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PMI Gold’s Ghana Gold Projects in the fast lane to development

|Includes: PMI Gold Corp. (PMVGF)

PMI Gold (TSX-V:PMV, ASX:PVM) is a Canadian based gold explorer and developer with a focus on developing a number of highly prospective projects located along 85 km of Ghana’s prolific Ashanti and Asankrangwa Gold Belts. The Company’s concessions are all located within Ghana’s golden triangle hosting resources that may exceed 186 million ounces of gold.

These include the Obotan and Kubi Mines that closed in the last decade due to low gold prices, leaving in place unmined and delineated ore resources. Both mines can be fast tracked through feasibility studies and into production, at low cost, while avoiding multiple development and permitting issues associated with green-fields exploration and development.   

Until recently, PMI Gold was an explorer struggling to develop its prime Ghanaian acreage on a limited budget. The Company had identified numerous anomalous areas and structural targets that have the potential to support multiple long life mines. This concept was heartily endorsed in December of last year when a very successful secondary listing took place on the Australian Stock Exchange, raising $35 million in several tranches, and installing Australia’s Macquarie Bank as its largest shareholder holding 13.2% of 197 million shares. Macquarie has a long history of financing many profitable ASX listed mining projects, and has a significant African presence.

PMI Gold established an $8 million exploration budget at Obotan, where it has commenced a +40,000 m drilling program to upgrade and increase resources at the Nkran open pit and satellite deposits. The Obotan Mine produced 730,000 ounces at a grade of around 2.2 g/t, and ceased operations in 2002, abandoning substantial in ground resources at a time when gold was wallowing near decade long lows of US$350 per ounce.   

The Company recently completed a JORC resource built around these remnant resources and more recent confirmatory drilling, which estimated a current Indicated and Inferred Resource of 1.2 million ounces. The break down of these resources include the Nkran Pit area which contains 800,000 ounces, made up of 412,000 ounces at 2 g/t Au, accessible to open pit mining methods, and 420,000 ounces at 3.5 g/t Au, in an underground configuration. The remaining resources are scattered amongst a number of open pits found on strike lines across the property, and include Adubiaso for 166,000 ounces at 1.4 g/t Au, Asuadi for 65,000 ounces at 1.3 g/t Au, and Abore for 147,000 ounces at 1.4 g/t Au.

PMI Gold believes that there is potential for an additional 1 to 2 million ounces at 3.0 g/t gold in extensions under and around the Nkran open pit. Earlier drilling by the previous operator had intersected viable gold grades at depths below 400 m within the pit area.


The Company has deployed 3 diamond drill rigs that are currently working full time on resource expansion. An additional 2 multipurpose and 1 rotary air-blast drill rigs have been secured, and will progressively join the campaign effort. Drilling has commenced within the Nkran pit area with eight of the first nine holes intersecting significant mineralization. Seven of these holes have intersected multiple zones of mineralization within the parallel Western, Eastern Lodes, and the broad Central Stock-work Zone. The excellent results from this renewed drilling phase confirm the integrity of the mineralization at Nkran as well as the potential for both depth and strike extensions.


Highlights include NKR10-031, which intersected gold from 256.92 to 337.0 m (106.92 m below the pit floor), for an intersection of 80.08 m at 7.49 g/t Au. NKR10-022, which intersected gold from 272.79 m to 519.0 m (122.79 m below the pit floor), for an intersection of 246.21 m at 1.86 g/t Au, and NKR10-018, which intersected 22.0m at 6.48g/t Au from 291m, 1m at 101g/t Au from 301m, and 22m at 3.5g/t Au from 324m. 


Data from earlier mining at Obotan and Kubi are proving to be very positive for prefeasibility studies. Prior information confirms that previous reserve models reconciled almost perfectly with final production numbers, and metallurgical recoveries in previous mining reached 95%. This will allow completion of a pre-feasibility study by the end of calendar 2011, and allow for acceleration of bankable feasibility studies to follow. PMI Gold is targeting initial production of +100,000 ounces of gold per year by 2013 from Obotan.

The second proposed mine is at the Kubi Gold Project, which lies to the south and on the same Ashanti Gold Shear Zone as the adjoining Anglo Ashanti Mine. This is the largest underground mine in Africa and has been operating continuously for 113 years, and has a current resource of 60 million ounces of gold. Kubi is also located on a cross structure that trends to the west where Perseus Mining (ASX: PRU, TSX: PRU), has identified and drilled out a 5 million ounce gold resource.

The Kubi mine produced 59,000 ounces of oxide gold from ore grading 3.65 g/t Au, from near surface mineralization measuring over 400 m along a 1,800 m strike line. This mineralization is contained in narrow high grade veins that are known to plunge to depths of at least 400 m. Current JORC stands at a Measured and Indicated Resource of 1.99 million tonnes, grading 5.42 g/t Au for 348,000 ounces. 

Kubi is currently identified as a source of high grade ore for processing at Obotan at a theoretical rate of 50,000 ounces per year, however recent exploration efforts are indicating that this area may grow into a much bigger project.

Recent geophysical surveys and auger drilling have led to the discovery of the 513 Gold Zone, which extends for 600 m and is located on the Ashanti Shear Zone, which runs parallel to the Kubi Shear located 2-4 km to the west and 1.4 km southwest of Kubi.

The Ashanti Shear Zone has very significant potential for high grade, narrow lode style deposits that plunge to at least 3,000 m in depth. The Company has commenced a district wide 10,000 m auger drilling program, of 2,000 holes, to get below shallow overburden that masks potential gold zones on both shear zones. In the south of the same concession drilling will test for source rock that may have shed alluvial gold at Dunkwa.


The Asankrangwa concessions cover approximately 70 km of strike, and contain 17 regional exploration targets identified from ground surveying and airborne geophysics. The area is highly prospective for new gold discoveries, as is indicated by scout drilling at Fromeda, which has intersected 43 m at 3.00 g/t Au and 23 m at 5.7 g/t Au. 


On a peer group comparison PMI Gold looks undervalued, having a current Enterprise Value of $60 per gold resource ounce, where its peer group average is at $125 per resource ounce. The current tempo of drilling activity has the potential to substantially increase resource ounces into the multi millions, and leading to conversion of resources into reserves, which in turn should drive the market valuation of PMI Gold.