Keegan up on first resource from Ghana

Keegan Resources (KGN-T) first resource estimate for its Esaase gold property in southwest Ghana is in, and the market liked what it saw.

The tightly held exploration junior saw its shares climb 7% or 28 to $4.45 on 171,000 shares traded in Toronto on Oct. 25.

While a $4.45 price tag may seem rich for an exploration junior releasing its first resource estimate, digging a bit below the surface shows that the price is built on a solid foundation.

With just 23 million shares outstanding, no debt, a strong cash position and some mining heavyweights well positioned in the company, Keegan’s shares are lined-up to move with positive news from its two projects in Ghana.

And such was the case when news that Esaase’s indicated resource stands at 5.4 million tonnes grading 1.4 grams gold for 240,000 oz. while inferred resources came in at 31.9 million tonnes grading 1.4 grams gold for 1.43 million oz.

The estimate was based on 151 holes drilled at collar spacing ranging from 25 metres by 40 metres to 40 metres by 80 metres — all of which was done in a time span of one year.

The people we have working for us, both our directors and in-country have been a critical part of that, co-founder and company financier Ivan Bebek says.

And with a mining licence already in hand, what could have been a significant obstacle down the road is already out of the way.

The mining licence came with the property thanks to a previous mining company that was getting productions from alluvials at the site. When falling gold prices caused the company to go under, Keegan was able to secure the property with 7 years left on a licence which, Bebek says, is easily renewed.

And with the deposit open along strike, down dip and at depth, Bebek says there is considerable upside.

Were not a cheap company to buy, but were still in the very early stages of exploration and we do expect that our production rate of results on Esaase will continue over the next year, he says.

With $8 million in the kitty, and another roughly $17 million available through warrants and options, the company is in good stead to push ahead with aggressive drill programs at both Esaase and Asumura both of which it holds a 100% stake in.

Asumura sits roughly 65 km south and on the same greenstone belt as Newmont Minings (NMC-T, NEM-T) 20 million oz. Ahafo gold mine.

Bebek explains that it was this project that caught Newmonts eye and likely motivated it buy into the company to the tune of roughly 5%.

While Esaase has emerged as the flagship project since then, the company still has lofty expectation for Asumura and will begin drilling it in the first quarter of next year. A best hole from the project returned .72 grams gold per tonne over 25.5 metres and 1.68 grams gold over 10 metres.

The drill program at Esaase will also be ramped up in the new year, as second drill to bring inferred resources into the indicated category.

Other notable investors in the company include Dundee Resources, which holds roughly 15%, and Sprott Securities which holds roughly 9%.

In all institutional investors hold roughly 32% of the company, while management, insiders and consultants hold roughly 21%.