Archeologist Howard Carter spent a good chunk of his life searching for a tomb in Egypt’s Valley of the Kings that he wasn’t even sure existed. Imagine his moment of discovery. It was November of 1922. Carter's hands were trembling as he made a tiny breach in the door to the tomb of King Tut. Ancient air wafted out of the fissure, causing his candle to flicker. Peering in, his heart pounding, his eyes slowly adjusted to the light. What lay inside struck the archeologist dumb with amazement, such that when asked what he saw by the people behind him, he could only stammer, “wonderful things”.
Hidden somewhere under an ocean of sand lies a treasure potentially more valuable than all of the Pharaohs’ buried riches put together. In the Arabian-Nubian shield, a vast expanse stretching from the southern tip of Israel all the way down to Ethiopia, gold and silver have been mined since the Bronze Age and used to serve the glory of ancient Egypt, the oldest nation on Earth.
Despite this long history of human industry at the crossroads of the Mediterranean Sea and Indian Ocean, the land has remained virtually untouched by modern mining technology. While there were a few minor operations by the British in the area, they were mostly focused on low hanging fruit: visible, high grade mineralization. Most of these projects died out around World War Two, and the subsequent rush to discover new oil and gas plays took over the attention of resource explorers in the country. Like King Tut’s buried treasure, the gold has lain hidden beneath the earth’s surface, waiting to be discovered.
Sami El-Raghy, former Centamin CEO developed Sukari Gold Mine into Egypt’s only active operation. (image source: Twitter)
Egypt-focused gold producer Centamin’s legendary former CEO Sami El-Raghy always believed that the Abu Marawat concession, once held by Centamin and now 100% owned by Aton Resources Inc., had the most potential for gold in the country. A native Egyptian by birth, El-Raghy left for Australia as a geology student following the nationalization of the Suez Canal by the country’s then President, Gamal Abdel Nasser. It was a good call. Years of political instability followed, and to this day only three gold mining companies remain in Egypt. The only gold mine in active operation in the country is Centamin’s Sukari, which El-Raghy developed into a low cost venture with 13 million oz of gold reserves as of June 30, 2015, with a team that included Mark Campbell, now CEO of Aton Resources.
Despite some believing that Egypt is one of the world’s last mining frontiers, Abu Marawat saw very little modern exploration activity like most Egyptian prospects, until Aton acquired it in 2007. Its tremendous potential remains in place mostly because of challenges gold explorers have faced in the country for years: the regulatory regime governing the industry and the political climate. The 2011 revolution that led to the resignation of long-time President Hosni Mubarak left a political vacuum in Egypt with the Muslim Brotherhood, the military and judiciary, and dozens of other political parties struggling for power. After the Muslim Brotherhood's candidate Mohamed Morsi initially won the presidency in 2012, mass protests and eventual intervention by the secular-oriented military resulted in his removal from office in July 2013. In May 2014 Abdel Fattah El-Sisi, a former General, was elected President and has ruled the country ever since.
President El-Sisi has cautiously tried to reestablish stability, successfully negotiating billions in foreign aid from Egypt’s allies and the IMF. However, in order to continue receiving aid payments, the country will have to find a way to increase revenues and meet the ambitious spending targets set by the IMF. One of the prime areas identified for reform is in industrial licensing and regulations, which includes gold and mineral exploration.
Through it all Abu Marawat’s resources await development and its exploration potential remains untapped. After several false starts the concession is now owned by Aton Resources Inc. (TSX.V: AAN) $6.5 million market cap company led by President and CEO Mark Campbell. Campbell is based in Cairo and brings plenty of experience to the table, both in the mining and energy sectors in Egypt and Sudan. After working as a consultant for Sami El-Raghy, Campbell eventually sat on the Board of Pharaoh Gold Mines, a Joint Venture formed with the Egyptian government to exploit Sukari. Aton’s VP - Exploration Rick Cavaney was also involved with Centamin as one of the original exploration managers at Sukari. The management team is rounded out by Exploration Manager Javier Orduna, CFO Justin Blanchet, VP - Investor Relations Blaine Monaghan, and Corporate Secretary Christina Boddy.
