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 Background The bulk of Ghana's 90 million ounces of gold production has come from the Ashanti and Bibiani Gold Belts. Situated in between these is the lesser known, however still very prospective, Asankrangwa Gold Belt. PMI Gold's Ashanti II Gold Project covers 70 kms of this Belt and includes dozens of historical local mining operations and three recent modern mines. Interest in the Asankrangwa Gold Belt was renewed in 1995 after the first modern airborne magnetic survey was completed over southwest Ghana. The survey identified major deformation zones and cross structures that were spatially related to Ashanti's mega gold mine at Obuasi and to the numerous historical gold mines and showings that define the Belt. Subsequently, PMI Gold acquired the former Obotan mine concessions (see below) and conducted over US$5 million in work programs over the balance of the Asankrangwa concessions, including ground and airborne geophysical surveying, drilling and a review by SRK Consultants Inc. This review established 17 regional target areas for further detailed exploration for large gold deposits. To date, only 6 of these targets have been partially drill tested. Ashanti II Gold Project -- Obotan Mine In August 2010, PMI announced the Mineral Resources for five nearby gold deposits at Obotan were estimated by Hellman and Schofield Pty Ltd of Australia as follows:
The location, quantity and distribution of the current data are sufficient to allow the classification of Measured, Indicated and Inferred Resources. For the near surface mineralisation where MIK (multiple indicator kriging) modeling methodology was employed, mineral resource estimates are reported above a 0.5g/t Au economic cut-off grade. MIK modeling was also used for the deeper underground mineralisation (Nkran Underground), and the mineral resource estimates are reported above a 1.50g/t Au economic cut-off grade. An assumed oxidation surface was utilised. Summary results for all individual project areas are presented below and are effective as of the 23rd of August 2010.
The table includes possible near surface depletion as a result of local miner activity to depths estimated to be up to 20 metres. A 10% discount to inferred and indicated resource estimates was applied to all project areas by H&S in the table above, with the exception of Nkran where no depletion was applied due to the inaccessibility of the main mineralized zones and limited observed surface activity. The figures in the table may not sum due to rounding. Significant figures do not imply an added level of precision. H&S has not, to date, undertaken an economic viability analysis with respect to the inferred resources at the Obotan project. Please see the following link for a map of the Obotan Mineral Resource Estimate deposits: http://www.pmigoldcorp.com/i/maps/NR10-10DrillCollarPlan.jpg Based on the significant resources now confirmed at Obotan, PMI Gold has initiated a Pre-Feasibility Study, which on acceptance by the Government of Ghana, will allow us to convert our mineral licenses at Obotan into a Mining Lease to prepare for future production. PMI Gold will also undertake a significant follow-up drilling program following its ASX co-listing which will be aimed at increasing the gold resource at Obotan. The Qualified Person with respect to the mineral resource estimates at the Abore, Adubiaso, Asuadai and Nkran deposits, Obotan Gold Project, is Robert Spiers, BSc Hons, DM Appl Geol / Geophy MAIG, a full time consulting geologist with Hellman and Schofield Pty Ltd. based in Melbourne, Australia. Mr. Spiers has been involved in preparation and reporting of resource estimates in accordance with JORC guidelines for more than 12 years, and NI43-101 guidelines for approximately 6 years. Mr. Spiers reviewed the available data supplied to him by PMI Gold Corporation, and performed sufficient tests to conclude that the quality control measures undertaken by PMI Gold Corporation have established that the diamond drilling and subsequent sampling is representative and free of any biases or other factors that may materially impact the reliability of the drilling, sampling and analytical results; and that the sample preparation, security and indicated analytical procedures adopted by PMI Gold Corporation and the laboratories utilized provide an adequate basis for the current Mineral Resource Estimates. Mr. Spiers has been involved with the Obotan Project since October 2009, and visited the project site on two separate occasions, from the 8th to 18th of November 2009 and again from the 14th to 22nd April 2010. In November 2006, PMI Gold acquired, by application to the Government, the 89 square km Abirem and Abore concessions - which cover the former Obotan Mine operations of Resolute Mining of Perth. Resolute ceased mining when the price of gold fell below US$320 per ounce and handed the property back to the Government of Ghana in July 2006 after fully completing the property reclamation.
