Golden signature awaits Konongo Signature Metals Ltd is on the cusp of gold ,..)producer status in Ghana's Ashanti gold belt. When managing director Bill Oliver spoke with Paydirt in November the company's plant refurbishment at the Konongo gold project, 200km north-west of Accra, was 60% complete but on track for first gold production in January. Production is expected to start on time and within budget so the company can relish gold prices that tipped $US1,3901oz at the time of print. The great thing about this project over the last year is that everything we said we were going to do or everything we thought was going to happen has happened to expectations or better than expectations. Last quarter (September) we had some fantastic exploration results from our exploration campaign and some excellent drill results. It's business as usual and business as usual is very good," Oliver said. Throughput at Konongo, 30km along strike from AngloGold Ashanti Ltd's 50 moz Obuasi gold deposit, is initially earmarked to be 350,000 tpa via a CIL plant however there is potential for expansion. An internal scoping study in the September quarter revealed throughput could be doubled and production between 40-60,000 ozpa gold at grades between 2-3 g/t is possible. Best of all the potential expansion may only cost about $US3-4 million and operating costs could be reduced by up to 15%. Currently year one production is scheduled for 26,000 ozpa @ 3 g/t gold. The company is examining that prospect and has also pledged to spend $5 million (Signature raised $13 million in September) in exploration in the coming year. With the development monkey off its back early in 2011, Oliver said Signature will be aggressive in its exploration campaign. Trenching results including 54m @ 0.22 g/t gold from Bimma South and 22m @ 1.52 g/t gold from Kyereben are fillips for a full frontal exploration assault at Konongo. Funding from production and its recent raising will ensure that will happen. "Trench is a surface technique which is a precursor so we're really excited to see nice, wide zones of anomalies that we can then follow up and drill test as well as higher-grade trenches such as 2m @40 g/t and 8m @ 3.84 g/t, so there are some pretty good numbers there. "We will be in production next year and everybody is looking forward to that. Cash flow will make us a lot more flexible and allow us to grow the company. More and more drilling and more and more activity on a very exciting landholding in one of the best addresses in Ghana is what you'll see. "We are going to be very aggressive next year and basically we'll have as many rigs as we need. We're really looking forward to putting some serious dollars into the ground and building our resources to be the equal of some of the others in the belt." Other companies with projects in Ghana's Ashanti gold belt include Perseus Mining Ltd, Ampella Mining Ltd, Gryphon Minerals Ltd, Azumah Resources Ltd, Castle Minerals Ltd, Noble Mineral Resources Ltd and Viking Ashanti Ltd, all of whom have served their investors well in the last two years, Oliver said. He said the companies mentioned were attractive to investors for various reasons, whether they are producers or near term, own production plants or demonstrate burgeoning growth upside. Oliver believes Signature has all those bases covered and hopes for a re-rating in the market courtesy of becoming a producer and continued exploration success. Signature was trading at under 3c/share at the time of print. "What has been hanging off us a little bit is the developer's curse; no one really likes development but it will demonstrate to people what we have achieved and hope to keep achieving over the next six to 12 months. "Fundamentally we believe we are undervalued against a lot of our peers and everybody can find different reasons for that but at the end of the day there will be a certain number of drivers that get things going." Konongo is primarily a gold project however don't be surprised to see market updates regarding exploration success in relation to the manganese potential. The company reported manganese values of more than 30% from seven of 19 rock chip samples at surface. Manganese occurrences have been mapped over 1.5km of strike over widths of 150m. Based on results interpreted by Signature so far its exploration target is 15-54mt @ 25-30% manganese. Signature is assessing the way forward to exploit the manganese potential at Konongo and has not ruled out involving a JV partner. Oliver said it provided the company with the chance to leverage off another "hot" commodity, which made Konongo unique. "Not too many people have multiple commodities; it's a bit unusual but exciting. Our primary focus is gold but you don't ignore things like that when they are on your property and we will develop it in parallel to the gold resources. There is nothing wrong with being in the right commodity at the right time," Oliver said. As Paydirt went to print Signature announced a resource upgrade at Konongo of 23.4mt @ 1.95 g/t for 1.47 moz gold (over 687,0000z gold indicated). Mark Andrews
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3.1¢ Sentiment: None Disclosure: Not Held