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Guyana's Golden Luster: Tajiri Resources Boosted by Unexpected Azimuth/Troy tie up
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Guyana’s Golden Luster: Tajiri Resources Boosted by Unexpected Azimuth/Troy tie up
SOURCE: VantageWire.com - It pays to be friendly to your neighbours, especially in the case of Tajiri Resources Corp. [TAJ:CA]. With its flagship Kaburi PL Gold Project in Guyana being centrally located within the West Omai Project held by Azimuth Resources - who as of last week has embraced a US$208 Million friendly takeover bid from fellow Australian gold producer Troy Resources (ASX:TRY/ TSX:TRY) Tajiri’s in the process of making a strong case for being the newest takeout target in the region. Commencing its first pass 3,000 metre drilling campaign on priority targets within Kaburi’s 2.5 x 4km seer gold-in-soil anomaly, Tajiri has enlisted the help of a familiar face to region to help take the company to the next stage.
Dominic O’Sullivan, founder and former president of Azimuth, who following his departure from the company this past November purchased the in-country assets of Drillex International. In doing so, O’Sullivan set up a new Guyanese based drilling outfit in Au Drilling Inc., which Tajiri has contracted to complete the program.
O’Sullivan’s acquisition came complete with 4 RC drills, one of which was residing directly next to Tajiri’s property. This proximity proved to be quite helpful for Tajiri, as it saved significant mobilization costs, and allowed the contract to get underway immediately. Tajiri hopes that a significant find throughout the campaign will catapult the company into the realm of having serious takeout potential, and a possibility of capitalizing on the type of premium witnessed with the Azimuth takeover.
THE CHANGING GUYANA LANDSCAPE
Tajiri’s drilling campaign launches on the heels of Azimuth’s major takeover announcement. Troy’s Azimuth acquisition closed out the month of March on a high-note for other players in the region. When last traded, Azimuth’s share price was approximately $0.245 a share, giving it a market cap of A$105.5 million (US$110.2 million). However, the acquisition came with a healthy 78% premium, as the takeover price was announced at A$188 million. Given that Azimuth’s larger property surrounds Tajiri’s, it’s understandable the reasoning behind the excitement regarding getting more data from the drill bit.
In a market that still remains mired in a downturn, especially for junior explorers, the news was a tremendous shot in the arm for Tajiri and its peers. But the good news in Guyana doesn’t stop there.
The year started with the positive news coming from an update to Guyana Goldfield’s [GUY:CA] Aurora Gold Project’s feasibility study. Originally slated with a cap-ex of approximately $500 million, the new numbers came back at less than half of that, with a projected cost of $200 million. The new estimate made the project a lot more plausible, and overall profitable.
The update quiets the critics of Guyana as an economic jurisdiction for gold mining. Previous to the update, many were scared off by the initial projections. However, updates to resource estimates in the former-Azimuth properties surrounding Kaburi have also done their part to help Tajiri’s case for its effective location scouting.
Azimuth had recently started to work on a preliminary economic assessment on its West Omai assets (that abut Tajiri’s Kaburi) and in doing so upgraded the resource nearly half a million ounces to 1.65 million in total. The project itself is going to be moving forward with mine development, further developing the area, and making Kaburi ever more attractive from the outside.
THE O’SULLIVAN CONNECTION
Bringing in the expertise of Dominic O’Sullivan is a bit of a coup for Tajiri, as it follows on the heels of the 2013 edition of PDAC. Having left Azimuth without so much as a goodbye, O’Sullivan still has quite an affinity for the region. Given the proximity to his former flagship, O’Sullivan is very familiar the landscape that Tajiri is operating in.
What Tajiri has that others such as the much larger Guyana Goldfields has is high grades at near surface depths. In the case of GUY, a depth of 500m is required before the higher grade results start to percolate.
In the aftermath of the Azimuth takeover, O’Sullivan would’ve probably been out of the region entirely, had he not been given the timing to purchase his drills. Now, the man that some have claimed has a chip on his shoulder, is ready to be set loose back upon the Guyana grounds that brought him to the region in the first place.
The drill program is projected to take about 2-2.5 weeks to complete. Upon samples being submitted, assays and results should roll out to the market by mid to late May. The company’s drilling will be targeted in areas associated with grades of up to 15.3 grams per ton of gold. These coincide with the Seer gold-in-soil anomaly where samples have so far been punctuated by 2.66 g/t, all of which appear structurally controlled by the two shear zones that appear to be responsible for all of the gold in the area.
If the company hits on this campaign, it’s quite reasonable to expect that Tajiri will go back to the market and raise the appropriate amount of cash (at a much more reasonable price level than it is now), and continue to drill off the resource to close out the year.
THE BOTTOM LINE
Guyana is still off of the map for many investors, and despite positive reports coming from the country’s mining sector, may still need more proof that it’s a great place to be. For Tajiri, the stars seem to be aligning, as its benefitting from the activities of its neighbours while preparing to ramp up its own news cycle for 2013.
While the company still holds a respectable property in BC, the focus is undoubtedly upon Guyana. At $50 a meter for RC drilling costs, the company can get a lot done on a smaller budget, compared to $75 to $100 in BC, and as high as $150 per meter in the Yukon. As well, Kaburi holds the distinction of being one of the most accessible projects in the country, with the rare ability to drive to the property, and paved access projected by the end of 2014. Hydropower is being set up 20km to the southeast, given the dynamic duo of drivability and cheap power.
With only 43 million shares outstanding, it’s apparent that management has done everything in its power to keep dilution to a minimum. Amongst a sea of depressed faces at PDAC, Tajiri’s future is actually worthy of a smile. Success begets success, and positive numbers on this current drilling campaign could really turn a corner for the company.
Keeping its eye on the prize, Tajiri can look to Azimuth’s acquisition as an extreme positive for its exit strategy down the road. The increased presence of Troy Resources in the area, along with the more positive outlook on the Aurora project for Guyana Goldfields gives the region some added heft. Now it’s just a matter of Tajiri getting the recognition it deserves, once the results from this drill campaign hit our inboxes later next month.
G. Joel Chury for the Bottom Line Report
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