Gryphon Minerals (ASX: GRY) has lifted the gold resource at its Banfora Gold Project by a stunning 2.5 million ounces - lifting it into a globally significant gold project status and into the mid-tier group of peers in terms of equivalent gold projects.
However, on today's results and exploration upside, there looks to be more ahead.
Strikingly, and as a pointer to project funding, the Measured and Indicated category is 31.4 million tonnes at 2.2 grams per tonne (g/t) for 2.2 million ounces of gold.
A Definitive Feasibility Study is due for completion in second half 2012 for +200,000 ounces of gold per annum.
Importantly, the potential is still high to continue building on this Resource base with mineralisation open along strike and at depth at each of the Nogbele, Fourkoura, Samavogo and Stinger gold deposits.
Gryphon has defined a JORC Resource for the four deposits of 56.4 million tonne at 2 grams per tonne (g/t) for 3.6 million ounces of contained gold, with 2.2 million ounces of that in the higher confidence Measured and Indicated categories.
The remainder of the total Resource comes from the additional heap leach potential material at the Nogbele gold deposit, which hosts the extra 49.2 million tonnes at 0.6g/t for 0.93 million ounces of contained gold in the Inferred category.
Preliminary results of above 90% average gold recoveries from recent column leach test work on bulk trench samples across three portions of the Nogbele gold deposit, targeting lower gold grade halo mineralisation, indicate a real potential for successful heap leach gold recovery.
Results of the heap leach studies are expected at the end of 2012, separate to the current Definitive Feasibility Studies.
Demonstrating the near surface nature of the deposits and the potential for an open pit operation, 90% of the Resource is from surface to less than 150 metres vertical depth.
Steve Parsons, managing director, commented on the milestone: "This is a great achievement for Gryphon. At 4.5 million ounces of gold, the Banfora Gold Project is one of the largest undeveloped gold projects in West Africa and certainly growing in scale on the world stage.
"Full credit must be given to our team for their ability to increase the Resource from 2 million ounces to 4.5 million ounces in a little over 12 months, which also demonstrates the enormous growth potential of Banfora as a major multi-million ounce gold district.
"We have reached a major milestone in advancing the Banfora Gold Project and importantly, this latest resource estimate provides a solid foundation for our next major milestone which is the completion of the Definitive Feasibility Studies in 2012."
Aggressive 2012 exploration campaign
For 2012 Gryphon has outlined a $30 million budget for exploration, along with a Definitive Feasibility Study to establish a multi-million ounce gold district at Banfora.
The company currently has five drill rigs turning onsite to continue to grow the Banfora Gold Project.
Supporting the upgrade, earlier this month Gryphon announced the discovery of further high grade discoveries from the newly defined Stinger target, which extends for at least 2 kilometres.
Further exploration upside is the identification of at least three more parallel mineralised zones across several kilometres at Stinger.
Proving its high prospectivity, follow up reverse circulation and diamond drilling at the target has delivered high grade intersections of:
- 16 metres at 1.2g/t gold from 52 metres and 10 metres at 8.67g/t gold from 141 metres;
- 34 metres at 1.2g/t gold from 10 metres and 20 metres at 3.02g/t gold from 110 metres; and
- 11 metres at 2g/t gold from 104 metres and 17 metres at 4.26g/t gold from 261 metres.
The upgraded Resource will now pave the way for the completion of Definitive Feasibility Studies based on a 3.5 million tonne per annum operation delivering plus-200,000 ounces per annum of gold.
The studies are scheduled for completion in the second half of 2012.
Gryphon is also continuing to review a combination of financing scenarios including debt, equity and other financing facilities with a number of Australian and global investment groups.
The Banfora Project is strategically located in the south‐west of Burkina Faso in a major gold producing district, which hosts Resolute Mining's (ASX: RSG) 11.5 million ounce Syama, Rangold Resources (LON: RRS) andAngloGold Ashanti's (ASX: AGG) 6.5 million ounce Morila and Rangold's 4.2 million ounce Tongon deposits.
Gryphon has achieved a more than doubling of its contained gold Resource to 4.5 million ounces an just over a year, demonstrating the major growth potential possible from Banfora, located in a multi-million ounce gold district.
With the latest resource increase to 4.5 million ounces, this should set analysts reaching for their calculators again. Propelling it again into the undervalued nature based on Ev/Ounces: a Market Cap of $248m and Cash of $62m (Mar Qtr).
Add to that the value of its listed investments and the under-valuation of Gryphon becomes even more acute.
Banfora with its grade, oxide component and high metallurgical gold recoveries is certainly shaping up to be one of the standout gold Projects in West Africa, propelling Gryphon into the ASX mid-tier gold space.
Although a challenging macro market for resources companies, Gryphon's valuation looks completely out of sync with the intrinsic value of its gold bounty on a 12 month basis.
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