Roxgold grows Bagassi South resource in Burkina Faso

Roxgold (TSX: ROXG; US-OTC: ROGFF) has improved grades by 37% and the resource size by 14% at its Bagassi South satellite gold deposit in Burkina Faso.

Bagassi South is 1.8 km west of its flagship underground mine at the 55 Zone, which is part of the company’s 90%-owned Yaramoko permit.

The updated resource is based on 250 core boreholes totalling 55,660 metres of drilling and resulted in converting inferred ounces into the indicated category.

The resource now stands at 352,000 tonnes grading 16.6 grams gold per tonne for 188,000 indicated oz. at a cut-off grade of 5 grams gold, and 69,000 inferred oz. from 130,000 tonnes grading 16.6 grams gold.

The previous resource estimate, completed in April 2016 and based on 114 core boreholes and the same cut-off grade, stood at 563,000 tonnes at 12.1 grams gold for 220,000 inferred ounces.

“We’ve been hard at work,” Roxgold’s president and CEO John Dorward says. “The drilling at Bagassi South was a key job for us in the first half, and the results looked strong in terms of widths and grade, so we were confident that we’d see a good conversion from inferred to indicated. I was pleasantly surprised by the impact of the grade after the final estimation.”

The resource update is a “really good springboard” for the company to move forward with the feasibility study, he adds, “and a good base to look at the economies of a combined operation to move to 150,000 oz. gold production.”

The Australian mining executive also notes that a feasibility study on Bagassi South will be finished before year-end and the deposit should churn out metal in 2018.

“We’ll be in production next year, so we’re looking at ore coming out of Bagassi South in the second half of next year — that’s our time frame now.”

Dorward is confident that permitting Bagassi South should be straightforward.

“I’ll be in Burkina to get an update on the ground, but everything points to a smooth process,” he says in an interview. “It’s effectively an amendment to the existing permit … and we’re not looking to relocate any villages … so the permit will be forthcoming to enable the time frame that we’ve discussed.”

On the exploration front, Roxgold has drilled 30,000 metres of its 60,000-metre program this year. It is conducting expansion drilling at Bagassi South and will drill at the nearby Ridge Line targets in the coming weeks.

About 6,000 metres of drilling started mid-year to target the QV1 extension structure. (QV1 and QV Prime are Bagassi South’s two main deposits.)

The QV structure, which accounts for 36,000 oz. gold within Bagassi South’s updated inferred resource, remains open down-plunge along the contact between the basalt flows and the Bagassi granite.

In addition to the drill program, Roxgold is undertaking a ground geophysical survey consisting of two pole-dipole gradient surveys and two conventional induced polarization (IP) surveys. The two pole-dipole surveys occur on parts of the concession where an IP survey in 2014 highlighted areas of disruption in the regional structural fabric at 55 Zone and Bagassi South.

Results from deep drilling at the 55 Zone are expected soon.

“It’s all about exploration gearing up again,” Dorward says. “We’ve been a little quiet during our ramp-up of operations [at the 55 Zone], but we’re stitching together our geophysical and geochemical data sets, and we’ll drill well into next year, so we have a number of targets, and hopefully, exciting times.”

As for the 55 Zone, production continues to hum along, he says.

“We’ll put out second-quarter results on Aug. 14, but the project continues to kick a lot of goals. The smooth ramp-up has continued and is settling into a rhythm. We see good production and cost performance.”

The updated resource estimate lifted Roxgold’s shares 7¢, or 6.4%, to $1.17 per share, in a 52-week trading range of $1.04 to $1.76.

Raymond James has a price target on the company of $1.90 per share. BMO’s target is $2.25 per share, and Macquarie has $3 per share.