Chalice Gold Will Complete A Feasibility Study On The Koka Gold Project In Eritrea Within A Matter Of Months.
By Alastair Ford / www.minesite.com
Chalice Gold's latest drill hits on its Koka gold deposit in Eritrea served to set the scene nicely ahead of the London visit of chairman Tim Goyder and managing director Douglas Jones. Because the drill hits in question were actually part of an infill programme on Koka designed to help the project along to feasibility, Tim Goyder wasn't feeling any particular need to talk up their significance when he popped into a noisy City coffee shop for a quick catch up with Minesite, at the start of a packed tour of the major participants in London's mining investment scene. Still, the numbers speak for themselves, and if it's true, as Tim says that they've delivered " no surprises either way, " then its also true that a reiteration of the types of intersection that Koka has consistently showed can do no harm either. Among the latest, some of the better results include six metres at 12.37 grammes per tonne gold, five metres at 21.9 grammes per tonne, 10 metres at 9.97 grammes per tonne, and four metres at 32.76 grammes per tonne.
With gold still strong at over US$1,100, such grades can do a company no harm at all, even if Eritrea is still perceived to be some way off the beaten track. No matter: with the Koka resource now officially standing at just shy of a million ounces, and with plenty more likely to come, the Chalice share price has been unashamedly tracking gold lately, oblivious of any potential Eritrean risk discount. The peak was some way above a very robust A60 cents, hit at the end of last year, when gold punched through US$1,200. Since then, as gold has weakened, Chalice's shares have also pulled back, but only as far as a still comfortable A43 cents. And its worth bearing in mind that this apparent correlation with gold is very recent. This time last year, before Tim and Doug embarked on a round of corporate activity and project consolidation work, Chalice's shares were trading at a much more modest price of A10 cents. They've more than quadrupled since then, comfortably outperforming gold, and much else in the market besides. But from here on in, the companys share price graph may start to look a bit more conventional, as Koka moves towards the completion of a feasibility study by the middle of this year, and new exploration work on neighbouring ground starts to deliver results.
The company's overall land package, following the consolidation of ground formerly held by Sub Sahara Resources, now stretches to over 4,000 square kilometres, so theres plenty to shoot for. On Koka East, exploration drilling has now commenced, following up on earlier results from rock chip assays which have delivered grades as high as 18 grammes per tonne. Doug is clearly excited by the prospect of expanding the overall resource base at Koka by some margin, and has budgeted for over 7,500 metres of drilling in the current phase of exploration there. Koka South is likely to get a look in too, as the company finally gets round to following up a more-than-promising looking 2007 drill result reported by Sub Sahara which showed grades as high as 92 grammes per tonne. And its grades like that that enable Tim Goyder to be able to say with some confidence, " I'm a believer that we have a two to five million ounce orebody, or orebodies, here. "
So the plan is to move the main resource at Koka ever closer to production, while systematically increasing the resource base the will support the eventual operation there. Theres some talk too, that the rest of Chalice's ground might also hold base metals deposits, but that will have to wait for another time. In the meantime, it's interesting to note that the company has taken a major stake in London junior miner London Africa, a company associated with Lester Kemp and Rupert Baring, and which holds a sizeable land package in the neighbourhood of Toka. And it was in Rupert Baring's company that the Eritrean ambassador attended our recent Minesite forum, and was able to listen with interest to some strong stories in other parts of Africa.
For, while its true that Chalice is not alone in Eritrea, and that Anglo, Nevsun, Antofagasta and Sunridge now number among fellow miners that have invested in the country, there has, as yet been no rush of the kind most recently witnessed in Burkina Faso and Mali. Tim and Doug would like to believe, as they contemplate their next corporate moves, that such a rush might get underway fairly soon. Certainly, mining activity in the country is gaining momentum. And a few more big names in the neighbourhood might add even more spice to Chalice's share price.
CHN Price at posting:
40.4¢ Sentiment: None Disclosure: Not Held
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