“Otjikoto was discovered in 1999 by a South African group called Avmin [i.e. Anglovaal Mining Ltd]. Avmin underwent some corporate restructuring and a couple of different spin-outs, and the property ended up with a company called TEAL Exploration & Mining. TEAL had a couple of non-core assets from what was then Avmin, large copper projects in Zambia and the Congo, and this base metal exploration project which turned into the Otjikoto gold discovery. [Companhia] Vale [do Rio Doce] took a look at the big copper projects and liked them, and they bought TEAL. Then, we recognized that Vale didn’t do 2 million ounce gold deposits—probably wouldn’t want to be in Namibia just for one asset—so we gave them a call and said we’d like to buy it and arranged the transaction and we ended up acquiring it last June.
“I think these assay results are pretty positive. I think what they demonstrate mainly is that this resource is part of a bigger system than was previously defined. What we’re really trying to do here—in the first 12 to 18 months that we’ve been on the ground—is to scope out how big this system might be. So we’re doing some pretty aggressive step-out drilling. One of the zones we’ve hit had been intersected by the previous operators, but only sporadically and not enough to really piece together the fact that there was something continuous there. With the drilling we’ve done now, we’re quite confident that there’s a pretty long zone there: 1.4 kilometres long, 50 to 150 to maybe 200 metres wide, and anywhere from 10 to 40 metres thick. So it’s an impressive zone of mineralization. Certainly it will convert to resource. How much of it will convert to reserve will be dependent on a number of things, not the least of which is the gold price. But some of it’s going to convert for sure. We’re not really there yet as far as putting economics on the project, but we hope to be able to give the market guidance on the timeline for that sort of thing.
“The project is advanced. 1.8 million ounces of resource at a grade of 1.4 g/t—that’s at a cut-off grade of 0.4 g/t. If you want to raise that cut-off to something more appropriate for open pit mining—say 0.8 g/t—then the resource goes to 1.5 million ounces of 1.9 g/t. So there’s a significantly higher grade core to this deposit. And we think that’s going to have a significant impact on the economics.
“Ultimately production is our focus. If something happens in the market otherwise, well that’s beyond our control. But that’s certainly our intention. We’re going to de-risk this project and advance it as quickly as we can towards production.
“The plan for 2011 is pretty simple. We’re going to be focussed primarily on exploration. But we are doing long lead time items on the development studies, like environmental and social impact and geo-hydrological studies. These are things that take over a year to do. So we’re getting them done now, and we’re going to do it to a definitive feasibility level so it doesn’t have to be repeated further down the road.
“I think this project is great. Namibia is a great operating jurisdiction. It has a very stable government, is a mining friendly country, and has excellent infrastructure. Infrastructure is really key on this project. It’s three kilometres from a paved highway, three kilometres from a railway line, and power lines are nearby. And even though Namibia is a very dry country, there’s significant ground water in the area. So water access won’t be a hang up for the project.
“Basically, it’s got all the ingredients to go. And at those grades and on that scale, this thing ought to be able to produce 100,000 ounces a year quite easily. That’s a nice threshold. The market accepts that and that’s the kind of asset that’s in high demand.”
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