A Good ReadApril 22, 2010
Volta Resources Closes In On A Maiden 43-101 Resource On The Kiaka Gold Deposit In Burkina Faso
By Alastair Ford
“The Kiaka deposit just keeps on delivering. I’m very, very bullish on it.” So says Kevin Bullock, chief executive of Volta Resources, the company that acquired Kiaka from Randgold in a C$7 million cash and shares deal towards the end of last year. At that time, Randgold reckoned it contained at least 2.65 million ounces of gold. Now Volta Resources is drilling hell for leather to prove them right. And a string of extremely encouraging news results that have issued forth from the company in recent weeks seems to show that everything is proceeding to plan.
Volta remains on track, says Kevin, to deliver a maiden 43-101 compliant resource on Kiaka by June, which, as April rolls by and the ash clouds dissipate, makes it more a matter of weeks than months. He’s confident that that target will be met, and advises investors to anticipate even greater newsflow over the intervening period, as the last drill results come in. If they are anything like as good as the ones that have already been delivered, then investors should be well pleased, although given that the company’s shares have more than tripled in value since the end of last year, it’ll be interesting to see if the news is already priced in.
To give just a flavour, among the latest results are intercepts of 119.5 metres at 1.15 grammes per tonne gold, 60.2 metres at 1.17 grammes per tonne, 120.5 metres at 0.94 grammes per tonne, and 90 metres at 1.06 grammes per tonne. Under the current programme Volta is drilling down to a depth of 200 metres, although the original Randgold work went down to 300 metres, and Kevin is keen to emphasise that it’s wide open at depth. What’s more, as more detail emerges about the mineralisation at Kiaka, it’s becoming apparent that any mining operation that Volta can get going there will be able to target higher grade zones early on. That straightforward fact, plus an attractive looking tax holiday that amounts to half of mine life up to a maximum of ten years, means that the project economics already have some headwind behind them.
And on that subject, plans for a scoping study are already underway. Kevin would like to get the ball rolling on scoping studies proper as soon as the 43-101 resource is delivered, and to that end he’s already started laying out the groundwork. Over in Burkina itself, chief operating officer Vic King is overseeing the work: a weather station has been established, a census taken, and proper relationships established with the locals. Vic’s no stranger to operating in West Africa, having spent many of the formative years of his mining life assessing projects for Goldfields. Kevin’s also got plenty of West African experience under his belt too, for that matter, as at one stage he ran Iamgold’s operations across the entire region. Between the two of them they are unlikely to make many false moves.
The drill-bit will be the ultimate arbiter, of course, but what with the grades holding up well, and the core coming in so hard that Kevin has no doubts that a pit wall at Kiaka would hold up very nicely indeed, things look to be well on track. Money is always an issue too, of course, but on that score Volta has little to worry about, at least in the short term. In March the finance arm of the World Bank, the IFC, invested C$4 million in Volta at a price of C
.74 per share. This is a considerable vote of confidence in Kiaka, and brings onto the register a heavyweight investor that may well make a difference when it comes to negotiating with the government over access to power and water and other infrastructure. Volta’s shares are currently trading at a very healthy C$1.34, so the IFC won’t have any complaints in the short term. It’s got the right to put another C$4 million into the company, and the way things are going, you get the feeling they’ll be jumping at the chance.
But following on from the IFC investment it was perhaps even more interesting to see Randgold putting new money into Volta too. Under the terms of the sale of Kiaka, Randgold has the right to participate pro-rata in all equity issues in Volta as long as it maintains its stake in Volta at 15 per cent or higher. What that goes to prove, with hard cash down, is that although Randgold wanted shot of Kiaka, it didn’t want a complete end to participation. After all, no-one’s ever doubted Randgold’s 2.65 million ounce estimate. As Kevin Bullock says, it was done for internal purposes, and not for arm-waving – there’s no reason why the Randgold boys would have pumped up the numbers. Randgold didn’t sell Kiaka because it didn’t think it was any good, but rather because it had just bought Moto with its tens of millions of ounces, and rather had its hands full. Alright, it’s up to Volta now to satisfy the Canadian authorities that the numbers stack up, but Randgold clearly has no doubts. And that ought to give a clear signpost to investors too.