Pasofino Gold Ltd. (VEIN:TSX.V; EFRGF:OTCQB; N07:FSE) entered into a cooperation agreement to settle some pending issues with its 50.8% shareholder, gold producer Hummingbird Resources Plc (HUM:AIM) and the latter's parent company, Nioko Resources Corp., a West African investment group, noted a news release.
"Pasofino can now move forward for the benefit of all shareholders and emerge from what has been a static number of years development-wise," said Pasofino Board Member Stephen Dattels in the release. "This should represent a turning point in the company's future for the benefit of all shareholders."
Brett Richards, the company's chief executive officer (CEO), commented that the agreement "represents a rebirth of the Dugbe gold project, now having a strong partnership, committed funding, and a strategic direction to create transformational value for all shareholders." Dugbe is Pasofino's flagship asset.
These are the topics and the terms the companies agreed to for each:
Board Reconstitution: Pasofino's board now will comprise three Hummingbird nominees (Oumar Toguyeni, Geoff Eyre, and a yet-to-be-named person), Pasofino CEO Richards, and two people nominated by the board pre-reconstitution (Krisztian Toth and Emre Kayışoğlu).
Shareholder Rights Termination: Pasofino is to do what it can to ensure no shareholder rights are exercised and no common Pasofino shares are issued, bought, or distributed, under the rights plan the company adopted in November 2024. The current agreement outlines what is to happen if shares get issued. Also, Pasofino is to cancel the special meeting of rights holders scheduled for April 30, 2025.
Funding Responsibility: For the rest of 2025, Pasofino has a 2-year lead order on financings, and a guaranteed pro-rata funding from its majority shareholder Hummingbird. Pasofino will use the proceeds to update the Dugbe Gold Project feasibility study and start certain preconstruction activities.
"Our joint funding commitments will help ensure further derisking of the project as we seek to realize the project's full potential for the benefit of all shareholders," Hummingbird CEO Geoff Eyre said in the release.
Strategic Review: Pasofino will terminate the strategic review process that is now underway. When the feasibility study is done, the board will consider the various options in the company and shareholders' best interests. This could include revisiting the strategic review process or starting to plan how to finance the advancement of Dugbe into production.
Standstill Period: Until October 31, 2026, Hummingbird will vote its shares in favor of management nominees at each of Pasofino's annual general meetings. Also, through this future date, Hummingbird will abide by a standstill covenant favoring Pasofino, to include not acquiring beneficial ownership of any Pasofino securities, not making a takeover bid for Pasofino, and not transferring or otherwise disposing of its Pasofino shares.
Royalty: Regarding the net smelter returns royalty deed held by Aus No. 5 Pty. Ltd., if this holder exercises its right to terminate the royalty given Nioko's acquisition of Hummingbird, Hummingbird-Nioko will pay the US$15 million (US$15M) termination fee, after which it may refinance or resell the royalty at a fair and reasonable price. If resold, proceeds up to US$15M will go to Hummingbird-Nioko, and any amount above that will go to Pasofino. If the resale proceeds are less than US$15M, Pasofino will grant Hummingbird-Nioko an equivalent royalty, the maximum amount of which will equal the shortfall.
Board Member Resignations: Director Robert Metcalfe and Deputy Chairman Stephen Dattels will be resigning. A senior partner at Fasken Corp., a mining industry law firm, will take Dattels' place.
Committed To Advancing Project
Headquartered in Ontario, Canada, Pasofino Gold Ltd. owns Dugbe through its subsidiary ARX Resources Ltd. and is advancing this 2,078-square-kilometer project in southern Liberia. The mineral explorer's priority is to update the 2022 feasibility study of the Dugbe Gold Project. The base case gold price used in that assessment was US$1,700 per ounce (US$1,700/oz).
"In this current and forecasted gold environment, and given the 2022 dated feasibility study, we are going to quickly engage the necessary resources to update all aspects of the study with respect to cost(s) and gold price assumptions, as well as optimizing all processes to maximize recoveries and project economics," Pasofino's CEO Richards said in the latest release.
"With a high and growing probability of a buyout soon on favorable terms for shareholders, [VEIN] is rated an Immediate Strong Buy," wrote Maund.
Pasofino has a mineral development agreement (MDA) for Dugbe in place with the Liberian government, which outlines secured mining rights and terms for 25 years, according to Pasofino's Investor Presentation. Under the MDA, the royalty rate on gold production is 3%, the income tax rate payable is 25% (with credit given for historic exploration expenditures), the fuel duty is reduced by 50%, and the Liberian government gets a free 10% carried interest in the project. This MDA derisks the mining license application for Dugbe, the company said.
Already one of largest gold projects in the southwestern part of West Africa's Birimian geological region, Dugbe has a Measured and Indicated resource of 3,300,000 ounces averaging 1.37 grams per ton gold.
*Its proximity to other major gold deposits in the prolific Birimian bodes well for further discoveries, noted Technical Analyst Clive Maund in a December 2024 report. The Birimian Supergroup, a collection of rich gold-bearing rocks, is a major source of gold in West Africa, according to Africa Mining IQ.
As for Liberia itself, it has a well-established and growing mining industry, particularly with respect to gold. Mining contributes significantly to the country's gross domestic product.
