comments on konongo

There has been some interesting discussion on the Konongo transaction since it was announced however there are a couple of points that area probably worth noting that have not been raised (to my knowledge), and which have a material impact on the value of the asset(s).

1. The existing mill is CIL - requires oxide ore - and as such can not process the majority of the standing 1Moz resource. This is why the previous operations shut down in the mid 1990's (ran out of ore and no money for further exploration).
2. Much of the ‘resource’ is both deep and partially refractory (albeit good grade) or locked up in the Santreso deposit and rapidly disappearing under urban expansion.

Basically, it is my opinion that the current mill is of no use to them (unless they find more oxide resources) and as such the suggestion that they will be a 100,000ozpa producer with the current assets has to be viewed with a fair degree of scepticism.

Having said that, the potential of the property as an exploration asset is fantastic with potential for various types of mineralisation (many similarities to the Bogosu/Prestea properties).

Summarising some discussions with a geologist mate on mine who is familiar with the project;

"1. At the north end of the Konongo district, the style of gold mineralization is primarily associated with broad, disseminated sulphides and quartz fracture systems (Obenemase-Kwakawkaw) districts.

2. Towards the southern end, the coalescing shear systems break up into more discreet shears, which host narrow, quite high-grade grade quartz veins that commonly have selvages/alteration halos with significant gold values.

Unfortunately, the sulphides are more often than not, highly refractory.

In addition to these principal types, there are also quartz stockwork systems."

For the moment, I will watch from the sidelines as I have reservations regarding Matt Woods involvement with Lichvak (IBR) which was spruiked in a similar manner to this. (i.e. project close to production etc).

If they get serious about increasing the resource base and approach this in a similar fashion to what PRU have done at Ayanfuri then I may reassess.