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25th January 2007 UK EQUITY RESEARCH

NATURAL RESOURCES

BUY 69½p CLUFF GOLD PLC*


Cluff Begins Development on 2 Key Projects

Target Price 107p


Cluff Gold plc (“Cluff”/ “the company”) has begun developing both its Kalsaka
Market Cap £31.66m
Index Aim (Burkina Faso) and Angovia (Ivory Coast) projects. Cluff has retained the services
Shares in Issue 45.55m of Banlaw Africa as its mining contractor, a company which has extensive West
NAV N/A
African experience and has a client list including Newmont, Goldfields, and AIM
Net Cash $21m
Resources. The company has also appointed a Project Engineer.
Performance (%) Absolute Aim
1 month: -9 -11 The Angovia project development has recently been strengthened by the definition of
3 months: +16 +8 additional resources. Angovia now comprises 330,000 ounces of gold (oz Au), comprising
12 months -2 +5
both oxide and sulphide resources of 6.15 million tonnes (mt) at a grade of 1.7grammes
High/Low
12 months: 83 - 57 per tonne (g/t) Au . The oxide resources which will be first developed equate to 3.7mt at
1.4g/t Au for 170,000oz Au. Mineralisation remains open at depth (i.e. into the sulphide
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zone) and along strike, meaning that there is the potential for additional oxide resources to
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75 be defined in the vicinity of the mineralisation known of to date, which could be processed
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cost effectively as part of this mining plan. Cluff can also ascertain the additional sulphide
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resources from deeper drilling. A further drilling programme is planned for H1 2007.
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Drilling has re-commenced at Baomahun, Sierra Leone and the results are the first holes
May 06
Jan 06

Feb 06
Mar 06

Apr 06

Jun 06

Jul 06

Aug 06

Sep 06

Oct 06

Nov 06

Dec 06

Jan 07

are very encouraging – mineralisation has been confirmed to extend along strike and

Last Results Finals, Sept 5 down dip in the Western Zone. High grades have been encountered in these new
Next Results Interims, Feb 07 intersections – in the order of 7m at 5.76g/t Au from 96m depth and 8m at 7.67g/t Au from
Next Event AGM, Oct 19
139m depth. Cluff has still only explored approximately 25% of this mineralised trend.
Reuters/BBG CLF.L / CLF LN We anticipate another resource update for Baomahun, following the 880,000 ounce
resource inventory, with the focus being upgrading the inferred resources into the
Change in Recommendation No
indicated category so the company can start a pre-feasibility study in H2 of this year.
Cluff’s discovery costs for Baomahun are impressive - less than US$5/oz.

We retain our buy recommendation on Cluff, as we believe that the company is well
positioned to deliver the markets desire of cash flow from its two smaller projects, whilst
maintaining its focus on advanced exploration at Baomahun – the company’s biggest

Analyst Louise Collinge project. Cash flow from the Burkina Faso and Ivory Coast assets will be used to progress
+44 (0)207 220 1692
Baomahun.
louise.collinge@wh-ireland.co.uk

Key Sales Laurie Beevers


Contact +44(0)161 819 8724
laurie.beevers@wh-ireland.co.uk

*WH Ireland acts as NOMAD and broker to


Cluff Gold plc. Any research on this company
should not be relied on as objective or
impartial. This note is intended for institutional WH Ireland Limited, 11 St James’s Square, Manchester, M2 6WH
investors only and is not for distribution to WH Ireland is authorised and regulated by The Financial Services Authority and is a member of The London Stock Exchange.
private clients. Important disclosures and certifications regarding companies that are the subject of this report can be found within the disclosures page
at the end of this document.
NATURAL RESOURCES

Summary
Cluff Gold listed on AIM on 15th December 2004 with a suite of assets in west Africa. Prior
to Cluff Gold, Chairman and CEO Algy Cluff formed Cluff Resources, which was
subsequently acquired by Ashanti Goldfields, and then Cluff Mining, which became Ridge
Mining.

