Shares of Roxgold (TSXV: ROG; US-OTC: ROGFF) took flight after the junior increased the indicated resource for the 55 zone gold deposit on its Yaramoko exploration permit in Burkina Faso by 143%, where the company expects to complete a preliminary economic assessment by mid-September.
The deposit remains open at depth and contains 1.9 million tonnes grading 13.88 grams gold per tonne for 850,000 contained oz. gold in the indicated category, and 860,000 tonnes at 9.88 grams gold for 273,000 contained oz. gold in inferred. The resource is calculated at a cut-off grade of 3 grams gold per tonne, and is based on 99,077 metres of drilling.
Yaramoko is 200 km southwest of the capital city of Ouagadougou, and contiguous to Semafo’s (TSX: SMF; US-OTC: SEMFF) Mana gold mine concessions in the northeastern portion of the Houndé greenstone belt. Mineralization is most commonly hosted in quartz veins in dilation and shear zones in granitoid, felsic porphyry and volcanics. It is also found in sheared volcanics with no conspicuous quartz veining.
“It has been difficult this year, no question. But at the end of the day I think we have the benefit of grade, and what we are aiming to do in the PEA is demonstrate a robust gold project through a range of different gold-price scenarios,” John Dorward, Roxgold’s president and CEO, told The Northern Miner. “We believe we will be able to demonstrate the potential for a low-capex, high-margin project, given the starting grade of the deposit.”
Dorward notes that the 55 zone has potential for growth, as the company has yet to drill more than 400 metres to the east, and has drilled only isolated but encouraging holes below 400 metres to the west.
In the second quarter Roxgold spent $5.1 million on Yaramoko, bringing the total for the first six months of the year to more than $9.2 million.
As of June 30 the company held cash and short-term investments of more than $9.1 million and over $7.2 million in working capital. Early in the third quarter Roxgold raised $10.3 million through a private placement.
“The opportunity from existing and new shareholders was there to raise the additional capital, so we took it to make sure we were well funded to complete the PEA, initiate a bankable feasibility study and continue with our exploration,” Dorward says.
Other highlights during the second quarter included regional exploration drilling at Bagassi South (2 km south of the 55 zone) and the 300 zone, and a 1 sq. km induced-polarization orientation survey over the 55 zone. It also received a three-year extension on its exploration permit for Yaramoko, now valid until Sept. 8, 2016.
Roxgold released drill results from Bagassi South in early July, with intercepts of 41.7 grams gold over 4.4 metres; 25 grams gold over 3.8 metres; 16 grams gold over 1 metre, within a wider intercept of 3.1 grams gold over 10.2 metres; 6.9 grams gold over 1 metre; and 10 grams gold over 0.3 metre. “Bagassi South has emerged as our most advanced exploration target,” Dorward says. “In terms of the geology, we think it’s prospective for future discoveries. The structures are amenable, and there have been some strong mineralization events in the past.”
Roxgold says it will work on environmental and social studies throughout 2013, and continue metallurgical and geotechnical drilling on or around the 55 zone, as well as an environmental and social-impact assessment ahead of applying for an exploitation permit covering part of the Yaramoko property. It also plans to map and sample artisanal mining sites across Yaramoko, and conduct more ground geophysics to supplement existing data.
Dorward notes that Burkina Faso is a good jurisdiction to work in and has a “reasonable fiscal regime.” The corporate tax rate on mining is 17.5%, and royalties are on a sliding scheme. At less than US$1,000 per oz. gold the royalty is 3.5%, and that rises to 5% if the gold price exceeds US$1,300 per oz., with a royalty of 4% for everything in-between. The state takes a 10% carried interest in the project.
“Burkina Faso has been excellent to work in,” Dorward says, who has spent a number of years working in West Africa, including Senegal. “Burkina is an experienced jurisdiction with seven new mines in the last five or six years, and mining is making a big economic contribution to the economy.”
At press time Roxgold’s shares were trading at 72¢ per share, within a 52-week band of 36¢ to $1.02 per share.
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