Pasofino Gold (VEIN) - $1Bn Free Cash Flow over 12yr Life of Mine

Pasofino Gold Ltd. is a Canadian-based mineral exploration company listed on the Toronto Stock Exchange (TSX-V: VEIN), the OTC Markets (EFRGF), and the Frankfurt Stock Exchange (N07). The company's flagship asset is the Dugbe Gold Project in Liberia, West Africa.  

We met with Ian Stalker, President, and CEO, Pasofino Gold. Ian has over 4 decades of experience in resource development, mining construction, and operations in Australia, Europe, South America, and Africa. He currently serves as a Director at K92 Mining Ltd. as has served as a CEO for multiple AIM and TSX-listed companies. 

Company Overview

Pasofino Gold is a mineral exploration company founded in 2010, headquartered in Toronto, Canada. ARX Resources Limited and Bethlehem Iron Ore Corp. are the company's subsidiaries. The company is looking to develop its first Gold mine, the Dugbe Gold Project within the next 2 years.

The Dugbe Gold Project

The Dugbe Gold Project is a historical asset present in Liberia, West Africa. This site is spread across an area of 2,559 square kilometers and it features 2 major gold deposits Tuzon and Dugbe. 

Pasofino Gold has an ongoing agreement with Hummingbird Resources Plc to earn 49% economic interest. This deal was signed prior to the 10% free carried interest in the project with the Government of Liberia. 

Hummingbird Resources has previously spent $70M to carry out extensive airborne and surface exploration programs at the Dugbe Gold Project between 2006 and 2014. Pasofino Gold commenced a renewed surface exploration program on the site in October 2020 to identify prospective targets. 

The Dugbe Gold Project features large and wide orebody reserves that are consistent at 1.5g/t - 1.51 g/t grade reserves. The project features a robust mine with a historic stripping ratio of 3:1. The stripping ratio for the mine's lifetime stands at 4.5:1. The open-pit nature of the mine and a robust orebody has garnered attention from several mining contractors. 

Results of the PEA and the Ongoing DFS

Pasofino Gold recently published a PEA (Preliminary Economic Assessment) on their Dugbe Gold Project and is currently carrying out a DFS (Definitive Feasibility Study) which was initiated in December 2020 and is scheduled to complete by Q2 2022. The company also has a strong focus on the ESG (Environmental, Social, and Governance) component. The PEA study shows that over the past 12 years, the mine has a resource of 180,000oz - 210,000oz gold yearly at a mining rate of 5Mt material being processed at the plant. 

The DFS seeks to increase the quality of the inferred resources as the company continues to step out of the Dugbe and Tuzon zones. 

The company has planned an additional resource updating within 4 weeks which will account for the infilling carried out at Dugbe and Tuzon areas. The company has discovered mineralization in the pit shell and based on this data, the company is building a new MRE (Mineral Resource Estimation). 

Operational Costs

Pasofino Gold currently has cash liquidity of $4.5M. The company's sustenance cost over the life of the mine is projected at $840-$850, with a cash cost of $870. This places the company in a strong competitive position compared to the current gold trading prices that hover around the $1,780 - $1,790 mark. 

The company has implemented measures to further decrease the operating costs by self-generation of power at $0.18/kWh. The company is currently in talks with the local government to employ the area's hydropower sources which can potentially bring the electricity costs down to $0.06/kWh. This will result in a sub-$800 operating cost. 

The Dugbe Gold Project is located 70km away from the Greenville deep-water port. This close proximity and easy access have resulted in a 10%-15% drop in logistics costs for building a mine. This also opens up the opportunity to develop the port as a hub for potential subcontractors.

Pasofino Gold has signed a mineral development agreement with the local government which further facilitates the mine-building efforts. 

Meeting the CapEx

The company's current CapEx (Capital Expenditure) stands at $391M, which includes $80M for a tailings dam. Prior to the release of the PEA, the company was able to raise $9M at a stock price of $0.07 in May 2021. The company is working closely with several brokers including Stifel GMP, Haywards, and Beacon Securities to meet the future CapEx requirements. 

The company is aiming towards its $391M CapEx target as it works towards crossing the $100M market cap. The company seeks to raise 30%-40% in equity and is considering debt finance, a royalty, or an offtake to raise funds. This will prevent the over-dilution of the company and preserve its overall market value. 

Capital Allocation

The company has a CapEx of $391M and plants to spend an additional $90M-$100M on upfront exploration. The company has been able to avail a fixed corporate rate of tax at 25% for the mine's lifetime, offering added stability to the financial end of the operation. 

The lifetime cash flow of the mine is estimated at over $1Bn. The company's pre-tax IRR (Internal Rate of Return) is 34% and 31% post-tax. This makes the Dugbe Gold Project a highly profitable operation. The close proximity to the port and a stable geopolitical climate makes Liberia an attractive prospect. 

The company has initiated a strong marketing campaign along with its recent resource updates to attract potential investors. 

To find out more, go to the Pasofino Gold Website