Awalé grows Charger outside new Odienné resource

Drilling by Awalé Resources (TSXV: ARIC; US-OTC: AWLRF) at its Newmont (TSX: NGT; NYSE: NEM) backed Odienné project in Côte d’Ivoire has extended high-grade gold at the Charger deposit outside the initial resource envelope. Shares rose.

Step-out drilling at the Charger 2 target, returned a highlight hole CHDD-24 of 18 metres grading 9.2 grams gold per tonne starting at 144 metres downhole. It included 7 metres at 18 grams gold from 155 metres. Hole CHDD-23 cut 16 metres averaging 4 grams gold from 153 metres, including 4 metres at 14.1 grams gold.

The Charger 2 hits mark a step change for Odienné because they point to a parallel high-grade repeat of Charger that could lift output well beyond the current plan, SCP Equity Research analyst Justin Chan said in a note.

“We model Charger at 200,000 tonnes per year at 5 grams for roughly 30,000 oz. annually. A parallel structure adds meaningful ounces per vertical metre, could likely be serviced from the same decline and could materially lift the production rate. More drilling is still needed to confirm widths and grades, but another 20,000 to 30,000 ounces a year looks like a reasonable starting point, which would lift production into our 170,000-to-180,000-oz. range.”

Charger already holds the best grades in Odienné’s initial resource, about 400 km northwest of the capital Yamoussoukro. Under Awalé’s agreement with Newmont, the major funds all exploration at several JV targets, including Charger, BBM and Empire.

Côte d’Ivoire has emerged in recent years as one of West Africa’s fastest-growing gold jurisdictions. Endeavour Mining (LSE, TSX: EDV) is advancing Assafou in the country, Perseus Mining (ASX, TSX: PRU) operates Sissingué and Yaouré there, and Resolute Mining (ASX, LSE: RSG) has secured permits and approved development at Doropo.

The company’s Toronto-listed shares on Wednesday afternoon gained 9.5% to 81¢ apiece. It carries a market capitalization of $89.7 million (US$64.5 million). The stock has traded in a 12-month range of 47¢ to $1.18.

Initial resource

Odienné hosts 32.4 million inferred tonnes grading 1.33 grams gold and 0.33% copper holding 1.4 million oz. contained gold and 93,000 tonnes copper across the BBM, Charger and Empire deposits. Charger accounts for 1.6 million tonnes grading 4.64 grams gold for 231,000 oz., gold, giving the company a compact, high-grade underground growth front beside the much larger BBM deposit.

The mix of open-pit ounces at BBM and Empire with underground tonnes at Charger gives Awalé more options to shape its first economic study, which it is targeting in the third quarter. A pre-feasibility study is slated for late next year.

“Following the positive resource estimate for the project, drilling at Charger 2 has returned higher grade results than the discovery holes,” CEO Andrew Chubb said in a release. The resource was released last month.

Discovery momentum

Five rigs are active across Odienné and two more are due to arrive, the company said. Assays are still pending from a six-hole step-out program northeast of Charger 1.

On the broader property, the company plans roughly 88,000 to 100,000 metres of work on the JV ground and another 15,000 metres this year on its own permits.

The upside is not confined to Charger. Awalé last month reported a new shallow discovery at Fremen, 11 km from BBM on 100%-owned ground, where assays returned 17 metres grading 1.9 grams gold from 6 metres downhole and confirmed mineralization over an initial 1-km zone within a broader 8-km corridor.

Results from 52 additional holes are still pending. Across Odienné, the company controls 2,346 sq. km in seven permits and says only about one-fifth of the land package has been explored.

Funding risk

As of May 31, Awalé had about US$18.8 million in cash after warrant exercises, enough to keep the rigs turning.

Newmont lowers some of the exploration risk. It owns 8.5% of Awalé and is funding all exploration on the two joint venture permits, about one-third of the land package, under an earn-in that has already completed a US$5-million first stage for 51%.

A second stage is to increase that stake by another 14% through a further US$10 million in exploration and defining a 2-million-oz. gold resource. Fortuna Mining (TSX: FVI; NYSE: FSM) has a 13.2% interest in Awalé and Orecap Invest (TSXV: OCI; US-OTC: ORFDF) holds 5.7%.