SHARES in Asanko Gold made further gains on Thursday (January 18) after the ravaging of last year which saw the value of the gold producer and development firm fall to its lowest level in five years.
The company is now worth C$223.8m after creeping up 1.82% on the Toronto Stock Exchange where it is listed. On a 12-month basis, however, shares in Asanko are some 76% lower following fears about the group’s long-term liquidity.
Announcing fourth quarter and full-year production numbers today, the group made a point of discussions it was having with its main lender regarding financing existing debt. It also said it had liquidity in the form of $49.1m in cash, $2.1m in gold receivables and $4.1m in doré which had a market value of $5.9m.
Said Peter Breese, president and CEO of Asanko Gold: “Discussions with Red Kite are progressing on the refinancing of our existing debt facility”. An update on the refinancing negotiations, as well as plans to optimise its operations, would be provided when Asanko announced its first quarter figures in the current 2018 financial year.
Red Kite is an anchor lender to Asanko Gold after it provided some $150m in 2013 for Asanko Gold’s $286m Asaase gold mine in Ghana. The loan deal was essentially an off-take agreement in which its subsidiary, Re Kit Mine Finance, had a nine day window in which to pay the lowest gold price once the gold has been shipped to a refinery.
At the time, Breese was talking about Asaase producing 200,000 ounces of gold a year at a gold price of between $1,300 to $1,400/oz. The gold hasn’t lived up to those targets. Thereafter, Asanko has attracted negative publicity following reports by two hedge funds which raised questions about Asanko’s ability to finance replacement ounces and growth – the latest last year which sent Breese into a cold anger. He claimed that the report had damaged the firm’s ability to use shares for cash.
In June, Asanko presented a bankable feasibility study regarding the expansion of Asanko Gold Mine in which it would increase production to some 230,000 ounces of gold a year by means of a $22m mill expansion. It would then extend gold output to 460,000 oz/year, possibly from 2022, spending a total of $200m.
Production for the 2017 came in at 205,047 oz which was just about within the revised guidance range for the year of between 205,000 to 225,000 oz of gold.
“Highlights for the quarter include the opening up and commencement of ore mining operations at our second satellite deposit, Dynamite Hill, record milling rates by the processing plant, which achieved the design throughput rate of five million tonnes on an annualised basis for December inspite of lower oxide tonnes being fed to the mill than designed for, and high metallurgical recovery, which continues to be above design at 94% at these elevated mill throughput rates,” said Breese in a statement.