Merrex Teams With IAMGOLD in Mali
By Greg Klein and Ted Niles
The wider world learned of Mali’s wealth at least as far back as 1324, when the Emperor Musa and his sumptuous court caused a sensation with their pilgrimage to Mecca. Now the wealthy come to Mali in hopes of getting, well, wealthier. In one such instance, the Siribaya Gold Project assembled by explorers Merrex Gold Inc has attracted IAMGOLD, a million-ounce-a-year mining giant with a $7.66-billion market cap, into a joint venture.
Siribaya comprises 848 square kilometres and is the largest contiguous block of gold exploration in Mali. “We put it together in 2005,” says Merrex President/CEO Greg Isenor. “We spent $8 million in all, geochemistry and drilling, and put together a resource. What’s significant about [Siribaya] is the grade—it’s two to three grams, and it’s open pit. That really attracted the attention of the majors.”
Assays released July 11 include 1.59 grams per tonne gold over 13 metres (including 3.59 g/t over 2 metres), 4.06 g/t over 4 metres (including 6.44 g/t over 2 metres), 1.11 g/t over 11 metres (including 3.88 g/t over 1 metre) and 1.75 g/t over 7 metres. A February 2010 resource estimate shows 308,200 gold ounces indicated and 69,500 ounces inferred, for a total of 377,700 ounces at a cut-off grade of 0.5 g/t.
Isenor comments, “It hangs together and there’s good continuity. What IAMGOLD has done in the last year is they wanted to show the footprint—how big this thing could be—and we see it now over 10 kilometres. The resource is over one kilometre.”
“There are three drills on the property,” Isenor continues. “A diamond drill, an RC drill and an auger drill. We’re getting assays regularly now, so we’ll be putting out assay information over the next couple of months. These assays are reasonable. They’re certainly ore-grade. We have much higher assays and deeper drilling, and detailed drilling will certainly give us better assays. There’s a lot more assays to come out, but we’re extremely pleased with these results.”
IAMGOLD became project operator in September 2010. “IAMGOLD is spending $10.5 million to earn 50% of the project. They’ve got over $8 million spent, and they will earn their 50% interest before year-end,” says Isenor.
IAMGOLD has deep pockets, with $1 billion cash on hand. It has spent $7.75 million apart from its earn-in requirement already, including a total of $4.25 million in two private placements since May 2. As a result, the company now controls 14% of Merrex. IAMGOLD currently operates two gold mines in Mali, Sadiola and Yatela.
What IAMGOLD has done in the last year is they wanted to show the footprint—how big this thing could be—and we see it now over 10 kilometres —Greg Isenor
“They’re a natural to run [Siribaya],” Isenor says. “We will, at some point, make a decision on a buyout, but we’ve got a built-in partner, so we’re pleased with that. Mali is excellent. It’s a great regime. All the majors are there. Randgold is there with a couple of producing mines, IAMGOLD is there, AngloGold Ashanti, Avion Gold; Newmont is there doing a lot of exploration. It’s a very good jurisdiction.”
Isenor says the plan for the rest of 2011 is “drilling, drilling, drilling”—30,000 metres to extend the strike and 10,000 for an updated resource estimate, scheduled for early 2012. Drilling will also take place at two recently discovered mineralized trends, Siribaya West and Babara/Kofia.
At press time Merrex had 118.9 million shares outstanding at $0.495 for a market cap of $58.9 million. Apart from Siribaya, Merrex holds a 100% interest in the Jubilee Zinc-Lead Project in Nova Scotia.
Isenor concludes that Siribaya is “a big project. There are lots of untested structures on the property. It’s going to produce a lot of ounces. It’s in a proven area. It’s got good grade, and we’re very excited over it. The most important thing about it is its grade. It’s not a gram deposit; it’s two-and-half to three grams.”