Exploration Insights by Robert Tyerman

On the small company scene, depressed Dwyka Resources has bounced from a 2.75p low to 6.13p on its agreed £1.8 million paper bid for Ethiopian gold play Minerva. Centamin Egypt, highlighted by Growth Company Investor at 33.25p in October, has hit 90p on expectations for its Sukari gold prospect and potential bid rumours.

Medusa’s golden glow
Medusa Mining says new drilling results from Co-O in the Philippines confirm it as a ‘world-class’ gold deposit. The company cites encouraging high-grade intercepts, ranging from 2.3 metres with 12.13 grammes of gold per tonne of ore and 3.05 metres with 18.76 grammes a tonne, to 1.5 metres with 140.52 grammes a tonne and 1.15 metres with 167.63 grammes a tonne.

Medusa says these drilling results will be incorporated into a new resource estimate this month. Managing director Geoff Davis declares that the company ‘will continue aggressively to explore’ the Co-O site and is ‘now moving towards exploring other vein systems in the immediate vicinity’.

Highlighted by GCI three years ago at 27p and again last January at 48p, Medusa shares have now reached 110p. Partial profit-taking might be prudent now, but there should be more mileage yet if Davis’s strategy pays off.

Fun in Fiji
Vatukoula Gold Mines says it could be producing at an annual rate of 110,000 oz before July 2010, subject to equipment delivery.

Steered by entrepreneurial chief executive officer David Paxton, the AIM-quoted company, which resumed producing gold at Vatukoula in Fiji last year and lost £3.9m in the six months to February, says the mine increased its output 17 per cent to 8,711 oz of gold in the three months to May.

According to Vatukoula, the mine achieved a net profit of £983,000 over the same period, having lost £742,000 in the previous quarter. Vatukoula has been mined for over 70 years. Once called Emperor Mines, it attracted interest from Jim Slater and other entrepreneurial characters.

Paxton and his fellow directors now suggest the company could lift gold production to an annual rate of 110,000 oz during the first half of next year, provided that present mine refurbishment goes to plan and mobile equipment is delivered to schedule. Vatukoula says it hopes to cut costs by switching equipment from diesel to sugar-based power.

Vatukoula’s shares have veered between 4p and 0.53p over the past 12 months. The company recently raised £1.2 million by issuing shares at 0.6p to Canadian Zinc, a company headed by Anglesey Mining chairman John Kearney.

On paper, Canadian Zinc has already almost doubled its money, with Vatukoula shares now trading at 1.1p.

W. African move for Gasol
Liquefied natural gas play Gasol has won rights to its first gas assets in the West African state of Equatorial Guinea.

The AIM-quoted company, steered by chief executive officer Soumo Bose and with the entrepreneurial Haresh Kanabar still on the board, has obtained the rights to assets in Block B of the country’s Zafiro project through a joint venture with Sonagas, the national gas concern. Gasol, which does not have to make any upfront payment, says it estimates the project could generate eventual potential revenues of £1.1 billion at a cost of some £310 million.

Gasol recently secured a £10 million ‘equity credit’ line with US investment group GEM Global Yield Fund. Bullish analysts see the company making £4 million pre-tax this year, while the shares have swung between 9.75p and 0.48p over the past year and now stand at 2.98p.