hares of Asante Gold Corp. (CVE:ASE) were up nearly nine per cent Friday, having advanced roughly 30 per cent in the past month, as investors look forward to seeing the benefits of a deal inked last fall to buy the 1 per cent net smelter return (NSR) royalty Goknet Mining Company holds on PMI Gold's (CVE:PMV) Obotan gold project in Ghana. The consideration of the royalty acquisition deal, reached in November last year, is $22.5 million, consisting of 45 million shares in Asante stock, at a deemed value of 50 cents per share. Asante president and CEO Douglas MacQuarrie, who is also the managing director of Goknet, said earlier this month that he was looking forward to the company’s shareholder meeting to approve the royalty acquisition - and moving Asante forward. MacQuarrie acquired another 1 million Asante shares for $250,000 in early January, bringing his total investment in the company to about 4.47 million shares, 250,000 share purchase warrants and 300,000 stock options, representing roughly 22.77 per cent of Asante’s stock, on a partially diluted basis - a show of confidence in the junior gold explorer. PMI Gold has previously announced that the Obotan project has a post-tax net present value of US$387 million, assuming a US$1,300 per ounce gold price, and a 5 per cent discount rate. It also has a projected post-tax internal rate of return (IRR) of 28 per cent, and a capital payback period of just less than 3 years. Start of construction is targeted for this quarter, for first gold production beginning in 2014, conditional on approvals and financing arrangements. Average production is slated for 221,500 ounces of gold per year for the first five years, with total production estimated at 2.26 million recovered gold ounces over the 11.5 year mine life. Project revenue over the life of the mine is forecast at a whopping US$2.9 billion using a $1,300 an ounce gold price, and at US$3.61 billion using a higher price of the yellow metal. Average cash operating costs are anticipated at US$626 per ounce, and the capital cost estimate for Obotan is US$296.6 million, including a pre-strip mining cost of US$82.2 million. Asante is also currently exploring the Fahiakoba Concession located in the centre of Ghana's Golden Triangle between Perseus Mining's (TSE:PRU) (ASX:PRU) 280,000 ounce-per-year Edikan gold mine, and AngloGold Ashanti's (NYSE:AU) 315,000 ounce-per-year Obuasi gold mine. Last September, the company said it collected final assays from a soil auger program on its Fahiakoba mining concession. Auger holes were drilled to depths of seven metres to test for blind gold mineralization within weathered bedrock below widespread alluvial cover. Anomalous gold values ranged from 25 to 650 parts per billion (ppb), with background levels of 10 ppb gold or less. The assays were part of a 1,200 auger-hole soil geochemical drill program designed to outline additional drill targets. Asante’s shares were up 2 cents as at about 1:30 p.m. EDT Friday, trading at 25 cents. |