A total of 730,000 ounces of gold were produced at Obotan, with 590,000 ounces produced at an approximate grade of 2.2 g/t gold from the Nkran pit, and a further cumulative 140,000 ounces from the Adubiaso and Abore pits. Mining ceased in December 2002. In 2003, the mill was sold in and removed from the property. The Nkran pit is currently water filled. Local galamsey workers continue to work the high-grade extensions of the Galamsey Reef, the strongest reef outlined during the mining operation, beyond the south end of the pit. Photos
Prior to completing mining at Nkran, Resolute conducted extensive studies on the feasibility of continuing mining from underground mineralization beneath the pit. Modeling completed with a US$350 gold price suggested good potential for establishing an underground operation. In July 2007, PMI Gold commissioned RSG Global Pty. of Perth to review all the data and complete a concept study re the potential for further mining at Obotan. Highlights of their Concept Study, from the Executive Summary include: "The Obotan Project is a rehabilitated open pit gold mine located in Ghana, West Africa. PMI Gold requested that existing information regarding one of the deposits associated with the mine, Nkran, be evaluated for underground mine potential." "The block model provided was constrained to show only the blocks above an estimated cut off grade of 3.6 g/t Au within the nominated area of interest. This process isolated three possible stoping blocks. The blocks were then cut from the block model and tonnes and grade above cut off was determined. A design was created to access the underground mineralisation and the design was fully costed." "RSG Global is aware that the deposit is part of a well mineralised system and additional exploration has the potential to identify additional mineralisation which may become economic, however the current study has been based on the available data only." "The existing waste dumps may provide an additional ore source which would improve the processing economics by increasing throughput and potentially lower the cut off grade for the underground operations. This depends entirely on determining with some certainty the presence of a parcel of economic material (in the dumps). At this stage, there is insufficient data to make a definitive comment on the potential viability of the dumps." In order to evaluate possible mining scenarios, RSG Global constructed a Surpac model, combining the available previously estimated block models. Sufficient deep drilling data was only available for the West Lode below the southern half of the Nkran Pit, and the model was limited to this area. Given the size and orientations of the outlined mineralized blocks, a low cost 'up hole benching' mining method, suitable for a locally trained workforce, was proposed. In order to complete a program of resource definition drilling and test mining/bulk sampling, it was proposed to dewater the pit and drive a 5x5 metre decline from the bottom of the pit - south end to a depth of 120 metres below the current pit base. The results of this further exploration program would provide the data for a pre-feasibility study that would define the gold resource and economic parameters. Based on similar 500 tpd operations in Australia and Africa, and using an overall mining dilution of 18% and a mining recovery of 80%, RSG Global estimated mine operating costs at US$29.70 per tonne; and total site based operating costs including milling but not capital, of US$62.18 per tonne. RSG Global also calculated that if sufficient resources were defined to increase the throughput to 1,500 tpd, the total operating costs would drop to circa US$50.00 per tonne. Costs to dewater the pit and complete the first 800 metres of decline and drill bays, were estimated at US$4.3 million. RSG Global has also calculated that a minimum gold resource of 160,000 oz of Au at a grade of 4.6 g/t would be required to cover the outlined development and operating costs. Any resource outlined in excess of this amount should, with the current gold price and costs, contribute directly to generating a mining surplus. PMI Gold believes there is an exploration target of one to two million ounces of gold grading above 3.0 g/t below the Nkran pit, based on deep drilling results and projections to 400 metres below the deepest intersection. This assumption is conceptual in nature and there has not been sufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource, and is based on the following:
In order to disseminate the drill information on which the resource estimate will be based, the gold intersections under the Adubiaso pit were published on December 23, 2009. Likewise, significant composite drill intersections from the base of the Nkran pit to depths up to 500 metres below the pit, based on 96 drill holes from the historical data and an 8 hole program completed by PMI Gold in 2007, are highlighted below (Note: true widths are estimated at from 50% to 90% of the stated core lengths): Table 1 - Underground Bulk/Underground Selective High Grade Type Model Composite Gold Drill Intercepts (>50.00 g/t Au metres) from below the Nkran Pit (1.0 g/t Au cut off with no more than 7 consecutive metres of <1.00 g/t Au):
Please see the following link for the full list of 1.0 g/t Au cut off, composited, drill intersections and drill hole collar data: http://www.pmigoldcorp.com/i/maps/NkranDrillIntersectionsUnderPitFeb0410.pdf If the above intercepts are re-calculated to emphasize width rather than grade as at other advanced development stage or producing open cut gold projects in Ghana, Australia and Canada, with a minimum of a 0.80 g/t Au cut-off at the beginning and end of the intercept, and allowing for no more than ten consecutive samples (ten metres) of less than 0.80 g/t Au., the following significant drill intersections are noted: Table 2 - "Super Pit" Low Grade - High Widths Type Model Composite Gold Drill Intercepts (>130.00 g/t Au metres) from below the Nkran Pit (0.8 g/t Au cut off with no more than 10 consecutive metres of <0.80 g/t Au):
