Keegan Provides Esaase Project Review Update
September 06 2012 - 8:00AM
Marketwired
Keegan Resources Inc. (TSX:KGN)(NYSE MKT:KGN)(NYSE Amex:KGN)
("Keegan" or the "Company") is pleased to provide an update on
activities currently being undertaken to maximize the value of the
Company's Essase Gold Project in Ghana, West Africa. Over the last
several months the Company has undertaken an extensive
re-examination of the development options for the Essase project
with a goal of minimizing capital requirements while improving
project economics. The Company believes this process has been
successful and has re-focused its development plan for Esaase
looking at two primary areas:
-- a processing plant with a reduced processing capacity and improved
metallurgical process design to substantially reduce initial capital
requirements, and
-- an improved mine design which features higher grade feed to the
processing plant and/or a lower strip ratio.
The Company has engaged DRA Minerals Projects ("DRA") of
Johannesburg, South Africa to investigate a reduced capacity
processing plant that would use an improved process design. Initial
work by DRA investigated the merits of utilizing a flotation
process to enhance the project economics. In a trade-off study, DRA
estimated capital and operating costs for flotation versus whole
ore leach processing and determined that implementing a flotation
process would provide a positive incremental benefit to the project
economics and create favourable environmental advantages as
compared to the whole ore leaching process.
Based on the revised preliminary process flow sheet, DRA
completed a conceptual level capital and operating cost estimate
for a 4.0 million tonne per annum ("Mtpa") processing plant.
Preliminary capital cost estimates indicate that the project
capital cost could be reduced to approximately US$260 million
excluding mining equipment. Mining equipment is expected to be
provided as part of an agreement with a mining contractor.
The Company also engaged Minxcon, a South African based mineral
resource consultancy firm to review the mineral resource estimate
and mine plan for opportunities to improve the minable ore grade
and/or reduce the strip ratio during the early years of production.
Minxcon concluded that there is an opportunity to improve the
minable ore grade by using selective mining methods rather than the
bulk mining method as proposed in the September 2011 Pre
Feasibility Study ("PFS"). This work also suggests that Esaase
could be selectively mined at higher ore grades than the bulk
mining plan prepared for the PFS.
Minxcon is currently updating a refined block model utilizing
existing data which the Company expects will more precisely
delineate the mineralized zones within the resource area and
produce a resource estimate for selective mine planning. The
Company expects to be able to release the results of the revised
resource estimate in the fourth quarter of 2012.
The Company intends to continue working with DRA, Minxcon and
other technical advisors over the coming months to further de-risk
and enhance the Esaase project. A revised PFS based on a 4.0 Mtpa
flotation plant is now underway and completion is expected in the
first quarter of 2013.
A proposed reduction in plant throughput capacity to 4.0 Mtpa
from 7.5-9.0 Mtpa is expected to reduce the project capital cost to
approximately $260 million, a significantly lower amount as
compared to the current PFS, resulting in more financing options
for the Company. Keegan has a current cash balance of approximately
$188 million.
Concurrently with the re-engineering work, the Company has
continued its permitting activities and stakeholder engagement. The
Company plans on submitting a revised Environmental Scoping Report
to the Ghanaian environmental authorities in September 2012, which
will be followed by a formal community consultation process. All
studies necessary for submission of the Company's Environmental
Impact Statement ("EIS") have been substantially completed and
final submission of the EIS will follow community consultation in
support of our efforts to obtain an environmental permit for the
project.
CEO Shawn Wallace commented on the project developments, "Keegan
is well on its way to delivering a substantially revised and
improved Esaase project study that is better aligned with market
expectations in the current environment. Our efforts to fully
preserve the treasury of $188 million have placed us in a strong
position to rapidly execute on the right strategy going
forward."
On Behalf of the Board of Directors,
Shawn Wallace, Chief Executive Officer
About Keegan Resources Inc.
