Dublin-based
Although managed by industry veterans, the company is relatively new to the Canadian mining scene, having acquired a public listing here in December 1998 after a $2-million financing and the reverse-takeover of Toronto-listed Westley Mines International.
Moydow is headed by President Brian Kiernan and his father, Chairman Noel Kieran, who also is also the honourary consul to Ghana in Ireland. Westley’s former president, Vancouver-based Victor Jones, has become Moydow’s vice-president, and the company has brought on board several Toronto-based directors, including Albert Gouley, Michael Power and Norman Hardie.
“Going public last December, when the markets were comparatively poor, speaks volumes about the assets we have and the people we have in the company,” says Brian Kiernan.
Active in Ghana as a private company since 1992, Moydow has a minority interest in the Wassa open-pit gold mine, which poured its first gold in January, and a controlling interest in the Ntotoroso gold exploration property.
The former, situated 150 km west of the capital Accra, comprises 57 sq. km and is jointly owned by Moydow (31%), Irish-listed Glencar Mining (59%) and the Ghanaian government (a carried 10%).
Wassa’s geology is characterized by the metamorphosed volcanic and sedimentary rocks of the Birimian group. Gold mineralization occurs in hydrothermal vein stockworks in two parallel zones controlled by a major northeast-southwesterly trending shear system.
Reserves at Wassa are estimated at 23 million tonnes grading 1.4 grams gold, equivalent to 1 million contained ounces gold. About 60% of these reserves are in weathered rock, with the remainder hosted by fresh rock with low sulphide levels.
Construction of the mine was financed entirely by debt: US$27.5 million was raised via a gold loan from Standard Bank of London, and another US$15 million came from the U.K.’s Commonwealth Development Corp. In concert with the financing, the Wassa mine has also entered into a forward contract to sell 236,208 oz. gold at US$324 per oz. over four years.
“With the production that’s going on, we think we will be able to pay off everyone by the end of 2002,” says Kiernan, noting that Moydow’s full investment so far in Wassa has been about US$12.5 million.
Mining is contracted out to PW (Ghana) Ltd. and ore is processed using heap-leach methods with standard carbon-in-pulp recovery. The recovery rate is expected to be at least 87% in the first years of operation.
The mine has an annual capacity of 3 million tonnes and is projected to produce at least 120,000 oz. gold this year. Total cash costs, including royalties paid to the government, are expected to be about US$157 per oz. for 1999 and about US$180 per oz. over the life of the mine.
“The story is not yet over at Wassa,” says Kiernan. “Even though it is a 1-million oz. deposit and is producing, there is quite a lot of exploration going on.”
A 10,000-metre drilling campaign, funded by cash flow from the mine, is attempting to expand the overall resource (including reserves) of 50 million tonnes grading 1.25 grams gold, equivalent to 2 million oz., and to upgrade more of that resource into the reserve category.
The Wassa orebody remains open both laterally and at depth below 100 metres, and geochemical sampling indicates that mineralization may extend 6 km from the mine to the southwest, where there are several abandoned mines from Ghana’s colonial era.
“The value of Moydow, at the moment, probably reflects only our interest in Wassa,” says Kiernan. “But we are an exploration company first — we’re always looking for the next one, and I’m sure we’ve found it in Ntotoroso. Ntotoroso is really what we’re all about.”
The Ntotoroso licence is in the Brong Ahafo region of west-central Ghana, 30 km south of the region’s capital, Sunyani.
Geologically, the licence is on the northeasterly trending Sefwi gold belt — a 200-km-long break that separates Lower Birimian metasedimentary rock to the north from Upper Birimian metavolcanic rock to the south. Intruded into the break are granodioritic batholiths, stocks and dykes.
Ownership of the 72-sq.-km Ntotoroso licence is divided between Moydow, with 60%, and Normandy LaSource, with 40%. The latter is a wholly owned subsidiary of Australia’s
Normandy earned its 40% interest in part by spending US$2.5 million on exploration work at the property, and the company will likely exercise an option to earn another 10% by spending a further US$4 million. (In Ghana, however, once a project reaches an advanced stage, the government assumes a 10% carried interest.)
Under the deal with Normandy, Moydow earns a management fee of 15% of any expenditures at Ntotoroso and retains operator status until completion of a positive feasibility study. As operator, Moydow will choose both when to advance to feasibility and who will perform the study (namely, either Moydow or a third party). The agreement also expressly states that if a mine is developed, it will be funded by debt.