The most advanced project is the Kalsaka project in Burkina Faso (of which Cluff has a
78% interest), approximately 150km north of the capital, Ouagadougou. This deposit has
a reserve of 290,000 oz, and nearby potential to increase resources once the plant is
developed. The Angovia district has potential for a substantial deposit of near surface,
heap leachable oxides. With the plant already on site, this project could provide cash flow
for very little investment, and certainly no debt. The Baomahun deposit in Sierra Leone is
the company’s key focus as it has the potential to have a large resource inventory. Cluff is
currently spending $5m in order to earn a 60% interest in the project, which currently has
a resource of 880,000 oz. Cluff also has some interesting exploration ground in Mali
which, although early stage, looks prospective.

Fig 1: Life Cycle of a Mining Company’s Share Price

Source: Taken from Cluff presentation

We have added the above picture as it illustrates the natural shape of a one project
company’s share price graph through exploration, discovery, then ultimately through
feasibility, decision to develop to development and production. The point is that Cluff is
not a one project company but has four key projects, to ensure that the share price should
continue to rise as value is constantly added, through progression of one or more of the
projects.

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Angovia, Ivory Coast


The Angovia project is located within the Mt. Yaoure permit area, which is 40km northwest
of Yamoussoukro, the political capital of the Ivory Coast. The project contains the old
Angovia Gold Mine, which was in production from 1998 until 2003. The mine reportedly
produced over 180,000 oz of gold from heap leaching 2 million tonnes of oxide material.
There is much artisanal activity on the site now. Infrastructure is good as there is a HEP
dam 6km from the mine site. Cluff has a 90% interest in the Angovia project, which it
acquired in late 2004 from the previous owners COMINOR, a subsidiary of the French
uranium company, COGEMA. This acquisition included COMINOR’s technical database
and plant.

The Mt. Yaoure permit consists of the Birimian age units (approx 2.2ba), consisting of
mafic metavolcanics, felsic volcanic intrusions and minor conglomerates, which are
intruded by ultramafic and calc-alkaline plutonic intrusions. Locally, the geology has been
hydrothermally altered and intruded by dyke swarms and larger intrusions. The rocks
have been affected by local and regional folding. Weathered lateritic material overlays the
stratigraphy, and is the source of the oxide deposits. The actual orebody is a quartz vein
which varies from 3 to 10 metres in width. The known mineralisation is open along strike
and at depth. Mineralisation appears structurally controlled as opposed to lithologically
controlled and relates to sheared and brecciated zones within intermediate volcanic rocks.
There appears to be a series of these veins, in a linear trend, some of which occur within
the oxide layer.

Cluff currently has a resource of 330,000 oz, a recent 70% increase – the result of an
independent resource estimation undertaken by Ankobra Resource Services, and
reported by SRK. This resource update has put an additional 25% of the resources into
the indicated category. This increase has resulted from the drilling programme of 2006
which has defined the resources in 4 target areas, all within 2km from each other. The
plant, which Cluff already owns, will be located in an area central to resources.

We feel it acceptable in the short term to assume the oxides are heap leachable, as that
was the processing method for the 5 years in which the mine was in operation. COGEMA
experienced recoveries of 80% with its heap leaching operations. The oxides are crucial
as this means the company should be able to cheaply process the material and should be
able to commence production without requiring project finance, thereby generating cash
flow. The sulphides (essentially a continuation of the oxides at depth) will form a different
project, with a more complex and capital intensive plant. We feel the company should
focus on exploring more potential near surface oxide resources.

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Table 1: Angovia Resources (lower cut-off 0.5g/t Au, upper cut-off 20g/t Au)

Resource Characteristics Resource Category Tonnes (millions) Grade (g/t Au) Ounces Au

Oxidised Indicated 2.78 1.4 130,000

Inferred 0.93 1.4 40,000

Sub-total 3.71 1.4 170,000

Sulphide Indicated 0.87 2 60,000

Inferred 1.57 2 100,000

Sub-total 2.44 2 160,000

All Material Indicated 3.65 1.6 190,000

Inferred 2.5 1.8 140,000

Total 6.15 1.7 330,000

Source: Company data / WH Ireland research

Kalsaka, Burkina Faso


The Kalsaka project is Cluff’s most advanced, having a completed bankable feasibility
study. The project is located approximately 150km north west of the capital,
Ouagadougou. Cluff owns 78% of Kalsaka, with 12% held by IMARB and the government
has a 10% free carried interest.

