Cora Gold Drills In Mali – At What Political Risk for CORA?

Cora Gold (LON: CORA) shares could do well given that the company is following a long-established and often successful exploration idea. The problem, over and above the normal ones that concern any mining exploration exercise, is that there’s some political risk in Mali these days.

Cora shares have done well sometimes on announcements of drilling programmes, sometimes not much has happened at Cora. That’s just one of those things that afflict all mining exploration programmes. The job is to build the wall of evidence that shows there’s something worth mining, in a large enough quantity to mine it. Each brick in the process may or may not move the price – it’s the wall that matters in the end.

The basic strategy being followed at Sanankoro, in Mali, is as we say something that has worked for many another company in the past. Mining exploration technologies advance, so do extraction ones. So, a useful idea is to go back over old, known, occurrences and see whether the new technologies now make them economic. This leads to the conceptually rather strange idea that one of the best places to go looking for gold is where others, 50 years or a century back, said there was no more because it was all mined out.

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Mali has long been famed for the richness of the gold fields. The king of the place in the 1300s was probably the richest man who ever lived as a result. Many of the mines were simple surface things, what we would call artisanal mines these days, others alluvial. Going back over those occurrences with modern equipment is something that could well work.

This being largely what Cora Gold is doing in Mali. So far the results have been that there’s a mineral resource estimate of 800 thousand ounces or so of gold there. The aim is to find out whether there’s more and if so how much. Note that a mineral resource means “we’re pretty sure this can be mined profitably” while a reserve is “we have shown this can be mined profitably”. This drilling, the further work that will be done on this specific mineralisation, are all bricks in that wall of proof that is required before raising the capital to actually go mining itself.

So far so entirely normal for a junior miner. The future value of Cora Gold will depend upon how much gold they can actually prove is there.

But there’s an additional risk. Along with much of the Sahel governance is not exactly secure. France just announced, a few weeks back, that it was pulling its “peacekeeping” (ie, those that made sure there was no regime change against French interests) forces out. You can’t move a mine off somewhere else if the government changes and wants to redefine the contracts. At present, this risk seems remote but it is there. Cora Gold shares will be volatile dependent upon those political developments, as well as the more normal ones about resources found and proven.