SOURCE: VantageWire.com -- As the African resource rush continues to ramp up, much attention is being drawn to the potential for the continent’s second largest producer of gold, Ghana. Second only to South Africa, Ghana has drawn sizable operators such as: AngloGold Ashanti (NYSE: AU) with its Obuasi Mine, Newmont Mining Corp. (TSX: NMC)(NYSE: NEM) and its Ahafo Mine, Kinross Gold (TSX: K)(NYSE: KGC) and its Chirano Mine, and Gold Fields (NYSE: GFI) with its Tarkwa and Damang Mines.
But while majors have been in the country for many decades, it has only been over the last 10 years that juniors have started to make their presence known in Ghana. For Abzu Gold (TSXV: ABS) their efforts to become a household name among Ghanaians have been successful, through making honest efforts to develop relationships within the community and to in turn be given a welcome mat in some of the more prestigious gold belts the country has to offer.
Today Abzu boasts the potential for two multi-million ounce flagship properties, known as Asafo and Nangodi, located along the eastern border of the country to the south and to the north, respectively. These properties were secured both with relationships on the ground with leaders of the nation’s tribal communities including the King and many chiefs, and on this side of the ocean with corporate partners, including Kinross that gave a solid vote of confidence by awarding Abzu operatorship of ten of its Ghana properties. As well, their relationships allowed them to procure these properties ahead of Newmont, which was in the running.
With a management team stacked with experience and an on-the-ground presence, Abzu is poised to engage an aggressive exploration program in 2012, and to continue its development amidst the bigger players it calls neighbours.
GHANA – BUSINESS ENVIRONMENT
The history of Ghana’s gold goes far back along the timelines of human civilization. It is believed that the gold brandished by the Egyptians, the Romans and the Ancient Greeks was to have come from this part of West Africa. The development of gold in the country has continued strongly to this day, including the ongoing production from the Obuasi mine which has been in production for over 100 years.
Today, Ghana is seen as a friendly environment to operate in, bolstered by many skilled geologists and mining engineers. Its strong mining culture is likened to that of Peru and Chile, and its estimated that upwards of 25% of the population derives economic livelihood from mining activities within Ghana at some point of their lives.
Formerly a British Colony, known to colonists as the “Gold Coast,” Ghana today has a stable parliamentary government system, along with a strong legal and mineral titles system that makes the country attractive to foreign investment. Though there has been steady development over the last few decades, overall the country is still seen as tremendously underexplored, with very high discovery potential.
NANGODI – NORTHERN PROPERTY
Near the border of Ghana and Burkina Faso, Abzu’s Nangodi property is comprised of a 1.2 km drill-tested gold zone, within the same Bole-Nangodi Belt that hosts Endeavour Mining’s (TSX: EDV) Youga Mine on the Burkina Faso side of the border. The belt extends over 100km, and has gold-bearing characteristics similar to those found in the Ashanti Belt.
Historically, the property has seen high-grade production averaging 26 g/t from over 25,000 tons. Abzu’s current stake amounts to 51% and operatorship through a JV with Red Back Mining Ghana Ltd. and Kinross. So far the property has had 58 holes drilled on it (27 from Abzu in 2011, and 31 from Africwest in 1997). What’s been found are high grades of gold associated with sheared quartz-feldspar porphyry.
The drill holes completed so far have encountered eye-openingly high gold grades such as 17.93 g/t over 3m, 8.94 g/t over 3m, and 6.90 g/t over 10m, as well as economic grades over larger depths, including 1.91 g/t over 44m, 1.53 g/t over 66m, and 1.15 g/t over 73m.
What the market will be waiting on is the official numbers that will come from a resource calculation. According to the company, a resource evaluation should be coming later this year in Q3/Q4. Between now and then, some important work will take place, with ground geophysics, surface sampling and trenching to take place right away, along with further geological mapping, and more drilling is on deck in Q2 with phase 2 step-out drilling of over 5,000m (approximately 30 holes between 150-200m). The hope is that the estimation proves the potential of a multi-million ounce resource the company believes Nangodi holds.