The licence area forms a folded greenstone belt (the “Birimian Series”) area between 2
granitic intrusions. Outcropping gold mineralisation has been identified at several
locations within the licence area, but there have only been two areas drilled in detail,
therefore only two areas have been included in the feasibility work. These areas are
highlighted in red on the diagram (overleaf). The two pits closer to the south form the
Kalsaka Hill Orebody, while the 2 smaller pits in the north (750m north of Kalsaka Hill) are
the K-Zone Orebody. The total measured and indicated resources at both Kalsaka Hill
and the K-Zone are 10.9 million tonnes at 1.5g/t gold, equating to 500,000 oz, and a
further 2.8 million tonnes of inferred resources at 1.1g/t for 100,000 oz. As inferred
resources cannot be converted to reserves, the measured and indicated resources
converted to reserves of 290,000 ounces of gold. These reserves comprise near surface,
oxidised deposits which are heap leachable.

Cluff has began development at Kalsaka, and has appointed Banlaw Africa Ltd as the
mining contractor, and will look into financing options for the project, some portion of
which will be debt.

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Fig 2: Kalsaka Mining Area

Source: Company data / WH Ireland research

Although Kalsaka may be a small project financially, it remains of interest in terms of


potential upside. The schematic diagram, Fig 2 shows the site, with the red areas being
pits defined in the BFS. The blue areas are additional prospects of interest, along the
same strike as the open pits (therefore the company has prior geological understanding)
which will soon be explored with a view to adding resources in the area, and
commissioning a plant with additional capacity so as to enable production to be increased.
We believe there is the potential for the company to define resources in these
neighbouring discrete areas.
Fig 3: Kalsaka and Yako Permits

Source: Company data / WH Ireland research

In addition to the prospects around the Kalsaka project, Cluff has also been granted the
exploration licence immediately to the south of the Kalsaka belt, and already has a
resource of 150,000oz on its Koupela Nagsene prospect, Yako permit, therefore adding
credibility to the prospectivity of that belt. The company also has 5 additional target areas
along the same belt to further explore.

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Baomahun, Sierra Leone


We believe Baomahun represents Cluff’s “company maker” project. A site visit has
demonstrated the potential to define further resources based on the strike length, a good
geological understanding and a sensible exploration programme.

Cluff’s Baomahum project is located 180km due east of Freetown, the country’s capital.
The site is accessible by roads, of which over half the journey is on good asphalt roads.
Currently there is diesel generated power on the site but a visit showed pylons leading
most of the way towards the project. These pylons were erected in conjunction with a
major hydroelectric dam project which was put on hold due to the civil war over the past
decade. There are hopes that this project will be re-instated, therefore there is the
possibility that cheaper power will be provided to the project area.

The project comprises 2 exploration licences, Baomahun and Victoria, both of which are in
the name of Winston Mines Limited. Cluff has the right to acquire a 60% interest in these
licences, through spending US$5m or completing a bankable feasibility study, which ever
is earliest. The company has currently spent over US$3m, so is well on the way to
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completing the transaction. The licences cover an area of 51.8km and 85.5km2
respectively. The company is looking to consolidate its land holding on the Kangari
greenstone belt.

There is considerable history of gold and gold production in the area. Gold was first
discovered in the area in the 1920s. A small amount of mining was undertaken during that
time, but there are no records for this. In the 1960s the Sierra Leone Geological Survey
explored the area, undertaking soil sampling and drilling. A variety of companies also
looked at the project throughout the 1970s and the early 1980s and mapping, further
drilling and trial mining took place during this time. Winston Mining obtained the
exploration licences in 1985 and between that time and 1993, an adit was driven into the
deposit and fan drilling was undertaken. The operations ceased in 1993 as rebels
destroyed the site during the country’s civil war. Activity in the area recommenced by
Winston Mines in 2004, when the company re-entered the adit, and took channel samples
at 1 metre intervals along the adit walls. This adit has been of the utmost importance to
the exploration team, as it has enabled the company to essentially visualise the centre of
the deposit. As fan like drilling was undertaken at the end of the drive, this area has been
classed as “indicated” in terms of the company’s resource statement. The adit was visited
on the recent site visit and the trenches, drilling, and mineralisation were seen. Another
notable point is the large number of artisanal miners panning for gold in the thin layer of
surface oxides covering the bedrock deposit.

