The Baomahun project in Sierra Leone is considered the company’s flagship asset as exploration results thus far have shown it has the potential to be a multi-million ounce deposit. However, the Kalsaka project in Burkina Faso and the Angovia project in Côte d’Ivoire are more advanced and could be in production sooner.
Following a placing in April 2006 where £15.4 million before expenses was raised with BMO Nesbitt Burns, mainly from US investors, Cluff Gold has sufficient funding to undertake exploration on its projects for at least the next two years.
It is envisaged that over the next 12 months the company will spend approximately US$3 million on additional resource definition drilling and further exploration at its Baomahun project in Sierra Leone and it will spend US$2 million at the Angovia project in Côte d’Ivoire on confirmation drilling. In addition, it will also spend about US$1 million over the same period on the Kalsaka project in Burkina Faso. With no field work underway at the moment at Kalsaka, this expenditure will mainly be allocated to project evaluation and legal due diligence work required for project finance. Cluff Gold will also be spending some US$500,000 over the next 12 months on a joint venture brownfields project in Mali where it has an 80% share. The aim there is to do some drilling this year and evaluation of previous UNDP work undertaken on the licence.
Cluff Gold technical director Douglas Chikohora says, “The near term aim is to secure project finance to begin construction and development at Kalsaka. The project is planned as a 60,000 ounce a year heap leach operation with a resource base of 600,000 ounces of gold at a grade of 2 g/t. The oxide ore body extends to a vertical depth of up to 80 metres and the gold recovery by the plant is estimated at approximately 85%. The heap leach plant will be fairly standard and will include a MMD sizer and agglomeration drum, after which a network of conveyors and stackers will move the ore to the pads for leaching.”
The capital cost for the project is approximately US$20 million excluding deferred capital and the company has mandated RMB Resources to arrange the debt finance to fund project construction and development. Production is estimated to begin12 months from the commencement of construction with the plant operating at full production within three months following this.
The water and mining permits in place are valid for 20 years and cover 25 km2 of the 334 km2 Kalsaka exploration license area. The environmental impact assessment and management plan is also in place.
“If we have achieved financial completion on project finance we would like to begin construction on the project in the last quarter of 2006 just after the cessation of the wet season,” Chikohora says.
Chikohora believes that the area, located some 150 km northwest of Ouagadougou, will sustain gold mining for several years due to the discovery of other deposits in the vicinity of Kalsaka with the possibility of a regional mining hub being formed. Cluff Gold is also undertaking exploration activities on the Yako permit, which covers 442 km2, where it is trenching near an already established deposit with a resource of 150,000 ounces of gold. This is located 25 km from where the Kalsaka plant is planned to be located creating the option to truck ore from Yako. Chikohora estimates that at least some 50,000 ounces of gold from this satellite deposit can be recovered. Other groups with deposits in the area are also looking at possible agreements with Cluff Gold relating to its planned processing facility.
Angovia, which management believe will be the company’s next project in production following closely after Kalsaka, is according to Chikohora actually two projects in one. The orebody at Angovia, located 40 km northwest of Yamoussoukro, the political capital of Côte d’Ivoire, consists of 30 to 40 metres of oxide material near the surface and is amenable to heap leach processing as well as sulphide material at depth. Cluff Gold holds a 534 km2 license in Côte d’Ivoire that includes the Angovia project.
“The Angovia project is quite advanced and has the added advantage of very good infrastructure since the mine was in operation from 1998 to 2003. Water and grid electricity is at the site. The company has purchased the existing plant and site infrastructure from the Societe Pour Le Developement Minier De La Côte d’Ivoire (SODEMI) and this will give us cost and time benefits during the construction process,” Chikohora says.
Cluff Gold currently has contracted the use of a multipurpose drilling rig at Angovia and plans a 15,000 metre drill campaign. Half of this will be for confirmation drilling of the historical Angovia deposit. The first 7,500 metres of drilling will thus upgrade the historical 800,000 ounce resource potential at Angovia to one compliant with modern mining codes. Chikohora is looking to complete this part of the drilling programme by the end of July 2006, based on drilling rates averaging 150 to 200 metres, and once this has been completed drilling on the deeper sulphides will commence in order to establish an orebody for a second phase of the project. The aim is to complete this second portion of the 15,000 metre drilling campaign by the end of this year.
