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In the news: Amani Gold

Published: 13:56 11 Oct 2017 BST

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COMPANIES

AMANI GOLD††

ASX:ANL | A$0.029 | US$35m | Speculative Buy

Amani Kicks Off Latest Drilling Programme at Giro Gold Project

Amani Gold has announced the details of a new drilling programme that will see up to 30,000m of RC and diamond drilling at Kebigada, 6,345m of RC drilling at Douze Match, and additional drill programmes planned for newly defined target areas. Drilling at Kebigada will focus on upgrading the existing resource, with other drilling focused on adding ounces from potential satellite pits. An updated resource combined with planned metallurgical testing will form the basis of a feasibility study.

COMMENT: With this latest release, Amani has provided details of an extensive drill program. The infill drilling will upgrade the resource ahead of a feasibility study, while the addition of a higher-grade satellite pit would add meaningful value. We expect the general pace of execution to accelerate as Amani and its new partners look to advance the project to feasibility and production over a short period. The company expects that in late-October they will have the first results from Phase 1 drilling at Douze Match, and in Q1 2018 they will have completed the infill drilling programme, upgraded the mineral resource and completed a scoping study by BGRIMM leading towards feasibility studies.

Giro Gold Project background — Amani is focused on advancing its 55%-owned Giro Gold Project in the DRC. The majority of activity on the licence has focused on the Kebigada Zone, which was the basis of a maiden resource. A number of other targets, including areas of historical mining, have been outlined by soil sampling and some followed up by drilling. Most significantly, at Douze Match, in the north of the licence area, initial drilling returned some spectacular high-grade results, although follow-up drilling has so far not lived up to earlier results. After putting out a maiden resource in July 2017, the company has concentrated on upgrading and expanding the resource, as well as the metallurgical drilling needed to complete pre-feasibility and feasibility studies. In the near-term, the company has engaged the Beijing General Research Institute of Mining and Metallurgy (BGRIMM) to complete an initial scoping study at Kebigada.

RC drilling at Douze Match has already started — Drilling is focused on the Tango Shear, and is being scheduled in two phases. Phase 1 will involve 77 RC drill holes or 3,645m over a strike length of 1 km to define the orientation and continuity of the northern shear zone. Phase 2 will involve 50 holes for 2,700m targeting areas between the more widely spaced Phase 1 drill holes to ensure full coverage. First drill results are expected in late-October, while final grid spacing is expected to be 50m by 25m to deliver a maiden resource at Douze Match in Q1 2018. Operationally, Douze Match is being viewed as a source of higher grade material that will be blended with material from Kebigada to increase the head grade during processing.

There are plans to upgrade the resource at Kebigada — The current resource consists of 16.5mt of ore grading 1.5 g/t for 800koz in the Indicated category and 29.1mt of ore grading 1.4 g/t for 1,330koz in the Inferred category. Previous infill drilling to define the Indicated resource resulted in an increase in grades. Management is looking to continue this trend as they infill drill 167 RC holes for 25,000m in a 25m x 25m grid that they expect will form the basis of a Measured resource. Furthermore, a significant portion of the Inferred resource sits below 100m. To date, 29 diamond drill holes have served to define this area. Management now plans to add a further 14 holes resulting in a 50m x 50m grid to bring this deeper resource into the Indicated category. In preparation for feasibility studies, a further 3 diamond PQ/HQ holes will be drilled for metallurgical testwork, and Geotech logging will be carried out on all diamond tails. Additional holes will be drilled for hydrological studies and monitoring of water levels. This work programme will commence once Amani has complete access to the area of drilling with management expecting work to be completed in H1 2018.

Further drilling to focus area surrounding Kebigada and Adoku — High-grade soil anomalies previously resulted in targets in the immediate area surrounding Kebigada. Many of these anomalies are associated with artisanal mining or with chargeable IP anomalies. A programme of 40 shallow scout RC drill holes for 2,170m has been planned to cover selected anomalies with the goal of identifying potential satellite pits. An additional potential satellite pit, Adoku, is within 5km of Kebigada and is associated with artisanal mining that has supported a village for a number of years. Channel samples showed strong gold mineralisation, but follow-up diamond holes showed no significant mineralisation. Management believes drilling at Adoku may have been east of a fault and is planning to follow up with 12 RC holes for 1,200m.

Amani’s current market cap is A$45m/US$35m — The company has 1,566m shares outstanding, with 47m options exercisable at prices ranging from A$0.03 to A$0.10/share expiring from November 2019 to December 2020. Cash as of 30 June 2017 was A$1.1m, with the A$25m Luck Winner Investment Limited (LW) transaction closing subsequently. The terms of the binding subscription agreement with LW included 300m shares for A$10m at a price of A$0.05/share, and a commitment to provide a further A$10m subject to an Amani shareholder vote in November 2017 and other conditions precedent. As part of the deal, LW is to receive 250m options exercisable at A$0.07/share with a two-year term from the date of issue. Management expects these financings to help cover the costs of pre-feasibility and feasibility studies on the Giro Gold Project. While Amani is seeking to grow the size of the deposit to the multi-million ounce scale, there is a contingency payment that becomes payable should Amani define 3Moz in the Measured and Indicated categories at a cut-off grade of 2.5 g/t. At such a scale and cut-off grade, however, having to cover the US$5.35m payment would be a welcome development.

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