Consolidation key to Sarama’s success in Burkina Faso’s best gold belt

VANCOUVER (miningweekly.com) – Asset consolidation in the southern Houndé gold belt, in Burkina Faso, is critical to Perth, Western Australia-based project developer Sarama Resources successfully establishing “a mine or two” in the region.

The company, which is incorporated in Canada’s province of British Columbia and has its primary equity listing on the Toronto Venture Exchange, already has interests in 1 750 km² in the Houndé gold belt, billed as the “most prospective gold belt” in the West African country.

The company holds title to a significant regional position with interests in three connecting projects containing more than 3.2-million ounces of gold.

This position has been bolstered by the recent acquisition of the Botoro prospect, as well as of the Bondi deposit that has an initial resource estimate. Botoro shares geological similarities to Sarama’s Djarkadougou property, which hosts the Bondi deposit and its historical resource estimate of some 300 000 oz of gold in the measured and indicated categories, and 100 000 oz of gold in the inferred.

“Bondi has been key to our consolidation strategy, and now Botoro also plays into this,” president and CEO Andrew Dinning tells Mining Weekly Online in an interview.

He says there are further opportunities for consolidation and the company is in contact with the holders of legacy permits. “There is more land to consolidate,” he affirms.

Some of its Canadian, West Africa-focused peers include Semafo, Teranga Gold, Roxgold and Endeavour Mining, whose Houndé project is expected to pour first gold before year-end.

Dinning believes Sarama is well positioned to benefit from the substantial optionality that exists between the exploration, consolidation and development and the gold price upside.

The company’s flagship Houndé South project already has the backing of Barrick Gold’s majority-owned Acacia Mining, which has completed the first stage of an earn-in on the South Houndé joint venture (JV) with Sarama and, as a result, now owns 50% of the JV and has become the operator.

PROSPECTING PROGRESS
To date, Acacia has essentially doubled the depth of the South Houndé deposit to about 550 m.

Dinning explains that the Houndé South programme is designed to test depth and strike extensions to high-grade shoots within known mineral resources and forms part of an ongoing, multifaceted exploration programme aimed at increasing the project’s inferred gold resource.

The most recent results, published last week, reported positive results from 1 300 m of reverse circulation (RC) drilling and 4 500 m of diamond drilling, over 11 holes, on the MC and MM deposits, continue to expand resources and to examine the potential for underground mine development, in addition to the openpit.

Results from the MC deposit were highlighted by 112.3 g/t gold over 0.5 m within a wider interval, the highest grade to be intersected at the project. Drilling in the MM deposits highlighted the potential for underground mining with future step-out drilling expected to expand resources by about 200 m down-dip.

Acacia continues to explore the project, with drilling, to date, supporting compliant mineralisation of 2.1-million ounces of gold in the inferred resource category, including about 500 000 oz of oxide ore.

Meanwhile, Dinning explains that the resource is expected to grow at its 30.5%-owned Karankasso project JV with Savary Gold, which is undertaking a third phase of drilling on the project. The company has reported positive results so far this year, as part of an ongoing drill programme that started in November, 2016, which was designed to increase the data density and improve confidence in existing zone interpretations in the current resource, and to extend known zones and test new gold-mineralised systems.

Savary had in October of 2015 declared a maiden inferred resource estimate of 671 000 oz of contained gold at the Karankasso project JV.

This year, about 90% of the C$8-million budgeted for exploration on Sarama’s assets will be carried by the JV partners, Dinning points out.

EXPLORATION PORTFOLIO
The progress of its JV partners has allowed Sarama to shift its exploration focus to its other two significant project areas, including the Bondi/Botoro/Bamako (ThreeBee) targets and the Koumandara project.

The ThreeBee project comprises three properties covering an area of 482 km² and lies immediately north and east of the South Houndé project.

Dinning says the company is working with the local government authorities to transfer the Djarkadougou permit, covering some 168 km², which it acquired from Orezone Gold in December 2016. The Bondi deposit lies within the Djarkadougou permit, which is located immediately next to and within trucking distance to Sarama’s South Houndé project. The deposit has an historical estimate of 282 000 oz gold in the measured and indicated categories, and 150 000 oz gold inferred, much of which is also understood to be oxide ore.

Also included in the project is the Bamako permit (90 km²) that lies about 20 km to the east and the Botoro permit (224 km²), which has recently been acquired and is situated about 4 km to the south-east of the Djarkadougou permit.

Sarama has started exploration programmes across all three permits, including a desktop review and verification of Bondi data, soil geochemistry surveys and geological mapping on the Botoro permit. It is also planning to follow up on high-grade, yet unpublished, drill results from the Bamako permit.

Meanwhile, the Koumandara project comprises two properties covering an area of 338 km² and lies 80 km west of the South Houndé project. The company intends to maintain the Koumandara project in good standing and small exploration programmes are planned for 2017, pending receipt of the required ministerial decrees.

OPTIONALITY
While Sarama is well positioned to further consolidate the gold belt, Dinning notes that, should its larger partner Acacia decide to tie up the region, the JV agreements are structured such that Acacia will have to go through Sarama to increase its landholdings, reflecting significant value creation potential for Sarama shareholders.

Acacia might very well become increasingly invested in Houndé South as the project reflects more value through development.

Dinning notes that Houndé South is currently ready to be a small-scale oxide heap leach operation, with an intermediate scale operation of about 100 000 t/y to 120 000 t/y operation “on the horizon”.

But it is the large-scale “Acacia-sized” potential of Houndé South that is piquing Acacia’s interest, as it looks to replace its ageing Buzwagi mine, in Tanzania, which is slated for closure in 2019.

Management is heavily invested in Sarama, holding about 20% of the outstanding equity stock, with Dinning holding 7% himself.

“What differentiates us from other juniors is that management is so heavily invested and has a record of delivering results. We are accomplished mine finders, project developers and operators.

“It’s not about making a discovery, it’s about making a mine,” Dinning stresses.