Auryx Gold is Secure and Moving to Production in Namibia
By Ted Niles
The offices of Auryx Gold must have resounded with a great sigh of relief after the announcement from Namibia’s Mines and Energy Minister. On May 10, Isak Katali clarified that nationalization will not apply to foreign-owned companies with existing licenses. Since the confusion began April 28, Auryx’s share price has taken a near-20-cent tumble to, at press time, $0.55, but CEO Tim Searcy remains confident. “Namibia is a great operating jurisdiction,” he maintains. “It has a very stable government and is a mining friendly country. I think this project is great.”
Auryx’s Otjikoto Gold Project is part of the company’s roughly 3,080-square-kilometre Otavi exploration area. Auryx holds a 100% interest in one Exclusive Prospecting Licence, consisting of 971 square kilometres, and a 92% interest in four other EPLs, totalling 2,409 square kilometres.
The focus for 2011, Searcy says, is exploration of Otjikoto. “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.”
Assays released May 12 included 5.49 grams per ton gold over 1 metre, 0.63 g/t over 36 metres, 0.79 g/t over 36 metres, 1.05 g/t over 30 metres, 0.64 g/t over 16 metres and 0.95 g/t over 15 metres. April 13 results included 3.14 g/t over 4 metres, 1.72 g/t over 2 metres, 0.5 g/t over 12 metres, 1.11 g/t over 4 metres, 0.56 g/t over 14 metres, 0.71 g/t over 9 metres, 1 g/t over 7 metres and 1.82 g/t over 7 metres.
Searcy calls the latest results “pretty positive.” He explains, “I think what they demonstrate is that this resource is part of a bigger system than was previously defined. 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.”
Otjikoto is located in the Damara Belt Formation, as is AngloGold Ashanti’s Navachab Gold Mine, which produced 86,000 ounces in 2010 and hosts 3.64 million ounces measured and indicated and 850,000 ounces inferred.
This thing ought to be able to produce 100,000 ounces a year quite easily. That’s a nice threshold. – Tim Searcy
At a 0.4 g/t cut off, Otjikoto has a resource estimate of 1.16 million ounces gold indicated and 658,643 ounces inferred, both at a grade of 1.4 g/t. But Searcy notes, “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 [indicated and inferred] 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.”
And Otjikoto’s infrastructure is solid. “It’s three kilometres from a paved highway, three kilometres from a railway line, and power lines are nearby,” Searcy reports. “And even though Namibia is a very dry country, there’s significant groundwater in the area.”
Production, Searcy says, is the company’s ultimate focus. “We’re going to de-risk this project and advance it as quickly as we can towards production. In 2011, we’re going to be focused primarily on exploration, but we are doing long lead-time items on the development studies, like environmental and social impact and geohydrological 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.”
While the market has yet to recover from the initial shock of the Namibian government’s new “strategic metals” policy, Searcy is persuaded that Otjikoto has “all the ingredients to go.” He concludes, “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.”