Geologically, much of Sierra Leone is underlain by Archaean terrain, comprising granites,


gneisses and sedimentary rocks, which form the West African Craton. The Baomahun
Project is located in the Sula Mountain/ Kangari Hills Greenstone Belt, which consists of
folded and sheared metasediments and metavolcanics. These form the country rocks of

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the deposits. The localised geology consists of a variety of schists – these have been
identified and logged by the field geologists who identified the transition in and out of more
dominant minerals, and include biotite-quartzite schist, cordierite schist, garnet-mica schist
and garnet cummingtonite schist – banded iron formations (BIF) which tend to be
interlayered within the schists, and amphibolites (i.e those rocks which have undergone a
more intense metamorphism).

The geological team on site have developed a good understanding of the controls on
mineralisation. They note a BIF association with gold mineralisation, but only in BIF areas
where the rocks have been structurally distressed, meaning either along the contacts with
BIF and schist, or where the BIF has been internally sheared. This appears to have
encouraged gold deposition. The gold is not necessarily found within the BIF layers, but
where there is gold mineralisation there are usually BIF units in the vicinity. Gold is
always associated with the presence of sulphides, and more specifically, is either
associated with arsenopyrite and/or pyrrhotite. The company now only begins assaying
for gold when the geologists see the first signs of sulphides coming into the core, as they
know from experience there will be no gold prior to that.

Fig 4: Airborne Magnetic Map

Source: Company data / WH Ireland research

There are 3 discrete zones which have been initially targeted by the company for drilling
and resource estimation. These are, the Eastern Zone, the Central Zone and the Western
Zone.

The company flew airborne magnetic geophysics over the 2 licences, and this has
identified the BIF units (see figure 1) within the area, and therefore has given the company
a clear focus on future exploration. The geophysics map also shows the locations of the

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three zones currently with resources. In addition it shows the areas which have been soil
sampled (these have also been trenched now), and it also shows the areas to be soil
sampled next year.

The Eastern Zone - 12 holes have been drilled in the eastern zone. This was the first area
targeted by the company as it contains the adit previously described. In this zone it is the
presence of pyrrhotite which influences gold mineralisation, but in addition, it is the
amount of arsenopyrite which drives the gold grade. The whole area has a resource of
380,000 oz, but 40,000 oz are classified as indicated due to the drilling pattern and level
of understanding in and around the adit area.

Fig 5: Baomahun Core, Eastern Zone

Source: Analyst’s photograph

A recent drill hole for this area, DDH47 has one particular mineralised intercept of 16m
grading on average 20.16g/t Au (see picture opposite). Interestingly, this drill hole has
also revealed another mineralised horizon below the one already known about, which is
interpreted to be part of an en echelon array of structures forming along the same strike.

The Western and Central Zones – 17 holes have been drilled in each zone. The controls
on mineralisation are the same as for the eastern zone, i.e. BIF and sulphide association,
however, gold mineralisation is more closely associated with the presence of arsenopyrite
in the central zone than pyrrhotite. Cluff has recently drilled in between these two zones
and interpretation to date is that mineralisation between these two zones is continuous.
Cluff has interpreted that all three zones are on the same structural trend and that the
rocks are folded in between the Central and the Eastern Zones.

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A report was written in 1992 for Harry Winston, entitled “Characterisation of an ore sample
from the Baomahun Gold Deposit: Chemistry, Mineralogy and Metallurgical Testwork”.
Importantly, the study concluded that 95.2% of the gold is free milling. It also stated that
approximately 95% of the gold could be recovered by a variety of standard processing
routes – including gravity concentration and cyanidation. The company will undertake
metallurgical work in the near future, but we believe that this document is a good
endorsement of the metallurgy for the time being.

The company’s exploration plan involves systematic soil sampling, followed by trenching,
parallel to the line of soil samples, with 2 trenches per soil sample line. It is from these
trenches that drill targets are defined. The company is steadily progressing north with the
soil and trench samples, with the area north of the Western Zone currently being trenched.
Further north the company has been soil sampling, and has identified areas suitable to
trench. This exploration plan is simple but effective:- stick within the BIF areas (generated
by airborne geophysics), soil sample, trench, drill, in a continuous progression moving
north. Because of this, we feel the project is being well managed, and there is scope for
additional resources to be defined along the length of the BIF belt.

