Red Rock updated the market yesteday with new sample results from the Migori gold project in Kenya (click here to view).
It seems that good progress in being made on the ground; quoting one line from the announcement, which should encourage investors:
It seems that good progress in being made on the ground; quoting one line from the announcement, which should encourage investors:
"The results confirm the economic potential of the tailings, and the existence of further exploration targets suitable for early follow-up in the eastern license and at Nyarongi"
We asked Chairman Andrew Bell if he could expand on the news for the benefit of investors. Here's what he had to say:
MM:. Can you give our readers a brief overview of the significance of this update from Migori?
MM:. Can you give our readers a brief overview of the significance of this update from Migori?
AB: In 1982 a Kenya-based company conducted sampling and metallurgical testwork at the old Macalder tailings. Some work was said to be carried out in Kenya, some in Australia, and some at Imperial College. In 1985 Mackay and Schellman quoted these results in some work they produced, but had not been able to source the original data. That was three years later, and they couldn’t track down the details. So in 2010 it is impossible.
We ran some numbers on the conclusions as to volume, grades, and recoverability, using today’s metal prices, and hypothesized just under $200,000,000 of recoverable metal.
But this was as we recognized quite unreliable. There was no alternative to going back and redrilling, resampling, doing cross and long sections, doing metallurgy, and coming up with figures that could be relied on and a process path that would enable us to implement the recovery of the metals. This is what we have done.
So far the figures for base metals agree quite well with the old figures. The copper grades reported by previous work in the calcine dumps looked unrealistically high, and our figures are lower, but still good. The sulphide copper figures agree well, our cobalt readings are a bit lower grade, especially in the sulphides. Also our zinc is a bit lower, which is an artifact of the upper detection limit of 1% in our ICP test: this factor means our calcine tailings copper grade is slightly low too. Overall there is good agreement, which increases slightly our confidence in the rest of the work done at that time.
The other results, which are encouraging, show that we are already identifying areas outside those already explored where we think we can identify and prove up mineralization to add to the resource base.
MM: Can you also comment on the significance of the results for the Hand-grab samples collected at new BIF-related targets in the Eastern license?
AB:The results as we say are positive, and the Eastern license has been underexplored and the old mines there only mined to a certain depth because of the higher water table. The potential around the very old mines, in a couple of places, is clearly very good. The BIF model and our excitement at finding our hypotheses confirmed is something we shall enlarge on in our next announcement which is coming shortly.
MM:Investors would hope that at some stage that the company may be able to generate revenues from the extraction and sale of the base metal content identified. Would you say the results indicate there may be content of economic significance in this respect and if so, what would the extraction and sale procedure involve and what timescales would you envisage?
AB:We are impatient and are looking actively into installing simple gold production plant and into tailings treatment. How soon? As fast as we can possible do it: this is our priority. We have to await metallurgical testwork on the tails, and are sampling the gossan and some surface areas. I anticipate that we shall extract gold and silver as well as the other metals from the tailings, but the optimal process route is actually what our metallurgists will be working out.
MM:We note that the results for the gold and silver content from the tailings are still awaited, will you be reporting them them separately to the market and if so when do you expect this would be?
AB:This is a different set of tests. It should not be long. We expect them to be good so of course we want to announce the moment we can.
MM: How do today's results add to your confidence in the overall economic viability of the Migori project going forward?
AB:I would be a little surprised and disappointed if we could not make an economic project out of treating the tailings, and do so within a short space. That creates the prospect of cash flow, and cash flow will help exploration and development proceed faster. I would hope that the tailings treatment, and, separately, a small gravity plant to treat surface gold, would themselves make a very viable project. But their development would not detract from, but assist, the continuing effort to build up a major resource by exploration along the length of the belt.
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