Roxgold (TSX: ROXG; US-OTC: ROGFF) has reported additional results from the first phase of its infill drill program on the Koula prospect at its Séguéla gold project in Cote d’Ivoire, 240 km northwest of Yamoussoukro and 480 km northwest of Abidjan.
Highlights include drill hole SGRC919, which intersected 4 metres grading 108.9 grams gold per tonne starting from 32 metres downhole, including 1 metre grading 257 grams gold per tonne starting at 34 metres. Drill hole SGDD072 returned 9 metres grading 49.3 grams gold from 73 metres, including 1 metre of 201 grams gold.
The Koula prospect, 1 km east of the Antenna deposit, was discovered in September through field reconnaissance and recent artisanal workings in an area previously considered to be a lower exploration priority, the company said. The prospect remains open along strike to the south and extends at depth within a moderately southerly plunging high-grade core.
“With this second round of drilling results, the Koula prospect is rapidly demonstrating its potential to add material value to the Seguela gold project,” John Dorward, the company’s president and CEO, stated in a statement. “Koula was a recent addition to what is already a considerable portfolio of prospects and is continuing to demonstrate many similarities to the high-grade Ancien deposit with comparable consistency and style of the high-grade core, alteration style and southerly plunging nature.”
The 363-sq.-km project consists of the Antenna, Agouti, Boulder, and Ancien near-surface deposits and 22 prospective targets. The project is close to existing infrastructure, including grid power.
The infill drill program at Koula consists of reverse circulation (RC) and diamond drilling and follows a 10-hole reconnaissance RC drill program completed in September. The drill program will support an initial inferred resource estimate for Koula, the company said, and may be incorporated into an upcoming feasibility study.
There are three drill rigs operating at Koula, with a fourth slated to begin this month.
The company said that three shallow RC drill holes, SGRC913, 915, and 917 from the recent drill program, which returned relatively lower grades, had been interpreted as intersecting the remnant halos of near-surface high-grade mineralization associated with shallow (less than 10 metres vertical) artisanal mining activity.
Re-logging of the initial 10-hole discovery drill program, the company said, indicated that the discovery hole, SGRC854, stopped short in an unmineralized dyke. It has subsequently been extended to 189 metres, with visible mineralization and alteration resuming approximately 1 metre further on from the previous barren end of the hole, and extending a further 20 metres. Assays for this drill hole are pending. Drill hole SGRD855, from the latest drill program on the same section, will also be extended to test for potential extensions to the mineralisation.
The Seguela project contains measured and indicated resources of 7.1 million tonnes grading 2.3 grams gold per tonne for 529,000 contained oz. gold. Inferred resources add 5.37 million tonnes grading 2.9 grams gold per tonne for 508,000 ounces.
In April, a preliminary economic assessment (PEA) for Seguela outlined a mine life of just over eight years producing 100,000 oz. gold annually at an all-in sustaining cost (AISCs) of US$749 per ounce.
In the first three years, the PEA envisions average production of 143,000 oz. gold per year at AISCs of US$600 per ounce.
The PEA estimates an after-tax net present value of US$268 million at a 5% discount rate and an after-tax internal rate of return of 66% using a base case gold price of US$1,450 per ounce, and an after-tax net present value of US$379 million at a 5% discount rate and an after-tax internal rate of return of 88% using a gold price of US$1,730 per ounce.
“Our goal this year at Seguela has been to build upon the PEA and demonstrate the potential for the project to grow in quality, scale and scope,” Dorward said in a statement. “We believe that this year’s stream of exploration results, reinforced again with today’s results from Koula, build confidence in the potential for Seguela to ultimately achieve this goal and that further exploration upside will continue to be realized as we progressively work across the high priority Seguela prospects.”
He also noted that permitting discussions at the project continue to progress well, as evidenced by the recently approved Environmental and Social Impact Assessment, and that the company remains on track to complete a feasibility study in the first half of next year.
“We continue to be impressed by the company’s exploration results on Seguela, particularly at the high-grade Ancien target, and more recently at Koula,” Geordie Mark, an analyst at Haywood Securities, commented in a research note to clients. “We expect these high-value satellites will be a key lever driving front-end project economics as more advanced mine sequencing plans come to light.”
Craig Stanley, an analyst covering Roxgold at Raymond James, said that Koula is “shaping up as the next high-grade deposit at Seguela,” and noted that the project “has the potential to more than double Roxgold’s production in a relatively short timeframe without issuing equity.”
At press time in Toronto, Roxgold was trading at $1.85 per share within a 52-week trading range of 56¢ and $1.92. The company has 373 million common shares outstanding for a $689.9-million market capitalization.