(MENAFN- ProactiveInvestors - Australia) Papillon Resources (ASX: PIR) has offered significant promise exploring and developing its gold assets in western Mali, West Africa.
Today, Papillon has delivered in spades in defining a maiden resource of 3.14 million ounces of gold for the Fekola Project.
The resource at the company's flagship Fekola Project has been estimated at 40.1 million tonnes averaging 2.4 g/t gold for a contained 3.14 million ounces of gold at a lower cut-off grade of 1.0 g/t gold.
The resource comprises 10.5 million tonnes averaging 2.75 g/t gold for a contained 0.93 million ounces of gold classified into the Indicated Resource category, plus Inferred Resources of 30 million tonnes averaging 2.3 g/t gold for 2.21 million ounces of gold.
Papillon's acting managing director Robert Behets said "This initial Mineral Resource Estimate is a significant milestone for the Company and clearly demonstrates the significant potential of the Fekola Project.
"We believe that it provides an excellent platform for future growth as well as greatly enhancing Papillon's ability to fulfil its strategic objective of becoming a West African gold producer in the near term."
This is based on drilling covering a strike length of approximately 2 kilometres and to a maximum vertical depth of 250 metres.
As a nod to the scale of the potential resource at Fekola, this represents a small portion of the strike extent of the highly prospective Fekola Corridor. Mineralisation remains open at depth and along strike.
The resource statement is an initial resource for the Project and potential exists to substantially increase the resource base with ongoing work. This will be incorporated into the Scoping Study, which is likely to be concluded in the December quarter of 2012.
Overview
Papillon's gold assets include 18 prospecting authorizations and research permits that cover 1,460 km² on the northeast margin of the West African Shield, that cover two major project areas in Western Mali for 482 km² and Southern Mali for 980 km².
The current intense interest in Papillon Resources is built around its Western Mali Project area that covers very prospective ground in the southern part of the Kéniéba Valley.
Mali is Africa's third largest gold-producer, with southern and western Mali underlain by Birimian greenstone belts similar to those in nearby Ghana. Despite this, and the favourable geology and demonstrated gold endowment, the country remains largely under-explored.
This is elephant country for major gold finds and already hosts a strike line of gold discoveries and resources that start at Yatela with 4.50M oz. and Sadiola with 13.1 M oz., operated by AngloGold Ashanti Limited (JSE: ANG, NYSE: AU) and IAMGOLD Corporation (TSX: IMG, NYSE: IAG), Sabodala with 2.70 M oz., Loulo with 11.5 M oz., and Gunkoto with 5.8 M oz., operated by Randgold Resources Limited (LSE: RRS, NADAQ: GOLD), and Segala / Tabokoto with 3.8 M oz., operated by Avion Resources (TSX: AVR, OTCQX: AVGCF).
The Papillion ground covers 25 kilometres of strike on the same Kéniéba-Kedougou Inlier that extends for 65 kilometres, and already hosts over 27 million ounces of gold resources and reserves on these nearby concessions. Current drilling programs have only hinted at the potential that may develop on the strategic holdings under development by Papillon.
Papillon owns an 80% interest in the Medinandi Project, and has already completed early drilling for a JORC compliant Indicated and Inferred resource of 827,500 ounces, at a grade of 1.76 g/t Au.
A new discovery has been announced at Fekola that adds to a contiguous line of deposits that cover 8 kilometres of strike within the Project area.
These gold resources are located at Fadougou North East for 106,100 oz. at 1.92 g/t Au, Fadougou Main Zone for 306,763 oz. at 2.69 g/t Au, and Fadougou South East for 414,608 oz. at 1.37 g/t Au, with all zones open along strike and depth, and where further drilling is planned for development of additional ounces.