Please see the following link for the full list of 0.80 g/t Au cut off, composited, drill intersections: http://www.pmigoldcorp.com/i/maps/NkranDrillIntersectionsUnderPitFeb0410.pdf In August 2010, the Company announced the results from the first 43 of 65 diamond drill holes recently completed at our Obotan Gold Project in Ghana. The program consisted of a total of 10,877 metres, with 6,315 metres in 35 resource definition drill holes and 4,562 metres in 30 quality control (QC) drill holes. The results of this definition and QC program have been added to the historical Obotan database of 2,930 drill holes totalling some 202,250 metres. A maiden NI 43-101 resource estimate for Obotan is currently under preparation. Drilling was completed at Nkran (holes labeled below with 'NKC' and 'NKR'), Adubiaso ('ADP'), Asuadai/Edubia ('ASP') and Abore ('ABP'). Douglas R. MacQuarrie, President and CEO commented: "We have achieved the objective of this drill program which was to confirm, and to commence expanding, the historical Obotan drill data base. The excellent grades, widths and continuity of the gold mineralization intersected in drilling at Nkran clearly indicate the potential of this zone for renewed mining activities -- by either a pit push back or underground bulk mining techniques. In addition, significant near surface gold mineralization was noted at Adubiaso, Asuadai and Abore. Additional drilling will commence once all of the current results have been compiled." Table 1 -- Significant Gold Intercepts (>10.00 g/t Au metres) :
Edubia Mining Lease In August 2007, PMI Gold acquired the 13 square km Edubia Mining Lease which Adansi Gold Company (100% owned subsidiary) has the right to acquire for 100% interest subject to a 0.5% NSR royalty to the vendor. The Edubia Lease was originally issued in 1931 for a term of 99 years to one of the original indigenous owners of the concession that now hosts the world-famous AngloGold Ashanti Obuasi mine. Upon his death, the estate and title was formally acknowledged by the Government of Ghana and formal registration pursuant to the newer mining legislation commenced. In the mid-1990's a license was granted over a much larger area, and work programs consisting of sampling of old adits, extensive trenching and soil sampling was completed. Adit samples to 2.8 g/t Au over 36 metres were reported in quartz stockwork systems hosted by Birimian metasediments and granitic intrusives (Griffis et al, 2002, in Gold Deposits of Ghana, pg 292). Some 213 short drill holes were completed, averaging 40 metres and with a maximum length of 126 metres. Gold mineralization was outlined in a zone from 20 to 60 metres wide and elongated northeasterly over a 700 metre length. Localized drilling results indicated 1 to 5 metre true widths with grades from 3.0 to 12.0 g/t Au. Adansi can earn a 100% interest in the lease by making cash payments of US$100,000 (paid); by paying a further US$100,000 upon the receipt of a positive pre-feasibility study recommending production; and by reserving for the vendor a 0.5% net smelter returns royalty. In addition, Adansi retains the first right of refusal on any other Biney leases that form a part of the estate. Douglas R. MacQuarrie, President and CEO comments: "The acquisition of the Edubia lease joins our Abirem and Abore concessions together and gives PMI Gold an additional 4,500 metre long and highly prospective gold in soil anomaly which is on strike with and part of a continuous 13,000 metre long trend on our concessions which host the former Nkran mine and the African Star deposit. Gold mineralization at Edubia may fit in with our model to develop deep, underground resources, and its location just 8 kilometres from our Nkran deposit is particularly attractive. We look forward to exploring the balance of the lease with our in-house geophysical crews and further drilling. "  Click to enlarge Drill Plan In late August 2008, we acquired the Kaniago (Adansi) License by direct application to the Minerals Commission of Ghana. Kaniago, which is 23 kilometres long and from 1.3 to 3.5 kilometres wide centered on the Ofin River, joins together our Abore Abirem (Obotan), Switchback, Fromenda, and Diaso Afiefiso concessions, now giving PMI Gold a continuous 70 kilometres of the central Asankrangwa gold belt. This completes the aggressive land acquisition program commenced by PMI Gold in 2003. The concession covers a 54 square kilometre part of the former 390 square kilometre Dunkwa Continental Mining Lease where dredging activities were active from 1930 for nearly 70 years on the Ofin, and Ankobra Rivers (Asankrangwa gold belt) and the Oda and Jeni Rivers (Ashanti gold belt, southwest of our Kubi gold project). During this period some 1.45 million ounces of gold were recovered, with dredge production peaking in the early 1960's at 69,000 ounces per year (Minerals Commission, 2002). Of prime interest to PMI Gold, the concession covers five northeast trending and deep seated gold mineralized trends, including the Juabo -- Nkran (Obotan) -- Edubia trend; the Switchback -- Abore Mine -- Keegan Essase trend; and the MEM -- Fromenda -- Miradani Mine trend. Historical reports from the dredging indicated increased gold grades in the Ofin River near the Miradani Mine (Ghana Geological Survey Annual Report 1964-1965 ) suggesting a local source for the gold. The intersection of the strong northeast gold trends with the north trending Ofin River linear is considered to be a prime exploration target for deep seated gold mineralization.  Click to Enlarge |
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