No more flip-flops for Crusader as golden future beckons
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Crusader’s flip-flop years are behind it as new management gets cracking on gold production in Brazil, writes Barry FitzGerald in his Garimpeiro column.
There was a time when the first port of call at a mining industry conference was the company booth of ASX-listed Brazilian specialist Crusader Resources (ASX:CAS).
Spend a couple of minutes listening to a one-on-one presentation and you would score a pair of Crusader-embossed Havaianas – thongs in this part of the world, but pretty much known as flip-flops in other parts.
The flip-flop terminology is kind of appropriate for Crusader because for a good 10 years or so, that has been what it has been doing in Brazil – flipping and flopping between wanting to be known as an iron producer, or a gold developer/producer.
The flipping and flopping has come at a cost to the market’s rating of the stock.
Was the punter backing an iron ore stock or a gold stock?
And which of the two had the best chance of making Crusader something more than it is after all this years – a $24 million company, at its last sale price of 7c a share?
But a big transformation is underway — one that has put Crusader’s flip-flop years behind it.
New management has been installed with a brief to get cracking on Crusader’s gold production potential, and there is a pivot to the London market where there is a real hunger for near-term gold production stories.
A listing on London’s AIM market in conjunction with the raising of $US10 million to $US15 million to fund the gold push is in the works.
That might seem ambitious for a company with an ASX listed value of $24 million.
But part of the pivot to London includes the appointment of some heavyweight directors with the connections to make it happen – Marcus Engelbrecht as managing director, and the proposed appointment of Andrew Vickerman as non-executive chairman.
Engelbrecht is known in these parts as a former 20-year veteran at BHP Billiton who rose to chief financial officer of its diamond and specialty products division.
More recently he took AIM-listed Archipelago Resources from construction to production ahead of the gold group being acquired for $600 million, and he was chief executive of the AIM listed gold developer, Stratex International.
A merger between Stratex and Crusader was planned last year but fell over on opposition from Stratex shareholders who wanted its focus to remain on African opportunities.
Engelbrecht promptly jumped ship to Crusader.
Vickerman is best known in these parts as being a former Rio Tinto man who raised $US750 million for the development of the now Newcrest Mining-owned Lihir gold mine in Papua New Guinea.
As much as Crusader flipped and flopped over the last 10 years, there is no doubt it has assembled a strong gold asset base, as well as developing invaluable intellectual property from its stint as an iron producer on how an ASX company can operate in Brazil.
It means Engelbrecht’s ambition to establish the company as a Brazilian gold producer within two-and-a-half years looks to be very doable.
There is an aspirational target to become a 150,00-200,000 ounce a year producer from organic developments and merger and acquisition activity.
But the initial focus is very much on the development of Crusader’s Borborema gold project in Brazil’s north-east.
Originally picked up by Crusader in 2010, Borborema is now head of the queue courtesy of its 2.4m ounce resource base at 1.1 grams of gold a tonne.
About half of the resource was captured in a recently released “optimisation” study which envisaged average annual gold production of 70,000 ounces at a cash cost of $US724 an ounce from a $US93 million development.
Across on the edge of the Amazon, Crusader has a second development candidate known as Juruena – a high-grade deposit where a resource of 261,00 ounces of gold grading 6.5g/tonne has been outlined.
More drilling is required to confirm it as a development project.
Crusader’s transformation under Engelbrecht has attracted the attention of London investment house Hannam & Partners.
In a recently released research note, Hannam set a 22.5c price target on the stock.