Turaco Gold Expands Its Stake in the Afema Project to 80%
TCG (TCG) Share Update November 2024 Tuesday 26th
Turaco Gold Increases Stake in Afema Project to 80%
Turaco Gold Limited has announced a strategic move to increase its stake in the Afema Project in Cote d'Ivoire to 80%, marking a significant step in its expansion strategy.
Instant Summary:
- Turaco Gold increases Afema Project interest to 80%.
- Accelerated milestone payments total US$14.2 million.
- 50% of the payment in cash, 50% in Turaco shares.
- Net smelter royalty reduced to 1.5% from 2.0%.
- Turaco's financial position remains strong post-transaction.
Turaco's Strategic Expansion
In a strategic move, Turaco Gold Limited has finalized an agreement with its joint venture partner, Sodim Ltd, to increase its stake in the Afema Project to 80%. This decision accelerates previously agreed milestone payments, allowing Turaco to enhance its interest from the current 51% to 80%.
The total payment of US$14.2 million comprises US$7.1 million in cash and US$7.1 million in Turaco shares. This balanced approach ensures that Turaco maintains a robust financial position, with cash funding sourced from its proforma cash reserves of approximately A$48 million.
Financial and Operational Implications
The agreement also includes a reduction in the net smelter royalty from 2.0% to 1.5%, should the joint venture partner opt to convert its 20% interest. This adjustment provides Turaco with a pre-emptive right over the NSR, further strengthening its position.
Additionally, Turaco has committed to a discovery payment of US$1.0 million upon declaring a JORC resource estimate of at least 2.0 million ounces at a grade greater than 1.2g/t gold within the exploration permit areas.
Current Developments at Afema
Currently, three drill rigs are operational at the Afema Project, complemented by geophysical, soil sampling, and auger programs. Ongoing metallurgical test work and optimization efforts are expected to bolster the project's resource estimates.
The Afema Project has already declared a JORC Mineral Resource Estimate of 2.52 million ounces of gold, distributed across the Woulo Woulo, Jonction, and Anuiri deposits.
This strategic increase in stake is likely to enhance Turaco's market position and investor confidence. The reduction in net smelter royalty and the financial structuring of the deal suggest a positive outlook for the company's future cash flows and profitability. Investors may view this as a significant growth opportunity, potentially driving up Turaco's stock value.
Investor Reaction:
Analysts are likely to view this development positively, given the strategic nature of the transaction and the potential for increased gold production. The balanced financial approach and reduction in NSR are expected to be seen as prudent moves by the management.
Conclusion:
Turaco's decision to increase its stake in the Afema Project represents a calculated risk with potentially high rewards. Investors should keep an eye on the company's progress in resource estimation and project development as these will be key indicators of future success.