THE DIRT: Robin Bromby | May 18, 2009 Article from: The Australian
BUSINESS advisory giant Ernst &Young has a new - and bullish - report out on the metals industry, saying in effect that since 1961 demand has been growing relentlessly, interrupted by the occasional recession. Its message is that, once we're past this, we may see new highs in prices.
But the authors have a view on gold where you may wish to take a different view: “Gold exploration, nonetheless, still seems to be regarded as mostly too risky to be worth investing in.”
Tell that to the Aussies looking for gold in West Africa.
“What risk?” they will ask. They think they are in elephant country.
There have been some interesting announcements out of this crowd in the past few days.
Ghana is Africa’s second largest gold producer (after South Africa), with Mali in third place. Resolute Mining is in the processing of commissioning its Syama gold mine in Mali, and now Golden Rim Resources has reported an assay of 1205 grams per tonne from a rock chip sample at its Sepola project in that country.
Quartz veining at one site has produced assays up to 28.6g/t. These are the types of grades that would make headlines if found in Australia. And GMR already has an inferred resource of 162,000 ounces at Sepola.
The other hot spot for our explorers is Burkina Faso, a country with as yet only a handful of operating mines but which has set itself the goal of becoming Africa’s fourth largest gold producer.
Among the companies working there are Ampella Mining, ElDore Mining Corp, Blackthorn Resources and Gryphon Minerals. Each of these is on the scent of promising gold projects.
And there’s Ghana. Perseus Mining, which so far has found more than 5 million ounces of gold, is in the process of raising another $75 million. Now Adamus Resources has produced surface sampling assays from a new zone 20 kilometres from its proposed treatment plant with intercepts up to 88 metres long.
An interesting new play is Signature Metals which has just taken an option to buy 70 per cent of the Konongo project in Ghana, which already has an indicated and inferred resource totalling 978,000 ounces of gold. SBL is aiming at becoming a 100,000 ounce-a-year producer (that’s a very handy $93 million a year at today’s price).
SBL was originally involved, as Signature Brands, in the wine and clothing sectors and then moved into acquiring a chain of juice bars. Not a good move, the company being suspended in 2006.
Now it is a resources company with Konongo as well as iron ore, nickel and copper aspirations in Kenya and Uganda.
The people behind SBL's new thrust are chairman Matthew Wood (who has extensive experience in the resources sector), exploration director Bill Oliver (whose CV includes time with iron ore in the Pilbara) and Stuart Murray, CEO of Aquarius Platinum.
There is only one cloud on the horizon. There have been recent reports that Ghana is considering raising the tax levied on gold produced in the country. At present, companies pay a royalty of 3 per cent, and there is talk of lifting that to 5 per cent. But that should not deter those with high grade deposits.
And one last piece of news out of West Africa.
Shield Mining has put out its first drilling results from the Tijirit project in Mauritania, with intersections including 6m at 17.63g/t and 2m at 24.9g/t. True, Mauritania has proved a heart-breaker for earlier gold hopefuls - remember the sad story of the former General Gold Resources? Great hopes, great disappointments.
But this is now. West Africa is almost certainly the best exploration gold address in the world in terms of discoveries and, more importantly, grades.
The writer implies no investment recommendation and this report contains material that is speculative in nature. Investors should seek professional investment advice.
GRY Price at posting:
33.0¢ Sentiment: Buy Disclosure: Held