The drilling in 2006 has resulted in the definition of a further 362,000, an over 70%
increase on the previous resource for the project, which now stands at 880,000 oz, with an
average grade of 3.2g/t Au. The drilling programme comprised 4400m of diamond drilling,
and comprised the results from holes DDH029 to DDH048.

Table 2: Baomahun Mineral Resources

Resource Class Resource Area Tonnage Grade (g/t Au) Ounces Au

Indicated East 240,000 5 40,000

Inferred East 2,080,000 4.8 320,000

Inferred Central 2,210,000 3.9 280,000

Inferred West 4,120,000 1.9 250,000

Total Indicated East 240,000 5 40,000

Total Inferred All areas 8,410,000 3.1 840,000

All Categories All areas 8,650,000 3.2 880,000

Source: Company data / WH Ireland research

The results of 3 recently drilled holes have been released. These holes have confirmed
the along strike and down dip extent of mineralisation in the Western Zone – which when
combined with the knowledge that only 25% of this mineralised belt has currently been
drill tested, is highly encouraging. Exciting intersections are as follows: 7m at 5.76g/t Au

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from 96m depth, 8m at 7.67g/t from 139m depth and 8m at 1.38g/t Au from 80m. Cluff
expects a second diamond drill rig to arrive on site in February, which will speed up the
30,000 planned metres which we believe will lead to both an increase in the resource
inventory, plus an increase in the confidence category into more measured and indicated
resources. Cluff hopes to initiate a pre-feasibility study into Baomahun in H2 2007.

Karbasso, Mali
Fig 6: Karbasso Licence

Source: Company data / WH Ireland research

Mali represents Cluff’s grass roots exploration. The company has signed a JV agreement
with Kadiel Mining, in which it has a 90% interest in the Karbasso licence area, situated in
southern Mali, close to the Ivory Coast. The concession has been carefully selected as it
is along strike, on the main mineralised belt in the country, from Resolute’s 5m oz Syama
mine, and Etruscan Resources permit, the drilling of which has returned some good
intersections.

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Peer Group Comparison


Table 3: Comparable Companies

Share Market Attributable


price Capitalisation Cash Enterprise Resources EV/ Resource Ounce
Company Country Listed (US$) (US$) (US$) Value (US$) (oz) (US$)

Sierra Leone, Ivory


Coast, Burkina
Cluff Gold Faso, Mali AIM 1.35 61,420,400 21,000,000 40,420,400 1,443,000 28.01
Mano River
Resources Sierra Leone TSX/AIM 0.23 67,235,000 1,800,000 65,435,000 1,400,000 46.74

Equigold Ivory Coast ASX 1.22 209,781,000 45,200,000 164,581,000 3,494,900 47.09
Ghana, Ivory Coast,
Perseus Mining Kyrgyzstan ASX 0.38 33,930,000 4,680,000 29,250,000 949,000 30.82

Orezone Burkina Faso TSX 1.36 180,888,500 24,780,000 156,108,500 3,660,000 42.65
Ivory Coast, Mali,
Niger, Burkina
Faso, Ghana, South
Etruscan Africa TSX 3.31 333,429,500 22,601,500 310,828,000 2,325,000 133.69
Golden Star
Resources Ivory Coast TSX 3.29 679,558,000 10,000,000 669,558,000 11,000,000 60.87

Axmin CAR, SL TSX 0.85 142,562,000 7,578,000 134,984,000 3,327,000 40.57

Goldbelt Resources Burkina Faso TSX 0.96 56,737,500 11,168,000 45,569,500 1,138,000 40.04

Semafo Inc Burkina Faso TSX 1.63 313,590,500 32,366,000 281,224,500 4,947,400 56.84

Avnel Gold Mining Mali TSX 0.77 42,933,500 2,017,000 40,916,500 1,334,000 30.67

Source: Company data / WH Ireland research

* Data as of 25th January 2007

The above table contains details of companies active in the West African region. The
average EV per resource ounce of the peer group is US$51. The table clearly shows that
when considering EV/ resource ounce, Cluff is undervalued in comparison to its peers. If
it were to be valued at the mean EV/resource ounce this would equate to £1.07 per share.
This is based on current resources and does not take into account exploration potential -
in the large strike extent of Baomahun, the potential in the Kalsaka and Angovia areas,
and the grass roots area in Mali.

