The Company has a highly skilled management team that has developed a business plan focused on defining at least one gold resource hosting a minimum 1.1 million ounces of gold within two years of listing on the ASX.
This objective is now being drill tested at Morley, K4/K5 and Samba targets at the Reo Project, at the Songonduari target at the Nassile Project and at the Big Hill target at the Nuon River Project, any or more of which could achieve the objective sought in the original undertaking made to shareholders.
The Company is now in the midst of a number of aggressive drilling programs that will be completed over the course of the current calendar year.
Share Price: $0.36
Issued Shares: 99.9 m
Unlisted Options: 16.2 m
Market Cap: $35.96m
Cash: $8.0m
EV: $27.96m
ANALYSIS
Promisingly, Newmont Mining Corporation (NYSE:NEM) has a 10% stake in Middle Island Resources, also providing a project generation opportunity for the company.
Institutions hold 18% of the company, the support from this sector of the market is telling and a strong sign of the upside valuation potential viewed in the company.
The company is currently developing four significant gold projects in Burkina Faso, Niger and Liberia.
Middle Island has a minimum exploration target of 1.1 million ounces of gold in resources by December 2012.
The company’s tenements are in underexplored areas prospective for gold, close to known deposits, many with extensive artisanal workings.
With a strong management, Rick Yeates’ team has vast experience in the West African region.
The most advanced project is known as Reo and was vended from Newmont Mining for a major stake in the Company, and attests to the quality of management and project potential.
Reo has advanced targets at Morley, K4/K5 and Samba any of which appear to hold the potential to meet the Company objective of defining a minimum 1.1 million ounce resource.
The Company is well advanced on defining two gold resources at Reo that may each develop into 1.1 million ounce resources, and has clearly stated that it views Barteh Jam/Big Hill at the Nuon River Project in Liberia as the most promising gold prospect in its portfolio.
This may provide investors with a “triple play”, and not the single play first thought.
At the one million ounce resource base, could ultimately translate and evolve Middle Island into a 80,000 to 100,000 ounce a year producer, which is a strong start to critical mass required in West Africa.
Middle Island has contracted to deploy 6 drilling rigs on five targets at 3 projects by mid month, and aggressively define a number of new gold resource opportunities. The market can expect to see a constant flow of drilling news that will continue throughout the year.
Together, the company ticks many boxes and looks capable of being re-rated significantly in market valuation and share price in 2012 as exploration activity ramps up and as it increases the size of the global resource base.
MANAGEMENT
Peter Thomas serves as Non-Executive Chairman and is a retired solicitor who has provided corporate and commercial advice to the mining industry since 1980. He was the Founding Chairman of Sandfire Resources NL and is currently the Chairman for five ASX listed companies.
Rick Yates serves as Managing Director and is a senior geologist with 30 years experience with BHP Billiton, Newmont and Amax. He co-founded RSG, which became RSG Global and Coffey Mining and he has 21 years experience in West Africa. He is also a Non-executive Director of ASX200 nickel producer, Western Areas NL.
Beau Nicholls is Technical Director and is a professional geologist who has a proven track record of discovery and development that was established over 16 years. This included 10 years with RSG Global and Coffey Mining where he worked as regional manager for 3 years and covered all West African jurisdictions.
Linton Kirk is a Non-executive Director and a professional mining engineer with 30 years international experience in mining, earthmoving, contracting, management and consulting. He has extensive West African gold experience at Iduapriem in Ghana, partner at RSG Global, and Chief Mining Engineer at Coffey Mining.
Andrew Chubb is Exploration Manager resident in West Africa and a professional geologist with 11 years international experience including Mali, Tanzania, the Democratic Republic of the Congo and Tunisia.
The Company is also developing the Nassilé and Dogona projects in Niger, and has outlined a 7 kilometre long mineralised strike line at Nassilé that is the subject of a current RC drilling campaign.
Management has stated that the Nuon River Project in Liberia includes some of the most prospective gold ground in the whole of West Africa, and is being fast tracked with surface sampling, mapping, airborne geophysics and an initial drilling program to fully evaluate its potential.
