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African Queen, mineral exploration company set for upside

African Queen Mines (CVE:AQ) is an exploratory resource company focused in Africa, with loads of development potential. Being at its lowest share price in two years due a recent hammering of small-cap junior mining stocks, the company is set for significant upside potential, asserted CEO Irwin Olian to Proactiveinvestors.

By investing in the stock of the company, which has gold and other metal properties in southern, east and west Africa, one would gain access to five major resource projects led by a strong geological team and management, with two large drill programs being conducted this year, and possibly even a third in the works.

At its King Solomon gold project in Mozambique, African Queen just started a 2011 core drilling program covering around 3,000 metres, focused on four major targets.

The project, which covers an area of 230 square kilometres, is under a joint venture agreement with Swiss-based Opti Metal Trading, and so far, African Queen has earned a 51% interest, with the potential to gain up to 85% by funding additional prescribed stages through feasibility.

Last year, African Queen completed its initial 3,000 metre drilling program, encompassing a total of 19 holes ranging from 120 to 200 metres in depth. Significant copper, gold and silver was found at the Mankombiti West target, including 7.73 metres of 1.51% copper, 1.32 grams per tonne (g/t) of gold, and 27.6 g/t silver, along with 4.79 metres of 1.63% copper, 1.13 g/t gold and 32.2 g/t silver.

2011 drilling will mainly focus to the west of the 2010 program, where geophysics has suggested the potential for better mineralization and thickening of the zone, the company said. Three kilometres of strike remains to be tested at the prospect.

Perhaps one of its most promising projects is the 1 millon ounce plus Noyem-Nyafoman gold project in Ghana, for which the prospecting license was transferred over from Newmont Mining in a purchase and sale deal. The project, which is under a joint venture agreement with Akan Exploration, could see African Queen earn up to 75%.

The license, which hosts a historical resource of over 1 million inferred ounces of gold at a grade of around 6.67 g/t from just 12 holes in one small corner of the property, covers an area of 28.9 square kilometres, located within the Birim North District of eastern Ghana. It is also at the northeastern end of the country's prolific gold-producing Ashanti Belt, nearby Newmont's Akyem deposit, which is due to go into production next year.

As part of the license transfer agreement with Newmont, the two companies agreed that the product from Noyem-Nyafoman would eventually be trucked over to Newmont's Akyem, meaning no capex is associated with African Queen's project, said Olian.

And the company is certainly progressing the endeavour. Just last Friday, African Queen announced that it reached a settlement with the chief of the Nyanofoman community in regards to four mining claims that were in conflict.

Since African Queen received the prospecting license, 26 small-scale mining claims have been identified that are potentially in conflict with the development of its planned large-scale project, and it has since been in negotiations with the owners of the claims to achieve settlements.

The chief, Nana Ansah Sasraku Nipa Pepprah IV, signed an accord that will see African Queen earn four of the 26 licenses in question, paving the way for speedy settlements of the remaining conflicting claims, it said. This is because the chief gave up his own family claims, which is expected to have a domino effect within the tribe.

Still, the company has identified other targets that are not in dispute, and until settlement is completed, it will focus this year's work program on other prospects.

In addition to these two projects, the company also has three in Kenya, including the Rongo gold project, under a joint venture with Abba Mining. Work at this property is now underway with a ground geophysics survey to assist in targeting an upcoming potential drill project this year.

To fund all this work, the company announced earlier this month a planned $2 million private placement offering, which will consist of 8 million units, at $0.25 each. African Queen is also able to increase the size of the placement to 9.6 million units, it said.

Vancouver-based African Queen spun out of Pan African Mining Corp in 2008, when Pan African was acquired by Asia Thai Mining Co.