Chikohora envisages a 30,000 to 40,000 ounce heap leach project at Angovia, which has potential to expand to increased levels of annual production. Based on current thinking the company estimates the capital expenditure to be between US$8 to 10 million, assuming contract mining. This number will increase if it opts to undertake the mining in-house. In parallel with the drilling Cluff Gold has begun pre-feasibility work on Angovia’s oxides including an environmental study, pit optimisation work and resource planning, as well as detailed engineering on the refurbishment required for the plant. The project will feature multiple pits with at least three likely to be mined initially.
Because of its proximity to infrastructure the cash operating costs are predicted to be below US$300/oz. Cluff Gold’s aim is to complete its internal feasibility study by the first quarter of 2007. With the plant and facilities already on site the estimated construction time for the project is six to nine months. With the Côte d’Ivoire not being a well established mining country as yet, Cluff Gold does its laboratory analysis in Ghana, but it is looking at sourcing a supplier that will provide a laboratory service in Côte d’Ivoire.
However the project on which Cluff Gold is investing most financial resources is the Baomahun project. Baomahun is located about 180 km east of Sierra Leone’s capital, Freetown, in the Bo province of the country, and the geological setting is similar to the Lake Victoria goldfields in Tanzania. In 2005 the company undertook a 5,000 metre drill programme and proved up 518,000 resource ounces and it is now undertaking an 11,000 metre programme planned to be completed by the end of 2006. Twenty-one drill holes have already been completed this year and one of the intersections obtained was 22 metres at 8.24 g/t of gold including five metres at 20 g/t. More assays from the remainder of the holes drilled are expected in due course.
“We can’t tell yet if this will be a five or more million ounce deposit, but it is obvious it will be a multi-million ounce deposit,” Chikohora says.
This has been substantiated by an independent report published by LR Kilpatrick Associates (LRK) earlier this year, which stated, “LRK believes that the Baomahun project offers very good potential for the discovery of a high-grade multi-million ounce gold deposit, and we highly recommend additional exploration on this property.”
The drilled depth of the orebody extends to at least 175 metres and the hilly nature of the topography suggests that open cut mining can be used to mine to 250 metres. The known orebodies are still open both along strike and down dip. It is expected that a resource update due out soon will increase significantly the resource at Baomahun where to date only 25% of the prospective trends have been drilled on the 137 km2 licence area. The company has contracted a Boart Longyear rig on site and is hoping to have a second rig operating on the licence to complement the existing rig.
Cluff Gold has four geologists on site, three drill rig operators with the rig working 24 hours a day seven days a week. It also has soil sampling and trenching crews working on the site.
Chikohora, who has been with the Cluff companies since 1987, and notes that it was Cluff that discovered Tanzania’s outstanding Geita gold mine, says that one can never foresee what will happen, but the plan is for Cluff Gold to go it alone at Baomahun. “We have a great resource potential at Baomahun in what is typical banded iron formation mineralogy and it will be a capital intensive project that will require a CIL/CIP processing plant. It is a project in a remote part of Sierra Leone so power and other infrastructure requirements will add to the cost, but we are looking at a possible 4 g/t plus orebody and we think this will be a great project,” he says.
In Mali Cluff Gold has its fourth project in the form of the Karbasso project which is a joint venture with Kadiel Mining in which Cluff Gold holds 80% interest. This 250 km2 licence area is located in the southeast of the country and along strike of the Syama deposit and further to the south is Etruscan’s Finkolo permit, which is on the same trend, and regarding which encouraging drill results have been published recently. Cluff Gold has obtained encouraging historical soil sample results and geophysical information on the Karbaso property and believes there is exciting potential on this corridor. “We are at an early stage and we need to confirm the data we have, and consider where to undertake reverse circulation or rotary air blast drilling,” Chikohora says. “We are setting up our office in Bamako in Mali and will start fieldwork at Karbaso in September or October this year after the rainy season.”MRA