Keegan is a junior gold company offering investors the
opportunity to share ownership in the rapid exploration and
development of high quality pure gold assets. The Company is
focused on its wholly owned flagship Esaase Gold Project (3.64
million ounce Measured and Indicated and 1.55 million ounces
Inferred resource averaging 1.1 grams per tonne gold at a cutoff
grade of 0.4 grams per tonne) located in Ghana, West Africa; a
highly favourable and prospective jurisdiction. Managed by highly
skilled and successful technical and financial professionals,
Keegan is well financed with no debt. Keegan is also strongly
committed to the highest standards for environmental management,
social responsibility, and health and safety for its employees and
neighbouring communities.
Keegan trades on the TSX and the NYSE MKT under the symbol
KGN.
More information about Keegan is available at
www.keeganresources.com.
Qualified Person and QA/QC
Richard Haslinger, P. Eng. is the Qualified Person with respect
to NI 43-101 at Esaase. RC samples were taken at one-metre
intervals under dry drilling conditions by geologic and resource
consultant Coffey Mining Inc. utilizing drilling and sampling
techniques widely accepted in resource definition studies of other
West African gold deposits. All reverse circulation drill samples
are weighed on site and all cores is drilled at HQ diameter and
sawed into equal halves on site. All samples are assayed using
standard 50 gram fire assay with atomic absorption finish by ALS
Chemex Labs in Kumasi, Ghana. QA/QC programs using internal and
external standard samples, re-assays, and blanks indicate good
accuracy and precision in a large majority of standards assayed.
Repeatability in duplicate samples is generally within 10%
variance. In instances where variance is greater than 10%, the
assays from both samples are averaged. Intercepts were mostly
calculated to emphasize width rather than grade: a minimum of a 0.2
g/t cutoff at beginning and end of the intercept and allowing for
no more than eight consecutive samples (eight metres) of less than
0.2 g/t Au. Mineralization in the main zone strikes approximately
10 to 30 degrees east of north and dips 45 to 90 degrees to the
west. Holes are drilled at 110 degrees azimuth and are inclined at
45 to 60 degrees, so true widths are estimated to be over 80% of
the drilled widths. Intercepts are calculated using a 0.5 g/t lower
cutoff over at least 5 metres. The intercepts reported in this
release were only those with grade-widths above a value of 8 (g/t
gold multiplied by metres of intercept).
The techniques by which drill hole assays have been previously
used in resource estimation at Esaase can be found in Keegan's most
recent NI 43-101 technical report on www.sedar.com.
Forward Looking and other Cautionary Information
This release includes certain statements that may be deemed
"forward-looking statements". All statements in this release, other
than statements of historical facts, that address estimated
resource quantities, grades and contained metals, possible future
mining, exploration and development activities, are forward-looking
statements. Although the Company believes the forward-looking
statements are based on reasonable assumptions, such statements
should not be in any way construed as guarantees of future
performance and actual results or developments may differ
materially from those in the forward-looking statements. Factors
that could cause actual results to differ materially from those in
forward-looking statements include market prices for metals, the
conclusions of detailed feasibility and technical analyses, lower
than expected grades and quantities of resources, mining rates and
recovery rates and the lack of availability of necessary capital,
which may not be available to the Company on terms acceptable to it
or at all. The Company is subject to the specific risks inherent in
the mining business as well as general economic and business
conditions. For more information on the Company, Investors should
review the Company's annual Form 20-F filing with the United States
Securities Commission and its home jurisdiction filings that are
available at www.sedar.com.
Neither Toronto Stock Exchange nor the Investment Industry
Regulatory Organization of Canada accepts responsibility for the
adequacy or accuracy of this release.
Contacts: Keegan Resources Inc. Shawn Wallace Chief Executive
Officer 1.604.683.8193 or Toll Free: 1.800.863.8655 1.604.683.8194
(FAX)info@keeganresources.com www.keeganresources.com
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