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West Africa
Sierra Leone – Sierra Leone has recently emerged from a 10 year civil war which began in
1991 when the Revoltionary United Front (RFU), led by former army corporal Foday
Sankoh, campaigned against the then President Momoh. The UN intervened in 1999, but
the civil war was officially declared over in 2002. During the war, diamonds were being
used in exchange for arms from Israel, and were referred to as blood or conflict diamonds.
The country is working towards reconstruction, and the extraction of natural resources,
namely diamonds and gold, has helped the post conflict economy. Sierra Leone has long
been well regarded as prospective for diamonds and gold, and in the last few years the
country has begun to encourage foreign interest in the industry again. Companies such
as Sierra Leone Diamonds, Mano River Resources, Axmin, Sierra Rutile, Koidu Holdings,
African Diamonds, Argyll Resources, in addition to Cluff, have all been active in Sierra
Leone – an endorsement on the improving political situation.

Ivory Coast – The Ivory Coast was formerly seen as the most stable and wealthy country
in west Africa. This changed in 2002 when a civil war began. For the 30 years prior to
this the country was renowned for ethnic diversity with harmony, and its well developed
economy. The civil war has divided the country in 2 – the government controlled south
and the rebel controlled north. The northern muslims, including many immigrants from
Burkina Faso and Mali who have long lived in the country working in agriculture, especially
cocoa farming, began to feel they were politically disadvantaged. Fighting has now
stopped, but the situation remains tense, and a buffer zone between the north and the
south is maintained by the UN. Disarmament has not yet begun. Cluff’s Angovia project
is well within the government controlled south of the country. Regarding mining, the
country has favourable geology and a robust mining code, dated 1995, which encourages
foreign investment. Randgold and Ashanti are active in the Ivory Coast in conjunction with
several juniors, including Etruscan Resources, Equigold, and Golden Star Resources.

Burkina Faso – Burkina Faso remains one of the poorest countries in the world. The
country’s economy is reliant on cotton production. It has significant gold resources.
Droughts continue to affect the country, and desertification causes problems for farming.
The country has been linked to the conflicts in neighbouring countries, including
accusations of involvement in diamond smuggling by rebels in Sierra Leone. Many
Burkinabes have a history of working in the Ivory Coast but relations are strained as the
Ivorians have accused Burkina Faso of backing rebels in the north of the country. Burkina
Faso has in turn accused the Ivory Coast of mistreating Burkinabes who live there.
Regarding mining, there is a modern mining law, 2003. There are exploration companies
operating in Burkina Faso, including AIM resources who has an advanced zinc project in
the country. Other active mining/ exploration companies in the country are High River
Gold, Orezone, Etruscan, Goldfields and Randgold.

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Mali – Mali is relatively under-explored and is a stable multi party democracy (since 1992)
with a modern mining code. These factors lead it to be an attractive country for gold
mining and foreign investment. The country is known historically for gold production.
Many companies are active in Mali, including Randgold Resources, Anglogold Ashanti,
Glencar, IAMGold, Resolute Resources, Nevsun Resources and Avnel Gold Mining.

Fig 7: Cluff’s Countries of Operation

Source: Company data / WH Ireland research

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Directors and Management


Algy Cluff, Chairman and CEO – Mr Cluff has been involved in the natural resources
industry for over 30 years. In 1972 he formed CCP to bid for North Sea oil licences, and
then subsequently Cluff Oil Ltd which acted as the management company for CCP. He
then founded and was chairman of Cluff Resources. From the early 1980’s, Cluff
Resources became focused on mineral exploration in Africa and was eventually acquired
by Ashanti in 1996. Mr Cluff then formed Cluff Mining, now Ridge Mining and was with the
company until he resigned in 2004. He formed Cluff Gold in 2003.

Nicholas Berry, Non-Executive Joint Deputy Chairman – Mr. Berry is chairman of


Stancroft Trust Ltd, and a number of other public companies. He joined the Cluff group in
May 2004.

