Cardinal Resources raises $6M as Ghana gold grows

Cardinal Resources (ASX:CDV) has demonstrated market support for its strategy and leadership with the recent raising of A$6 million for ongoing development of the Namdini gold project in Ghana.

The fundraiser included a placement to sophisticated and professional investors at $0.10 per share for $4,158,118, with one free listed option for every two new shares exercisable on or before September 30, 2019 at $0.15.

An additional placement to Cardinal directors will add $841,882 to the financing drive.

The company has completed the first tranche of the placement to raise up to $2.8 million. The second tranche (for up to $2.2 million) and all listed options will be issued subject to shareholder approval.

A further $1 million has also been secured from experienced West African resources investor Macquarie Bank, which recently committed to the purchase of 10 million shares on the same terms as the $5 million placement.

Macquarie, which is involved with several well-regarded explorers, developer and producers in the region, followed a vigorous review process, including a site visit to Ghana and a detailed review of all data.

The investment will result in Macquarie being one of the largest shareholders in Cardinal, with an equity position of 5.79%.

This news coincides with confirmation from fellow Cardinal shareholder U.S. Global Investors Inc that it had grown its stake in the gold developer to 6.39%, effectively becoming a key institutional investor and a substantial shareholder.

The funds raised will be applied towards the further reverse circulation drilling and diamond drilling at Namdini, payments for mining tenement acquisitions at Namdini and for working capital.

Archie Koimtsidis, managing director of Cardinal, commented:

“We are very pleased with the strong level of support from new and existing shareholders who recognise the significant potential of our projects.”

Confidence in Namdini

The raisings reflect investor and management confidence in Namdini’s ongoing exploration efforts, which resulted earlier this month in a range of near-surface gold hits including 13 metres at 3.65 grams per tonne gold.

This hole confirmed gold mineralisation over a more than 100-metre-wide zone in an extension area of the project, with other intervals delivering 11 metres at 3.8 g/t gold from 41 metres, 10 metres at 2.2 g/t gold from 48 metres and 3 metres at 4.4 g/t gold from 58 metres.

More significant results from Namdini have returned 9 metres at 8.5 g/t gold from 85 metres and 10 metres at 4.2 g/t gold from 47 metres.

Last month, progress in confirming the metallurgical properties of Namdini material was achieved with favourable cyanide leach results, including a 92% gold recovery rate from oxide samples and an 87% gold recovery rate from fresh samples.

These samples were taken from a drill hole located 600 metres north of the confirmed mineralised zone.

Namdini represents the Cardinal’s flagship property within the Bolgatanga project area, which occupies a Paleoproterozoic granite-greenstone belt near the border with Burkina Faso.

Jurisdictional edge

As a jurisdiction with a low sovereign risk rating, Ghana has enjoyed more than 20 years of continuous democratic rule and has established itself as one of the most developed and affluent countries in Africa.

The mining code is considered well-developed, underpinning infrastructure and a population with the technical skills to support modern mining projects.

Political stability in Ghana has made the country one of the most attractive new mining investment areas in Africa. After South Africa, Ghana is Africa's second-largest gold producer.

Large industry players such as Newmont Mining Corporation (NYSE:NEM) AngloGold Ashanti (ASX:AGG) and Kinross Gold (NYSE:KGC), have been joined by smaller companies as well as individual and local artisanal miners.

Many industry participants see potential for the discovery of further significant deposits in Ghana as large parts of the country, particularly in the northeast region where Cardinal operates, remain relatively underexplored.

Expertise in new leadership

The latest investor support for Cardinal also reflects confidence in the company to attract top talent to its board with the appointments of Mark Thomas and Simon Jackson as non-executive directors.

Thomas’ experience with Macquarie– which has funded numerous mines in Ghana over the past 20 years – is expected to be valuable in progressing Cardinal plans.

Jackson was part of an executive team that commissioned a mine in Ghana and was an integral part of the senior management team that saw Red Back Mining's market capitalisation grow from C$40 million (A$42.6 million) in 2004 upon listing on the TSX to over C$9 billion on takeover.

While at Red Back, Jackson oversaw the financing, development and construction of the company's mines in Ghana and Mauritania which today produce over 300,000 ounces of gold per year.

“Both of these guys have seen many African projects over the years, so we really think this was a major tick of approval for them to join us developing our exciting Ghanaian assets,” Koimtsidis said.

“Mark in particular has a wealth of experience in reviewing Ghanaian gold projects, and for him to come out of retirement to join us is very notable.”

Analysis

Cardinal’s A$5 million capital raising positions the company to continue drilling out an exceptional 100-metre-wide area recently identified as a highly prospective extension zone of Namdini.

The additional $1 million investment by Macquarie is also significant in light of the bank’s detailed knowledge of the West African resources industry, having funded many successful gold projects in the region over many years.

The increased stake in Cardinal taken by Texas-based U.S. Global further highlights the interest in Namdini’s latest exploration milestones.

The funding support also marks the rising investor confidence in Cardinal’s tenement holding and exploration strategy, which is likewise reflected in a more than 160% increase in share price since the beginning of the calendar year.

The company’s ability to attract Ghana gold veterans of the calibre of Jackson and Thomas offers meaningful testimony to industry-level confidence in Cardinal’s properties.

Cardinal management and exploration personnel live in-country, allowing for more locally savvy and agile operational leadership.

Cardinal also benefits from an uncommon operational flexibility among juniors in that it owns and operates two drill rigs along with in-country infrastructure that allows for low-cost operations.

Ghana is regarded as a premier gold jurisdiction in Africa, particularly regarding its mining code, which is characterised by 30-year lease allowances as well as competitive gold royalty and corporate tax rates.

It is considered a model mining code in West Africa and was the basis for the code now driving Burkina Faso’s thriving gold sector.