Aton is currently operating under an exploration permit, which is set to expire in July 2018. For the company to convert from an exploration to an exploitation permit, it must declare a commercial discovery by this time. Although this process is uncertain, if Aton is successful the company will acquire a highly coveted exploitation permit. This permit lasts for 20 years, with a possible 10 year extension. Given these time limits, Aton has reorganized its management team to focus on an ambitious program of drilling and prospecting to support its application for the exploitation permit. At CEO.ca's Subscriber Investment Conference on March 4, 2017, VP - Investor Relations Blaine Monaghan described the immediate plan for the company as simply: "Drill, drill, drill!"
The results? So far so good. Aton has undertaken a series of drilling programs, as well as trenching, and geophysics to locate a concentrated resource lode that could meet the standard for commercial development. One of the most recent programs, completed by May 18, 2017, took place at one of three zones at the end of a 40 km gold trend and returned promising results. The zone in question, Hamama West, boasts an Inferred Mineral Resource of 341,000 oz gold equivalent (AuEq), and an Indicated Mineral Resource of 137,000 oz AuEq. All of the final eight holes intersected mineralization, with highlights including 22.0m of 2.73 g/t AuEq, 28.0m of 2.84 g/t AuEq, and 4m of 6.05 g/t gold and 376 g/t silver.
Regionally, the Company is looking to make new discoveries within the huge concession area. Channel and grab samples from Abu Gaharish returned assays of up to 22.6 g/t gold and 26.6 g/t gold respectively, which confirms the presence of a high-grade gold mineralization with potential for a high-grade, structurally controlled zone. Meanwhile the Bohlog prospect, which shows archaeological evidence of ancient mines, also showed potential, with recent channel and grab samples returning assays of up to 15.4 g/t gold and 21.1 g/t gold respectively. Aton is continuing this effort to collect strong results that will support its application.
Financing is a challenge for any exploration company. Aton raised gross proceeds of roughly $4.6 million from investors including Sprott Inc in December 2016 at 6.5 cents per Unit. The gold mining industry has struggled in 2017 and Aton’s share price has fallen to 3.5 cents at press time. Aton had working capital of $745,675 as at March 31, 2017.
Egypt is a complex, ancient country, and as such has always been a tricky place for resource exploration and extraction. Knowledge of Egypt’s culture, customs and legal system is the key to unlocking Abu Marawat’s potential. Aton’s CEO and VP - Exploration have already contributed to the only modern success story in the country, helping to get Centamin’s Sukari Gold Mine up and running despite decades of neglect and deadlock. With the IMF pressing the Egyptian government to reform the mining sector (and others) in order to continue to receive aid, Aton is on the verge of a licensing breakthrough that could give it up to 30 years of uninterrupted access to a historically rich plot of land with potential to be developed into a commercially viable, long term project.
The discovery of Tutankhamun’s tomb is still considered to be archeology’s finest hour. Aton Resources’ work in Abu Marawat may well produce gold mining’s finest hour in Egypt, with rich rewards for shareholders.
Sources:
https://ceo.ca/@marketwired/aton-provides-exploration-update-at-abu-marawat-concession
https://ceo.ca/@marketwired/aton-returns-28-metres-of-284-grams-per-tonne-gold
https://www.atonresources.com/company/management/management-team/
https://www.britannica.com/topic/Aton
https://www.youtube.com/watch?v=_bOdvQKOtvo&t=601s
https://www.stratfor.com/article/egypt-looks-help-where-it-can-get-it
https://www.stratfor.com/article/egypt-hopes-benefits-economic-reform-outweigh-risks
https://en.wikipedia.org/wiki/Horemheb
https://www.thoughtco.com/current-situation-in-egypt-2352941
https://www.oxfordbusinessgroup.com/overview/facing-future-country-seeing-return-stability
http://www.imf.org/external/country/egy/
www.kellogg.northwestern.edu/faculty/.../html/.../ISIS_April_13_2016_Effi_final.pdf
http://www.reuters.com/article/egypt-imf-idUSL5N1F8598
http://www.huffingtonpost.com/entry/imf-to-review-egypts-reform-program_us_58cc1d66e4b07112b6472d18
Phone interview, Blaine Monaghan - June 8, 2017
AAN Q4 Financial Statement - SEDAR http://www.sedar.com/GetFile.do?lang=EN&docClass=5&issuerNo=00027019&issuerType=03&projectNo=02619774&docId=4105683
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