BURKINA FASO - REO PROJECT
The Reo Project covers 1,166 square kilometres and includes 7 permits plus some additional on-going tenure consolidation. Reo is located 150 kilometres west of Ouagadougou in Burkina Faso, in an area with excellent access and infrastructure.
Newmont sold MDI the Reo Project in Burkina Faso and is now a 10% shareholder.
Reo was originally selected by Newmont following a cratonic study that identified a structurally complex junction of the Boromo and Houndé greenstone belts. This structure is located within 100 kilometres of Poura with 1.5 million ounces of gold, Mana with 3 million ounces, and nearby the new high grade Perkoa Zinc Mine.
Middle Island Resources has inherited 6 gold prospects associated with structures that are found around the margins of the Didyr granite. The highest priority has been assigned to the Morley and K4/K5 prospects which were identified from soil sampling and airborne magnetics.
Morley encompasses a soil anomaly that carries elevated gold values of up to 500 parts per billion over a 3,250 by 800 metre strike zone, and contains a series of 6-12 metre wide stacked lodes that trend from east to west, and dip to the north.
An extensive trenching and drilling program at Morley included highlights at KDTR01 with 10.6 metres at 17.4 g/t Au at surface, KRAC128 with 34 metres at 16.4 g/t Au commencing at 2 metres, KRC022 with 10 metres at 7.55 g/t Au at 16 metres, MRTR001 with 11 metres at 7.97 g/t Au at surface, and MRRC005 with 10 metres at 9.63 g/t Au at 74 metres.
K4/K5 encompasses an artisanal field that was recently worked by 10,000 miners who were evicted in mid 2011. The field is covered by transposed laterite and comprises the largest and highest tenor soil anomaly within the Reo Project area. The geometry of the prospect is unresolved, but appears to contain stacked, broadly east-west trending zones that host sheeted to massive quartz-carbonate veining in sericite altered meta-sediments.
Early drilling highlights include 18 metres at 2.51 g/t Au from a depth of 12 metres, and 13 metres at 2.33 g/t Au from a depth of 59 metres with both holes ending in mineralization. A shallow rotary air blast (RAB) drilling program of 4,000 metres at K4/K5 reported highlights of 4 metres at 16.2 g/t Au from 4 metres, 4 metres at 14.0 g/t Au from 28 metres, and 12 metres at 4.11 g/t Au from 4 metres.
The Company has completed 2,932 holes for 22,598 metres of a 40,000 metre shallow geochemical auger drilling deploying 3 rigs that are covering all prospective corridors at Reo in order to define new targets. An additional 18,000 metres of shallow drilling has been approved and will refine targets for cost effective RAB or Aircore drilling.
Morley and K4/K5 have now been confirmed as significant targets that both have the potential to reach the minimum resource objective of 1.1 million ounces of gold. A follow up RAB drilling program of 10,000 metres commenced at both prospects in November of last year.
NIGER PROJECTS - NASSILE AND DOGONA
Nassile Prospect
Two projects are held that straddle the Niger side of the Burkina Faso border at Nassilé and Dogona that collectively cover 1,400 square kilometres of poorly explored Birimian greenstones. Both prospects are close to the city of Niamey, and the Samira Hill gold mine with 2 million ounces of gold resources which present opportunities for toll treatment of ore.
The Company is earning an initial 70% interest at Nassilé for staged expenditure of US$2 million over 3 years. Ashanti Goldfields and Island Arc/Cassidy completed historic work at Nassilé that included RAB and RC drilling at Koutougou and Songonduari prospects.
Highlights included NRB202 with 12 metres at 2.09 g/t Au, NRC011 with 12 metres at 3.08 g/t Au at 51 metres, NRC013 with 6 metres at 1.98 g/t Au at 23 metres and 15 metres at 2.24 g/t Au at 72 metres. A 25,000 metre geochemical auger drilling program has since identified a 7 kilometre long high tenor extension at Songonduari.
The Company has recently commenced a 7,500 metre RC drilling program at Songonduari to test the gold trend.
Dogona covers 822.7 square kilometres and was the site of a new gold rush that commenced at the beginning of 2011 with 7,000 artisanal miners working on numerous untested artisanal mining sites and contains potential for significant greenfields discoveries.
