In examining the variance, we estimated an upper case tonnage of 16mt based on a continuous lens at Konkera North, multiple zones at Konkera Main, and an SG of 2.6 in fresh rock. In its 18mt calculation, AMX domained multiple lodes at Konkera North, quantified a complex lode array at Konkera Main, and applied an SG of 3.0 in fresh rock. Wireframes were extrapolated 25m along strike and 70m down dip where unbounded, with AMX applying a 16g/t Au top cut. The resource was complied by AMX but subject to independent review by Ravensgate Mineral Industry Consultants.
Impact.
The maiden Inferred resource at Konkera soundly exceeded our expectations. We had considered 750koz at 1.5-2g/t Au a solid springboard from which to grow - AMX has clearly got off to a flyer. Bulked up, Konkera resources total 1.54moz at 1.4g/t Au (0.5g/t Au cut-off) while at a 2g/t cut, AMX has defined a discreet high grade position of 6mt @ 3.2g/t for 612koz. Importantly, higher grade zones appear to be associated with local steepening of plunge component and this represents a useful exploration target for CY10 infill drilling.
Just the beginning of the story. While the maiden resource soundly surpassed our expectations, we stress that the real upside lies in unlocking the greater potential of Batie West. AMX controls 1,350km2 of highly prospective Birimian stratigraphy which straddles 110 strike kilometres of a major crustal shear (southwest extension of the Boromo Greenstone Belt).
AMX is undertaking the first modern exploration at Batie West and we consider this prospectivity is supported by an artisanal gold rush of +30,000 miners active throughout the project.
While the presence of artisanals may be perceived as a risk, this form of mining in Burkina is highly organised and adequately regulated. Moreover, artisanal scouts are scouring the wider land package and in our view are a useful exploration tool for AMX.
Post resource AMX is trading at a 22% discount to its peer group (A$75/oz versus weighted sector average EV:Resources of A$96/oz), and we expect this gap to close to reflect Konkeras compact geometry (one or two pits) which should see it optimise well on peer comparison.
AMX Price at posting:
67.0¢ Sentiment: Buy Disclosure: Held
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