Oriole Resources (LSE:ORR) is currently sitting at 0.45p after confirming the presence of significant gold anomalism at the Madina Bafé prospect on its Dalafin project in Senegal last week. With the results boosting Madina Bafé’s position as a potential satellite deposit for a nearby gold deposit called Boto, chief executive Tim Livesey talks us through the company’s plans for the project.
In last week’s announcement, Oriole posted the results of a 2,428m air core (AC) drilling programme carried out at Madina Bafé, where it is 85pc-owner. The results confirmed the presence of a 1.5km gold mineralised trend in the southeast and a 400m gold anomaly in the northwest, both greater than 20 ppb. As well as firming up what Oriole already believed to be on offer, Livesey told us the drilling could have increased Dalafin’s prospects:
‘While the results have confirmed the anomalism that we identified earlier through our work, it has also confirmed the trends associated with structures and given us new trends and new structures with anomalous mineralisation.’
The drilling also produced higher-grade gold samples, with best results including 2.48g/t gold and 0.66g/t gold. According to Oriole, these grades could indicate the presence of a feeder zone at depth on the prospect. Livesey said he is very encouraged by the tenor of the grades‘
This AC programme comprised a series of short vertical holes just to punch through the laterite. We have intersected some very high grades considering we only collected a base of soil samples, rather than drilling through the centre of a vein zone at depth.’
The drilling was carried out in Q3-/2018 by a Canadian miner called IAMGOLD, which has the option to acquire a 51pc stake in Dalafin by spending $4m over four years, diluting Oriole to 41.65pc. It can increase this by a further 19pc to 70pc by investing another $4m.
Last week saw IAMGOLD deliver the results of a feasibility study at Boto, its gold development project in Senegal. The study gave the site proven and probable reserves of 1.93Moz grading 1.71 g/t gold and indicated resources of 2.49Moz grading 1.61 g/t gold. These figures equate to a 12.8-year mine life producing an average of 140,000ozs annually, with production of 160,00ozs per annum expected for the first six years.
Livesey tells us that IAMGOLD is now keen to find ways of extending Boto’s mine life by accessing nearby satellite prospects that can add to its resource base. With Madina Bafé lying around 12km away, he believes last week’s promising results could help the prospect become a significant part of IAMGOLD’s growth strategy:
‘The expectation is that IAMGOLD will go ahead with Boto. It has said it is applying for a mining licence before the end of this year, and that is a very, very positive signal. Once Boto goes into construction, all of the focus will be on finding additional resources. So, Madina Bafé is a prime candidate for additional exploration work to try and extend Boto’s mine life or increase its production.’
IAMGOLD will carry out an a 3,000m RC campaign at Madina Bafé in November, testing identified anomalies as well as strike extensions at some previous mineralised holes. Following this, the company will complete a 500m diamond drilling campaign to validate some of the best intersections offered by Oriole through earlier drilling. Livesey says these programmes will give IAMGOLD a better idea of how it plans to move ahead at Dalafin:
‘The AC programme has given IAMGOLD a lot of confidence to move on to the next stage. The upcoming work should further confirm that the structures being seen are anomalous with gold on the surface and have something within them. The next phase beyond that will be additional drilling to start looking for resource numbers, which could take place later in 2019.’
With Oriole falling 12.3pc following the release of the results, Livesey says he believes the market is yet to fully recognise the significance of IAMGOLD’s involvement and the potential on offer as Boto progresses. He thinks further newsflow from the project and other areas of the business could help the shares move forward:
‘The critical driver of value is going to be newsflow coming from Dalafin, and we will probably have results and updates from the first quarter of next year. As far as other areas of the business, our assets in Cameroon are moving forward and we will soon be starting a trenching programme. We are also continuously reviewing new potential projects and we have had some interesting discussions around new opportunities. There could be additional newsflow coming from absolutely brand-new programmes and projects that are not currently in the Oriole portfolio as we move forward.’
Author: Daniel Flynn
Disclosure: The author does not hold positions in any of the stocks mentioned above