As a result Axmin controls two major greenstone areas in the CAR, the 2,000 km2 Bambari permits and the 1,000 km2 Pouloubou permit.

By going into an African country perceived to provide a level of political risk, Axmin is looking to repeat what many of its key people have done before – in Tanzania.

Though Axmin was formed in 1999 its origins really go back a decade earlier to 1989 when the junior exploration company, Samax, was put together by current Axmin president Michael Martineau. Samax made two significant new discoveries in Tanzania, one of which was the Golden Pride deposit in Tanzania now mined by Resolute Mining. Another, at Kukaluma – Matandani forms part of Geita. In summary, Samax proved to be a huge success and was eventually bought out by Ashanti Goldfields for US$140 million in 1998.

Samax had the strategy to be the first in Tanzania, and Axmin CEO, Dr Jonathan Forster says that as with Samax then, Axmin now is looking to gain the advantage of being first mover in the CAR.

“When we went into Tanzania it did not have a modern mining code and it was a politically difficult place to do business,” Forster says. “This was not dissimilar from the situation in the CAR when we entered it, and geologically they are identical.”

“When we sold out to Ashanti, our backer the European based African-focussed oil group Addax & Oryx (AOG) had achieved a significant return on its investment, and was keen to restart a similar venture with key people who had made up Samax.”

Thus Axmin is again backed by AOG, an integrated oil company formed in 1987 and which now produces about 80,000 barrels a day from west Africa and is very strong across the continent in the distribution of refined products.

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Dr Jon Forster (CEO) and
Axmin geologists atop Topa iron
ore discovery at the Bambari
permits in the CAR.

“With the backing of AOG, which has achieved substantial success over the last decade, Axmin has the objective of becoming a US$500 million gold mining company in the next five years.”

Tanzania so far has yielded 50 million ounces of gold, and that is Axmin’s reference point. Geologically the Achaean greenstone belts in CAR are an extension of those in the northern DRC where some 11 to 12 million ounces of gold have been produced. No primary exploration has been done on the greenstone belts in the CAR, and the only previous exploration was some alluvial work done by the French in the 1930s to 1950s. Forster says there is no reason not to assume the Bambari greenstone belt, and the separate Pouloubou greenstone area located about 150 km southeast of Bambari cannot be as productive.

Exploration in the CAR for primary gold started with Asquith Resources, which had the Bambari permit and commenced an initial exploration programme. Axmin farmed into the project in a joint venture in mid-1999 and was on the ground in the CAR in late 1999. It completed 5,000 metres of reverse circulation drilling and reconnaissance exploration and liked what it found so much that it bought Asquith.

The CAR has had a number of political coups down the years, but Forster says this is not due to any ethnic or religious polarities, but rather economic mismanagement. In 2003, General Bozize led a coup to usurp the incumbent president and promised elections within two years. This promise was upheld, and at elections held in May this year, President Bozize was given a five year mandate by the population.

One of the roles Axmin has played has been to educate the government of the CAR regarding the benefits of establishing an industrial scale gold mining sector. “The government is starting to appreciate the scale of investment associated with a modern commercial scale gold mining industry. We took a delegation to Mali and showed them Sadiola to give an overview of an open pit gold mine. In April 2005 President Bozize subsequently visited our Bambari site and appreciates that we are looking at a gold project that could produce at a rate in excess of 150,000 oz per annum, and that could require an investment into the country of between US$60 and US$80 million.”

At the invitation of the government Axmin has now submitted its proposals for a mining convention which will establish the fiscal and legal framework under which the future mining operation and continuing exploration will operate and has promised to expedite these negotiations. Such mining conventions are an important and standard part of mining operations in Francophone Africa and typically provide the security of tenure and fixed conditions of operation for the life of a project.

Axmin’s project also seems likely to be able to avoid socio-environmental problems, with the project site well away from population centres. The CAR has a population of 3.5 million who mostly live in its western quadrant; the central region is only sparsely populated.

However, that means that Bambari is a remote site, some 1,500 km from the coast. Forster says that this is not too different to some other modern gold mines constructed in Africa, such as Samira Hill in Niger. Road access from the west coast to Bambari is through Cameroon, a country in which AOG has operations. Bambari is not far from a major tributary river on route to Bangui, the capital of the CAR. Forster says that it would face the same challenges as projects in Mali, Niger and Burkina Faso in getting fuel to site efficiently. The remoteness of the site admittedly will add to operating costs compared with a site in the middle of, say, South Africa.

