Clarus Securities Inc.

Asanko Gold Mine Site Visit

Nana Sangmuah

We return from last week’s site visit very encouraged and with furthered confidence in the project’s operational performance and management’s staged development approach to doubling production by 2022.  The plant performance to date, grade reconciliation, qualified personnel and ramp up in production to steady state by Q2/16 provide us with optimism.  Our flyover of the mine revealed the extent of artisanal activity, indicative of a highly prospective belt.  In our opinion, AKG is well positioned to boost production by 50% to 280 koz by 2018 and to doubling production to ~480 koz by 2022 supported by internally generated cash flows.

Article Highlights:

Mining Ramp-up on Track
  • Nkran can be effectively mined at a rate of 3Mtpa without requiring significant push backs that could be detrimental to the project economics...
Grade control drilling
  • In the western and eastern portions of the pit where the ore body daylights, positive reconciliation on grade has been seen and is currently being encountered in the main ore body...
Plant and Metallurgy
  • TSF has a capacity for 120 Mt, more than sufficient for the combined capacity of Phase 1 and Phase 2 of 95 Mt.  In addition, the Nkran extension which was picked up as a result of condemnation drilling and is contiguous to the TSF is planned to be mined out soon and that could provide room for additional capacity, if needed...

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Emergence of World Leading Financial Market in the Cannabis Space

Brock Winterton

While cannabis companies predominantly focused on the Canadian market were the first to emerge in the financial market, we are now seeing US focused players accessing capital on Canadian markets.  Liquor companies, beverage companies, tobacco and pharma companies have begun to think about how they can play in the cannabis space.  Clarus remains deeply involved having brought two new companies public (totaling $102 million IPO values) and advised another on a $300 million M&A transaction.   

And let’s not forget the gold mining market.  Clarus raised funds for exploration related companies and played a major role in the annual Denver Gold forum hosting multiple events with a total of 12 companies and 15 money managers.

In total, some $523 million of value was raised or advised on.

What's Happening at Clarus...

Brock Winterton

  • While uncertainty continues to roil most segments of the market due to trade concerns, the passage of cannabis legislation in Canada removed the final legal uncertainty for this dynamic new industry.  Capital market activity in the cannabis space was widespread in June and Clarus was once again one of the leaders raising or advising on $294 million in three transactions in June alone.  We also continued to be active helping to raise $50 million for new and emerging businesses in modular construction and potentially the massive new LNG market; and $10 million for a new gold mining venture.  Total capital raised was $354 million for the month. (6/29/2018)

Greater Volatility but Investment Themes Resonate

Brock Winterton

Markets have taken a more volatile turn resulting in more cautious and less committed trading activity.  Clarus has been able to remain active in important investment themes with some highly targeted financings in the cannabis, blockchain, technology, specialty healthcare segments. M&A has emerged in the Gold sector as larger players are driven to enhance productions levels, meanwhile Clarus has been busy at the other end of the spectrum as it helps fund exploration and mine restarts.  Through May 2018, we have participated in $717 million of financings of which $295 million were as lead or co-lead.  Reflecting the growing needs of our clients, we were also involved as strategic advisors or offering fairness opinions on $641 million of transactions.

Recently we initiated on People Corp, one of Canada’s largest players in employee group benefit consulting and third-party benefits administration (PEO $6.90, TP $8.50).  Liberty Health Sciences is also new coverage for us.  Focused on the Florida medical cannabis industry as an integrated player offering growing through dispensary services. LHS has a strong early mover position in this potentially huge market (LHS $0.87, TP $2.00).

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