Cluff Gold's Ivory Coast sulphide drilling points to significant operation

Gold sulphide drilling results from Cluff Gold’s (LON:CLF, TSE:CFG) Ivory Coast acreage indicate a lot of future potential, brokers said today.

Shares rose 8% to 86.75p as Cluff itself described the results from the Angovia project - now called the Yaoure project - as “very promising”.

Broker Shore Capital added Yaoure has the potential to become a significant operation in future and today’s news was a positive for the shares.

The company said it was confident that the existing resources at Yaoure - consisting of 169,000 ounces in the measured category and 123,000 ounces in the indicated - can be significantly increased during this year.

Initial work suggests that a significant open pit resource could be delineated at favourable stripping ratios. 

Importantly, testwork indicates that the sulphides are not refractory, suggesting that recovery from a standard CIL plant will not be a problem.

"To this end, we have approved a US$6.6 million budget for an aggressive 79,000m exploration drill programme in 2012 which is currently underway," said Cluff's chief executive Peter Spivey.

"Our focus is to delineate sufficient sulphide resources to sustain a CIL operation, whilst at the same time continuing to search for lateritic and saprolitic oxide resources, which could result in an early re-opening of the heap leach operation."

Spivey added that Cluff remained confident the project could deliver considerable value for shareholders.

The company decided to re-evaluate Yaoure last year and has now decided to concentrate on the sulphide potential rather than the oxide resources - hence the change of name.

Today's results mainly stem from the Yaoure Central area, where 23 diamond holes were sunk in a 1,967 metre programme.

The results include 28.35 metres at 3.24 grammes of gold per tonne in hole YD0021, 31.60 metres with 1.97 g/t in hole YD0014 and 13.25 metres at 4.14 g/t in hole YD008.

The project is also within  5km of a hydro-electric power source and in a location where abundant water is available.

It added that a second phase of diamond drilling focusing on the N-S structures, consisting of 2,000 metres across 9 holes, has begun with results expected in March this year.Meanwhile, an additional 1,000 metre drilling programme following up on the E-W structures is planned for February this year, with results expected this April.

Shore Capital added that if the group is successful in its search for lateritic and saprolitic oxide resources at its Angovia prospect, this would enable the moth-balled heap leaching operation to restart and provide a source of early cashflows to help fund further Yaoure's development.

Oriel Securities added that Cluff’s commitment to a US$6.6m budget for the Yaoure project suggests it is confident of delineating a significant sulphide resource and that the proximity of infrastructure will support a CIL/CIP operation.

At present, Cluff is producing from the short-life Kalsaka mine in Burkina Faso and has a major gold development on the go at Baomahun in Sierra Leone.

Production from Kalsaka totalled 71,505 ounces in 2011 against guidance of 70,000 ounces and its output should be between 60,000- 70,000 ounces in the current year.

Last week, Cluff said that extending the life of Kalsaka remains the “utmost priority” as it set aside US6.8 million for a drilling programme around the current site and also at Yako, about 25km southwest of Kalsaka.

Cluff ended 2011 with total cash and bullion holdings of approximately US$32.9 million.