Gold Sector Sees Strategic Financing Boost for West African Ventures

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* Disclosures for the quote from the John Newell and Clive Maund articles published on September 6 and May 8

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John Newell Disclaimer

As always it is important to note that investing in precious metals like silver carries risks, and market conditions can change violently with shock and awe tactics, that we have seen over the past 20 years. Before making any investment decisions, it's advisable consult with a financial advisor if needed. Also the practice of conducting thorough research and to consider your investment goals and risk tolerance.

Sanu Gold Corp. (SANU:CSE; SNGCF:OTCQB; L73:FRA) has announced a non-brokered private placement of up to 100 million common shares at five cents per share, for total gross proceeds of up to US$5 million. AngloGold Ashanti Ltd. (AU:NYSE; ANG:JSE; AGG:ASX; AGD:LSE) and Capital DI Ltd., the investment subsidiary of Capital Ltd., are the lead participants in this strategic financing.

One of the world's top producers of gold, AngloGold Ashanti, has expressed its intent to acquire 33.4 million common shares for US$1.67 million. This would result in an ownership of 14% post-financing. Capital DI Ltd. will also subscribe to 24 million common shares for US$1.2 million. This would represent a 10% ownership stake. Money from the investment will primarily be used to advance exploration on the Diguifara and Daina permits in Guinea, West Africa, the location where Sanu operates its gold exploration projects.

Subject to regulatory approval, the placement also includes provisions for a four-month hold period on issued securities as per Canadian securities law. Eventus Capital Corp. has been appointed as a finder in connection with the placement. Expectations are that the transaction will close as soon as all regulatory approvals are received.

Looking At The Gold Market

The gold market has remained strong in the face of investor confidence. Highlighted on September 9 by Barron's, gold's upward track appeared far from over. Expected U.S. interest rate cuts could drive prices even higher. In the report, ING analysts stated that central bank purchasing, safe-haven demand driven by geopolitical tensions, and a resurgence of ETF interest have all contributed to this rally. The estimate from ING further was that gold would average US$2,580 per troy ounce in 2024's final quarter, with expectations that this would continue into 2025.

In a separate September 3 report, Yahoo! Finance cited Goldman Sachs' positive gold outlook. Analysts have advised investors to take advantage of the continuing strong performance and attributed this momentum to record-breaking central bank buying in Q1 2024. Uncertainty has contributed as well, with gold remaining a key focus for portfolio diversification.

US Global Investors' Frank Holmes expressed optimism on September 3 regarding the potential for gold stocks, noting their unique value as both a hedge and a high-reward investment. "Gold stocks not only provide protection during economic uncertainty but also offer considerable upside as gold prices increase," Holmes remarked. With forecasts from major institutions such as UBS and Goldman Sachs predicting gold prices to reach US$3,000 by 2025, the sector's outlook appears robust.

The Catalysts For Sanu Gold

AngloGold Ashanti's role as a lead investor has been marked as a significant catalyst for Sanu Gold's growth. The company brings extensive experience as one of the world's top-tier gold miners. Having operated its Siguiri mine in Guinea for over 25 years and producing between 200,000 to 300,000 ounces of gold annually, the company's decision to invest in Sanu signals confidence in the prospectivity and quality of Sanu's assets in West Africa.

Capital DI Ltd., a subsidiary of Capital Ltd., further solidifies this financing by adding its operational expertise in the mining sector. Its expanding presence in West Africa, Capital's support through investments, drilling, and laboratory services provides the company with the operational backing needed to accelerate its exploration activities.

In connection with AngloGold Ashanti's investment, Sanu Gold will enter into an investor rights agreement. This agreement will grant AngloGold rights to participate in future equity issuances and involvement in technical oversight on the Diguifara project, indicating a long-term commitment to Sanu's exploration and development efforts.

Experts On Sanu Gold

*On September 6, expert John Newell emphasized that Sanu Gold is "well-positioned to capitalize on Guinea's untapped potential and the growing global demand for gold." He noted how Sanu's Bantabaye project already produced "spectacular" results, including gold intercepts such as 11.4 grams per tonne (g/t) gold over 15 meters. Newell pointed out that the company's successful Phase 1 drilling at strategic landholdings across Bantabaye, Diguifara, and Daina provides a drive towards future projects. Based on these factors, he rated the stock a Buy. 

Bob Moriarty from 321gold.com had expressed similar optimism on May 20, citing Sanu Gold's operations in one of the world's most prolific gold regions. He highlighted their impressive land package and the early success of the Bantabaye project and its other exploration efforts. Moriarty indicated that Sanu's share price had declined by 80% over the past two years, presenting a potential buying opportunity before the broader market recognizes its value. He mentioned how the company is "likely to be among the first to benefit" once market sentiment shifts toward gold exploration companies.

*That same month, Technical Analyst Clive Maund called Sanu Gold an "Immediate Strong Buy." Maund praised the company's strategic position in a world-class gold district. He remarked on the company's potential for further high-grade discoveries, noting how Sanu had already made significant progress at its Bantabaye project. Maund's analysis of the stock's charts indicated a strong upside potential, with the possibility of the company potentially being acquired by a larger player in the sector due to its valuable landholdings and exploration success. 

Ownership and Share Structure

According to Refinitiv, 11.65% of Sanu Gold is owned by management and insiders. Of those, President and CEO Martin Joachim Pawlitschek owns the most with 4.23%, Director and Co-Founder Fatou Sylla Gueye owns 3.83%.

4.38% of Sanu Gold is held by institutions with Palos Management Inc owning the most at 2.55%

The rest is retail. The market cap for Sanu Gold is US$5.62 million with 122.33 Free Float Shares. The 52 week range for the stock is US$0.03–0.15.