Grandich Client Oromin Explorations – Going for “World Class” Gold in West Africa

The global search for ‘world-class’ gold deposits has transformed West Africa into one of the fastest growing gold production and exploration area in the world, thanks to the efforts of visionary companies such as Oromin Explorations Ltd. West African gold production has increased by 53% over the past decade and the region continues to generate multi-million-ounce gold discoveries at a time when similar discoveries are declining in more mature mining districts, notably in the Americas and Australia.

Oromin may not have the highest profile or market valuation of the rapidly growing list of West Africa gold explorers — having focused more on drilling programs than self-promotion — yet has achieved a track record of success that warrants serious attention from industry and investors.  Within the past five years, the company has elevated the OJVG Gold Project in Eastern Senegal from a grassroots prospect into a potnetial  near-term gold producer with truly exceptional long-term exploration upside.

A positive feasibility study completed in mid-2010 examined a proposed open-pit/underground mine that would produce 174,000 ounces of gold annually at cash costs of US$409 per ounce in the first three years, with payback of capital (US$291 million) within two years. But this study doesn’t reflect the project’s full potential as it was based on only five of nine deposits discovered to date. It doesn’t include results from subsequent drilling of these five deposits, drilling at four other gold deposits not included in the study or drilling results from several new discoveries.

Oromin is continuing a dual-track strategy to advance the OJVG Gold Project. On the one hand, ongoing drilling programs and value engineering studies are focused on upgrading and expanding resources and examining opportunities to improve project economics, including potential heap-leach processing of oxide mineralization not included in the feasibility study.  But the company is also focused on generating new gold resources within four deposits not included in the feasibility study and within multiple priority exploration targets, including two recent bulk-tonnage discoveries. The estimated budget for this work to mid-2011 is expected to exceed $30 million.

Oromin plans to release an updated resource estimate in Q1 2011 that is expected to boost current resources totaling 3.17 million ounces of gold in the measured/indicated category, plus another 0.33 million inferred ounces. (The current probable reserve contains 1.42 million ounces.)  But as before, this will represent only the tip of the proverbial iceberg.  The OJVG Gold Project has extraordinary potential for resource growth in the years ahead. It’s also a potential takeover target, particularly now that two West African gold producers, TSX-listed IAMGOLD Corporation and Mineral Deposits Limited (MDL) of Australia, have each acquired toehold (roughly 15%) equity stakes in Oromin through recent share purchases.

Oromin was an exploration pioneer in Senegal, attracted by the West African nation’s favorable mining laws, tax and royalty terms, including a minimum 7-year tax-free status. But the biggest draw was highly favorable geology hosted within the same Birimian greenstone belt as the producing 35-million-ounce gold camp just across the border in nearby Mali. Today, Eastern Senegal is an emerging gold camp with one producing mine and approximately 12 million ounces of gold discovered to date by various companies, including Oromin, MDL and Randgold, among others.

As operator of the OJVG Gold Project, Oromin has defined nine gold deposits and multiple exploration targets within a NNE-trending 8-km-wide structural corridor that runs the entire 22-km length of the property. The western side hosts five lower grade bulk-tonnage “Masato Style” deposits and targets similar to those being exploited at MDL’s adjacent open-pit Sabodala Mine (3.5 million ounces in gold resources and 1.6 million ounces gold reserves). The eastern side hosts four higher grade “Golouma Style” deposits and targets with both open-pit and underground potential, similar to mines in West Africa and Eastern Canada’s famous gold camps. These mesothermal-style shear-hosted greenstone vein deposits are known to extend to great depths — up to 2.5 kilometers in the case of the Obouasi Mine in Ghana. Oromin believes that its Golouma Style deposits have potential to extend to at least one kilometer in depth, well beyond the limits of their existing combined resource (1.2 million ounces gold) defined to roughly 300 meters vertical extent.

The bulk-tonnage “Masato Style” deposits have exploration upside as well, including at Masato, the largest of the five oxide-rich bulk-tonnage deposits and the only one included in the feasibility study. What’s interesting about Masato is that it also has potential for deeper higher-grade mineralization, as shown by recent intervals drilled below the modeled open pit, notably: 6.47 g/t gold over 23 meters; 2.18 g/t gold over 43 meters; 5.7 g/t gold over 9 meters and; 7.89 g/t gold over 7 meters. Two new bulk-tonnage discoveries, which Oromin believes may collectively prove to be larger than the current Masato open pit, offer additional resource potential. Beyond all this, Oromin sees long-term potential to generate new resources from multiple early-stage exploration targets of both types, including some that are yet to be drill-tested.  The Company’s management team is no stranger to world-class precious metals discoveries, having played key roles in the discovery and development of the Hemlo and Eskay Creek mines in Canada, and the immense Petaquilla Cu-Au-Mo Project in Panama (now under development by Inmet Mining).

Oromin has also earned its reputation as a socially and environmentally responsible company. Community consultation and social programs conducted over several years have led to strong government and local support for the OJVG Gold Project.

In early 2010, the Government of Senegal granted OJVG a 15-year renewable Mining License, paving the way for construction to begin in 2011 and plant commissioning in Q4 2012.  Oromin has achieved many other major milestones in the past five years and is finally starting to receive the recognition it deserves for its vision, hard work and technical excellence. It appears safe to say that the best is yet to come for Oromin.

October 26th, 2010
Categories: Uncategorized . Author: caliche