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WEST AFRICAN GOLD

Gold strike in Burkina Faso

Ampella has identified "six potential multi-million ounce gold targets" at its Batie West"gold rush" concession.

Author: Barry Sergeant
Posted: Friday , 24 Jul 2009

JOHANNESBURG -

Australia-listed Ampella Mining's stock price has gone ballistic over the past month or so, on increasing recognition that it seems to have struck some kind of a gold province in Burkina Faso, which is partly exposed to the Birimian belt, a super-group of geological units formed about 2.1 bn years ago.

A company roadshow presentation released this week suggests that Ampella may have "already" identified "six potential multi-million ounce gold targets" on the Batie West concession, in Burkina Faso, down near the borders with Ghana and Ivory Coast. Ampella reckons that West Africa's Birimian greenstones have so far proven up deposits, with a minimum size of 1m ounces, of 100m ounces in Ghana, 33m ounces in Mali, 12m ounces in Burkina Faso, 8m ounces in Ivory Coast, and 3m ounces in Senegal.

Based on the Ampella presentation, Batie East provides Ampella with 110km along a prospective gold-bearing shear, where early drill programmes are "producing shallow, wide, grade quality results". To its credit, Ampella makes it clear that the property has been well used by artisanal miners. Small time gold digging is found across huge areas in West Africa, where gold has been dug out for centuries.

Various estimates put the number of artisanal gold miners active in Burkina Faso at around 200,000, working more than 200 mining sites throughout the country. However, Ampella has rights to claiming new discoveries within Batie East, especially when drills go below the levels that artisanal miners would feel comfortable with.

Just a year after acquiring Batie East, Ampella claims the Konkera Main "gold discovery" over 1km, where every hole intersected yielded "significant gold mineralisation above 0.5 g/t". A virgin gold discovery has been claimed at Konkera North, where gold grades over 0.5 g/t over two kilometers. At this find, there are "significant intercepts" within 100m from surface; gold mineralisation is "open in all directions and at depth".

Gold production has grown exponentially in West Africa since the early 1990s, when waves of privatisation of previously nationalised state assets swept across the continent. One of the leaders was South Africa-based Gold Fields, which took over the Tarkwa gold mine in Ghana, and its ageing underground system. However, exploration and development work on the property proved up a world class surface deposit system, and Tarkwa was developed into what probably now ranks as the biggest open cut gold mine on the continent.

The government of Ghana seized a 55% stake in Obuasi, the biggest African gold deposit outside South Africa, in 1972, following a coup d'état. The erstwhile Lonrho retained an equity stake in Obuasi and remained, by and large, in control of day-to-day operations. At the time of the 1994 re-listing in London, the government privatised Ashanti Goldfields by selling 25% of its holding, reducing its equity stake to 30%. In 2004, AngloGold Ashanti completed a friendly USD 1.1bn merger with Ashanti Goldfields.

Along with a number of other gold mines, Ghana has retained its position as the No 2 gold producer on the continent, in turn leading West Africa as the fastest growing gold production region on the continent.

Burkina Faso has generally lagged the resurrection of gold mining in West Africa; today it hosts gold mines operated by High River (Taparko-Boroum Mine), Semafo (Mana Mine), Etruscan Resources (Youga Mine), Cluff Gold (Kalsaka Mine); Iamgold, a leading global Tier II gold name, gets bigger and bigger in West Africa; its most recent acquisition in the area was seen earlier this year, when it swallowed Orezone, mainly for Essakane (resources: 4m ounces of gold) in Burkina Faso. Smaller gold companies active in the country include Channel Resources, Riverstone Resources, and Sanu Resources, currently involved in a business combination with Canadian Gold Hunter.