners? Resource nationalism is getting worse for investors, not better. Does not matter if we are talking Ghana, Burkina Faso, Mexico, Colombia, Tanzania.
 
Another company with west Africa data this week is our African Gold Group,
Asankrangwa owner. African Gold Group Inc. (TSX: V.AGG, Stock Forum) continues to broadcast its nugget effect theme for Kobada in Mali. 
 
Kobada one day will produce 8 million ounces of gold, at a profit regardless of gold price. This is TCR talking. I have seen Kobada a couple of times, and one day it will be legendary. Until that day, AGG shareholders and managers will suffer horribly: investor shingles, you can call it.
 
If you are confused, Asankrangwa is in Ghana, and Michael Nikiforuk's African Gold Group at some point will sell that property to Asanko to keep AGG running. Price? Likely north of $10 million. Asanko predecessor Keegan supposedly made a run at Africaan Gold Group one summer, I believe it was 2011 but I never got that confirmed. The attempt to take out AGG failed.

Kobada on the other-AGG-hand is in Mali, which is recovering from a Muslin coup that received way too much in the way of media scare-headlines. I own AGG shares, at a price that is far above its current 10 cents Canadian.

African Gold Group execs will stage a conference call for anyone who cares to dial in: Monday , December 23, 2013 at 1:15 p.m. Pacific. E-mail the company for info.

ONCOSEC MEDICAL Inc. (OTO: ONCS, Stock Forum): I had a telephone update with OncoSec's CEO and CMO, Punit Dillon and Robert H. Pierce. Dr. Pierce is new to OncoSec but a stalwart in the race to crack hard-tumor code. OncoSec's Phase II melanoma data out this week from UCSF trials in San Francisco could set in motion medical excitement about abscopal effect in the treatment of metastatic cancers such as melanoma. 

"This is seen as a holy grail, abscopal effect," says Dr. Pierce, recently from Merck. I will report further later this week or early next. I do not own ONCS (in USA) shares, which is on a run; I do own step-sister company Inovio Pharmaceuticals Inc. (NYSE: INO, Stock Forum), whose shares are on a run. Both are in San Diego; both use electroporation to deliver potential therapies into humans.

Both could be our next price-performer with the scope of an Illumina, the genomic tools company based near San Diego that has proven itself a pioneer in genetics.
 
Recent purchases: Inovio Pharmaceuticals; Direxion Daily Gold Miners Bull 2X Shares (NYSE: NUGT, Stock Forum). Considering: Sysorex Gobal Holdings Group (OTO: SYRX , Stock Forum). 
 
Attached: Photo of Kibi Gold Belt in Ghana

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