Gold bug bites Denison, Ghana bet with Sikaman

After being out of the gold exploration business for nearly seven years, Denison Mines is jumping back in with both feet. And the company is taking aim at the original Gold Coast, specifically the Republic of Ghana on the west coast of Africa.

Here, Denison and joint venture partner,iginal Gold Coast, specifically the Republic of Ghana on the west coast of Africa.

Here, Denison and joint venture partner, Sikaman Gold Resources, newly listed on the Toronto Stock Exchange with a successfully completed underwriting of $2.25 million, plan an estimated $4-million program this year on a 58-sq- mi property called the Bogosu Concession.

“We have been looking for good gold properties for a number of years, but we’ve never come up with one as good as this,” says Stephen G. Roman, assistant to the chairman.

The timing of this diversification seems right for Denison. With some 60% of its operating profit coming from its world-wide oil and gas operations, one of the toughest challenges the company faced this past year was the drastic slash in oil prices. But due to a combination of asset sales, earnings from its Elliot Lake uranium operations and a share issue early last year, the company emerged from fiscal 1986 with a profit of $44.6 million compared with a loss of $157.9 million a year earlier.

The reason for the company’s interest in the gold project is 2-fold, a second spokesman for Denison tells The Northern Miner. Not only is the yellow metal one of the few commodities whose price is up these days, but the merits of the project are good.

Denison has actually known about the concession for quite some time. It made its orginal application for the property back in 1980. The company re-activated its application five years later at the urging of Sikaman Gold. Subsequent to the confirmation of the application by the Ghana government in 1986, the two companies formed Canadian Bogosu Resources, a private Ghanaian company. Owned equally by Denison and Sikaman and operated as a joint venture, Canadian Bogosu Resources holds 90% of the Bogosu concession while the Republic of Ghana holds the remaining 10%.

Under the terms of the joint venture, exploration costs will be shared jointly by the two companies. It’s estimated the preliminary phase of work to be completed by the end of June will cost $1.6 million, while total exploration costs for the year will be close to $4 million. Familiar territory

Ghana is a country familiar to the principals of Toronto-based Sikaman, which was formed in 1985 to hold an indirect interest in and to explore and develop various gold prospects in that country.

Sikaman President A. Thomas Griffis, is also president of Griffis International, a company primarily involved with projects in developing countries. For the past two years, he has worked with the firm of Watts, Griffis and McOuat, consulting geologists and engineers, on gold properties in Ghana and Zaire. This firm will also be project consultants on the Bogosu Concession.

Project manager of the Bogosu joint venture is his brother Robert J. Griffis, who in his former capacity of senior geologist at Watts, Griffis and McOuat has had more than 20 years’ experience working on several international resource projects. Bogosu concession

The concession is located in the southwest corner of Ghana and covers most of the original operating concessions held by the old Marlu Gold Mining Areas Ltd. of London, England.

The infrastructure of the property is excellent, notes Robert Griffis. A 2-lane asphalt highway crosses through most of the central and southern part of the concession. A major power grid runs parallel to the road and a rail line comes within 7 km of the concession.

Marlu mined the property from 1936 to 1955 save for a 3-year shut- down during the war. Over that 16-year period, 923,913 oz of gold were recovered from 7.5 million tons of ore which averaged in grade 0.12 oz gold per ton.

The production was from a dozen major open cut operations scattered along the length of the concession. Because of gold prices in effect at the time, Marlu concentrated its efforts in the shallow areas above the water table and many of the major pits were terminated at water level or when increasing sulphide content resulted in low mill recoveries. Priority targets

A 1986 report by consulting engineer R. D. Westervelt notes a number of attractive known targets on the concession, four of which are priority:

* At the Marlu prospect itself, considerable underground development was carried out prior to 1951 with the intent of starting an underground mining operation. Old sample plans from the workings indicate proven reserves of 831,000 tons of 0.25 oz of gold per ton at Marlu and probable reserves of about 200,000 tons of 0.23 oz at Bogosu North.

The plan this year, says Robert Griffis, includes dewatering the immediate underground working followed by sampling, preliminary metallurgical testing and initial rock stability studies. Depending on results, a 6-month full feasiblity study would follow.

* The Marlu tailings area has indicated proven and probable reserves of 7.5 million tons of 0.033 oz gold per ton. Sampling and metallurgical testing is planned for early in the year with a bulk sampling program and full metallurgical testing in the latter half of the year.

* Several open pit prospects occur on the concession. These include Nankafa where sampling has indicated probable reserves of 338,000 tons of 0.09 oz. Detailed sampling nearby in adits of Old Dumassie indicate a mineralized zone about 100 ft wide with an average grade of 0.12 oz. Sampling in a roadcut near Bogosu South indicated a grade of 0.15 oz g over a 36-ft width.

Robert Griffis says a program of surface trenching, detailed sampling and follow-up shallow drilling is planned for these open pit targets.

* Testing will also be done this year on several stream channels between Bogosu South and Kumso in the view of bringing the best alluvial reserves into immediate production, thus providing early cash flow, notes Robert Griffis.

Other targets to be looked at further down the road include the area underlying the Chujah No 1 pit where drilling in the 1970s outlined probable reserves of 5.2 million tons grading 0.14 oz to a depth of depth of 600 to 700 ft.

But for now Robert Griffis says the plan is to “get our feet on the ground first and get the cash flow going with the four targets this year.”