African Gold Group (AGG.V) announced it has closed an oversubscribed C$2.4M private placement as it issued 20 million units at a price of C$0.12 per unit. Each unit consists of one common share and one half of a warrant and a full warrant allows the holder to purchase an additional share at C$0.18 within two years.
It’s very encouraging to see the company was able to raise cash in this environment and it seems to indicate the perceived country risk of Mali is going down. Additionally, ASX-listed Papillon Resources (ASX:PIR) which owns the large Fekola project in Western Mali has been in trading halt for the past week as it was finalizing a corporate transaction with B2Gold (BTO.TO, NYSEMKT: BTG). We think it is excellent to see some M&A in the Malian gold sector, and would like to point out the different valuations of Papillon and African Gold Group. Papillon is trading at a market capitalization of $490M (and will be taken out for close to $600M) for a total resource estimate of 5.15 million ounces at 2.35 g/t, whilst African Gold Group is trading at a market cap of $22.5M for 2.85 million ounces of gold at a grade of 0.88 g/t.
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Disclosure: The author holds a long position in African Gold Group and has participated in the recent financing. Please see our disclaimer for current positions.
