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Alecto Minerals showing the way for junior gold explorers

Alecto Minerals is a great example of how gold explorers have adapted to achieve success in this new environment for juniors.


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Alecto Minerals (LON:ALO) is a great example of how gold explorers have adapted to achieve success in this new environment for juniors.

With the capital markets hard to crack, the Africa-focused group has taken the pragmatic decision of sharing the burden.

It has done this by joint-venturing some exciting ground in Ethiopia with FTSE 250-listed Centamin (LON:CEY), which has the option to spend up to US$14mln on exploration.

At the same time it is developing its Kossanto Project, in Mali, itself.

Although modest on a global scale, Kossanto has the potential to be a low cost and fairly straightforward operation to bring online.

There’s even a little blue sky nearby in Massakama, which has the potential to host the sort of elephantine deposit seen regionally such as Sadiolaand Loulo.

And with £1.2mln in the bank the group is funded into the middle of next year.

As far as news flow is concerned, investors are expecting a further resource upgrade for Kossanto, which is made up of five licences, including the West and East Gourbassi targets.

The current JORC-compliant figure stands at 193,000 ounces at 0.5 grams per tonne cut-off. Any further uplift will take Alecto closer to its aspirational target of 500,000 to 1mln ounces.

And while those sorts of numbers are expected to remain out of reach on this pass, an assessment of the claims offers another potential opportunity.

With four other deposits uncovered in close proximity to that at Gourbassi, there is the opportunity to jointly run a single, central facility with its neighbours.

While a cheap and practical approach, chief executive (CEO) Mark Jones says his discussions with the owners of the neighbouring projects, Golden Rim and Desert Gold, are on-going, they are early stage, so should not be expected to provide a source of news flow in the near future.

One thing that should be pointed out is that the Gourbassi discoveries, while not particularly spectacular grades, have much to commend them.

They are close to surface, making them cheap and easy to mine, while the ore is of the easier to process oxide and transitional varieties.

Early metallurgical work suggests the gold will be fairly straightforward to liberate.

Massakama, the other core target on Kossanto, is a different beast altogether, with extensive artisanal mining giving a clue to its high-grade potential.

This is backed by drilling, which hit mineralisation of up to 18.5 grams per tonne gold.

“If there is an elephant it is likely to be in the Massakama area,” says Jones.

“It is right on the trans-current shear zone and there are a huge amount of artisanal miners.

“We have a structural geologist who is starting to get to grips with it. We have done some RAB (rotary air blast) drilling and had wonderful intercepts, but you can’t build a mine around an isolated intersection.”

Eagerly awaited is the planned update from Centamin on progress in Ethiopia, where work is focusing on the Wayu Boda, in the country’s Adola Greenstone Belt, and Aysid Metekel.

The gold miner must spend US$1.8mln to take 51% of the former, and a further US$6mln to increase its holding to 70%. Meanwhile, it will spend US$6.2mln in two tranches for an identical stake in the 1,953 square kilometre Aysid licence.

The company recently announced that 2,500 metres of drilling has been completed at Wayu Boda, representing 80% of the campaign initially planned at this project while at Aysid Metekel, Centamin has formally notified Alecto that it will now proceed to satisfy its initial expenditure commitment following reconnaissance work.

The first results from Wayu Boda are expected in July, and Jones is satisfied with the way the collaboration is shaping up.

“We are very happy with the progress and they are happy with the ground,” he says.

“The joint-venture model is one we really like and we will continue to embrace it as long as the capital markets are tight.

“To get anyone to commit to pay up to US$14mln is very good.”

Outside Mali and Ethiopia, Alecto also has Wad Amour in Mauritania, which has strong potential to be an iron oxide copper gold (IOCG) deposit.

A drill programme that was scheduled to begin in April has been delayed to the end of the year so it can be done cheaper, reveals the Alecto CEO.

“From our viewpoint the project may be a wonderful adjunct, but it may also be a low grade IOCG play,” Jones adds.

“We want to do sufficient work to really understand it and then joint venture if there is something there. Otherwise we will drop it.”

Not content with sitting still, Jones is also looking to pick up assets too.

“We want to move out of pure exploration,” he explains.

“If we don’t find any opportunities then we will be looking to see how quickly we can make money from the regional play; either by ourselves or with others.”

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