Tembo Gold Corp. (TBGPF / TEM.V) is digging up Africa, specifically Tanzania. That country is ranked 102 out of 174 on Transparency International's Corruption Perceptions Index for 2012, with an absolute score of 35 out of 100. Tanzania also ranks 110 out of 179 on the Heritage Foundation Index of Economic Freedom for 2012, with an absolute score of 57. This translates into a huge political risk that investors must bear in mind.
The CEO is a geologist with a long history of operating in Tanzania. Good news. He'll need that local knowledge given the high level of corruption and low level of freedom there. I'll give the rest of the team good marks for knowing stuff about mining.
Their Tembo property may have promise. I think they did something brilliant by overlaying plotted artisanal mine activity onto their aerial magnetic survey results. Tembo's 43-101 report from July 2012 does not reveal any MII resources but does recommend a $12M follow-up exploration program. I wonder how they're going to fund this next phase.
Tembo Gold's financial statements for June 30, 2012 show C$426k in cash on hand, plus C$4.6M in short-term investments. The notes to their financial statements do not reveal any encumbrances tied to those investments, so I will consider that as part of a total cash reserve of C$5M. Their burn rate is about C$520k/month (averaging their three-month and six-month net losses), and they closed a financing round for C$4M in November. This gives them enough cash to survive until the end of December 2013. It is difficult to determine how much of this raised cash will be devoted to their follow-up exploration.
Some of Tembo's drill samples show some incredibly high grades but that's not enough to entice me to invest. Let's see some 2P reserves first. Oh, BTW, Tembo should hope the Tanzanian economy becomes more transparent.
Full disclosure: No position in Tembo Gold Corp. at this time.
