Gold and Diamond Recovery Company in Sierra Leone, West Africa

Opportunity Snapshot

Investment Opportunity

Our UK Ltd. is incorporated to establish an operating Gold and Diamond recovery company in Sierra Leone and an International sales platform for recovered gold.

Initially, before we obtain and complete the licensing of our own JV claims, we will commence building relationships with Artisan miners in the alluvial gold areas. Our business will be providing and operating mechanical Trommel equipment and services as well as gold separation tables/wheels.
Basically the miners will stock pile pay dirt and at a pre agreed interval we will move onto their site a Trommel to separate the tailings from the gold/diamond bearing sands. Normally Gold miners in the region discard Diamonds, mainly due to the way they operate.

Each machine has an average capacity of over 10 tons per hour this will enable the miners to stockpile and process much more raw product than has been feasible in the past.

If we operate on a claim for a miner with one trommel at 10 tons per hr. and process over eight hours 80 tons of pay dirt we could produce approximately $4,800, assuming a recovery of 1g/ ton of pay dirt and a price of $46/g (UK refinery price).

Our share would be 25% (minimum) of any recovered gold. Eg. 80g recovered gold would produce a payment of 25% of the 80g ($920). Plus 10% of recovered diamonds. This makes our service an attractive proposition to local miners. Assumption in the cash flow projection is for an income of $920 per day, 20 days per month by month 9 of year 1. Please remember we see this as MINIMUM.

Once the company has a joint venture agreement with a claim owner and is in full production we can expect to recover gold up to the value of $3,713 per day (8hr shift), assuming 10 tons per hour and gold of 1.g/ton. The claim owner would receive 15% of the gold recovered.

Why invest in alluvial gold?

Low capital investments:
Placer gold is usually found close to the Earth’s surface and can thus be accessed more easily. Conventional hard rock mining can be considered profitable from about 1 g of gold per tonne of rock, but mining alluvial gold can be economical from as little as 0.2 g per cubic meter of gravel. Placer gold deposits can contain substantially high gold grades.

Competitive Advantage

Price - Gold:
Gold continues its run up reaching the $55.7/gram on 13th September 2012. The increase is driven by the behavior of investors who buy gold as a means of hedging against the weak Dollar, rising inflation and heightening geo political and financial instability. Selling price (without export tax 3%, without discount): $ 40/gram (locally)

Price - Diamond:
The price of diamonds varies. It is dependent upon the quality of the diamond, determined by the color, clarity and cut, the carat weight of the diamond, which determines how big the diamond is.
Selling price (without export tax 3%, without discount): $ 150/carat (approx)

While there are many multinational mining companies operating or about to start operations in Sierra Leone, as out area of interest is Artisan and small alluvial operations they are not really to be considered competition or a threat.

Rationale for the deal

Dollar hedge:
Gold is often used as an effective hedge against fluctuations in the US dollar, the world's main trading currency. If the dollar appreciates, the dollar gold price falls, while a fall in the dollar relative to the other main currencies produces a rise in the gold price. While this may also be true of other assets, gold has consistently proved among the most effective in protecting against dollar weakness.

Risk management:
On the whole, gold is significantly less volatile than most commodities and many equity indices. In this respect it tends to behave more like a currency. Including assets with low volatility in a portfolio will help to reduce overall risk, with a beneficial effect on expected returns. Risk factors that may affect the gold price are quite different in nature from those that affect other assets.

Demand and supply:
As is true of all asset prices, gold's price moves in response to the changing balance between supply and demand. Mine production is relatively static due to the long lead times that exist in gold mining, which explains why the rally in the gold price since 2001 has still not caused a rise in production levels. Meanwhile, demand has shown sustained growth, due at least in part to rising income levels and industrial requirements for the metal. This has created the foundation for the most positive outlook the precious metal has known for a quarter of a century.

Use of financing

To raise $73,111 (£45,000). Start services to Artisan miners. Develop our own JV claims and produce gold. Also to provide a service were Alan Jenkins would accompany buyers to Freetown, arrange gold purchases and using our export license return with the buyer to his preferred destination.

Opportunity for the investor

78% tax relief lures start-up investors
UK Investors may be eligible for up to 78% tax relief on an investment in our UK Ltd.

Private investors are being given the opportunity to back a range of risky start-up businesses with sums of as little as £10 – and claim up to 78 per cent tax relief – thanks to new services giving access to the government’s Seed Enterprise Investment Scheme (SEIS).

Investors who back these businesses can claim 50 per cent upfront tax relief plus an exemption from 28 per cent tax on any capital gains after three years.

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