Keegan jumps on deep gold at Esaase

Vancouver – The first four holes of the 2009 program at Keegan Resources‘ (KGN-T) Esaase project in southwest Ghana all hit strong gold mineralization below the defined resource and the news gave the company’s share price a healthy boost.

Esaase is a 3 km long, northeast striking deposit that dips moderately to the west. After the 2008 exploration program Keegan doubled the gold resource but the deposit remained open along strike and at depth.

One of Keegan’s goals for this year is to probe the depth potential, specifically the potential for a high-grade feeder structure below the defined open-pittable resource. And the first four holes hit high grade gold right where Keegan’s geologists hoped it would be.

The four holes were collared 100 metres west of the deposit’s northeastern half. Hole 538 returned three intercepts: 29 metres grading 3.04 grams gold per tonne from 275 metres depth, 46 metres averaging 1 grams gold from 360 metres downhole, and 15 metres of 1.79 grams gold from 435 metres depth.

Hole 540 returned the highest grades of the bunch, cutting three intercepts. At just 31 metres depth the drill hit 2 metres carrying 31.23 grams gold. Then at 375 metres it cut 10 metres of 6.04 grams gold and from 412 metres depth returned 22 metres of 10.31 grams gold.

Hole 541 also intercepted three mineralized zones: 25 metres of 3.59 grams gold from 258 metres depth, 12.4 metres of 3.07 grams gold from 357 metres depth, and 15 metres of 1.15 grams gold from 424 metres depth.

And Hole 539 cut four mineralization intercepts between 375 and 482 metres depth: 15.9 metres of 1.67 grams gold, 15 metres of 1.05 grams gold, 11 metres of 1.06 grams gold and 9 metres of 1.06 grams gold.

“These are out first holes to look for that, for a feeder zone,” says Ivan Bebek, an advisory board member for Keegan. “How big this will get, how meaningful it is, obviously we need a lot more drilling to determine that. But right now it look promising and our block model is working.”

In late May Keegan closed a $19.2-million financing, selling 8 million shares at $2.40 a piece. With its coffers full and its property returning exciting results, the company is now looking to add a second drill rig to Esaase. Plans had called for 40,000 to 50,000 metres of drilling in the current program but Bebek says that number will grow if the second rig arrives.

Keegan’s exploration efforts last year allowed the company to double the resource at Esaase – both the tonnage and grade increased. The project currently hosts 41.9 million indicate tonnes grading 1.5 grams gold as well as 28.6 million inferred tonnes averaging 1.6 grams gold, giving a contained gold count of 3.5 million oz.

Even without new drill results the resource grade might grow. Keegan sent a random selection of drill samples for fire screen assaying, wherein the entire coarse fraction of the sample is assayed instead of only a 50-gram split. When samples contain coarse-grained gold, such as those from Esaase, splitting the sample can mean missing large grains of gold and thus reducing the overall grade.

“It’s still early in terms of figuring out what it means but we saw the gold grades increase by 28% on average,” Bebek says. “We’ve now sent another 1,400 samples to get fire screen assays – if the results are similar, it could add 20 to 25% to the deposit.”

News of the deep Esaase drill results lifted Keegan’s share price 24¢ to $3.03. The company has a 52-week trading range of 49¢ to $4.39 and has 37 million shares outstanding.