Avesoro Resources Inc. (TSE:ASO), formerly Aureus Mining Inc. (TSE:AUE), is a Canada-based mid-tier gold producer. The company is engaged in the exploration and development of gold deposits in Liberia and Cameroon through its subsidiaries. The company has 5,324.7 million shares and has a fully diluted market capitalization of CAD160 million. The company currently has zero debt and CAD4.2 million cash. Shares consolidation is very likely in the future to control the dilution of shares like happened with Euro Sun Mining (TSE:ESM) formerly called Carpathian Gold.
Avesoro Resources began production in the second quarter of 2015 at the projected target of 120,000 ounce per year. Commercial Production was declared at New Liberty on 1 March 2016 but the company produced gold at the rate of 7000 ounce per month primarily because of inadequate oxygen generating capacity of the existing processing plant. The company is expecting to install two additional PSA oxygen plants at site during the middle of Q1 2017.
Avesoro Resources Valuation
Avesoro Resources all-in sustaining cost (AISC) for gold is less than $900 US per oz. At US$1200 price of gold, Avesoro will be cash flowing about CAD47 million per year or CAD0.01 per share with projected annual production of 120,000 ounce. In the near future, Avesoro Resources should trade between 6-10 times cash flows or fair value of about CAD0.06 to CAD0.1. Currently the stock doesn’t seem to have great potential but at US$2000 per ounce of gold the share price will most likely be trading at 8 to 13 times the current price of CAD0.03. The shares during the last bull run in 2011 traded at around CAD1.75 (see the historical chart below) when it was just an exploration company with a much lower share float of around 200 million shares.
The company’s gold reserves in the ground are currently valued at CAD57 per ounce of gold which is still lower than many other gold producers.
Avesoro Resources Assets
Avesoro Resources Assets include the New Liberty Gold Mine in Liberia in Liberia. It also owns rights to the Weaju, Gondoja, Ndablama and Leopard Rock projects in Liberia, and to the Batouri gold project in Cameroon. Avesoro Resources Inc. has approximately 2.8 million ounce of gold in the reserves and resources category of which 1.5 million ounce are in the measured and indicated category.
New Liberty Gold Mine is located within the Southern Block of the Bea Mountain mining license in Liberia and covers an area of 478 square kilometers and has a 25 year, renewable, mineral development agreement. The New Liberty Gold Mine has an estimated proven and probable mineral reserve of 8.5 Mt with 924,000 ounces of gold grading 3.4 g/t and an estimated measured and indicated mineral resource of 9,796 Kt with 1,143,000 ounces of gold grading 3.63 g/t and an estimated inferred mineral resource of 5,730 Kt with 593,000 ounces of gold grading 3.2 g/t.
Avesoro Resources’ additional gold projects of Ndablama, Gondoja, Weaju and Leopard Rock are the focus of exploration programs during 2016. Ndablama has an indicated mineral resource of 386,000 ounces of gold grading 1.6 g/t and inferred mineral resource of 515,000 ounces of gold grading 1.7 g/t and Weaju has an inferred mineral resource of 178,000 ounces of gold grading 2.1 g/t. The Yambesei (759 km2), Archaen West (112.6 km2), Mabong (36.6 km2) and Mafa West (15.6 km2) licences will also be subject to preliminary reconnaissance geological work.