* Says to defer Esaase overland conveyor construction
* Expects to generate $51 mln in cash for rest of 2017
* Shares surge 13.2 pct before paring gains (Adds shares)
June 5 (Reuters) - Asanko Gold Inc said it could bolster its liquidity position to over $100 million by the second quarter of 2018, days after short seller Muddy Waters said the Canadian gold miner would run out of cash by next year.
Asanko outlined a plan on Monday for the expansion of its gold mine in Ghana, which includes the large Esaase deposit.
The company's shares tumbled last week when Muddy Waters released a 43-page document saying production at Asanko's Nkran mine in Ghana and other deposits would not meet the company's expectations because the estimates were based on flawed geology reports.
The Muddy Waters report predicted that production shortfalls would cause Asanko to run out of cash next year as it struggles to repay $165 million in debt.
Deferring the construction of a 27 km overland conveyor connecting the Esaase deposit to existing processing facilities could help improve its liquidity position to over $100 million in the next 12 months, Asanko said on Monday.
The company also said it expects to generate $51 million in cash for the rest of 2017 that would result in a cash balance of $78 million to $96 million by the end of this year.
Asanko's shares rose as much as 13.2 percent to $2.40 before paring gains on Monday. Up to Friday's close the stock had fallen 3.2 percent since the Muddy Waters report on May 31. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Shounak Dasgupta)