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Core drilling rig at Passendro.

Apart from the 3,000 km2 Axmin has under license, it has another 3,000 km2 under application. One of the reasons that Axmin has been able to obtain such a dominant position, other than the perception of the CAR until recently as a poor place to do business, is that the country is only geologically partly known. “Greenstone belts are shown as granite, so the maps do not show the real geology,” Forster says.

Forster also believes that with a dearth of mid-tier mining groups, the market is ready for more of these. While he is pragmatic about possible outcomes the intention is to take Bambari to production of 150,000 to 200,000 ounces of gold a year within the next three to four years. And because the territory it has is so large, there is no reason to see why this could not double again.

Foster is a geologist, and is excited about that aspect of the projects in the CAR. Eighteen months to two years after Axmin began drilling on its Passendro project on the Bambari permits, SRK has delivered an indicated resource of 1.1 million ounces at 2.5 g/t of gold. There is another 1.1 million inferred ounces. Axmin has four drill rigs (two core and two reverse circulation) working at Passendro to convert the inferred resources to indicated resources and to test further drill targets. Axmin’s fifth drill rig (rotary air blast) is continuing to define anomalies on the Pouloubou permit. Drilling at the Bambari permits will continue non-stop through to the end of 2005.

Axmin has initiated a pre-feasibility study on Passendro for a minimum production of 150,000 ounces of gold a year. The pre-feasibility study is scheduled for completion during the fourth quarter of 2005 after which, on the basis of positive results, Axmin will proceed with a bankable feasibility study. GBM of the United Kingdom is leading the pre-feasibility team, supported by Amec Earth and Environmental (UK) which will report on tailings and waste management systems, Golder Associates (UK) on the environment and SRK on the mining aspects.

The geology at Passendro is relatively straightforward, with simple metallurgy and deep levels of oxidation that will facilitate open pit mining. Ongoing exploration is expected to continue to add resources.

Currently there are no known environmental drawbacks to the project, with no population pressure and access to water is not an issue.

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RC drilling at Passendro.

In addition, in the CAR Axmin finds itself sitting on a major iron ore occurrence at Topa, which has surface samples that have an average grade of 66.7% Fe. Axmin is looking at alternatives to progress this discovery.

WEST AFRICA PORTFOLIO
Axmin’s portfolio is not limited to the CAR and it also has licenses in Mali, Senegal and Sierra Leone. In Mali its Kofi property, where it is joint venturing with Newmont, is located near the seven million ounce Loulo project. It is also located some 10 to 15 km from the three million ounce Segala Tabakoto project. At Kofi Newmont has been funding drilling to follow up on a gold discovery. Newmont can earn 50% of Axmin’s share of the project by undertaking work to the value of US$5.5 million over three years. Newmont will soon decide whether to spend US$3 million as its third year commitment. Should it not, Axmin will pursue the project on its own.

In Sierra Leone, Forster says the scenario is fairly similar to that of the CAR, with a lot of gold potential and very little primary exploration having taken place. Axmin has interests in five licenses covering 600 km2. One of these covers a portion of the Nimini Hill Archaean greenstone belt. It is one of the few prospects in Sierra Leone where some gold drilling was undertaken in the past. In all but one of the five licenses Axmin has formed joint ventures. Most of the exploration on the Sierra Leone properties is early stage.

In Senegal, Axmin has three licenses, Heremokono, Sonkounkou and Sabodala NW, covering some 400 to 500 km2. Axmin has retained the team that Samax had doing exploration for it. Exploration is at an early stage. Axmin used to own the Bouroum property in Burkina Faso, but it sold the resource for US$3.3 million to High River Gold, which is developing it with Taparko as a single project.

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Geologists panning the
drill cuttings at Passendro.

“We do take a business like approach to exploration. The project was too small for Axmin but a good fit for High River and so we elected to sell the Bouroum gold reserves,” Forster says.

Since 1999 Axmin has spent US$24 million on its exploration, of which some US$15 million has been in the CAR. This year Axmin will spend some US$7.5-8 million, of which US$6.5 million will be spent in the CAR, mainly on the Bambari permits. Axmin is spending about US$1 million in Sierra Leone this year, and some US$750,000 in Senegal, while Newmont is covering exploration expenditure in Mali.

Forster sees it as a real possibility that the CAR could be in the 2000s what Tanzania was in the 1990s, and his previous record and current progress makes this a very creditable call.MRA