More Possible Buyers Looking at Co. With Liberian Gold Project

Source: Streetwise Reports 11/22/2024

Pasofino Gold Ltd. (VEIN:TSX.V) says it continues to have discussions with “potential counterparties” as one offer’s period of exclusivity has expired. The company says the west African country has untapped mining potential as experts say gold’s bull market is continuing to pick up steam.

Pasofino Gold Ltd. (VEIN:TSX.V) announced the period of exclusivity for a formal proposal to acquire the company has expired, but it continues to work with the possible buyer on a “non-exclusive basis” to facilitate its financing for the purchase.

Pasofino granted exclusivity to the counterparty to submit its formal proposal of CA$0.907 per common share, which expired on November 7.

“The company has opened the data room to several additional potential counterparties and will be facilitating early-stage site visits for those who have expressed interest as part of their due diligence process,” Pasofino said in a release. “The company will continue to keep the market informed of any new developments regarding a potential acquisition of Pasofino.”

Catalysts for the stock in the near future include anything that could potentially come out of those discussions.

“We’re at a period in …. our development stage where it’s time to make a decision to finance and build this,” Director Brett Richards told Streetwise Reports. “So, the next catalysts are really who is going to help us do that, whether we sell the company completely or whether we partner with somebody to finance the mine construction on an earn-in.”

Strong Production Numbers, Economics

Headquartered in Ontario, Pasofino is a mineral explorer-developer advancing its Dugbe Gold Project, which spans 2,078 square kilometers in the southwestern corner of southern Liberia’s Birimian Supergroup. This collection of rich gold-bearing rocks is a major source of gold in West Africa, according to Africa Mining IQ.

Pasofino came to own Dugbe per an agreement with then-project owner Hummingbird Resources, entered into in June 2020. As part of the agreement, Portofino earned a 49% interest in Dugbe by advancing it through an exploration program and a feasibility study. Subsequently, Hummingbird converted its 51% interest in Dugbe into a 51% controlling interest in Pasofino in late 2023. Then, in January of this year, Hummingbird increased its stake in Pasofino by 53% via a US$2 million investment. Today, Pasofino owns Dugbe through its wholly-owned subsidiary, ARX Resources Ltd.

The feasibility study for the project is based on the Dugbe F and Tuzon deposits and 82,000 meters of core drilling. Completed in June 2022, it outlines an open-pit operation producing 2.27 million ounces (2.27 Moz) of gold over a 14-year mine life, with an output of 200,000 ounces per annum for the first five years, at an all-in sustaining cost of US$1,005 per ounce.

At a US$1,700 per ounce gold price (the current price at the time of writing is US$2,669.29), the economics would be a US$530 million after-tax net present value discounted at 5% and a 23.6% internal rate of return.

An Inferred resource of 2.88 Moz of 1.58 grams per tonne (g/t) gold, in and adjacent to the outlined open pit, not included in the FS, is upside. Additional upside also exists in the present expansion and exploration potential. The Dugbe F and Tuzon deposits remain open, and within a 10-kilometer radius of them, there are many drill-ready gold prospects, according to Pasofino’s website.

The company also has a mineral development agreement (MDA) for Dugbe in place with the government of Liberia, securing mining rights and terms for 25 years.

Mining Laws Based on Australia

Liberia has been a stable democracy since 2013 and has a pro-mining government. Its mining laws, based on those in Australia, provide stability and clarity to the industry, noted CityBuzz.

Surrounded by rich gold, diamond, and iron ore deposits, Liberia has a well-established and growing mining industry, particularly with respect to gold, according to Africa Mining IQ, and mining is a significant contributor to the country’s gross domestic product. Last year, mining was a major driver of economic growth in the country, according to the World Gold Council. In 2023, gold production there was 19.9 Moz.

“I see the geopolitical outlook for Liberia as being of the best, if not the best, in West Africa,” Richards said. “It’s really difficult to find projects of this size and scale in a geopolitical environment that is reasonably stable.”

Additional Exploration

Exploration also continues at the project, as Pasofino last month released results from its maiden diamond drilling at the Bukon Jedeh “gold camp” in Dugbe.