“We run this project,” says Kiernan. “It’s not our money, but it’s our project. The reason Normandy wanted to do this deal with us — and it is a very good deal for Moydow — is because geographically we’re quite important to them: we’re surrounded by Normandy projects.”
Kiernan is referring to Normandy’s 90%-owned Yamfo-Sefwi project, which consists of several licences, the most notable of which are named Yamfo, Kenyase and Bosumkese. The licences stretch across a strike length of 95 km, where nine deposits have been subjected to definition drilling and where numerous smaller potential deposits have been identified.
Normandy’s resources along the trend (excluding Ntotoroso) are estimated at 78 million tonnes grading 2.2 grams gold, within which are contained more than 5 million oz. gold.
The Australian major is contemplating building a centrally located plant near Kenyase with an annual 5.5-million-tonne capacity for oxide material. The company estimates that, starting in 2001, the Yamfo-Sefwi project could produce 300,000-oz. gold annually at a cash cost below US$200 per oz. A feasibility study of this plan is expected to be completed by year-end.
Meanwhile back on the Ntotoroso licence, Moydow and Normandy have defined three prospective gold zones, named A, C and E.
Zone A is the northern extension of a granodioritic, intensely sheared gold deposit on Normandy’s Kenyase East licence, where resources are estimated at 1 million oz. gold to a depth of 140 metres.
“Zone A, we’ve calculated so far, looks like 700,000 oz. gold [grading 2.5 grams gold] drilled to 100 metres from surface,” says Kiernan. “My math is not particularly great, but I think if we go down to 140 metres, we’ll have a million ounces.”
Of lesser importance to Moydow is Zone C, situated in the northern portion of the Ntotoroso licence. Zone C is the southern extension of a gold deposit on Normandy’s Bosumkese licence.
Moydow’s newest and most newsworthy target, Zone E, is situated 4.5 km south of Zone A on a structure 1.5 km east of, and parallel to, the regional metasediment-granodiorite contact. Zone E is defined by a 2.2-km-long, 200-metre-wide geochemical anomaly where gold mineralization is contained in a hydrothermally altered shear zone in granites.
At first, Zone E was considered one of the poorest targets on the licence, but that view changed dramatically with the drilling of eight 100-metre-deep reverse-circulation holes into a 600-metre segment of the anomaly. Those holes produced the following highlights:
- 36 metres (from 41 metres) grading 1.99 grams gold in hole 182;
- 27 metres (from 65 metres) of 3.99 grams gold in hole 184;
- 80 metres (from 20 metres) of 3.78 grams gold, including 12 metres of 6.93 grams gold, in hole 186; and
- 41 metres (from 12 metres) of 2.32 grams gold in hole
187.
Spurred on by these results, the partners have already launched a 6,000-metre campaign of follow-up drilling, which initially will test Zone E’s width and downdip potential. Drilling will then test for continuity of mineralization elsewhere along the zone’s 2.2-km strike length.
In accordance with the joint-venture agreement, all expenditures during this exploration phase will be met by Normandy, even though the major might prefer to devote more attention to Zone A.
“There is no doubt that Zone A and Kenyase will be mined as a single pit,” explains Kiernan. “Normandy has asked if it can include Zone A in its feasibility study and has requested us to drill it out on 25-metre centres. We have refused, because we know that if we keep chasing down Zone E, we’re going to receive more and better results. Also we don’t want to send a signal to that market that, ‘hey, we’re at feasibility and we’ve found all there is to find.’
“If I can be a little bit promotional, I think that if we have less than 2 million oz. in Zone E, we’re very, very unlucky. The reason is we’ve only drilled 600 metres of a 2.2-km anomaly and we can already put a resource of 600,000 oz. gold on it. And the reason we feel confident in doing that is because the geology is so obvious and so clear all the way through.”
Outside Ghana, in Guinea, Moydow was recently active at a gold project named Kissi Kissi. Unfortunately, the property is across the border from Sierra Leone and now hosts 250,000 refugees from that war-ravaged country.
“We won’t be able to do any work on it for at least six months, until things have quieted down a bit,” says Kiernan.
Commenting on the state of Moydow’s finances, Kiernan says: “We have about US$3 million in the kitty and very little to spend it on. We don’t want to be too aggressive — our portfolio is quite focused and we don’t want to start spending our money on greenfields projects at this time, even though there are some nice opportunities available out there.”
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