TORONTO –Ghana prospector Xtra-GoldResources’ geological model is out of the shed in a full-scale rendering that points to a fresh and neglected district of gold in the West Africa nation.
A just-released three-dimensional rendering shows an extensive Kibi Gold Belt shear zone and offshoots at the five-year-and-running gold project. “Definitely not linear, which is why structural modeling is so critical at this point,” says Xtra-Gold VP of Exploration Yves Clement.
A run-through of the prospector’s model indicates a concession at Apapam that very well might achieve West Africa fame for gold grade, scale of deposit and mine life. The prospect’s Central Granitoid and its attendant dykes and shoots resemble Canada’s Red Lake and the historic Homestake Mine in the USA Dakotas.
At stake is a greenstone belt, the Kibi, which was almost untouched five years ago when Xtra-Gold Resources (TSX: T.XTG, Stock Forum and OTC:BB: XTGR) scored most of the mining licenses in the region. (Photo: The ‘nose’ of the granitoid fold at surface at the Apapam concession – Thom Calandra photo)
Xtra-Gold’s geological model and concurrent drilling near its Apapam base camp first must prove true to form. (See: Just-releasedrotating view of main ore body)
Consulting geologist Robert Casaceli, based in Nevada, thinks the Kibi Gold Belt could yield tens of millions of ounces. Perspective: the Ashanti Gold Belt is Ghana’s granddaddy; it holds as much as 120 million ounces of gold produced or placed in reserves and resource estimates.
“When it comes to structural geology, you want to understand the movements within crustal rocks that create local areas of open-space,” says Mr. Casaceli, at one time chief consulting geologist for royalty franchise Franco-Nevada. “In the case of Apapam, axial plane cleavage fractures in a folded nose, or noses, appear to have control on deposition of gold. It takes sleuthing by structural geologists, helped by 3-D modeling, to unravel the correct sequence of events that will point toward the ultimate zone of mineralization.” (Graphic: Zone 2 model showing shoots and flanks in a static map)
After four tours of Xtra-Gold Resources’ Kibi Gold Belt project in booming Ghana, Africa’s longest-standing democracy, I can say this much: Xtra-Gold Resources and its principals have kept their word on the drilling component of this enterprise and on wise use of capital. Mr. Clement and consulting geologists, David Bell of 1980s’ Hemlo Gold Mines and board member Mr. Casaceli, have explored the rich red ground of the mesothermal deposit both methodically and aggressively.
If I am correct, Xtra-Gold and its three-dimensional plotting of prime prospects in its Zone 2, respectively named the Central Granitoid, Mushroom Zone and East Dyke, will spark a corporate scrum for the property, a revaluing of the company’s market worth or both. That is my estimation.
The danger here is that I embellish three years of research (and cramped coach seating to Accra). If that is the case, I apologize. My body of Stockhouse-distributed research stands or crumbles on its own merits. (The research is available here:Xtra-Gold Reports.)
Those who have joined me in support of Xtra-GoldResources these past three yearshave seen their capital treated with the respect demanded by shareholders in the speculative business of resource investing. That is saying something given the poor treatment that “junior” metals equities of all stripes are enduring. One just-published report from Canaccord in Toronto puts the “juniors” market damage since April 1 at minus-44 percent. Thus, we are until metals equities turn higher, all dogs in the kitchen.
Mr. Clement and his team don’t track the “juniors” market to stay abreast of their Ghana neighbours. “I couldn’t tell you why Keegan (TSX: T.KGN, Stock Forum) is suffering right now, or what’s what,” he says.
The 46-year-old Sudbury-born geologist says he has his hands full comprehending overall structure at prime Zone 2 of Apapam. “There is still so much to understand. Ours is a series of shoots but not a line along a larger structure,” Mr. Clement, who has worked in Latin America, Africa and Canada, tells me from the Ghana camp. “On a smaller scale when you look at a fold, it is linear. But then the faults plunge, and you have folds, refolded folds upon folds.”
Structural modeling of relatively unexplored Kibi is critical to the success of the Ghana project. “We have decades of Ghana data on the established belts, the Ashanti Belt especially, but almost nothing on the Kibi,” says country manager James Longshore, an Xtra-Gold co-founder from Ontario. The 45-year-old Mr. Longshore spends about 22 weeks a year at the Apapam base camp, some three hours outside the capital of Accra.
Mr, Longshore, Mr. Clement and CEO Paul Zyla put 29-year-old Denis Laviolette, recently of Goldcorp and Kirkland Lake, on the Apapam case. Using Leapfrog software and inputting drill data, rock type and other criteria, Mr. Laviolette in spring 2011 began a modeling exercise that until this week was kept mostly behind closed doors. (Graphic: Surface geological map of property)
Real-time geo reporting
Thanks to Denis and Mr. Clement’s veteran geologists and consultants, Xtra-Gold now can show detailed maps and a rotating ore body via Internet-fed media files. The ones I have seen are up to standards of real-time geological reporting. Each data point and 3-D representation is consistent with what I have viewed at Apapam.