Edward Haslam, Non Executive Joint Deputy Chairman – Mr. Haslam was CEO of Lonmin
from 1999-2004. He qualified as a metallurgist whilst working for British Steel. He then
joined Falconbridge in 1978. He worked in various international marketing positions
before being appointed by Falconbridge to Western Platinum Ltd as Marketing Director.
In 1997 he was appointed Managing Director of Lonplats and subsequently appointed to
the Lonmin board in 1999. He joined Cluff Gold in May 2005.

Douglas Chikohora, Technical Director – A Chartered Engineer with over 20 years’


experience in the mining industry. His experience covers rare earth minerals and base
and precious metals with various companies including Cluff Resources, which he joined in
1987 and where he was in charge of the exploration and development of the Ayanfuri
mine in Ghana. After the acquisition of Cluff Resources by Ashanti Goldfields in 1996, Mr
Chikohora joined Cluff Mining plc (now Ridge Mining plc) in June 1996 before being
appointed managing director of Cluff Mining (West Africa) Limited, responsible for its West
African gold interests. He joined Cluff Gold plc in January 2004.

Charles Lutyens, CFO – Mr Lutyens was formerly Managing Director of Rio Tinto India
and Head of Project Finance for the Rio Tinto group. He has extensive knowledge of
project finance and business development in emerging economies and has worked in
natural resources for over 20 years. He has in depth experience of working in partnership
with investors, banks, governments, multi-lateral and donor institutions and has negotiated
a significant number of financings, joint ventures, acquisitions and investment agreements
with host governments. Mr Lutyens also advises a group of governmental donor agencies,
including the UK's Department for International Development (DFID) on issues affecting
private sector investment in developing country infrastructure.

Eileen Carr, Non-Executive Director – Ms. Carr is a qualified accountant and has over 20
years experience in finance in the resources sector. She was previously Finance Director
of Cluff Resources until the Ashanti acquisition, after which she continued to work for the
parent company. She also worked for Marc Rich (now Glencore) and has held various

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other corporate financial roles in resources companies. She is an Executive Director of


Monterrico Metals, and CFO of Alexander Mining. She joined Cluff Gold in November
2003.

Bobby Danchin, Non Executive Director – Mr Danchin is a geologist and a chemist. He


recently retired from Anglo American where he was CEO of the exploration and
acquisition department and group deputy technical director. He is a Non Executive
Director of Gold Mines of Algeria. He is also a director of the South African Council of
Geosciences and a member of the Australian CSIRO Mineral Resources Sector Advisory
Council. He joined the group in May 2004.

Tim Wadeson, Non Executive Director – Mr Wadeson is a mining engineer. He was the
group technical director of Anglo American having worked there from 1993-1999, and prior
to that he was Technical Director of Minorco. Mr Wadeson is a Non Executive Director of
Mwana plc and Highland Gold. He joined Cluff Gold in May 2004.

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Disclosures

WH Ireland Recommendation Definitions


Share Price Target
Buy
Expected to outperform the FTSE All Share by The share price target is the level the stock should currently trade at if the market were to accept the analyst’s view
15% or more over the next 12 months. of the stock and if the necessary catalysts were in place to effect this change in perception within the performance
Outperform horizon.
Expected to outperform the FTSE All Share by
5/15% over the next 12 months. Stock Rating Distribution

Market Perform
Expected to perform in line with the FTSE All Recommendation Total Stocks Percentage
Share over the next 12 months. Buy 6 10%
Underperform Outperform 25 40%
Expected to underperform the FTSE All Share Market Perform 26 43%
by 5/15% or more over the next 12 months.
Underperform 4 7%
Sell Sell 0 0%
Expected to underperform the FTSE All Share
by 15% or more over the next 12 months. Total 61 100%

