IGR options Poura mine

The government of Burkina Faso will allow TSE-listed International Gold Resources (IGR) to acquire a 90% stake in the country’s largest operating gold mine.

The Poura mine is the fourth project the company has optioned in the West African country. It previously optioned the 770 sq.-km Youga, the 1,000 sq.-km Tamberi and the 500 sq.-km Kolokuame concessions, all of which are in an advanced stage of exploration.

The new agreement covers not only the Poura, but the surrounding 11-sq.-km mining licence as well. In addition, the government granted IGR an exploration licence covering 500 sq. km adjacent to the mine, and along its north-south strike extension.

Previously, the mine achieved a peak annual gold production of 100,000 oz. However, inefficiencies and inadequate funding combined to drive down production to 15,000-20,000 oz., resulting in an operating loss. IGR’s first exposure to the region came two years ago when it acquired an option to explore the past-producing Bibiani gold mine in Ghana. After drilling more than 125 core and 114 reverse-circulation holes, IGR announced the Bibiani had a measured and indicated resource of 1.8 million oz., in addition to other potential resources.

More recently, the company received encouraging results from a prefeasibility study (with a final study due in May).

IGR meanwhile began acquiring other properties in Ghana and, last year, signed a joint-venture agreement with Echo Bay Mines (TSE), which can earn an interest in these properties by funding exploration. This arrangement left IGR free to look at properties in other West African countries, its first choice being Burkina Faso.

Although IGR’s president, Dan Idzal, is encouraged by the exploration potential of Ghana, he is even more upbeat about Burkina Faso. “Ghana is very under-explored. However, Burkina Faso has undergone less than one tenth of the exploration that Ghana has,” he said. “I also think infrastructure, including road and telephone systems, is slightly better in Burkina.” He is not alone in this view. Other, more senior companies are believed to have acquired ground in the country, among them Placer Dome (TSE), Santa Fe Pacific Gold (NYSE) and Newmont Gold (NYSE).

IGR believes the methodology used at Bibiani — going back to a past producer, examining the host structure’s potential at depth and along strike, and examining the tailings and surface waste rock — will be as successful at the Poura project.

Also, Idzal says a potential joint-venture partner for the project may be waiting in the wings.

IGR commissioned private consultants to evaluate the facilities at Poura and determine the reserve and exploration potential. Based on the consultant’s conclusion that finding a potential 1-million-oz. deposit was viable, IGR entered the agreement.

The due diligence review is expected to last 120 days. Should it elect to proceed, IGR will suspend most or all of production and, instead, focus on delineating new reserves underground and on surface.

The company will spend several million dollars exploring the Poura over the next 12-18 months. In the nearer term, US$2.5 million will be applied to drilling programs at the Tamberi and Youga properties.