Mining explorer Cora Gold
(AIM:CORA) has produced a solid set of results from its flagship 95%-owned Sanankoro project in southern Mali.
These are the first results since Cora began exploration in November 2019. The West Africa-focused miner said it had uncovered 2.6g/t of gold over 29m across five drill locations.
Chief executive Bert Monro was extremely positive on the results, highlighting that less than a quarter of the 1-2 million oz target area covered by Sanankoro has been explored thus far.
“Cora has successfully intersected multiple higher-grade gold intercepts at Sanankoro in its latest drill programme,” he said. “The current resource has a range of pit depths from about 40-100m so there is significant scope to increase the open pit Resources with further successful drilling.”
Shares were up more than 6% at 6.75p in early Monday trading. This still represents a significant discount from Cora’s 2017 AIM listing, when it debuted at 16.5p.
The results came from targeting extensions at depth to the Maiden pit and testing continuity of mineralisation at depth, Monro noted. The outcomes include 3.89 grams per tonne (“g/t”) of gold over 12 metres, 8.38 g/t over 3 metres, 3.31 g/t over 7 metres, 1.08 g/t over 18 metres and 1.68 g/t over 4 metres. More results from additional drilling are expected by the end of February 2020.
Sanankoro is Cora’s key asset, with five permits across 341 square kilometres at Sanankoro, Dako and Kodiou, Bokoro East, and Bokoro II.
The property is one of eight that Cora is exploring across Mali and Senegal.
Supply and demand
On 30 January The World Gold Council offered a full year supply assessment which could further aid junior gold miners like Cora in 2020.
Mine production in the final quarter of 2019 fell by 2% to 889.5t. This is the lowest fourth-quarter production level since Q4 2016. It also represents a “clean sweep of year on year declines for all quarters in 2019 [and] the first annual production decline since 2008”, the report said.
With gold bulls riding high as we head into the second month of 2020 the lack of supply elsewhere in the system could be a major boost here.
Reasons to be cheerful
A mid-January scoping study at Sanankoro suggested an 84% internal rate of return at a gold price of $1,400, with a potential capex payback of just 18 months. Since then, the spot price of the precious metal has soared to $1,570 an ounce.
Management has been effectively keeping shareholders up to date since going public in 2017, and a December 2018 share placement at 5p was reportedly in high demand with existing holders.
In a 21 January 2020 research note, broker Turner Pope rated Cora at £17.1m or 13.2p per share, “implying 111% upside to the current share price”.