The infrastructure near Dugbe is "good," according to Maund. The project has road access. About 70 kilometers away from Dugbe is the Greenville seaport, through which supplies get to the project and product will be exported. Power at Dugbe will consist of electricity generated by liquefied natural gas primarily and solar secondarily.
Maund also pointed out that Pasofino's management team has significant experience in developing projects to the point of being attractive takeout targets. He also noted the company is far long in the permitting process, which could be concluded by about year-end 2025.
Gold In Powerful Uptrend
Growth is forecasted for the global gold market through 2030 at least, according to a March Research and Markets report. Between now and then, the market is projected to expand in size at a 5.1% compound annual growth rate. Cited growth drivers include economic volatility and uncertainty, technological advancements, expansion of the middle class in emerging economies, new uses for gold, global trade policies and geopolitical tensions.
According to Adrian Day of Adrian Day Asset Management, the factors now at play in pushing up the gold price are expected to persist for some time. These include central bank buying of gold, Chinese consumers worried about the loss of purchasing power and a fragile banking system and Western investors concerned about political uncertainty given many governments' unsustainable high debt.
"None of this is likely to change, and gold thus is likely to be higher a year from now, notwithstanding the possibility of a pullback at some stage," Day wrote in his Q1/25 Portfolio Review. "Gold, which has actually gained more than the S&P Index over the past four years, may continue to shine; it responds well to uncertainty, whether geopolitical, economic or monetary."
Despite touching an all-time high of US$3,194.40/oz on April 2, experts still believe the gold price has upside left. Technical Analyst Maund is one of them. Recently, he wrote that gold remains way down on its 2011 highs when compared to the stock market and is in a "powerful and thus far orderly uptrend."
"This thing has barely gotten started yet," he added. "There is clearly scope for massive gains."
Investing Haven wrote in a March 14 article that its gold price predictions for the coming years are "firmly bullish": US$3,265/oz in 2025, near US$3,805 in 2026, and peaking at US$5,155 by 2030. Also, during this period, some periods of weakness are expected in which the gold price retreats.
Perhaps Analyst Avi Gilburt's take is more realistic. "One of the most accurate market prognosticators of the past two decades," as described by The Gold Newsletter's Brien Lundin, Gilburt recently wrote, "While I do think we can still see higher levels over the coming year or so in the gold market, I am starting to see signs that we are moving into the final stages of this decade-long rally."
Ronald Stewart, Red Cloud Securities Mining Analyst, advised in a March 31 sector update, "Investors should be prepared to add to positions on any short-term pullback in the price."
Those positions should be in junior mining stocks, according to Lundin, as investments in this sector is one of the best ways to capitalize on the current, or any, secular metals bull market.
"The mining stocks remain near long-term lows," he noted. "Again, this is a generational opportunity, and one that should not be wasted."
The Catalysts: Project Milestones
Pasofino has at least two key events due to happen in the medium term that could boost its share price, as noted in the news release. One is the completion of the Dugbe feasibility study, expected in about a year.
The other is having reached a construction decision for the project, which the company aims to achieve within 18 months.
Streetwise Ownership Overview*
Pasofino Gold Ltd. (VEIN:TSX.V;EFRGF:OTCQB;N07:FSE)
Stock Undervalued, A Strong Buy
Pasofino's stock was looking quite undervalued when Technical Analyst Maund reviewed it, he wrote in a December 2024 report . On the charts, VEIN looked about to start moving higher soon, after a long, severe bear market and subsequent base building, he noted. At the time, Pasofino's share price was CA$0.58 per share, and today it is a couple of cents lower.
"With a high and growing probability of a buyout soon on favorable terms for shareholders, [VEIN] is rated an Immediate Strong Buy," wrote Maund.
Ownership and Share Structure
According to Refinitiv, eight strategic entities own 67.37%, or the lion's share, of Pasofino. Of these investors, the Top 3 are Hummingbird with 50.8%, ESAN with 9.6% and Stephen Dattels with 3.97%.
The rest is in retail.
Pasofino has 117.03 million (117.03M) outstanding shares and 38.19M free float traded shares. Its market cap is CA$45.83M. Its 52-week trading range is CA$0.375–0.80 per share.
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Important Disclosures:
- Pasofino Gold Ltd. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Pasofino Gold Ltd.
- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
- This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.
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* Disclosure for the quote from the Clive Maund article published on December 31, 2024
- For the quoted article (published on December 31, 2024), the Company has paid Street Smart, an affiliate of Streetwise Reports, US$3,000.
- Author Certification and Compensation: [Clive Maund of clivemaund.com] is being compensated as an independent contractor by Street Smart, an affiliate of Streetwise Reports, for writing the article quoted. Maund received his UK Technical Analysts’ Diploma in 1989. The recommendations and opinions expressed in the article accurately reflect the personal, independent, and objective views of the author regarding any and all of the designated securities discussed. No part of the compensation received by the author was, is, or will be directly or indirectly related to the specific recommendations or views expressed
Clivemaund.com Disclosures
The quoted article represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks cannot be only be construed as a recommendation or solicitation to buy and sell securities.
