Golden Knight sells stake in African JV

Golden Knight Resources (GKR-T) is selling its half-interest in the Manso Nkwanta joint venture in Ghana. The deal will see Australian-based Leo Shield Explorations assume total ownership in return for paying US$1.5 million in stages.

The partners have interests in four concessions in the Manso Nkwanta Asankrankwa gold belt. These include the Abore North and Mpesetia gold zones, which the joint venture has been exploring and developing since 1995.

Leo Shield’s first payment of US$375,000 will be made upon completion of a due diligence review. Another US$375,000 will be paid once the ownership transfer is approved by the Ghanaian government. The last two payments of US$375,000 will be made six and 12 months after ownership has changed hands. In addition, Leo Shield will pay Golden Knight US$3 per oz. gold after 100,000 oz. are produced, to a maximum of US$500,000.

Golden Knight will use the proceeds from the sale to fund costs associated with its 17.5% interest in Gold Fields Ghana, which manages the producing Tarkwa gold mine in southwestern Ghana. A second phase of expansion is under way at Tarkwa, and is due for completion by the second half of 1999.

The mine is expected to crank out 135,000 oz. gold in 1998, and production will rise to a projected annual rate of 250,000 oz. by the second half of 1999. Once the expansion is complete, cash operating costs are expected to fall to US$200 per oz.

Golden Knight has interests in seven other concessions in Ghana and neighboring Burkina Faso, as well as a large block of claims in the Ontario’s Timmins camp.

At the company’s 60%-held Night Hawk Lake project, east of Timmins, drilling is winding down on three targets at the recently discovered Road zone, 3 km southwest, and along strike, of the Cross Lake zone. The remainder of the project is held by Cross Lake Minerals (CRN-V), with 16%, East West Resource (EWR-V), also with 16%, and Canadian Golden Dragon Resources (CGG-V), with 8%.

Golden Knight’s largest single shareholder is Teck (TEK-T), which holds about 25% of its shares.

In the third quarter, Golden Knight incurred a net loss of $683,000 (or 2 cents per share) on revenue of $41,000, compared with a loss of $1.2 million (4 cents per share) on $201,000 in the corresponding period last year.

For the recent 9-month period ended Sept. 30, the loss totalled $2.5 million (9 cents per share) on revenue of $162,000, compared with a year-ago loss of $2 million (8 cents per share) on $1.7 million.

The July 1-Sept. 30 period was the first full quarter of gold production from Tarkwa’s surface operations. In total, 33,437 oz. of gold from Tarkwa were sold for US$287 per oz., compared with second-quarter sales of 15,175 oz. at US$301 per oz. Golden Knight’s share of surface and underground production increased to 8,204 oz., compared with 5,058 oz in the second quarter.

More than 1 million tonnes of Tarkwa’s ore were processed in the third quarter. The recovered grade was 0.9 gram gold per tonne, and cash operating costs rang in at US$255 per oz.