BY JOHN CUMMING
Vancouver-based PMI Ventures (PMV-V) is beginning to form a new geological model for regional gold mineralization in Ghana's Asankrangwa region, having spent the past year testing a string of grassroots prospects.
The Asankrangwa gold belt is midway between the better-known Ashanti and Yamfo-Sefwi (Bibiani) greenstone belts, where Ashanti Goldfields (ASL-N), AngloGold, (AUN), Gold Fields (GFI-N) and Newmont Mining (NEM-N) are operating, expanding and building some of the world's largest gold mines (see map on page B2).
There are old showings and galamsey (artisanal) workings throughout the Asankrangwa belt, but only one large, modern mine has ever been built: Resolute Mining's millionounce, open-pit Obotan gold operation, which opened in the mid-1990s and closed in 2002, after reserves were exhausted. Golden Star Resources (GSL-T) bought the 4,500- tonne-per-day Obotan mill in 2003 and is now dismantling it and trucking pieces to the Ashanti belt for use at the Bogoso-Prestea operations, which are being expanded.
PMI's vice-president of exploration, Douglas MacQuarrie, has been active in Ghana since 1993, when he presided over Pacific Comox Resources. At the time, Comox had a joint venture with Robert Quartermain's Mutual Resources, and together they helped fund the first Aerodat airborne survey over Ghana's Precambrian shield. Both companies had three months to look at the data before the public got to see them.
Pacific Comox quickly inked a deal with Anglo American, which was allowed to re-enter Ghana after the South African government dropped its apartheid policies. With Anglo's help, Comox's geophysicist pinpointed several exploration targets that today represent much of PMI's current 50-by-10-km land position covering the middle third of the 150-km-long Asankrangwa gold belt.
PMI's current project, which it refers to as "Ashanti II Deep," is being carried out on a land package put together in the early part of this decade by the privately held, nonarm's- length, Ghanaian company Goknet Mining. Goknet's directors and management include: MacQuarrie; Godfried Kesse, a former director of the Ghana Geological Survey; Thomas Ennison; Eric Ewen; Eric Dontoh; Felix Sibsa; and Aries Blankson. (The name Goknet is derived from the first two letters of Godfried Kesse's Christian name and the first letter of his surname; the last three letters of the company name are derived from a past partner named Janet.)
The various properties in the land package had passed through many Canadian and Australian hands over the years, including IGR, Leo Shield, Nevsun, Tri-Star and the notorious Golden Rule Resources.
In November 2002, MacQuarrie was introduced to mining executive Arthur Fisher, who cleaned up a Vancouver-based oil-and-gas shell company named PMI Ventures. The company was previously known as Primero Resources, and soon will be renamed again to reflect the company's focus on Ghanaian gold.
Fisher became PMI's president in 2002 but died suddenly on Jan. 23, 2004. PMI director Laurie Sadler, a retired accountant, has been appointed interim PMI president.
'Our theory is that when we go downdip, we're going to come into the more classical mafic volcanics.'
Under an option agreement, PMI can acquire up to 85% of the interests Goknet has in all these concessions, plus any adjoining concessions Goknet subsequently picks up, by spending $3 million on exploration over three years and issuing 3 million PMI shares. Goknet holds interests of 85-100% in nine concessions and applications, subject to a 10% carried interest in favour of the Ghanaian government. A year and a half into the deal, the earn-in is on schedule: PMI has spent $1.2 million on exploration and issued 1 million shares.
Once PMI has completed its earnin, Goknet will have 30 days in which to decide whether to keep its remaining 15% interests or convert them into a 4% net smelter return royalty, half of which can be bought by PMI for $2 million.
PMI now has 23.5 million outstanding shares, for a market capitalization of about C$14 million. Dynamic Mutual Funds owns about 10% of the shares, and is the largest shareholder. Exploring the Asankrangwa belt has its difficulties: the area is relatively flat-lying, densely vegetated, and exhibits extensive, recessive weathering to a depth of 60-70 metres. There is also a conspicuous lack of outcrops, quite unlike the Ashanti belt, where early prospectors combed over hills containing gold-bearing quartz reefs exposed at surface.
