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CGA Mining Heads to Production
By James West
MidasLetter.com
Thursday, March 12, 2009
There is plenty of capital available for companies with significant 43-101 compliant gold resources with a near-term production scenario on the immediate horizon. CGA Mining Limited (TSX.V:CGA, ASX:CGX) just completed a $25 million raise to augment its current cash position. The company is building the $170 million Masbate Gold Mine in the Philippines, which is expected to begin producing in excess of 200,000 ounces annually of gold by Q209.
The Masbate Project is an extensively studied, advanced stage development project with 55,686m of reverse circulation drilling and 58,757m of diamond drilling.
CGA's updated resource at Masbate is 7.7 million ounces of gold, of which 3 million ounces is in a reserve category. The initial cash operating cash costs for the Masbate project are forecast to be US$400/oz. With initial annual production of 200,000 oz commencing next month, this will result in substantial free cash flow as the company also has secured a 6 year corporate income tax holiday. CGA has 254 million shares out, and with a recent price of CA$1.49 per share, has a market capitalization of just under $378 million, rendering a price of $49 per ounce in the ground with gold at $900.
There is significant additional exploration upside at Masbate. The known resources at Masbate extend over a strike length of 3.5 kilometres trending in a north westerly direction. The exploration effort will not only be to add to the existing resources base, but to locate additional high grade zones so as to extend the forecast high grading period of operations.
The area immediately south of the Main Vein pit contains underground workings from past operations. The mineralization surrounding these previous workings has not been tested and is considered a highly prospective source of additional resources.
Masbate Gold Project CIL Tanks
The mine contractor is Leighton Holdings Ltd., who is the worlds largest mining project development and construction group with a market capitalization of CA$10.09 billion, 25,000 employees and current work in progress of $13.2 billion, with $5.6 billion in the mining and resources sector. Leighton, through its various operating subsidiaries has been involved in the mining and resources sector since the 1940's and operating in Asia since 1975. Annual revenue for the Asian region alone is over US$300 million, with almost 2,500 employees. Leighton have a successful track record of delivering projects on schedule and budget, with the financial and technical strength and experience to support a FPLS contract for Masbate.
Besdies joining the ranks or the world's 200,000 ounce + gold producers this month, the company is also exploring the Segilola Gold Project in Nigeria, in which it has a 51% interest. The project is
considered to be the most advanced gold exploration project in the country and is held by Segilola Gold Limited ("SGL") with joint venture partner TML, a Nigerian company owned by local investors and the Government of Nigeria.
The concentration of the gold in quartz veins and silicified zones along major faults and fracture zones is attributed to the Pan Africa thermotectonic event. The major fractures and shear zones, most with an overall NNE-SSW tend appear to be a feature of the region. The regional setting is very similar to the Ashanti and Sefwi systems in nearby Ghana, which have hosted gold production in excess of 20 million ounces.
A drill indicated gold mineralisation zone has been shown to exist for 950m along strike and to 150m in depth. The drilling to date suggests that a grade in excess of 5 grams per tonnegold may be achievable.
The most recent drill results from Segilola include:
- 11 metres grading 4.84 grams per tonne gold including 1metre grading 17.40 grams per tonne gold;
- 6 metres grading 19.09 grams per tonne gold including 93.60 grams per tonne gold;
- 6 metres grading 13.28 grams per tonne gold including 1metre grading 32 grams per tonne gold;
- 8.1 metres grading 12.37 grams per tonne gold including 2 metres grading 30.20 grams per tonne gold;
- 5.2 metres grading 9.95 grams per tonne gold and 0.7 metres grading 30.10 grams per tonne gold;
- 1 metre grading 81.00 grams per tonne gold;
- 2.8 metres grading 19.98 grams per tonne gold including 1 metre grading 53.0 grams per tonne gold.
Nigeria has a well established petro-chemical industry based in the Niger River delta and the government of Nigeria, is now in its second term of democratic rule. The Government has recently established the Ministry for Solid Minerals Development to administer all mineral assets occurring in Nigeria other than oil and natural gas.
CGA also retains a 51% interest in the Mkushi Copper Project in Zambia.
The company is headed by Michael J. Carrick, a Chartered Accountant with 20 years experience in the resources sector, and Mark S. Savage, who was a was a senior executive for a number of U.S. banks before moving to an Australian merchant bank.
SOURCE: http://www.midasletter.com/news/09031206_CGA-mining-heads-to-production.php
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