Orbis Gold: Maiden Resource Released

Orbis Gold, (MT3.F) published an impressive maiden resource for its high grade Natougou gold project in Burkina Faso last month. The company reported 15Mt at 3.7g/t for 1.8Moz, increasing its total in-country resource to 2.46Moz. The resource at Natougou has been fed into a scoping study that management expects to deliver by the end of October. The shallow, high grade nature of the Natougou deposit and its simple metallurgy is expected to underpin a large scale, low cost, open-pit gold operation. Separately, Orbis is evaluating a combined open-pit and underground operation at Nabanga (660,000oz), and continues to progress its Burkina Faso project pipeline with work on the Bantou and Tankoro discoveries.

Known structures, likely extensions to add ounces
Of the 1.8Moz (3.5g/t cut-off) Natougou resource, 200,000oz were indicated with the balance inferred. The mineralised zone identified so far is open in all directions except for the southeast, where the deposit surfaces. There is also known mineralisation in hanging wall and footwall structures along the southeast margin, which has not been included in the resource. A substantial drilling program will start by mid-November after the wet season, which will test the likely extensions to Natougou and attempt to upgrade the resource. Metallurgical test work returned in early August showed total recoveries for Natougou’s primary gold ore of 94.2%. The ore is suited to standard carbon-in-leach processing. Reagent consumption was encouragingly low.

Cash for now, but a top-up needed for feasibility work
Orbis had A$9.4m in cash at the end of FY13. The wet season has slowed the burn rate significantly and management states it has enough cash to see it through the scheduled drill programme. However, the company will need to raise more cash for a feasibility study if the scoping study proves positive.

Valuation: Further value in resource upgrade
Orbis’s resource multiple of A$28.23/oz is in line with the average for Australian-listed resources (based on the most recent update of Edison’s report, Gold – New benchmarks for old, published in 2012). As such, it currently appears to ascribe little premium value to either Natougou or Nabanga’s higher-than-average grade. Scope for further value addition also exists in Orbis’s ability to upgrade existing resource categories (especially ‘inferred’ into ‘indicated’ resources), and to increase the global resource with the coming drill programme.

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