It was a lack of mapping with shown extensions that became the “big knock” Xtra-Gold Resources endured at trade shows and analyst gatherings. No more. Since February 2011, a drill program has added 100 holes covering 12,000 meters. By December, Xtra-Gold will have drilled 30,000 meters across the main concession (and several satellite areas).
Specifics:
- Layers of mineralization in and around the Central Granitoid resemble Goldcorp’s Red Lake deposit (GG) and the original Homestake Mine in the Dakotas (ABX).
- The mesothermal deposit with its granitoid folds features shoots of mineralization going against the grain of the folds. This is atypical of Ghana gold belts and requires in layman’s terms a connecting of proven pods of gold to show economic value.
- Some shoots “plunge” to depth and others don’t. This leaves Mr. Clement and his geological consultants with expectations that consistent drilling this year will continue to “show” more shoots of mineralization.
- Says Mr. Clement from base camp, where an SRK structural geology team is now on site: “Our Big Bend is 20 percent of the Central Granitoid and is our most robust section. We trace from surface down to 500 meters … with strike length of 325 meters. When a determination is made that we can show (enough) ounces in this zone, well … at some point there will be a 43-101 (compliant resource report) commissioned.”
Actionable: Xtra-Gold has 25 partial or complete holes still sitting in a Kumasilab a few hours away. Wait times for assays in Ghana are improved to two months from four months earlier in this hectic year. Thus: news is pending from drill data that already show grades of 1.5 grams gold per tonne and greater over lengthy meters. Whether investors will act on pending data when fresh assays are published remains to be seen.
“We like what we see,” says a circumspect Mr. Clement. “Every hole has something but we need it all back in terms of the assays and I cannot comment until I see everything.” (See:Surface geology drill plan)
Mr. Longshore, a former CEO of the company and an accomplished Ontario and USA hockey player in his youth, is quick to defend Xtra-Gold’s restrained use of cash, all gathered in a 2010 financing that included a full Toronto Stock Exchange listing.
“Any company in Ghana, PMI (TSX: V.PMV, Stock Forum), Newmont (NYSE: NEM, Stock Forum), Keegan, anyone that has sewn together its data and tightened its drill spacings (down to 50 meters apart) have all shown major discoveries. All of ‘em,” Mr. Longshore tells me as we step through the modeling phases in a Toronto restaurant. (Photo: Mr. Longshore in Toronto – Thom Calandra photo)
“We think by waiting on a resource report (NI 43-101), we can boost shareholder value. So far we have spent $5 million to discover what we hope will be at least one million ounces. When we go to $10 million, on our own schedule, the only other company doing that in Africa, $10 an ounce in exploration costs, is Randgold (NASDAQ: GOLD, Stock Forum), and they are probably $20 an ounce. “
Mr. Casaceli, the consultant geologist, puts it so: “The ongoing strike-slip motion of two over-lapping, stepped faults forms a stress couple that creates lozenge-shaped areas of true extension with lots of open space. I suspect that we may have this type of setting just to the east-southeast of the Big Bendzone. You can quite possibly prove-up ounces at Apapam on the way to potentially finding something larger along the hidden northeast-trending range-bounding fault. Structural geology and 3-D modeling, together with geophysical data such as VTEM, can be crucial in reaching the discovery phase in this type of scenario.”
Xtra-Gold is a $75 million Canada and USA-traded company. I own about 160,000 shares. Over three years, the shares have held up well, even with metals equities these days groveling like dogs in the kitchen.
For a three-dimensional view of Xtra-Gold’s project, please see: https://www.xtragold.com/Videos/ORE_ROTATES.wmv
For the surface geology drill plan, please see: https://xtragold.com/Documents/Surface%20Geology%20Map.pdf
For Xtra-Gold’s 272-page NI 43-101 compliant technical report of July 2010, please see: https://xtragold.com/43-101/43-101%20Technical%20Report%20Kibi%20Project%20July12,%202010.pdf
For several years of Thom Calandra’s Xtra-Gold research, please see:https://stockhouse.com/tools/?page=%2FFinancialTools%2Fsn_shnews%2Easp%3Fsymbol%3DXTGR
NOTES: I will be speaking at Brien Lundin’s New Orleans Investment Conferencein three weeks. You can click on this link to get a discount on the entrance fee. … I am a partner of Torrey Hills Capital, which is in Del Mar, near San Diego, California. That investor outreach firm lists Xtra-Gold Resources as a client.
Stockhouse members – the service is free – can see my entire portfolio online. It is under the portfolio function and my user name, which is TCALANDRA. There is nothing in my portfolio suitable for risk-averse investors. I am not a financial adviser.
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