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The New Gold Discovery

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For the last few months, I have been waiting for the initial drill results from Abzu Gold’s (TSX Venture: ABS) Nangodi project. On Thursday, they finally came – unearthing a new Ghanaian gold discovery. And the initial results are BIG…

Before I go over the results, let’s play some catch up.

Abzu Gold (TSX-V: ABS) is a West African junior in Ghana that was featured in the Equedia Letter back in July (click for report).

Just last month, they teased us with 4.72 g/t gold over 20 metres at their Asafo location, near PMI Gold’s Obatan gold project (see update here). While those numbers were good, the real kicker for Abzu was their recent option on their Nangodi project – one of ten concessions currently under option agreement with Red Back Mining Ghana, a wholly owned subsidiary of Kinross Gold, with no current drill results…until now.

The Nangodi Discovery

The Nangodi is the site of a 1930′s vintage underground mine that produced gold at an average grade of ~26 g/t gold. Back in those days, gold was nowhere near current price levels (between $20-$35/oz) which meant that only extremely high grade gold deposits with visible gold showings were ever mined. Obviously, the mine eventually shut down as the cost to pull the gold out far exceeded gold prices.

Historical drill intercepts have intersected gold mineralization along a strike distance of 1.2 kilometres with true widths up to 60m with mineralization open in all directions and at depth.

Crescent Mine

But that was then and this is now.

Gold prices are now heading toward $2000/oz with extreme violence and the Nangodi project remains mostly untouched.

On Thursday, Abzu announced the first holes from the project…and the numbers are big.

Abzu Gold Announces New Ghanaian Gold Discovery at Nangodi Property

The Nangodi Project centers on a historic gold mine and the results released Thursday are from just one of several targets on the large, 142 km2, Nangodi concession.

Thursday’s drill results clearly confirm the presence of a broad gold mineralized system, with multiple higher-grade gold intercepts. Mineralization remains open in all directions including depth – which means a lot of room for expansion.

Take a look at the highlights:

  • 73 metres @ 1.15 g/t gold
  • 66 metres @ 1.53 g/t gold
  • 44 m @ 1.91 g/t Gold
Crescent Mine
click to enlarge

In addition, this drilling demonstrates the presence of a high-grade zone 1 to 15 m wide with values up to 41.6 g/t gold over 1 metre and 4.65 g/t gold over 15 metres.

So far, Abzu has completed 27 Reverse Circulation (RC) and diamond core drill holes totalling 4,039 metres in its phase 1 drill program. So far, 4 out of the 5 holes have returned significant results (as shown in above figure) and as shown here.

That means there are still 22 holes that have yet to be released. If they come back as strong as their first holes, we’re looking at a serious game changer for Abzu – especially considering their geophysical location and proximity to nearby deposits and mines. In a bull market, these results would send any junior skyrocketing in share price.

Abzu is in a great position to fully exploit not only high gold prices, but an extremely promising prospect at Nangodi.

Even today, artisanal miners are recovering gold from the Nangodi zone due to the richness of gold in the area. The grades are high and mineralization is open in all directions and at depth. That means there is significant room for expansion and I bet that Abzu’s management will be aggressive in moving this project forward.

Crescent Mine
Gold tail in artisanal miner’s gold pan washed from artisanal bedrock diggings at Nangodi.

Last week, I went over some basics on mining evaluation in the letter, “It’s Not That Simple: Mining 101.” In it, I stressed that proximity to producers and other deposits create great synergies in economies of scale which make juniors much more attractive.

If you’re looking for those traits, Abzu easily fits the bill with its projects directly near or adjacent to major deposits and producers in Ghana.

West African gold companies continue to draw serious attention due to the simplicity of its geology which allows companies in the area to move projects forward at record pace.

Just take a look at a few of the companies advancing projects in the area:

Combined, these projects include a total of more than 70 million ounces of gold!

Abzu’s Nangodi Main and other targets also align along a regional shear zone that continues to the northeast across the border into Burkina Faso where it hosts the Youga Mine of Endeavor Mining Corp.

Nangondi Map
The Nangodi and Yameriga concessions are located in northern Ghana in the Bole-Nangodi Gold Belt. Targets in these concessions are aligned along a regional shear zone that extends northeast into Burkina Faso and hosts the Youga Mine.

I am extremely encouraged by the most recent results from Nangodi. Not only have the first few holes shown us incredible numbers, mineralization is open in all directions and at depth. The remaining results should come out soon and if they are anything like the ones just announced, we’re looking at a potential game-changer for Abzu.

Given what I have seen, I fully expect the remaining upcoming results from Abzu to be positive. Abzu has properties and the potential to find the next big deposit in Ghana – let’s see what management can do.

Next week, I’ll continue with more in-depth discussions on mining valuations as promised last week.

Until next week,

Ivan Lo

Equedia Weekly

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