Drilling on the Fekola Zone is testament to the potential scale given the most impressive results, including highlights at drill hole FKCR-078 for 39 metres at 6.42g/t Au, including 23 metres at 8.97g/t Au, with the hole ending in mineralisation; FKCR-075 for 64 metres at 4.24g/t Au, and 14 metres at 2.46g/t Au; FKCR-071 for 23 metres at 2.07g/t Au; FKCR-099 for 16 metres at 3.75/t Au; FKCR-102 for 22 metres at 6.55g/t Au, and 22 meters at 3.37g/t Au; and FKCR-068 for 7 meters at 8.47g/t Au, and 10 meters at 2.67.Au. The tenor of the mineralisation is characterised by zones that consistently exceed 1g/t Au within broad mineralised envelopes, and remain open at depth and along strike in both directions.
These drill traverses on the Fekola Zone are currently spaced at 80 to 160 metres intervals and have recorded significant gold values at very shallow depths, over a strike line that extends for at least 400 metres.
The length of the strike line on Fekola is similar to that of the Fadougou North, and Main Zones, that carry 106,100 ounces and 306,763 ounces respectively, and may be indicative of the size of the resource that will be defined here, and that is without taking into account additional ounces along the open strike line and at depth, on all four zones.
Papillon Resources has stated that exploration upside remains substantial along this trend, and has secured multiple drilling rigs to ramp up drilling through the current dry season that ends in late June or early July.
Planned work includes infill and step out drilling at Fekola, Fadougou North East and Fadougou South East, along with Rotary Air Blast drilling of multiple regional targets generated from ground geophysical surveys, which include Tintiba, Betakili and Recon that are all located away from current resource drilling.
An Induced Polarisation-Gradient survey will also be completed over the remaining portions of the Medinandi Project. Rotary Core or Diamond drilling will also be completed at the Fadougou Main Zone.
Initial metallurgical test work indicates that the gold ore is free milling, and that gravity separation can recover up to 83.8%, and carbon in leach up to 92.3% of the gold. Metallurgical test work will continue on selected drill samples.
Discovery costs are currently running at less than US$10 per ounce within an exploration budget of $10 million for calendar 2011, which augurs well for the definition of many more resource ounces.
The Projects in South Mali currently consist of 10 separate permit areas that are located close to gold resources at the Komana Project, with 1.25 M oz., operated by Goldfields Ltd. (JSE: GFI, NYSE: GFI), Kalana Mine with 1.14 M oz., operated by Avnel Gold Ltd (TSX: AVK), and the Morila Mine with 7.5 M oz., operating as joint venture between Randgold Resources, Anglo Ashanti, and the Mali Government.
Papillon expects to generate a pipeline of advanced gold exploration projects from this program, and has already completed geochemical sampling and a 24,500 metre auger drilling program that produced positive results at Sankama, Mandiela and Ourou-Ourou, where auger drilling outlined a strongly anomalous area covering a strike line of 2,250 metres.
Auger drilling will continue on additional targets and will pave the way for Rotary Core and Rotary Air Blast drilling on anomalous areas in late 2011.
The Company is well funded to significantly ramp up gold exploration on its Mali Gold assets.
Ian Middlemas, who is a very experienced executive, has taken the helm of Papillon Resources as Company chairman and has a large following in the resources sector. He will oversee the development of multi-million ounce gold resources, and guide the Company toward development of its Mali projects..
Robert Behets has been appointed acting managing director.
With the imminent onset of the wet season in Mali, the current drilling program is nearing completion.
Tellingly, a significant portion of the holes drilled to date have not been included in this resource statement released today due to pending assays results.
Future drilling campaigns will be aimed at aggressively expanding the resource and upgrading the resource classification, which are planned to commence in October 2012.
Analysis
That Papillon Resources has delivered a "wow" of a resource today and trounced market estimates is an understatement. Today's resource statement is a starting point and clearly demonstrates that the size and scale of Fekola is still unknown and on current drilling results and trends it could well be in the vanguard of major gold deposits in the country.
With $25.5m of cash at end of March quarter, and based on today's resource statement places Papillon Resources back on the "undervalued status."
A re-calculation based on today's resource is warranted. A resource of 4 million or 5 million ounces is now not out of the question. On this basis, Papillon Resources could become one of the West African gold counters with the highest valuation upside listed on the ASX or overseas exchanges.
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