Keegan reports wide gold intercepts at Esaase

Keegan Resources (KGN-T, KGN-X) has reported more gold intercepts at its Esaase project in Ghana. Esaase is located on the Asankrangwa gold belt in southwestern Ghana, 13 km northeast of Resolute Mining’s (RMGGF-O, RSG-A) 3-million oz. Obotan gold deposit. To date, 118,000 metres of drilling have been completed.

Highlights from the latest round of drilling include 11 metres of 6.6 grams gold per tonne from a depth of 1 metre in hole 509; 18 metres of 2.8 grams gold from 109 metres in hole 519; 59 metres grading 1.4 gram gold from surface in hole 512; and 74 metres of 1.2 gram gold from 325 metres in hole 518. The drill assays will be incorporated in a resource estimate and a scoping study this year.

Resources defined so far include an indicated 5.4 million tonnes grading 1.4 gram gold at a cutoff grade of 0.6 gram gold, equivalent to 240,000 oz. gold; plus an inferred 32 million tonnes of 1.4 gram gold at a cutoff grade of 0.6 gram gold, equivalent to 1.4 million oz. gold.

Metallurgical tests on Esaase material indicate gold recoveries in the 65-91% range with minimum grinding. It is not yet known whether the mineralization is amenable to heap leaching, or whether a carbon-in-leach (CIL) circuit would be necessary.

Keegan says that the mineralization is bulk-mineable as an open pit. It is hosted in highly deformed Birimian metasedimentary rocks containing sheeted and stockwork quartz veins. The host rock includes mudstones, siltstones and lesser feldspathic sandstones.

The area is defined by a distinctive structural boundary that divides the more deformed, altered and mineralized siltstone shale unit in the hanging wall from the more massively bedded greywacke in the footwall. All rocks in the siltstone / shale package are moderately to strongly folded and foliated.

The project covers 73 sq. km, and is located 35 km northeast of Ghana’s second largest city, Kumasi. It takes one hour to travel to the city, and the distance is covered by paved and unpaved roads. The project is 100% owned by Keegan, but the government owns a 3.5% net smelter return (NSR) royalty, and has the right to take a 10% stake. The project has a mining permit.

Esaase is connected to the national electrical grid, and has cellular telephone coverage. The company has an active community relations program, and reports good community relations.

Keegan’s second gold project is Asumura, also located in southwest Ghana and to the west of Esaase. Beside the Asumura claim itself, the project also includes the Mt. Olives claim, for a 930 sq. km total. It is a disseminated open pit target, 65 km southeast of Newmont Mining’s (NMC-T, NEM-N) Ahafo deposit. A geophysics survey indicates that the structures that host the Ahafo deposit are also present on Asumura.

Asumura is located on the northwest edge of the Sefwi-Bibiani greenstone belt, a break along which gold occurrences can be found. About 12 km of this tectonic-depositional boundary is contained within Asumura, which is located on a large convex flexure. The property covers a 6 km segment of granodiorite – metasediment contact and a 5 km segment of metavolcanic – metasediment contact along the northwest margin of the greenstone belt.

Mineralization is associated with belt granitoid stocks, dikes and sills. Using a combination of geophysics and geochemistry, Keegan has identified bulk mineable targets with more than 40 km combined strike length on three major faults, and is drilling them. Highlights include 14 metres of 4.5 grams gold per tonne from a depth of 36 metres in hole 92; 11 metres of 1.1 gram gold from 39 metres in hole 163; and 5 metres of 1.1 gram gold from 74 metres in hole 197.

Asumura is subject to a 3.5% NSR royalty, half of which can be bought for US$2 million. The government can take a 10% stake in the project. The project is located 40 km from the town of Goaso (population 20,000), and the distance is covered by an unpaved road.

On September 30, the company had working capital of $9.3 million, and stated that it anticipated having more than US$5 million left in December 2008. At presstime, Keegan shares are trading at $1.12 in a 12-month window of 49¢-$5.85. The company has 36.7 million shares fully diluted.