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AEX Gold looking to build full-cycle gold company in South Greenland

  • Dual-London and Toronto-listed explorer focused on building a full-cycle gold company
  • Currently owns seven licences in South Greenland covering an area of 3,356 square kilometres
  • AEX’s principal asset is a 100% interest in the previously producing Nalunaq project

What AEX Gold does:

AEX Gold Inc (LON:AEXG) (CVE:AEX) is a dual-London and Toronto-listed explorer that is focused on building a full-cycle gold company in South Greenland.

The company was founded in 2017 as an exploration company with a focus on locating high-grade gold deposits in the North Atlantic island.

It currently owns seven licences in South Greenland covering an area of 3,356 square kilometres meaning it has established an unrivalled footprint and the largest gold licence portfolio in Greenland.

Greenland holds significant mineralization potential as a relatively underexplored gold belt.

AEX’s principal asset is a 100% interest in the Nalunaq project, an advanced exploration stage property with an exploitation license including the previously operating Nalunaq gold mine.

The official resource estimate currently stands at 250,000 ounces of gold grading 18.5 grams per tonne, but AEX’s chief executive Eldur Olafsson believes there could be as much as two million ounces of gold in the ground.

How is it doing:

On April 29, the company announced it is working towards de-risking the Nalunaq Project as much as possible and increase the scale and value of the resource.

Once it will complete the feasibility level engineering study and incorporated the updated resource model, the miner will proceed directly with the revised development plan for Nalunaq.

A peer review of the project conducted by Ausenco Engineering Canada Inc has identified scope for project capital cost optimization and de-risking.

An internal third-party engineering study is due to start imminently, so it can advance the project cost and schedule to a feasibility level of understanding, with planned completion later this year.

AEX has a current cash balance of C$54 million (£31mln).

The exploration and limited infrastructure ‘early works’ programme is estimated to cost C$10 million (£6mln), with another C$10 million to be paid for the taking delivery of long-lead items already procured for Nalunaq and engineering costs to date.

Based on the existing development concept, AEX expects that significant additional capital, including an equity component would be required to bring Nalunaq into production.

On February 1, the company reported results from last year’s exploration campaign at the Kangerluluk property within the Nuna Nutaaq licence in Greenland, which lies 120 kilometres northeast of the Nalunaq project and within the wider Nanortalik gold belt.

Historic channel sampling of the main shear zone has returned high-grade results, with highlights of 175.1 grams per tonne gold over 0.8 metres, and 35.4 grams gold over 0.95 metres. One grab sample collected from the main shear zone in 2020 returned 22.3 grams gold.

In the boardroom, in January this year, the resource group announced the appointment of Jaco Crouse as its chief financial officer (CFO) with immediate effect, replacing George Fowlie who stepped down as the CFO but remained on AEX’s board as a director.

Crouse is a seasoned mining executive with nearly 20 years of experience in financial management, mine financial planning, business optimization and strategy development.

Inflection points:

  • Revised plan report to shareholders
  • Gold price moves
  • Pandemic restriction developments

What the broker says: 

Stifel GMP on April 29 cheered the company’s decision to launch a strategic review of the Nalunaq development plan.

“The company is taking this year to conduct an internal Feasibility-level study to de-risk the project, provide an optimized construction schedule and make it possible to secure a fixed price EPC or EPCM construction contract, moving execution risk off of AEX,” the analyst firm wrote. 

“Detailed engineering is about 50% complete and the company’s hoping to get it to 80% before the end of 2021. Having a detailed study and fixed price construction contract will also open the door for alternative forms of financing to meet the current funding shortfall.”

Stifel noted that the company has “C$54m in the bank, however, this amount is insufficient to also fund the current construction plan” at Nalunaq. 

But looking ahead, the firm said the company plans this season to launch an additional 20,000-30,000 meters of drilling at Nalunaq with 2 drill rigs to further define the Valley block. 

Also, recent AEX management changes should benefit the company as well, Stifel said. 

“We see this as a step in the right direction for the company, taking advantage of the delay time to continue to de-risk the Nalunaq orebody and project execution,” the firm wrote. “These steps should limit the need for significant equity dilution to close the current funding gap. There is significant value to be unlocked in the company’s largely unexplored 3,870 km regional land holdings and we look forward to exploration results from these properties through the rest of 2021.”

What the boss says:

“Nalunaq remains one of the highest-grade gold projects in the world,” said CEO Eldur Olafsson in a recent release.

“This year we will be accelerating our exploration programme to better quantify the resource potential across our large licence portfolio. We have the premier land package in South Greenland and this exploration activity coincides with the rapidly growing interest the region is experiencing in the global scramble for strategic minerals.”

Contact the author: [email protected]

Follow him on Twitter @PatrickMGraham

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