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Posts tagged ‘Keegan Resources Inc. (KGN)’

The Next Million Ounces

June 6th, 2011

African Gold Aims for 2014 Mali Gold Production

By Ted Niles

According to Mike Nikiforuk, there are two things especially important about the 2011 drill program at African Gold Group’s Kobada project in Mali. The first, says the company’s President, is that “100% of our work this year is step-out drilling.” This is notable because the company spent 2010 focused on infill work—a necessary step towards updating Kobada’s resource, but as Nikiforuk points out, “the market is not really excited about infill drilling.” It’s the second that’s got Nikiforuk really excited. To wit: the expansion of the area containing Kobada’s inferred 740,000-ounce gold resource from 1,100 metres to 3,300 metres of mineralized strike length.

Nikiforuk explains, “The goal of the 2011 program—which we’ve drilled approximately 200 holes on to date, and we’re still drilling—is to bring visibility to the next one million ounces, or the two million ounce gold threshold, as an interim target. The only reason in the world we state that is because we are absolutely certain that we are at the one-million-ounce threshold, and we are going to the two-million-ounce threshold with this year’s program. That is not to say that we will be able to bring that into the 43-101 category this year—for that we’ll have to infill drill. But it’s there.”

African Gold Aims for 2014 Mali Gold Production

June 1 step-out drilling results from Kobada include 1.35 grams per tonne gold over 96 metres, 1.53 g/t over 46 metres (including 16.56 g/t over 1 metre) and 1 g/t over 102 metres. April 7 results include 5.7 g/t gold over 10 metres (including 25.45 g/t over 1 metre), 4.79 g/t over 15 metres (including 30.8 g/t over 2 metres), 1.21 g/t over 45 metres, 2.08 g/t over 34 metres, 6.23 g/t over 8 metres, 19.6 g/t over 3 metres and 42.4 g/t over 3 metres.

Situated in the Kangaba region of Mali, West Africa, the Kobada project is African Gold’s flagship property. A preliminary economic assessment for Kobada is expected to be released, Nikiforuk reports, “in the next short while”—incorporating all drill results to December 2010. And a second drill rig has been confirmed to start January 2012, running double shifts with the first rig. Nikiforuk outlines the plan moving forward, “We hope to be through feasibility approximately 18 months from now. That’ll incorporate infill drilling to bring those ounces into the resource; that’ll incorporate further step-out exploration drilling; it will also entail geotechnical drilling. That way, we’ll know precisely what our pit’s going to look like, our slopes, and where infrastructure is going to go.”

He continues, “Internally, we have envisioned that Kobada will be in production within three years from today. It’ll take 12 months to put it into production from the date of having access to the capital and making the decision to move forward. The plant that we’re looking at will run 10,000 tonnes per day. And we are looking at capital expenditure that will not exceed $125 million. That should spin in the magnitude of 130,000 ounces of gold production a year. Those are our internally stated goals.”

The goal of the 2011 program is to bring visibility to the next one million ounces, or the two-million-ounce gold threshold, as an interim target. – Mike Nikiforuk

If African Gold were to become producers themselves, the priority would be on finding a CEO adequately qualified to lead the company in that direction. But Nikiforuk recognizes that the likely interest from current producers cannot be dismissed. “It is our job—as a management team, it is incumbent upon us—to evaluate any offer and present it to the shareholders for a decision.”

Nikiforuk concludes, “I have no doubt in my mind that the project is going into production. I have no doubt in my mind that, ultimately, the PEA is going to arrive on our desk demonstrating positive economics and advising to push the project forward. And it’ll be a very low-cost producer. The preliminary numbers I’ve seen so far in terms of internal rate of return are very, very strong.”

The company also has significant landholdings in Ghana on the Asankrangwa Gold Belt—best known, perhaps, for hosting Keegan Resources’ Esaase project—but they remain in the early stages of exploration. African Gold Group has a market capitalization of $71.65 million at press time, trading at $0.62 per share.