11/04/2006 - 22:00

Gold explorers plunge into West Africa

11/04/2006 - 22:00

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A clutch of small-to-medium Western Australian gold companies is carving out a significant niche in West Africa’s emerging, key mineral fields.

Gold explorers plunge into West Africa

A clutch of small-to-medium Western Australian gold companies is carving out a significant niche in West Africa’s emerging, key mineral fields.

The focus is on the more politically stable Mali, Ghana and Burkina Faso, and to a lesser extent the troubled Ivory Coast, given West Africa’s high prospectivity and a growing investor willingness to trade sovereign risk for low cost production and a rising gold price.

The Perth companies run the gamut, from grassroots exploration to near production, and include juniors Gryphon Minerals Ltd, Adamus Resources Ltd, Azumah Resources Ltd and Perseus Mining Ltd, as well as the larger Equigold NL and Resolute Mining Ltd.

Resolute has just given the green light to an investment of up to $170 million in its six million ounce Syama gold mine in southern Mali.

This project looks like coming on-stream in early 2008 and will add more than 250,000 ounces a year to current production of about the same from a mine in Tanzania and another in Queensland.

The cash costs per ounce of production underscore the interest in this region, near the confluence of the Mali, Ivory Coast and Burkina Faso borders.

Cash costs for the $135 million Syama mine are projected at $US336/ounce, compared with the current $US454/ounce at Resolute’s Ravenswood mine in Queensland and $US296/ounce at its Golden Pride mine in Tanzania.

It is a good geological setting.

Just north-west of Syama is the 5.6 million ounce Morila mine, owned by South Africans Anglo Gold and Randgold Resources, and the Mali government, which produces 651,000 ounces a year at $US221/ounce.

Just south-east, across the border in the Ivory Coast, is Randgold’s three million ounce Tongon project.

At the other end of the scale, 50 kilometres east of Syama across the border in Burkina Faso, and in the same geological setting, Gryphon is hoping to turn its Banfora project into a company maker.

It has already spent about $500,000 drilling the 1,150 square kilometre sparsely explored ground previously held by Western Mining Corp and Resolute, and being acquired by funding a $2 million exploration program with a final $1.4 million on a decision to mine. The government will hold a free carried 10 per cent.

Results to date have been good, with wide, high grades from relatively shallow depths.

It has been enough to conclude a $3.5 million capital raising with investor groups, including the Macquarie Bank and $500 million Canadian gold fund Dundee Precious Metals Inc, symptomatic of the interest being shown in West Africa by such investment houses.

Gryphon managing director Steve Parsons told WA Business News the company was about to embark on a 5,000-metre drilling program.

“We plan to hit it hard with the aim of establishing a resource by the end of the year,” he said.

Gryphon has four geologists on the ground at Banfora and Mr Parsons said operating in country was no more difficult than in Australia.

A coup in Burkina Faso, the old French colony of Upper Volta, more than 20 years ago has left it politically stable ever since. While Burkina Faso is one of the poorest countries in the world, the World Bank recently wiped all its debt and the government is now looking to the mining sector to drive its economy, as in neighbouring Ghana.

Gryphon and Ghanaian gold explorer Adamus Resources Ltd share the same consulting and equipment sourcing group in the region, not surprising since Mr Parsons, Gryphon geologist Luke Kerr and Adamus managing director Hamish Halliday all went through Canterbury University’s geology unit in New Zealand together.

Adamus expects its $80 million Southern Ashanti Gold Project in Ghana to be in production late next year or early 2008, producing more than 100,000 ounces a year over a current eight-year mine life.

Mr Halliday said the bankable feasibility study on its 1.5 million ounce unhedged project would be completed before the end of the year, with financing completed and construction begun within the first quarter of 2007.

The company has launched a $4 million exploration program on key targets at Southern Ashanti between now and December aimed at lifting the current resource.

A newcomer to north-western Ghana is recently listed Azumah, which recently raised $6 million via an IPO and has begun drilling its Wa-Lawra project, which has a previously defined low level resource of 225,000 ounces at Kunche Main.

Despite the political unrest in the Ivory Coast, two major projects close to production include Equigold’s 1.36 million ounce Bonikro mine in the south and Randgold’s three million ounce Tongon mine in the north.

Both have been delayed by civil unrest, which it is hoped will be settled by United Nations and South Africa brokered elections in October this year.

Equigold’s bankable feasibility study is scheduled for completion in June ahead of a final decision before the end of the year.

Perseus is also in the northern Ivory Coast with its Tengrela project near the big Tongon and Syama deposits.

It has returned some very encouraging high-grade intercepts.

Managing director Mark Calderwood is unfazed by the civil unrest, saying a bankable feasibility study on the project was still about two years away.

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