Roxgold, Burkina Faso, and a Popular Uprising

Nick Hodge |

Word last week was that Burkina Faso was on the brink of a coup after protests broke out. Shares of companies operating in the African nation, including Roxgold ($TSX-V: ROG)($OTC: ROGFF), got an immediate haircut.

Roxgold fell from C$0.69 last Wednesday to C$0.39 by Friday.

Many newsletters immediately liquidated all their positions, citing political risk and the potential for a popular uprising.

I decided to play wait-and-see.

It remains to be seen if that was the right decision. But at this point, Roxgold shares haven't traded any lower than the C$0.39 they touched last Friday. And, in fact, have risen back to $0.56 this week.

What Happened?

First of all, some of the initial selling reaction may have been overblown. There was never any evidence that the protests would turn into a coup, and no evidence that the new leader would be unfriendly to mining in what, historically, has been a good place for gold mining.

The unrest, by the way, was the citizen reaction to President Blaise Compaore's attempt to extend his rule, which has already lasted 27 years.

Second, some of the tension in Burkina Faso quickly abated. Instead of putting up a fight, Compaore was quickly ousted and fled to another country. People who were rioting in the streets one day were sweeping up the next.

An interim leader has been appointed in Lieutenant-Colonel Isaac Zida, and meetings this week with three other West African presidents proved highly conducive to establishing a way forward. They outlined plans for a year-long political transition culminating with elections next November. All parties involved in the crisis talks welcomed the agreement.

Roxgold Still Showing Signs of Life

As for Roxgold, it reported last Friday that:

"...its activities on the Yaramoko Gold Project, located approximately 180 kilometers southwest of Burkina Faso's capital city of Ouagadougou, currently remain unaffected by recent civil unrest. All company personnel are safe and have been accounted for."

And it was out with more news this Tuesday. It closed its previously announced bought deal financing of C$30 million, consisting of 46.2 million units at C$0.65 per unit. Each unit consists of one share and one half-warrant to acquire additional shares at $0.90 until February 2016.

The financing was led by Cormark Securities and BMO Capital Markets, and included Macquarie Capital, GMP Securities, RBC Capital Markets, Haywood Securities, Canaccord Genuity, and Raymond James.

That means all those firms were comfortable financing Roxgold at $0.65, and getting additional shares at $0.90. Shares traded below $0.60 today.

The proceeds will be used to advance the Yaramoko Gold Project in Burkina Faso.

In the same announcement, for which trading in the stock was halted, Roxgold announced it had also gained approval from the Burkina Faso Council of Ministers for the issuance of the Yaramoko exploitation permit, which will allow the company to progress with development of the project. Shares gained 10% after that news.

Roxgold is fully funded and permitted to build its high grade, high margin mine.

I wouldn't abandon it just yet.



DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


Private Markets

Almond Smart Home Router by Securifi

Securifi sells user friendly touch screen routers that also have support for IoT/home automation.Securifi’s Almond revolutionized wireless router setup with its easy to use Touchscreen Interface in 2012. Now our…


Trustify provides trust and safety in both the digital and physical worlds through our vast network of on-demand Private Investigators.By removing the large retainers and high hourly rates that traditional…