ASAFO – SOUTHERN PROPERTY
Much like Nangodi, Abzu’s Asafo property sits within a mineralized gold belt that hosts a producing mine, and is believed by the company to also contain multi-million ounce gold potential. Unlike Nangodi, the Asafo property is 100% owned by Abzu. The property contains 152 km2 along the eastern margin of the Kibi Belt, and back in 2003 showed sampling of numerous mineralized intercepts including 32 g/t gold over 1m, and 1 g/t gold over 10m, based on a previous Newmont drilling program.
Since taking on the project, Abzu has done a lot to develop the property, including aerial geophysical surveys, surface sampling, and 13 hole 2,179m diamond drill program. Of the drilling that was done, one of the biggest highlights was a new discovery on the first of three new targets that yielded back 4.72 g/t gold over 20m. Each of these three new targets had coincident surface anomalies and magnetic features, as well as similar soil anomalies. But the big news was the 1,100m by 600m gold zone discovered on that first target. For those looking for bluesky, look no further.
This first target not only brought back 4.72 g/t gold over 20m, but another drill hole provided an economic 1.5 g/t gold over 9m. Next up for the property will be further trenching and surface sampling in Q2, followed by more drilling in Q3 along strike continuity and also step-outs. The Company will be adding 4,000m in further drilling, en route to determining whether or not this is another multi-million ounce resource or not.
MANAGEMENT – ON THE GROUND AND HITTING THE STREETS
Abzu’s President, Dr. Paul Klipfel has a history in Ghana going back nearly 12 years ago after his first tour of duty, so to speak, with Placer Dome. Since then Klipfel has made several visits, including work as a consultant for Keegan Resources (TSX: KGN)(NYSE:KGN) where he helped put together the NI 43-101 Resource for the Keegan’s Esaase Project (next to which Abzu currently has 3 x 100%-held concessions on the same Asankrangwa Gold Belt). Klipfel also did some work consulting for Newmont back in 2008.
While Klipfel was developing his valuable knowledge of the area, CEO Allan Serwa is Abzu’s relationship builder. Also living and working in Ghana since 2007, Serwa is responsible for putting together the properties in the company’s portfolio. With an astute knowledge surrounding the traditional culture of Ghana, Serwa serves as a defacto ambassador to the Ghanaian leaders representing responsible corporate growth on behalf of junior companies. His history in the country includes negotiating a Ghana/Canada iron ore project with a value estimated at over $4.6B.
Back in Canada, the Abzu board contains other mineral finders and money raisers, including Jeff Pontius who is the former CEO of International Tower Hill which built up 20 million ounces of gold in Alaska, (Klipfel also had a hand in the 43-101 for that project). Along with Pontius is Mark Cruise who is currently the President of Trevali Mining Corp., which is operating a mine in New Brunswick, and is poised to go into production soon in Peru. Bringing the history of fundraising is Gordon Neal, the Board’s Chairman, with over 25 years of experience with corporate finance and governance services to public companies. Since 2004, Neal is responsible for raising more than $400 million for mining and resource companies, and has been associated with the raising of more than $4 billion over his entire career. Neal is currently the VP of Corporate Development of MAG Silver.
THE BOTTOM LINE
Though not covered in detail in this article, the company also has another 5 concessions that are 100% owned, and another 9 joint venture concessions in the country at different stages. For a company of this size, it’s impressive that they hold 16 properties in total in a country like Ghana that’s so easy to do business in. Looking forward, the two flagships in Nangodi and Asafo are indeed the company’s biggest highlights and are worth following as they continue to develop.
It’s not often that you have a management team with such a true connection on the ground, as President, Dr. Paul Klipfel is currently residing in Ghana keeping a very close eye on the Company’s projects. Both he and members of his team have strong technical backgrounds that have a history of involvement with developing up resources.
The Company has strong backing from Kinross , which speaks volumes. Look for the continuation of the Company’s 2012 program to shed more light on the Nangodi and Asafo projects, as they work towards the next stage involving the possibility of two multi-million ounce resources.
G. Joel Chury
for the Bottom Line Report