Sahelian picks up Larafella-Balago

A letter-of-intent agreement is paving the way for Sahelian Goldfields (SHGI-C) to acquire the Larafella-Balago gold property in Burkina Faso from Gold Fields of South Africa.

The agreement, which is expected to be ratified shortly, calls for Sahelian to assume all responsibilities outlined in a previous deal between an affiliate of Gold Fields and the government. That agreement gave the affiliate the right to earn a 90% interest in the property by spending US$8.6 million on exploration and paying the government US$2.5 million in cash; US$5 million of the first requirement and US$500,000 of the second have already been covered, leaving Sahelian with the difference.

In the event production is reached, Sahelian will pay a fee to Gold Fields that will be tied to the size of the reserves being mined. Production arising from a feasibility study will be subject to a fee slightly smaller than that achieved without any such investigation.

The Larafella-Balago property covers 880 sq. km of ground west of, and contiguous with, Sahelian’s producing Poura gold property. Previous geological mapping, trenching and drilling outlined resources of 3.7 million tonnes grading 2 grams gold per tonne in six deposits potentially amenable to open-pit mining methods.

“You probably couldn’t make money starting from scratch, but we already have everything needed to support such an operation,” says Sahelian President Guy Charette. “If anything, bringing the deposits into production will probably lower our total costs per ounce quite nicely.”

Poura is an underground, carbon-in-leach operation that is expected to crank out 50,000 oz. gold annually at US$150 per oz. Commercial production of 500 tonnes per day is expected to be reached in the coming weeks.

Sahelian plans initially to prove up the resource at Larafella-Balago in order to augment reserves, which currently stand at 420,000 tonnes grading 11 grams gold. The deposit is within 5 km of the mine facilities.

“This property gives us one helluva land position and gives us access to the potential extension of the main orebody [at Poura],” says Charette. “It’s also a lot like our own exploration concession, only much more advanced.”

Charette’s long-term goal is to use cash flow from operations to explore the remainder of the property. Several gold anomalies have already been targeted for follow-up work.