Keegan gets first gold resource from Ghana

Keegan Resources’ (KGN-V, KGNRF-O) first resource estimate for its Esaase gold property in southwest Ghana is in, and the market liked what it saw.

The tightly held exploration junior saw its shares climb 7% or 28 to $4.45 on 171,000 shares traded on the news.

While a $4.45 price tag may seem rich for an exploration junior releasing its first resource estimate, digging a bit below the surface shows that the price is built on a solid foundation.

With just 23 million shares outstanding, no debt, a strong cash position and some mining heavyweights well positioned in the company, Keegan’s shares are lined up to move with positive news from its two gold projects in Ghana.

And such was the case when the company announced an indicated resource at Esaase of 5.4 million tonnes grading 1.4 grams gold for 240,000 oz., and an inferred resource of 31.9 million tonnes grading 1.4 grams gold for 1.43 million oz.

The estimate was based on 151 holes drilled at collar spacing ranging from 25 by 40 metres to 40 by 80 metres. All the drilling was done in the span of a year.

“The people we have working for us, both our directors and in-country, have been a critical part of that,” co-founder and company financier Ivan Bebek says.

And with a mining licence already in hand, what could have been a significant obstacle down the road is already out of the way.

The mining licence came with the property thanks to a previous mining company that was getting production from alluvials at the site. When falling gold prices caused the company to go under, Keegan was able to secure the property with 7 years left on a licence that, Bebek says, is easily renewed.

And with the deposit open along strike, downdip and at depth, Bebek says there is considerable upside.

“We’re not a cheap company to buy, but we’re still in the very early stages of exploration and we do expect that our production rate of results on Esaase will continue over the next year,” he says.

With $8 million in the kitty, and another roughly $17 million potentially available through the exercise of warrants and options, the company is in a good position to push ahead with aggressive drill programs at Esaase and its other wholly owned gold project, Asumura.

Asumura sits roughly 65 km south of Newmont Mining’s (NMC-T, NEM-N) 20-million-oz. Ahafo gold mine, on the same greenstone belt.

Bebek explains that it was this project that caught Newmont’s eye and likely motivated it buy into the company to the tune of roughly 5%.

While Esaase has emerged as the flagship project since then, the company still has lofty expectations for Asumura and will begin drilling there in the first quarter of next year. A best hole from the project returned 0.72 gram gold per tonne over 25.5 metres and 1.68 grams gold over 10 metres.

The drill program at Esaase will also be ramped up in the new year with a second drill brought in to help upgrade inferred resources to indicated.

Other notable investors in the company include Dundee Resources, which holds roughly 15%, and Sprott Securities, with roughly 9%.

In all, institutional investors hold roughly 32% of the company, while management, insiders and consultants hold 21%.