Best known for its coal-mining activities in South Africa,
Following the release of drill results in early September, the stock vaulted from below 60 to the 90 range.
The 144-sq.-km Banankoro property is near Kangaba in southwestern Mali, 130 km southwest of the capital, Bamako.
Under a deal signed last September, AfriOre became operator of the project and can acquire a 60% stake from New Gold Mali, a subsidiary of Paris-listed Maurel & Prom. In return, AfriOre must spend US$2.5 million on exploration or complete a bankable feasibility study by September 2006.
The Malian government holds rights to a 10% carried interest plus a 10% working interest once the project hits the exploitation stage. If the government exercises its working-interest option, AfriOre can boost its stake by 3.75% under the same terms as the government, and so retain a minimum 51% interest.
The property is home to several geochemically defined gold targets. New Gold spent US$3 million on the property, mainly on the Bagama discovery, where 25 reverse-circulation and 14 diamond drill holes identified at least four sub-parallel gold-bearing zones dipping at 60-70. These zones run from surface to a drilled depth of 120 metres within a geochemical anomaly that has a strike length of 700 metres.
One of Bagama’s four zones contains a high-grade zone at depths between 70 and 120 metres, in the transition zone below the saprolite. This zone runs up to 8 metres wide over a drilled distance of about 200 metres. It remains open in all directions.
The New Gold drilling returned between 0.65 and 421 grams gold per tonne over widths of 1-8 metres.
AfriOre’s first three holes, reported in July from an 11-hole follow-up drilling program, returned gold intersections of 10.38 grams gold over 2.6 metres, 12.37 grams over 0.8 metre, and 9.98 grams over 2 metres.
The latest results from the remaining eight holes were equally impressive. Highlights are as follows:
— 13.95 grams over 6.3 metres (from 192 metres) in hole BA5.
— 4.87 grams gold over 3.5 metres (from 128 metres) in hole BA7.
— 7.36 grams gold over 1.71 metres (from 211 metres) in hole BA10.
The remaining five holes graded 0.16-2.45 grams gold over intervals up to 10.5 metres wide.
Further drilling in the hanging wall of the F4 target returned high-grade values over 1-metre-wide intervals.
AfriOre says it is “delighted” with the results, and adds that the drilling has also identified critical mineralization controls to guide further exploration.
Given the thick laterite cover over the property, the company will follow up the drilling with a high-resolution aeromagnetic survey aimed at identifying the extent of a key diorite intrusive and the structural controls on gold mineralization at Bagama and elsewhere on the Banankoro permits.
Formed in 1995 and now based out of Bridgetown, Barbados, AfriOre operates a specialized coal and anthracite mining business in South Africa. Its flagship asset is its Springlake anthracite colliery, north of Dundee in Kwazulu Natal. AfriOre is operator and holds a half-interest, with the remainder held by CIBC Capital Partners.
In the fiscal year ended Feb. 28, 2003, the colliery produced 741,000 tonnes of anthracite, generating a small loss on C$8.7 million in revenue attributable to AfriOre — a result of what it calls “difficult trading conditions.”
For the recent first quarter, AfriOre lost $381,000 (1 per share), compared with a profit of $324,000 a year earlier. Net attributable anthracite production was 113,495 tonnes in the quarter, down from 138,676 tonnes a year earlier, owing to the closing of open-pit mining in December 2002 (though the open pit was subsequently reopened using augering of the high-walls).
In addition, AfriOre has a 100% stake in the Somkele anthracite project, also in Kwazulu Natal, where a feasibility study is ongoing.
In an unusual and not entirely successful business plan, AfriOre uses cash flow from its coal operations to fund other exploration and development projects, with a special emphasis currently on gold.
At the same time the company signed the Banankoro deal, it acquired an interest in the Dwaalboom advanced-stage gold project in South Africa.
AfriOre’s two other priority gold exploration plays are the Witwatersrand-type FSC project in South Africa (recently optioned to CUB-listed
The company has budgeted $3 million for gold exploration and project evaluation over the next 12 months, to be financed in part by $2.5 million raised by private placements in the spring.
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