Teranga increases resource at Golden Hill in Burkina Faso

Teranga Gold (TSX: TGZ; US-OTC: TGCDF) has updated the mineral resource estimate for its wholly-owned Golden Hill project in the central part of West Africa’s Hounde Greenstone Belt in southwestern Burkina Faso.

The project is surrounded by several gold discoveries, including Perenti Global’s Siou, Endeavour Mining’s (TSX: EDV) Hounde, which is contiguous with Golden Hill, and the high-grade Yaramoko deposits, owned by Roxgold (TSX: ROXG; US-OTC: ROGFF).

The total mineral resource estimate for Golden Hill increased by 34% from its previous estimate in 2019 and now stands at 12.62 million tonnes in the measured and indicated category grading 1.85 grams gold per tonne for 752,000 contained oz. gold. Inferred resources are 11.48 million tonnes grading 1.81 grams gold for 669,000 oz. gold.

The resource was based on a cutoff grade ranging from 0.49 gram gold per tonne to 0.55 gram gold per tonne.

The updated estimate incorporated drill results from over 900 reverse circulation and core drill holes totalling over 100,000 metres at five deposits, including Ma, Nahiri, Jackhammer Hill, Peksou/C-zone, and A-B zone, and several prospects, the company reported.

The most recent drill program was completed in the first quarter of this year. It consisted of 27,000 metres of drilling that evaluated nine separate targets, including four portions of the Ma structural complex (Main, North, East, and Jonction), C-zone, A-zone, Peksou Basin, Copper, and Gogoba West.

Based on the drilling campaign, the company increased indicated resources at the Ma deposit to 521,000 oz. gold and inferred resources to 410,000 oz. gold, and converted resources previously classified as inferred to the indicated category at Peksou/C-zone and at A-B zone.

The resources remain open to further expansion along strike and at depth, the company said.

“Drilling and preliminary engineering work to date confirm the potential for a high-grade open-pit gold mine at Golden Hill,” Richard Young, Teranga’s president and CEO, said in a statement. “As a result, we expect to submit a mine license application in the fourth quarter.”

“We expect to spend approximately $15 million on our resource expansion program at Golden Hill through the end of 2021, in order to reach our goal of outlining a resource of between two and three million ounces of gold.”

Golden Hill’s development, he added, is conditional on the project meeting or exceeding an internal rate of return of 15% at a gold price of $1,300 per ounce.

The resource update was positively viewed by mining analysts at CIBC Equity Research. The results, they said, “highlight Golden Hill’s potential to be a high-grade open-pit gold mining operation, and confirm our confidence in Teranga’s solid development pipeline and organic growth opportunities.”

The analysts have an outperform rating on the stock and a 12-18 month price target of $22.50 per share. 

Drilling at Golden Hill was suspended in March due to the Covid-19 pandemic but will recommence at the end of the rainy season in mid-October, the company said. The drill program will target at least five additional zones, including Gogoba North, Sebe, Nahiri, Peksou North and Pourey. It will focus along trend and at depth to extend the resource estimate components and initiate an evaluation of additional target areas.

Also included in the broader drilling campaign are a further five undrilled exploration targets defined by favourable stratigraphy, structure, geochemical and geophysical signatures, the company said.

“Within our three Golden Hill exploration permits, the structural-stratigraphic mineralized host can be traced for over 32 kilometres along trend, of which we have only explored about 10 kilometres,” David Mallo, the company’s vice president of exploration, said in a statement

“We look forward to getting back on the ground to drill and explore along this mostly untested trend where we have identified a number of undrilled target areas with very positive geophysical signatures, within the favourable host stratigraphy, compared to those observed at our known deposits, including Ma and Jackhammer Hill.”

Results from initial metallurgical testing indicate a flowsheet consisting of flotation, followed by leaching with gold recovery ranging from 83% to 93%, the company said. 

Teranga also plans to continue with early-stage engineering studies, metallurgical test work, and baseline environmental and social assessments. In addition, the company plans to submit a request to the government of Burkina Faso for the conversion of the Golden Hill exploration permits to a mine license by the of the year based on a technical study supported by the resource estimate.

At press time in Toronto, Teranga was trading at $13.91 per share within a 52-week trading range of $3.86 and $16.80. The company has 168 million common shares outstanding for a $2.3-billion market capitalization.