March 4, 2012 / 5:38 PM / 5 years ago

Red-hot Roxgold cashed up after break-out year

TORONTO (Reuters) - After a year in which shares of his African gold-mining company jumped nearly fivefold, Roxgold Inc ROG.V Chief Executive and co-founder Robert Sibthorpe has the luxury of not having to worry about how to pay for his next drill bit.

"We've raised about C$65 million ($66 million)over the last 12 months off the back of these results," Sibthorpe said in a phone interview, referring to a steady stream of strong drill results at its Yaramoko gold project in the western African nation of Burkina Faso. That has made the company one of the hottest plays on Canada's junior mining market.

An unknown entity a year ago, Vancouver-based Roxgold shares rose 380 percent during 2011, earning recognition from the exchange as the top overall performing company on the TSX Venture 50 index.

The stock tripled during a six-week period beginning last February after it released drill results that included a six-meter segment grading a rich 24.62 grams per tonne. It followed that up in early April with results that featured a 20 meter intercept grading 28.61 grams per tonne.

Sibthorpe, a former mining analyst and consultant familiar with the difficulties of funding a mining explorer, took full advantage, launching a series of private placements that have given it an 18 month-cash cushion, based on a cash burn of C$2 million per month.

"This exploration business is constantly being restricted by downturns and problems in the market and access to capital," he said in an interview ahead of the Prospectors and Developers Association of Canada (PDAC) mining conference in Toronto .

"We used this rise in stock price and the enthusiasm that the good results have generated to basically cash the company up."

After decades of political and economic turmoil, Burkina Faso has sought to stoke its fledgling mining industry through tax breaks and mining-friendly legislation. Several explorers and miners have projects in the country, hoping to take advantage of gold's 137 percent rise over the past four years.

DRILLS TURNING

Roxgold now has about 100 holes drilled and six drills turning in the ground at Yaramoko, although the company has run into delays in getting core results assessed, a byproduct of Burkina Faso's increasingly hot exploration industry.

Still, Sibthorpe insists he's in no hurry. The company has yet to find the edge of the deposit, and won't seek a resource estimate until it does.

"There' s no point in doing a resource until you sort of have your arms around the property," he said.

Sibthorpe says the high-grade hits are rare for a country that normally features lower-grade, bulk-mining deposits.

He likens the hard rock at Yaramoko to the big Canadian Shield gold deposits in Ontario, such as Goldcorp's (G.TO) Red Lake property or the Abitibi Greenstone belt, regions he's familiar with after decades of work in the Canadian mining industry.

It was the familiarity of these deposits that attracted Sibthorpe and his co-investors to Yaramoko and its sister projects two years ago, prompting them to buy options on the projects, then owned by Vancouver-based junior Riverstone Resources RVS.V.

"The Canadian geologists fit in very well over there because basically they're the same rocks that we see in Canada," said Sibthorpe.

Roxgold adopted a shareholder rights plan in September - the company has had discussions with potential suitors, Sibthorpe says - but Roxgold might also just try to push the project through permitting and mine it itself, Sibthorpe said.

In the meantime, he may use some of the cash to speed up exploration at the company's Bouboulou and Sebba projects, which are also in Burkina Faso, while hoping that the good run of discoveries at Yaramoko continues.

"It's not thrown any curves at us yet," he said. "Sooner or later, it will show what size it is and we'll start to miss on drill holes - but I just hope it's later."

($1=$0.99 Canadian)

Editing by Frank McGurty and Rob Wilson

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