Ausdrill invests in Azumah Resources

Ausdrill has struck up an alliance with gold explorer Azumah Resources, agreeing to invest $2 million in the company following the appointment of Ausdrill subsidiary African Mining Services as Azumah's preferred mining contractor.

Ausdrill will provide Azumah with a two-year unsecured note which may be converted into Azumah shares at 0.5 cents per share at any time prior to expiry.

Should Ausdrill convert its note into shares, it would hold a 10 per cent interest in Azumah and become the company's largest shareholder.

Azumah has the option to repay the note on expiry but can request conversion prior to expiry if the 30 day volume weighted average price for Azumah shares is above 0.75 cents.

The funds will help Azumah towards completing a revised feasibility study at its Wa gold project in Ghana, underpinned by an increase in the project's JORC mineral resource to more than 2.2 million ounces of gold.

Azumah managing director Stephen Stone said the agreement represented an important step towards development of the project.

"The $2 million investment and alliance is consistent with Azumah's strategy of having quality companies across a range of capabilities directly involved in its business," he said.

"AMS has a very successful and long-term track record for the delivery of reliable and competitively priced mining services in Ghana."

Azumah shares closed the day's trade 3 per cent higher at 3.4 cents.