Roxgold hits high grades at Seguela in West Africa

Roxgold (TSX: ROXG; US-OTC: ROGFF) has released assay results for reverse circulation and diamond tail drilling completed at the Koula deposit within its Seguela development project in Côte d’Ivoire.

The drill highlights included 14 metres of 42.9 grams gold per tonne starting at 61 metres; 11 metres of 46.2 grams gold per tonne from 48 metres; and 18 metres of 22.1 grams gold per tonne from 175 metres.

A four-rig infill program is underway at the Koula deposit, which is aimed at infilling this deposit on 25-metre centres to establish a future indicated resource. Additional extension drilling is also ongoing. Current inferred resources at Koula stand at 1.1 million tonnes grading 8.1 grams gold per tonne for a total of 281,000 gold ounces.

“Today’s results continue to demonstrate Koula’s ability to add significant value to the Séguéla gold project, through its ongoing expansion and the high grade tenor of mineralization,” John Dorward, Roxgold’s president and CEO, said in a news release.

A feasibility study for Seguela is expected in the second quarter of 2021, with a construction decision anticipated shortly thereafter for a potential first gold pour in 2022.

In April 2020, the company published the results of a preliminary economic assessment on Seguela. The study outlined an open pit operation producing an average of 103,000 oz. of gold a year over an eight-year life at all-in sustaining costs of US$749 per ounce. With an initial capital outlay of US$142 million, the project has an after-tax net present value estimate, at a 5% discount rate, of US$268 million and a 66% internal rate of return, based on a gold price assumption of US$1,450 per ounce.

In December, the company received the mining permit from the government of Côte d’Ivoire to develop and operate Seguela.

Geordie Mark, an analyst covering Roxgold for Haywood Securities, wrote in a research note that the company is a “preferred name within our junior gold producer space” and has a buy rating on the stock and a price target of $2.30 per share. (At presstime in Toronto Roxgold was trading at $1.54 per share within a 52-week trading range of 56¢ and $1.92 per share.)

“We continue to be impressed by the company’s exploration results on Sequela, particularly at the high-grade Koula target, and a little earlier at Ancien,” he noted. “We expect these high value satellites will be a key lever driving front-end project economics as more advanced mine sequencing plans come to light in the upcoming feasibility study due next quarter.”

Mark also noted that the latest drill results not only demonstrated “gold mineralization well above the average head grade for the deposit,” but also indicated “potential for resource growth beyond the defined pit.”

In addition, the analyst said the company trades at a “compelling discount to peers on an EV/21CF metric at 3.8 times versus peers at 5.8 times, and on a P/NAV basis of 0.47 times versus peers at 0.69 times P/NAV…”

Last year, Roxgold generated 133,940 gold oz. at its Yaramoko mine complex in Burkina Faso. This year, the mine is expected to produce 120,000 to 130,000 gold ounces.