Trading Buy
Expected to rise by 15% or more in absolute
terms within 3 months This table demonstrates the distribution of WH Ireland recommendations. The first column illustrates the distribution
in absolute terms with the second showing the percentages.
Trading Sell
Expected to fall by 15% or more in absolute Conflicts of Interest Policy
terms within 3 months
This research is classified as being “non-objective” as defined by the FSA’s Conduct of Business Rule 7.16.5.
Speculative Buy
Please refer to www.wh-ireland.co.uk for a summary of our conflict of interest policy.
The stock has considerable level of upside but
there is a higher than average degree of risk.
Analyst Certification
The research analyst or analysts attest that the views expressed in this research report accurately reflect his or her
personal views about the subject security and issuer. Furthermore, no part of his or her compensation was, is, or will
Disclaimer be directly or indirectly related to the specific recommendation or views expressed in this research report.
This research recommendation is intended only for
distribution to market counterparties and Companies Mentioned
intermediate customers as defined under the rules of
the Financial Services Authority and is not directed at * see table 3, page 11
private customers. This note contains investment
advice of both a general and specific nature. It has Share Price Date/Time
been prepared with all reasonable care and is not
knowingly misleading in whole or in part. The
information herein is obtained from sources which we Company Name Recommendation Price Price Date/Time
consider to be reliable but its accuracy and
completeness cannot be guaranteed. The opinions
Cluff Gold Buy 73p 09:30 25/01/2007
and conclusions given herein are those of WH
Ireland Ltd. and are subject to change without notice.
Clients are advised that WH Ireland Ltd. and/or its
directors and employees may have already acted Summary of Company Notes
upon the recommendations contained herein or N/A
made use of all information on which they are based.
WH Ireland is or may be providing, or has or may
have provided within the previous 12 months,
significant advice or investment services in relation to
Summary of Security Recommendations
some of the investments concerned or related
investments. Recommendations may or may not be N/A
suitable for individual clients and some securities
carry a greater risk than others. Clients are advised *Current Analyst (CA), Previous Analyst (PA)
to contact their investment advisor as to the
suitability of each recommendation for their own
circumstances before taking any action. No
responsibility is taken for any losses, including,
without limitation, any consequential loss, which may
be incurred by clients acting upon such
recommendations. The value of securities and the
income from them may fluctuate. It should be
remembered that past performance is not
necessarily a guide to future performance. For our
mutual protection, telephone calls may be recorded
and such recordings may be used in the event of a
dispute. Please refer to www.wh-ireland.co.uk for a
summary of our conflicts of interest policy and
procedures.

WH Ireland 16
NATURAL RESOURCES

Contacts
Chief Executive Small & Midcap Sales
Laurie Beevers Gary Marshall
0161-832-2174 0113-346-2852
laurie.beevers@wh-ireland.co.uk gary.marshall@wh-ireland.co.uk

Deputy Chief Executive Peter Morrison


Head of Corporate 0113-346-2854
David Youngman peter.morrison@wh-ireland.co.uk
0161-832-2174
david.youngman@wh-ireland.co.uk Rachel Newton
0113-346-2850
Head of Research rachel.newton@wh-ireland.co.uk
Matthew Davis
0113 346-2847 Sales Trading
matthew.davis@wh-ireland.co.uk Nick Beardsmore
0113-346-2840
Natural Resources nick.beardsmore@wh-ireland.co.uk
Louise Collinge
0207-220-1682 Sonia Hough
louise.collinge@wh-ireland.co.uk 0113-346-2856
sonia.hough@wh-ireland.co.uk
James Picton
0161-819-8855 Gabby Wray
james.picton@wh-ireland.co.uk 0113-346-2842
gabby.wray@wh-ireland.co.uk
Philip Haydn-Slater (Sales)
0207-220-1667 Les Ames
phs@wh-ireland.co.uk 0207-220-1686
les.ames@wh-ireland.co.uk
Small & Midcap Research
Keith Ashworth-Lord Research Assistant
0113-346-2847 Gill Randall
keith.ashworth-lord@wh-ireland.co.uk 0113-346-2841
Gill.randall@wh-ireland.co.uk
Liz Burrows
0113-346-2849
john.cummins@wh-ireland.co.uk

John Cummins
0113-346-2844
john.cummins@wh-ireland.co.uk

Matthew Davis (Head of Research)


0113-346-2847
matthew.davis@wh-ireland.co.uk

Emerging Companies
Anne Margaret Crow
0121-616-2101
anne.crow@wh-ireland.co.uk
WH Ireland Limited

11 St James’s Square

Manchester M2 6WH

T: 0161 832 2174

F: 0161 839 5706

www.wh-ireland.co.uk WH Ireland is a member of The London Stock Exchange and is authorised and regulated by The Financial Services Authority.