According to the company, results from the 11 holes drilled included 21.3 meters of 0.9 grams per tonne gold (g/t Au) from 53.5 meters downhole, 4 meters of 2.1 g/t Au from 46.5 meters downhole, and 2.5 meters of 2.2 g/t Au from 43.5 meters downhole.

The westernmost drill hole on the main trend “indicates a potential ‘build-up’ of mineralization towards an interpreted fold closure, a structural feature similar to that controlling the nearby 2.3 Moz Tuzon deposit,” the company said in a release. “Future drilling will aim to test down-dip and along trend from (that hole).”

Pasofino said additional exploration is also planned for the DSZ target, situated 4 kilometers along strike from the Tuzon deposit, where a 2021 channel cut into bedrock returned 36 meters of 0.6 g/t Au, though it remains untested by drilling.

The Catalyst: Gold Bouncing Back

Gold hit its most recent record price on October 30 but has been volatile since Donald Trump became president-elect. However, on Thursday, spot gold rose for a fourth consecutive session, hitting an over one-week high as safe-haven demand soared following AI bellwether Nvidia’s lackluster revenue forecast and intensifying Russia-Ukraine tensions, Reuters reported.

Investors flock to safe-haven assets during global crises, and gold has soared to multiple record highs since the Middle East conflict erupted in October last year, wrote author Sherin Elizabeth Varghese.

“It’s really one main geopolitical factor that’s at play here in the gold market over the course of the last several days – the increased tensions between Ukraine and Russia is probably most notable,” noted David Meger, director of metals trading at High Ridge Futures, according to Reuters.

Many experts are predicting a prolonged bull market. FXEmpire Analyst Christopher Lewis thinks gold will reach US$3,000 per ounce, he wrote in an October 15 article. Brien Lundin of Gold Newsletter predicted a gold price of US$6,000/oz by the end of this bull market cycle, he wrote in the Oct. 18 issue.

Lundin highlighted junior mining stocks as a way to get exposure.

“We’re in a long-term, secular bull market,” he wrote. “And we need to be positioned for it. One of the best ways, of course, is through high-quality junior mining equities.”

Declining interest rates and persistent geopolitical risks are expected to keep driving gold prices higher through 2025, analysts at UBS said, reported Investing.com.

“These elements are set to reinforce gold’s status as a safe-haven asset while also benefiting from broader economic conditions anticipated in the coming year,” Investing.com’s Navamya Acharya wrote.

UBS forecasts that central banks globally will adopt a more dovish monetary stance in response to subdued inflationary pressures and a slowdown in economic growth, the article noted.

“This environment typically diminishes the appeal of cash and bonds, making gold — a non-yielding asset — more attractive to investors seeking stable returns,” Acharya wrote. “UBS notes that declining yields in other asset classes are likely to drive increased capital flows into gold, boosting its value.”

Writing for MarketWatch, Cam Hui this week noted that for 2025, he was “reiterating my bullish call on gold — even, and over U.S. stocks.

“Going back to 1980, there have been several distinct gold bull-bear cycles,” Hui wrote. “Gold now is tracing out saucer-shaped multi-year bases against different regional stock indices. The gold/Dow ratio is the weakest owing to the strength of U.S. stocks, but it is nevertheless distinctive. The Gold/EAFE ratio is poised for a relative breakout, and the gold/emerging-markets ratio has marginally broken out of a 12-year base.” [OWNERSHIP_CHART-11178]

Hui continued, “These technical patterns argue for a bullish commitment to gold for 2025 and beyond for all investors in all major currencies from an asset allocation perspective.”

Ownership and Share Structure

According to Reuters, eight insiders together own about 60% of Pasofino. The largest shareholder is Hummingbird with 50.78%, followed by ESAN with 9.6%.

The other three investors of the Top 5 are Pasofino Deputy Chairman Stephen Dattels with 3.97%, Pasofino Chairman Daniel Betts with 1.28%, and Pasofino Director Robert Metcalfe with 0.66%. Richards owns 0.59%.

The company has 117.03 million outstanding shares and 38.36 million free-float traded shares.

Its market cap is CA$70.32 million. Its 52-week high and low are CA$0.80 and CA$0.30 per share, respectively.

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Important Disclosures:

1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Pasofino Gold Ltd.
2. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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