Galiano Gold Inc (GAU)

[Talldude]

KGN (Now AKG)
.... Canaccord Morning Coffee KEEGAN Resources*
(KGN : TSX : $3.73),
Change: 1.91%,
Volume: 168,828
10/26/2012

Time for some Esaase comments:

KEEGAN, a recently revived story, was boosted by news that it has commenced metallurgical test work for its Esaase gold project in Ghana. The company has reignited interest in its project with a revised development plan.

The company has engaged DRA Minerals Projects to estimate the impact of reducing the capacity to 4.0 MTPA, from 7.5-9.0 MTPA, while also utilizing a flotation process, instead of whole ore leaching.

DRA estimates that these changes should reduce capex to approximately US$260 million, from the US$506 million estimated in the pre-feasibility study.

This news was followed up with an updated resource estimate based on selective mining (rather than a bulk mineable scenario) in preparation for a revised pre-feasibility study.

The company reported an updated resource of:
3.83 million ounces grading 1.73 g/t gold in the M&I category, and
1.25 million ounces grading 1.75 g/t gold in the INF category,
using a 0.8 g/t cut-off.

Although the number of ounces remains almost unchanged, the grade of the resource has increased to an average grade of
1.73 g/t gold, from
1.1 g/t gold previously.

Using the same cut-off as the previous resource (0.4 g/t gold),
the project is host to a global resource of 6.72 million ounces
grading 1.17 g/t gold,
which is an increase in contained ounces and grade.

The metallurgical tests will be used to optimize the flotation flowsheet for processing ore and will use a higher grade ore than previously used that will closely resemble the mine plan for the first four to five years, testing weathered, transition and fresh ore.

Test work should indicate optimization techniques including:
*grind optimization tests,
*free gold recovery,
*flotation reagents suites and
*residence time in the float and leach plants.

Based on previous tests, Canaccord Genuity Mining Analyst Nicholas
Campbell has assumed
recoveries of 91%,
decreasing to 88% throughout the mine life
as processing transitions to fresh ore. (as opposed to weathered/oxidized/exposed/nearer the surface ore.)

The results from these tests are expected in Q1/13
and will form the basis for the Pre-Feasibility Study,
which is expected in early 2013.

He is also expecting an updated mine plan in Q4/12