Says MacQuarrie: "We're in between two classical greenstone belts, and what we've got is another synclinal trough, but it's just much deeper into the basin, so there's no volcanics showing. We've got all these sediments stacked on top, that's all. Our theory, much of which is based on airborne work, is that when we go downdip, we're going to come into the more classical mafic volcanics."
Of note, prior to PMI's 2003 drilling campaign, only two diamond drill holes had ever been collared on the entire land package.
"Even though there were a lot of holes drilled by our predecessors, there wasn't a heck of a lot of good information from them," says Mac- Quarrie. "There wasn't a geology map either, but there was some good geochemistry."
Most of the soil samples showed anomalous gold concentrations, but raising the lower cutoff grade to 1 gram gold per tonne revealed to PMI that the gold anomalies puddle into 10-15 groupings at intervals through the belt.
As the company works its way from north to south through the belt, PMI's exploration strategy is simple:
"Our success this past year has been in drilling these IP anomalies, which were completely new targets," says MacQuarrie. "You put a fence across them and - boom - you get ore grades and widths."
For example, diamond-drill results from last year's efforts on the Fromenda B concession include an intercept of 30 metres grading 2.63 grams gold at a down-hole depth of 44 metres, and mineralized intercepts have averaged 1.7 grams gold over 18 metres.
PMI was also encouraged by positive results from a metallurgical study showing recoveries of 95% from leach tests of Fromenda oxide-ore material.
Shallow drilling by PMI in the School zone returned encouraging values last year, including 2.9 grams gold over 16 metres in the School Zone North target and 2.7 grams gold over 12 metres in School Zone East.
PMI has $2.2 million in cash following several financings in 2003, and so the $1 million required to carry out this next phase of work is already in place. An additional $5-6 million could be made available if the large number of outstanding options and warrants (currently just out of the money, with the stock at $0.65) are exercised in the next few years.
"This phase is going to help us generate some deeper targets," says Mac- Quarrie, who emphasizes that PMI is expanding its knowledge of the stratigraphy and structure of the goldmineralized horizons, which are isoclinally folded northwest to southeast, and then folded in a northeast-tosouthwest direction. Where that stratigraphy comes to surface, a puddle of gold and arsenic shows up in the geochemistry, and shallow RC holes intersect economic grades and widths.
"As you moved along strike, a lot Drilling into the School zone on PMI's Fromenda concession. a lot of drill holes were not hitting [finding gold], and this confused everybody in the past," says MacQuarrie. "They'd say, 'damn, there's no strike length.' But no, it's a stratigraphic unit that's plunging, and it comes up again on the next hump."
PMI proved as much last year when hole 7 at the Fromenda concession intersected 5 grams gold per tonne over 23 metres in oxides. The hole was drilled vertically, just updip on the nose of an anticline overlaying a tuff.
PMI hopes to develop open-cut, heap-leachable, low-cost zones where the stratigraphy comes to surface, and, where they find good grades, drill down-plunge and develop underground resources.
"We're just at the start of a big project here," says MacQuarrie. "There's no point in blowing our brains out on the first one of these zones we find; the next one might be twice the grade, or half. Let's find the rich ones and develop those."
MacQuarrie is also encouraged that a major structure that cuts across the northern end of the Ashanti belt comes shooting through the middle of PMI's claim group, making room for two granitic intrusions.
"Where this structure meets the favourable stratigraphy, which is on the contact between the volcanics and the sediments, you have everything you need to make an ore deposit," he says, pointing to two potentially significant gold hosts: the granites, which, if they're slightly older than the structure, are going to have cracked and created the necessary porosity and permeability; and a greywacke unit, which is overlaying volcanic tuffs, and will have cracked upon folding, allowing favourable siliceous, gold- and arsenic-rich fluids to flood into it.
"We have to do a lot more diamond drilling to get that structure and stratigraphy worked out, but we're well on the way to getting a model that's going to be pretty impressive.
"We're going to have a lot of fun this year: we're funded; we have ten targets in front of us; we have ten oregrade and width intersections to follow up with; and we have stratigraphy that goes for miles. I don't think the market has appreciated that we have a tiger by the tail."