PMI Gold Corp (TSX.V:PMV) Smack Dab in the Middle of Elephant Country
By Darryl Kelley
Africa, besides being the cradle of civilization, is also host to some of the world’s oldest and richest gold mines.
Ngwenya Mountain in Swaziland hosts what is believed to be the world’s oldest mine, where early man mined hematite and specularite over 42,000 years ago.
PMI Gold's properties are all located in Ghana's Golden Triangle, an area in southwest Ghana with combined current reserves and historical gold production of 170 million ounces. Gold has been mined in Ghana for over 1000 years, and the famous AngloGold Ashanti Obuasi mine has been in continuous production for 110 years.
PMI Gold now has interests in 14 concessions in Ghana on the Asankrangwa and Ashanti Gold Belts, for a total of 669 square kilometers.
In November 2006, PMI Gold acquired the 89 square kilometre Abirem and Abore concessions - which cover the former Obotan Mine operations of Resolute Mining of Perth – from the Ghanaian government. Resolute ceased mining in 2002 after a total of 730,000 ounces of gold were produced, with 590,000 ounces mined at 2.2 g/t gold from the Nkran pit, and a further cumulative 140,000 ounces from the Adubiaso and Abore pits. The price of gold, at then less than $320 per ounce, had rendered the remaining known ore body uneconomical for further development.
Prior to completing the mining at the Nkran pit, Resolute conducted extensive studies on the feasibility of continuing mining from underground mineralization beneath the pit. Modeling completed with a US$350 gold price suggested good potential for establishing an underground operation.
PMI Gold believes there is an exploration target of one to two million ounces of gold grading from 3.0 to 6.0 g/t below the Nkran pit based on previous deep drilling results and projections to 400 m below the deepest intersection.
Resolute had previously completed internal studies concerning underground mining scenarios to co-exist with their surface mining. These preliminary studies were based on 58 drill holes which intersected +3.0 g/t gold mineralized material below the level of the pit.
Other results from these studies indicate that:
• higher grades are contained within lower grade envelopes and dilution won't be critical;
• screen fire assay retests conducted on high grade intersections indicate a significant coarse gold component to the high grade zones which may not be reflected in the current assay database;
• metallurgical test work on drill core composites from beneath the pit indicated recoveries of +96.6% on leached concentrator tails with +75% of the gold reporting to the gravity circuit; and that the assay database may be significantly under calling the grades of the high grade lodes as the metallurgical leach tests returned a 52% upgrade over the original screened 50 gram gold fire assays;
• modeling suggests that the majority of the high grade mineralization is within structures which are vertical with good continuity horizontally and vertically;
• the Western zone, also referred to as the Galamsey Reef, remains open to the south and at depth.
Two major near vertical gold bearing structures have been partially outlined by the previous drilling - called the Western and Eastern high-grade lodes. Most of the deep diamond core drilling targeted these lodes under the south end of the pit.
Using a top assay cut of 30.0 g/t gold and estimating true widths to be 55% of the mineralized intersection lengths, 30 drill intersections beneath the level of the pit exceed 22.5 gram gold per tonne metres.
These intersections have an average indicated true width of 4.40 metres and weighted average gold grade of 10.02 g/t gold. The deepest down plunge intersection was 8.80 metres true width, grading 8.15 g/t gold, and located 326 metres below the pit.
With gold above $600 per ounce, this historic, non-43-101 compliant data certainly lends itself to the compelling logic of focused development, and that is precisely what is underway at the site.
According to company CEO Douglas MacQuarrie, “Gold mineralization has been outlined to a depth of 425 metres below the pit with true widths varying from 20 to 45 metres. Within this bulk mineralized zone there are significant high grade drill intersections including 7.0 metres of 12.28 g/t Au; 8.0 metres of 10.00 g/t Au; 5.0 metres of 23.00 g/t Au; and 4.0m of 10.00 g/t Au. In order to prove the viability of this zone for bulk or selective mining, further detailed drilling will be required, preferably from underground drill stations as suggested by RSG Global in their recent concept study report on the Nkran mineralization.”
Highlights from the drill results announced last week include 44.5 m of 2.61 g/t gold in hole NK07-001 which tested the down dip extension of the Nkran pit orebody 330 m below the base of the previously mined pit; and 2.7 m of 8.91 g/t gold in NK07-005 collared 170 m to the south of the southern end of the pit.
And if there is any doubt as to the potential for an ‘elephantine’ sized orebody at Obotan, consider this:
If you were to draw a circle 120 km in radius from the center of the Obotan concession, it would enclose in the neighborhood of 80 million ounces of as yet un-mined gold, with one deposit measuring in excess of 10 million ounces gold, and the AngloGold Ashanti mine, which still contains an estimated 25 million ounces of gold and is currently under rehabilitation to permit mining to over 3 km in depth! Newmont, Goldfields, GoldenStar, and RedBack all have operating mines and juniors Central African Gold (Bibiani), Keegan (Bonte) and Perseus (Ayanfuri) are all defining orebodies for near term production.
This article is intended for informational purposes only and should not be considered as a recommendation to buy stock in any company. Although the author has made efforts to verify the information contained herein, the accuracy of all the information cannot be guaranteed. As always, it is recommended that you commit considerable time to completing your due diligence before buying stocks in publicly traded companies. A fee has been paid for the creation and distribution of this article.