Sovereign Mines of Africa – By Camkite
Currently Sovereign Mine Of Africa trades at less than a £1m marketcap with an extremely heavy weight board of directors who’s pockets are well aligned with private investors, the companies well positioned with the government in the Jurisdiction and the state mining firm SOGUIPAMI who own 25% of SMA’s mining subsidiary & SMA currently awaiting JV finalisation should see the company in a very healthy position should the market cap and share price re rate.
In October 2013 SMA announced a maiden inferred JORC gold resource of 610,000 ounces of at an average grade of 1.2 g/t based on 15,500 metres of drilling, covering only seven percent of the mineralized strike area. Open ended strike zones run in both directions with only 7% of the area being resourced to date it’s easy to see that the area has the ability to become a world class concession which could hold millions of ounces.
A team from a major international gold mining group visited the site in June 2014 and were of the opinion that Mandiana has the potential for a Tier 2 gold mine, supporting annual production in the range between 200,000 ounces and 500,000 ounces of gold.
SMA’s Data-room has been open for over a year and with a number of parties reviewing the data over the last 12+ months. In July 2015 the company confirmed that it had entered into an exclusivity agreement with a MAJOR 3rd party with the ability of carrying finances & joing forces with a view to progressing the Mandiana mine.
As stated in recent results, and due to the nature of the agreement the company were not able to comment to the terms of the agreement but expected to make an announcement in the first half of October ( Right about now )
Its worth noting that the current cash burn of the company is allegedly £100k P/A … the company currently have £40k in the bank so money is tight however one of the directors has said he will underwrite any future funding which supports the faith being shown in the company going forward.
Given the potential size of the gold resource, coupled to comments made by 3rd parties re: The Mandiana mine then it’s fair to say that the £1m Marketcap looks to offer yet another bargain basement play.
The current upside in SP is still very much unknown, terms of the JV deal and it’s partner will be the driving force to where the market values it the company. When looking over other peers within the sector, with ” Arguably ” less potential, non funded, no JV, worse grades and in my opinion occasionally suspicious business models. SMA are at the better end of the scale on a risk reward basis.
SMA – Speculative Buy