Pan African Resources (LON:PAF) has agreed to sell a 85.1% beneficial interest in its Akrokerri gold project in Ghana, from which it withdrew in early 2009.
The stake will be sold to fellow AIM listed miner GoldStone Resources (LON:GRL), which believes that the permit is prospective. Goldstone is the party that announced the deal this mornming.
The permit area is located in proximity of AngloGold Ashanti’s (NYSE:AU, LON:AGG, ASX:AGG, JSE:ANG) 50 million ounce (Moz) Obuasi gold mine, adjoining AngloGold's Obuasi eastern border and the southern boundary of GoldStone's Homase permit.
The Akrokerri license area contains at least two sites with known gold mineralisation.
A 2.8 kilometre (km) gold in soil anomaly indicates that the Homase structure and gold deposit extend into the northern portion of the Akrokerri permit, which was confirmed from the drilling of 110 boreholes for a total of 7,303 metres along the soil anomaly by Shea Gold Limited from 1998 to 2000.
Some of the most significant intersects include 15 metres grading 2.27 grammes per tonne (g/t) gold, 20 metres grading 2.09 g/t gold, 10 metres grading 2.14 g/t gold, 11 metres grading 4.76 g/t gold and 10 metres grading 2.47 g/t gold.
GoldStone is hoping to enhance the value and potential of its Homase permit through the drilling between the drill sections and below the known extend of mineralisation to add resource potential to Akrokerri.
The company has said it believes that Akrokerri is prospective because the structure which controlled the formation of the Obuasi and Homase gold deposits also trends through the permit and that drilling programmes to find extensions of the dormant gold mine in the central part of the permit area by previous operators have been inconclusive.
According to GoldStone, a small code compliant resource based on historical exploration data may be achievable after limited due diligence.
In the first stage of the exploration campaign, GoldStone will confirm the quality and integrity of the historical exploration data base.
Drilling on the permit area to add further ounces to the initial resource will commence during 2010.
An airborne geophysical survey and a soil sampling programme are planned to identify additional regional exploration targets.
In early 2009 Pan African withdrew from all its projects and activities in Ghana and decided to focus exclusively on its recently acquired platinum and gold producing projects in South Africa and Mozambique.
GoldStone will attain ownership of the 85.1% stake for a nominal US$1, subject to a 10% free carried interest in favour of the government of Ghana and a 4.9% holding in favour of Volta Resources and on the basis that Pan African’s Ghanaian subsidiary that holds the rights to the permit has no environmental rehabilitation liabilities, outstanding statutory requirements, future or existing contractual liabilities or pending legal proceedings, which may amount to more than US$25,000.
The government is also entitled to receive a mining royalty of 3% to 6% of the total revenue.
Pan African is focused on projects in South Africa and Mozambique, producing approximately 100,000 ounces of gold per year.
The company has no debt, is unhedged and is able to fund all of its current on-mine capital from current cashflows.
In late August, Pan African released its results for the year to 30 June, which showed a 30% jump in revenues to £68.5 million as underground production increased by 2.71% to 97,483 ounces.
Production is expected to continue to grow as a result of increased capital investment and the implementation of an integrated Mineral Resource Management (MRM) programme.