Eden Roc patiently developing Aniuri open pit

It took more than 10 years of patient, methodical work to bring into production the small Aniuri gold mine in Ivory Coast.

But after its first full year, the open-pit, heap-leach operation has not disappointed its owners — Toronto-listed Eden Roc Minerals (68%) and the Ivorian government mining arm known as Societe pour le Developpement Miniere de la Cote d’Ivoire (32%). SODEM (the latter’s acronym) originally held 10% but paid $1.9 million to ante-in for a 32% interest in the joint-venture (government-Eden Roc) company known as SOMIAF. (About 58% of Eden Roc’s outstanding shares are held by Toronto-listed Marshall Minerals.) In its first operating year, the West African mine yielded 30,000 oz. gold. The projected cash cost had been US$150 per oz., but the actual cost has come in at about US$130.

The mine produces 800 tons of ore per day grading 0.14 oz. gold per ton. The recovery rate is 80%. A quartz central core ranging in width from 6 ft. to 22 ft. averages roughly 0.3 oz. This was stockpiled because it required additional primary crushing.

Eden is aiming for an increase to 1,100 tons per day before the end of the calendar year. In terms of gold output, its target is 30,000 oz. this year, 45,000 oz. by 1995 and 100,000 oz. by 1997, when it is expected to open two new development areas.

Mine production began Feb. 2, 1992. The first dore bar, a 313-oz. pour, came late in February, 1992. From Day One, the Afema project, as it is called, outperformed estimates.

However, Eden Roc and parent Marshall hold a huge land package on extremely prospective ground in Ivory Coast. Eden’s exploration acreage covers 320 square miles while Marshall holds 510 square miles. It is this that attracted several analysts who visited the property recently.

Jonathon Challis, an analyst with ScotiaMcLeod, arrived at Aniuri in late September. “I was skeptical until I saw it,” he told The Northern Miner soon after his return from Ivory Coast.

According to his research report, the mine has proven and probable reserves of about 170,000 contained oz. of gold to a depth of 90 ft. To 300 ft., the reserve rises to 660,000 oz. From earlier drilling, there are indications that the deposit continues to at least 400 ft. below surface. Those figures are respectable though certainly not eye-popping.

But the current open-pit, heap-leach operation is only part of the Eden Roc story, Challis explained. The deposit is on a shear zone which runs parallel to both the Ashanti and Bibiani shears in Ghana, and may, in fact, be an extension of the Bibiani. The Ghanaian deposits have yielded more than 30 million oz. gold since their discovery. Current Ashanti Goldfields production yields 750,000 oz. per year.

Anuiri is “open along strike and has been identified by trenching over a length of 6 km,” he noted. Five old gold mines within the Eden Roc concession offer further reserve potential.

“It is possible that the gold potential of the concession area could be expanded significantly, and we would be surprised if reserves do not exceed two million ounces within two years,” Challis reported.

A Levesque-Beaubien-Geoffrion report by analyst Paul Carmel, who also visited the site, is similarly bullish:

“From our assessment of the geology of Eden Roc’s and Marshall’s concessions, we place a strong likelihood on one or more significant discoveries in the coming years.”

(Carmel’s report was written when Eden Roc was trading at $3. His target price, based on projected earnings and exploration potential, was $5. The stock is now trading at $4.20.)

Politically, Ivory Coast is stable and has strong ties to France. Its mining code is favorable to explorationists and producers. In Eden Roc’s case, it has full rights to explore for and to mine surface and bedrock units. Tax holidays and incentives are available. Eden Roc, for example, enjoys a 9-year income and mining tax holiday.

There are no export taxes on metals or ores, and an ad valorem tax on the value of mined gold and diamonds is being cut to 3% from the current 5%. There are no import duties on exploration equipment and such duties only apply to capital equipment after the first four years of operating life. There is a provision that the state receive a 10% equity share at no cost, but it can exercise its option to increase ownership beyond that only if commercial terms can be agreed to.

In Eden Roc’s case, as noted, the state upped its share to 32%, paying $1.9 million.

Beyond the geological potential, Eden Roc strengthened its operations team late last year by appointing Herman Derbuch as chief operating officer. Derbuch was director of mining for Noranda and, prior to that, had been superintendent of mines for Brunswick Mining & Smelting.

To get to this stage, Eden Roc has relied on several funding avenues. For example, the Africa Growth Fund, a private investment company managed by an affiliate of Equator Bank, invested US$2.5 million in the Ivorian project. The Overseas Private Investment Corp. (OPIC), a U.S. government agency, lent SOMIAF US$2 million in exchange for warrants to buy 600,000 common shares of Eden Roc at 70 cents. A major Swiss insurance company and a Swiss bank have also participated.

Besides Derbuch, the key people behind both Eden Roc and Marshall are Harry Quint, chairman of Eden since 1989 and chairman and chief executive of Marshall Minerals since 1982. Marshall holds 58% of Eden Roc. A graduate of Colgate University and the U.S. Officer Candidate School in Oklahoma, Quint was in the brokerage business, first with Merrill Lynch and later as a venture-capital specialist with Shearson Lehman.

Gerald Hedican, president of Eden Roc and a founding director of Marshall Minerals is a teacher of religious studies at St. Michael’s College at the University of Toronto.

The exploration chief is Joe Hinzer, a senior vice-president for both Eden and Marshall. Geologically, the rocks are pre-Cambrian in age and situated between an upper volcanic sequence and a sedimentary sequence, similar to the Val d’Or, Que. area. The difference is that, in Africa, surface material has not been scraped clean by glaciers, so the weathered bedrock still exists. As a result, intensive weathering has occurred, transforming hard surface rock into soft lateritic material which requires little, if any, blasting. This is the current state of mining at the Aniuri mine.

Expansion plans call for a similar truck-and-shovel operation at another deposit, known as the Adiopan, a kilometre from Aniuri. This will come on-stream in early 1994. A central heap-leach pad of agglomerated ore will produce the pregnant solution for further processing.

Below this top layer of laterite material (roughly 5-10 metres deep), there is a 25-30-metre layer of saprolite, followed by unweathered hard rock. At this lower level, conventional — and more expensive — drilling, blasting and milling would be incorporated.

After Anuiri and Adiopan, production will come from the Brahima and Asupiri deposits to the south. Reserves stand at 775,000 tonnes of surface ore grading 2.3 grams per tonne (852,500 tons at 0.067 oz. per ton). However, underground reserves have been identified at both Brahima (650,000 tonnes at 6 grams, or 715,000 tons at 0.175 oz.) and Asupiri (300,000 tonnes at 6.9 grams, or 330,000 tons at 0.201 oz.).

This phase should boost production to 45,000 oz. per year.

To raise output figures to the planned 100,000-oz. target in five years would require the mining of several deposits north of the Afema shear zone near the border of Ghana.