African Queen looks to repeat Pan African’s success

Irwin Olian is looking to strike it big in Africa yet again. 

The chief executive and president of African Queen Mines (AQ-V) is taking the strategy that worked so well with Pan African Mining in Madagascar to the continent’s mainland. 

With Pan African, Olian assembled a diversified portfolio of resource projects in Madagascar with the goal of hitting the proverbial gold mine on one of them.

When Asia Thai Mining acquired the company in June 2008, principally for its coal assets, Olian’s vision came to fruition. 

Pan African was initially priced at 25¢ a share in a seed financing deal and later went public in 2004 at $1 per share. Olian made all of those early investors happy by selling the company to an Asian consortium for $4.50 per share in 2008. 

But the acquisition did not include assets on the mainland, and Olian was free to spin those out into a new company, which morphed into African Queen. 

“We started with the non-Madagascar assets of the old Pan African but we increased our assets through acquisitions, and those acquisitions have now become our predominant assets,” Olian said after delivering a speech to the Richmond Club in Toronto on July 21.

But leaving Madagascar behind, and all of the contacts and goodwill that Olian had built up over the years, didn’t mean that the executive was ready to dive into the hornet’s nest of political corruption that plagues many countries on the mainland. 

“We look for projects with low political risk, in miner friendly social cultures,” Olian explains of his corporate philosophy. “We avoided the DRC and Angola because I feel that life is too short and there are too many other good opportunities in good places.”

African Queen’s current portfolio consists of assets located in such diverse countries as Mozambique, Kenya and Botswana. But it’s a recent deal with Newmont Mining (NEM-T, NEM-N) for the Noyem-Nyafoman gold project in Ghana that is getting the most interest.

That’s because the project already has a non-compliant historic inferred resource of 5.2 million tonnes grading 6.67 grams gold per tonne for 1.1 million oz.

Newmont was willing to let go of the asset so that it could focus on its Akyem project, which is roughly 20 km down the road from Noyem. 

Noyem sits in the Birim North district of Ghana’s Eastern Region, at the northeastern end of the famed Ashanti gold belt, 80 km from one of the world’s more substantial gold mines: AngloGold Ashanti‘s (AU-N) Obuasi Mine, which hosts 41 million oz. of gold. 

African Queen was able to secure a licence to the property for payments that Olian says will total close to $500,000. That money allows African Queen to earn a 75% interest in the 28.9-sq.-km property. 

Should the junior be able to prove up an economic mine, Newmont has the first right of refusal on any acquisition offers. 

And while drilling will intensify once a recently announced private placement is completed, the company has already gotten off to a solid start on community relations. 

Noyem has long been host to a multitude of artisanal miners and negotiations between Newmont and the local community were largely unfruitful. 

But African Queen managed to sign an accord with the key local Chief early on. The agreement led to the relinquishment of the first group of small-scale licences, which sets the stage for accelerated exploration and development, the company says. 

With the agreement in place, Olian is set to spend roughly $500,000 on drilling at the project. 

Thus far, past work at the site has defined mineralization down to 550 metres within reefs of the Tarkwaian conglomerates.

But in true Olian fashion, Noyem-Nyafoman doesn’t make up the entire African Queen story. 

The company’s second key project, King Solomon, sits in the Fingoe belt of Mozambique.

African Queen currently has earned a 51% interest in the project and can take that up to 85% by funding it through to feasibility.  

Early drilling by the company showed promise as last year’s 3,500-metre program returned highlight intercepts of 7.7 metres at 1.51% copper, 1.3 grams gold and 27.6 grams silver; and 4.8 metres at 1.63% copper, 1.13 grams gold and 32.2 grams silver. 

The company plans to drill 3,000 metres this year, focusing on an area to the west of the 2010 program, where geophysics, mapping and sampling results suggest the potential for better mineralization and the thickening of the zone. 

Financing for both King Solomon and Noyem would come from the yet to be completed private placement. If fully subscribed, the financing will raise $2 million for African Queen. 

And while the company would have preferred to do the placement under more favourable market conditions, Olian reasoned that pushing ahead on the projects was the top priority. 

“The market has been unkind to small caps as of late,” he says, “but rather than fight it and do a placement at a fairer price we decided to do it now, offer investors a chance to get in [at] a good price, and it allows us to move ahead on development at a faster pace.”

In Toronto on Aug. 17, African Queen shares were trading for 28.5¢. The shares have fluctuated between 20¢ and 75¢ over the last 52-week period.