The Company will earn an initial 90% interest with a staged $1 million exploration program over 2 years.
LIBERIA – NUON RIVER PROJECT
Middle Island Resources is earning a 100% interest in five permits and an initial 75% interest in a sixth permit that aggregate into a semi-contiguous area of 3,005 square kilometres, collectively known as the Nuon River Project, and adjoins the northern Liberian border.
Nuon River is situated at the boundary between the Archaean and Birimian components of the West African Craton, and is located immediately along strike from the Ity Gold Project which has a gold endowment of some 5 million ounces.
These permits have never been evaluated by modern exploration techniques and contain significant alluvial and saprolite artisanal gold mining activity at mining camps at Barteh Jam, Nico, Middle East, and Mambo, respectively located in the Grand Gedeh, Cestos North, Zwedru North and Cestos South permits. A number of other camps are known to exist within the permit areas but have not yet been visited.
Soil sampling has been completed over Nico and Barteh Jam, and stream sediment sampling and airborne geophysical surveys have commenced over the whole Nuon River Project area.
Barteh Jam was discovered in 1946, and is the second largest artisanal gold camp in Liberia and contains the Big Hill saprolite prospect that has been defined over a strike length of 3,500 metres and width of 80 metres.
Big Hill is an open ended target that hosts numerous artisanal shafts along its entire length, and carries a series of stacked and sheeted quartz veins and breccia zones that trend from east to west, and dip at angle of approximately 25 degrees to the south.
Big Hill has good potential for low strip ratios, high tonnages per vertical metre, and hosts a deep zone of oxidised ore. This represents an excellent oxide open pit target and will be fully evaluated for continuity of gold grades along strike and at depth.
Big Hill carries abundant and visible free milling gold that is found within quartz veins, and where surface panning consistently produces 200 to 300 grains of gold along with quartz vein fragments containing coarse gold in each pan, and indicates potential for high values over a wide area.
An initial 5,000 metre RC drilling is expected to commence this month, and the rig may be retained on a longer term basis if initial results are positive. A diamond drilling rig is also available for deeper exploration and evaluation.
Management believes that Barteh Jam holds strong technical merit and may develop into the Company’s first significant gold resource.
Middle Island Resources has confirmed the presence of widespread visible gold at the Nuon River Project and is to fast track a drilling program to seek open pittable gold.
ANALYSIS
Promisingly, Newmont Mining Corporation (NYSE:NEM) has a 10% stake in Middle Island Resources, also providing project generation opportunities to the company. Institutions hold 18% of the company, the support from both is telling and a strong sign of the upside valuation potential in the company.
The company is currently developing four significant gold projects in Burkina Faso, Niger and Liberia.
Middle Island has a minimum exploration target of 1.1 million ounces of gold by December 2012.
The company’s tenements are in underexplored areas prospective for gold, close to known deposits, many with extensive artisanal workings.
With a strong management, Rick Yeates’ team has vast experience in the West African region.
The most advanced project is known as Reo and was vended from Newmont Mining for a major stake in the Company, and attests to the quality of management and project potential.
Reo has advanced targets at Morley and K4/K5, either of which holds the potential to meet the Company objective of defining a minimum 1.1 million ounce resource.
The Company is well advanced on defining two gold prospects at Reo that may develop into 1.1 million ounce resources, and has clearly stated that it views Barteh Jam/Big Hill as the most promising gold prospect in its portfolio.
This may provide investors with a “triple play”, and not the single play first thought.
At the one million ounce resource base, could ultimately translate and evolve Middle Island into a 80,000 to 100,000 ounce a year producer, which is a strong start to critical mass required in West Africa.
Middle Island has contracted to deploy 6 drilling rigs on 5 targets at 3 projects by mid month, and aggressively develop a number of new gold resources. The market can expect to see a constant flow of drilling news that will continue throughout the New Year.
Together, the company ticks many boxes and looks capable of being re-rated significantly in market valuation and share price in 2012 as exploration activity ramps up and as it increases the size of the global resource base.
Originally published at: http://www.proactiveinvestors.com.au/companies/news/24470/middle-island-resources-sets-sights-on-minimum-1-million-ounce-gold-resources-in-west-africa-in-2012-24470.html
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