PMI Gold finds new prospect at Obotan

PMI Gold’s (PMV-T, PVM-A) flagship Obotan gold project — which already includes four known deposits in Ghana’s Asankrangwan gold belt (Nkran, Adubiaso, Abore and Asudai) and could produce gold as early as the second half of 2014 — appears to keep getting bigger, with the latest news of a new prospect called Dynamite Hill that has shallow mineralization and good grades.

Dynamite Hill is located 7 km northeast of the proposed processing plant at Nkran, between the Nkran and Asuadai deposits.

Highlights from RC drilling include: 10 metres grading 13.65 grams gold from 50 metres, including 1 metre of 102.72 grams gold from 55 metres; and 23 metres grading 4.89 grams gold per tonne from 42 metres, with 2 metres of 18.91 grams gold from 55 metres and 3 metres of 8.96 grams gold from 60 metres.

Assay results for 26 of the 28 holes drilled so far show that the gold system occurs over a strike extent of more than 400 metres, and is open along strike to the northwest and downdip. More drilling is scheduled in September. So far the drill program has identified a 5- to 20-metre-wide mineralized gold system to a 180-metre depth. A second mineralized zone has been intersected 300 metres east, but its extent is unknown.

Of Obotan’s four known deposits, Nkran is the largest and contains 75% of the project’s gold. It has been developed over a strike extent of more than 500 metres and maximum widths greater than 100 metres in the central portion, and delineated to a vertical depth of more than 250 metres below an open pit mined by previous owners. The Nkran deposit remains open at depth.

The Obotan project has measured and indicated resources of 44.8 million tonnes grading 2.16 grams gold for 3.11 million contained oz. gold, and inferred resources of 21.9 million tonnes grading 1.99 grams gold for 1.40 million contained oz. gold.

According to an August 2012 feasibility study, Obotan could produce 200,000 oz. gold per year for the first five years. Total production is estimated at 2.26 million recovered oz. over a 11.5-year mine life, with US$2.9 billion in revenue and forecast life-of-mine cash operating costs of US$626 per oz. Capital costs are estimated at US$296 million, with a 2.9-year payback. Post-tax net present value — assuming US$1,300 per oz. gold and a 5% discount rate — is US$387 million, and the post-tax internal rate of return is 28%.

Resolute Mining (RSG-A), Obotan’s previous owner, produced 730,000 oz. gold from three open pits up until December 2002.

Because of its history, PMI says the project is de-risked in terms of environmental and social permitting, metallurgical and process engineering, and infrastructure development.

Other results from the latest reverse-circulation (RC) drill program at Dynamite Hill include 16 metres of 2.14 grams gold from 36 metres, and 11 metres of 9.19 grams gold from 132 metres.

The prospect was found by testing historical geochemical anomalies and identifying favourable geological and structural settings using aeromagnetic interpretation, the company explained in a press release on June 4. The soil geochemical anomaly later underwent surface geological mapping,  and was tested with trenches and an induced-polarization and resistivity ground-geophysical survey completed earlier this year.

PMI Gold drilled 28 RC holes for 2,800 metres at Dynamite Hill, testing brittle greywacke and felsic units at the Nkran Shear intersection and interpreting a crosscutting, northeast-striking structure.

According to PMI’s figures, the project has the largest strategic ground package held by a single company in the Askankrangwa gold belt, encompassing 511 sq. km, that cover 60 km of the belt’s 150 km length.

PMI says it could delineate more oxide ore sources at Dynamite Hill to supplement its mill feed.

The company has a permit to dewater its pits and mining-lease approval from the Minister of Lands and Natural Resources. 

It has  bought semi-autogenous grinding and ball mills and hired mining contractors, while negotiating a 161 Kv grid power supply to the site and starting earthworks, drainage and foundation design, plant layout and process flow sheets.