Avnel Gold Mining (TSX:AVK)
Market cap: $82 million
Cash estimate: $15 million
Ownership: 80 percent
Resources: Indicated:14.5 million tonnes at 4.52 g/t gold
Project status: Feasibility
Avnel Gold Mining Ltd. announced infill drilling results from its Kalana project in southwestern Mali. The Kalana project is a former past producing small scale underground operation by a Soviet company in the late 1980's. The licence is held by SOMIKA (Societe des Mines d'Or De Kalana) which is in turn, held 80% by Avnel. The Malian government holds the remaining 20% free-carry interest, as well as a 3% royalty. As the project is a past producer, Kalana holds a 30 year exploitation licence to mine subject to an approved ESIA policy (Employment Support and Income Assistance). In 2013 after spending $32.5 million on the project over three years, IAMGOLD dropped their joint venture on the project. Highlights from the infill drilling include 10.0 metres grading 100.3 g/t Au including a high-grade interval of 844 g/t (uncut) over 1.0 metre. The pyrite and arsenopyrite mineralization associated with the gold occurs as shallow-dipping, high-grade quartz packages which are variably over printed by later steeply dipping lower-grade veins. While the cross cutting veins do not add significant grade they tend to bulk out the deposit in these areas potentially lowering the relatively high stripping ratio of 8.5:1. Also potentially improving the strip ratio is the extension drilling on the south-western margin of the deposit. Near surface drilling in the oxidized saprolite intersected what is believed to be the up-dip extension of Vein 1. Highlights include 3.0 metres grading 43.0 g/t Au from 28 metres depth and 4.0 metres of 22.5 g/t Au from 40 metres. True width is unknown. This drilling also has the potential to upgrade some near surface inferred resource to indicate. In March 2015, the Company increased the resource to 15.2 million tonnes at a diluted grade of 4.40 g/t Au with an additional 2.18 million tonnes at 5.33 g/t Au in the inferred class both using a 0.9 g/t Au cut-off and a $1,100 per ounce gold price. The March 2014 PEA indicated an after-tax 100% project basis NPV (5%) of $289 million with an IRR of 59%. Initial capital costs including a $15 million pre-strip cost is estimated at $147 million with an additional $31 million in sustaining capital. Total life of mine cash costs are estimated at $589 per ounce Au.
Previous Development: Small-scale soviet mine in mid-1980's. Closed on break-up of Soviet Union in 1992
Current Infill Drilling: 10 meters @at 100.3 g/t gold
Current oxide drilling: 3 metres @ 43.0 g/t Au and 4 metres @ 22.5 g/t Au
Risk AnalysisData contained in DRILL TRACKER WEEKLY is based on early stage exploration activity. The results are obtained at the very early stages of exploration and therefore, individual results may not be reproducible with additional trenching or drilling, nor may the results ultimately lead to the discovery of an economic deposit. Delineation of a resource body requires an extensive data gathering exercise according to guidelines set out in National Instrument 43-101 before investors can be reliably assured of a competent body of mineralization that may be of economic interest. DRILL TRACKER WEEKLY is designed to highlight individual trench or drill results, which stand out as being materially anomalous and are particularly worth of note - a type of early warning flag for a particular property that warrants further attention. Hence, DRILL TRACKER WEEKLY does not provide a recommendation to buy, sell or hold a specific equity - it is an information reference source to help quantify the meaning and relevance of early stage exploration results. Relevant Disclosures Applicable to: Drill Tracker Weekly The research analyst or a member of the research analyst's household owns and/or has options to acquire shares of the subject issuer. At the date of this release the author, Wayne Hewgill, owns shares in the following company: Balmoral Resources Ltd. (TSX.BAR). Balmoral Resources (TSX.BAR) is currently covered at Mackie Research Capital Corp. by analyst Peter Campbell Analyst Certification I, Wayne Hewgill certify that the information in this report is sourced through public documents that are believed to be reliable but accuracy and completeness as represented in this report cannot be guaranteed. The author has not received payment from any of the companies covered in this report. This report makes no recommendations to buy, sell or hold. Each analyst of Mackie Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst's personal views and (ii) no part of the research analyst's compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.