Riverstone defines gold deposit in Burkina Faso

Vancouver – Five years after deciding to focus its gold exploration efforts on Burkina Faso, Riverstone Resources (RVS-V) has defined its first gold resource in the West African country.

The four gold deposits delineated to date at the Karma project, which sits 100 km north-northwest of Ouagadougou, now host indicated and inferred resources totalling 1.14 million oz. gold. Specifically, Riverstone has defined 21.4 million indicated tonnes grading 1.2 grams gold per tonne and 12.2 million inferred tonnes averaging 0.82 gram gold.

The resource is oxidized and shallow; more than 95% of the gold sits within 100 metres of the surface. And Riverstone doubled the resource at Karma – one of the project’s four exploration permits came with a defined gold resource – for less than $10 per oz. in exploration costs.

Riverstone is confident the resource count at Karma will grow. Mineralization remains open along strike and at depth at all four of the deposits drilled thus far. And the property, which covers more than 600 sq. km, hosts numerous gold occurrences and artisanal workings that have not yet been drill tested.

The four deposits are close together. Goulagou 1 and Goulagou 2 are 8 km west of Rambo and Kao is 7 km south. Riverstone thus envisions a central processing facility near Rambo in a potential mining scenario.

Goulagou 1 and 2 were originally discovered by Channel Resources (CHU-V) and Placer Dome, now part of Barrick Gold (ABX-T, ABX-N) in the late 1990s. St Jude Resources then expanded the discovery, until its takeover by Golden Star Resources (GSC-T). In mid-2007 Golden Star announced a gold resource of 280,000 indicated oz. and 270,000 inferred oz. for the two properties. Riverstone acquired the projects in late 2007 and, with this new estimate, successfully converted most of the inferred Goulagou gold ounces to indicated status.

Goulagou 2 is an east-west trending, steeply dipping series of oxidized, gold-bearing lenses that have been traced along 2.1 km strike. The mineralized zone is up to 140 metres wide and in the middle, at its thickest, extends to 100 metres depth. Goulagou 1 is very similar: it trends northeast and comprises a series of oxide lenses. Goulagou 1 strikes for 1.1 km and stretches across 175 metres width. Riverstone says the zones remains “virtually untested” at depth.

Kao is a near-surface, gently dipping, tabular zone that has been traced over an area measuring 800 metres by 400 metres. Drilling to date has only tested mineralization to 85 metres depth, so the zone remains open at depth as well as in all lateral directions. Shallow drilling on the northern edge indicates the deposit may continue for 750 metres in that direction but at a slightly greater depth.

Kao is hosted in intrusive rock and sits at the southern end of a 6-km long gold-in-soil anomaly. The same intrusive rock is exposed throughout the soil anomaly. Shallow drilling 3 km to the northeast returned 12 metres of 1.54 grams gold; 1 km further to the northeast drills hit 6.73 grams gold over 3 metres and 1.86 grams gold over 12 metres.

And Rambo is a steeply dipping zone that has been traced for 300 metres along strike and to 100 metres depth, still open in all directions. It is hosted in mixed sediments and volcanics along the southern margin of a major intrusive. Promising step-out results, such as 1.9 grams gold over 36 metres from a collar 750 metres to the northwest, indicate good potential to expand the zone.

Riverstone acquired the Rambo property, its first in Burkina Faso, in 2003. Over the next few years the company picked up 16 additional exploration permits, including the Kao permit adjacent to Rambo and Golden Goulagou and Rounga properties. Riverstone now controls 3,500 sq. km of land, most of which covers Birimian Greenstone belts.

Riverstone has two other projects that have seen drilling. The Bissa project, which is divided into East and West, sits 100 km northeast of Ouagadougou. At Bissa East, which comprises four exploration permits acquired in 2006, Riverstone has sampled and drilled five gold zones and identified 28 other gold anomalies. Bissa East’s 984 sq. kilometres cover portions of the northeast trending Sabce shear zone; 6 km south of Riverstone’s land along the shear zone sits High River Gold Mines’ 1.2-million oz. Bissa Hill gold deposit.

And at the Ligidi project, a single permit 125 km southeast of Ouagadougou, Riverstone delineated a 13-km long, 3-km wide gold-in-soil anomaly. Drill results include 2.2 grams gold over 6 metres, 1.45 grams gold over 18 metres, and 1.53 grams gold over 18 metres.

In April 2008 Teck Resources (TCK.B-T, TCK-N) signed an earn-in deal for Ligidi. Teck agreed to spend $2.06 million on 3.5 million Riverstone units (each units contained a share and a warrant), in two tranches. The first tranche closed immediately; the second will transpire when Riverstone transfers the Ligidi permit into its Burkinabe subsidiary, which was supposed to occur by the end of 2008.

Riverstone was obliged to spend 25% of the subscription on exploration at Ligidi. Following that program, Teck has the option to acquire an initial 35% interest in Ligidi by exercising sufficient warrants to provide Riverstone with at least $2 million and by spending $4 million on exploration at the site over three years. An additional $4 million after that would boost Teck’s stake to 51%.

Riverstone does not own Ligidi outright; it has earned an 80% interest in the property from Orex Resources, a private Burkinabe company. This minority partner is currently making life difficult for Riverstone by engaging in a legal dispute that has prevented Riverstone from transferring the Ligidi permit to its Burkinabe subsidiary. As such Teck is not obligated to follow through with the second tranche of its subscription.

News of the Kambo resource left Riverstone’s share price essentially unchanged at 17¢. The company has a 52-week trading range of 5.5¢ to 44¢ and has 49 million shares outstanding, 61 million fully diluted.