(MENAFN- ProactiveInvestors - N.America) Mahdia Gold's (CNSX:MGD) claim to fame is its Omai asset in Guyana, a project that is seen to be more advanced than those typically held by junior explorers that have just listed on the public market.
The company acquired the rights to redevelop its flagship Omai Mine in Guyana with the receipt of a large scale, 7,240 acre prospecting license.
Previously, the property was commercially developed by Cambior, which held 70 per cent, and Golden Star Resources (TSE:GSC), which held the remainder, from the issuance of a mining license in 1995.
A total of 3.7 million ounces of gold was produced by 2006 through two open pits, with annual output coming in as high as 354,000 ounces.
Mahdia says that historical production of 2.35 million ounces came from an open pit, known as the Fennel pit, which produced an average recovered grade of 1.5 grams per tonne (g/t) to a depth of 250 metres.
A second open pit, known as Wenot, produced 1.42 million ounces. Significant portions of the Wenot mineral system were never explored, however, with the company claiming there are still some high grade mineralized zones that remain undeveloped and open for expansion.
According to Mahdia, the two pits that produced 3.7 million ounces of gold represent only about five per cent of the entire 7,240 acre license area.
A 2006 technical report by IAMGOLD (TSE:IMG) (NYSE:IAG) on just the Fennel underground deposit, identified 1.4 million ounces at 2.8 g/t. A year later, a memo by that company found a remaining underground resource estimate, which referred to an indicated and inferred 2.8 million ounces of gold.
Cambior had begun dewatering the Fennel pit in preparation for drilling the deposit at depth in hopes of finding higher grade lenses below the barren dyke.
"We believe a NI 43-101 resource statement by the end of the year will show at least 4 million ounces of gold in the two main pits and surrounding area," says president and director, David Bending, a professional geologist who has been active in mining and exploration in the Guyana Shield since 1985.
Guyana has a geological profile that contains greenstone belts which are similar to those found in Ghana, West Africa, and Timmins, Ontario.
The Guyana Shield, a 2.2 billion year old Precambrian geological formation, is the least explored of the world's Archaean and Proterozoic terrains.
Mahdia is now working on verifying previous drilling, with a program of around 12,500 metres of diamond drilling beginning early this year.
Using three rigs, the work will include hydrogeological evaluation, but will be primarily focused on confirming results from the Wenot mineralized western zone, as well as Wenot's eastern and deep zones, and the Fennell deep zone targets.
The gold miner sees the combination of the "well-defined targets and the upside potential within the Omai license area" to be in the range of millions of ounces based on historical data provided by the previous operator.
The company says about 5 kilometres of the Wenot mineralized gold trend within the license area was not explored due to transported cover, but still represents "major upside potential".
Previous drilling at Wenot West yielded drill results of 4.71 g/t gold over 21 metres.
Mahdia is forecasting initial open pit production from the Wenot trend, and progression through underground development in the Wenot trend and Fennel, with production rates of 10,000 tonnes per day and the option for expansion as satellite targets are developed.
During the drilling program, the company will also update the assay database, and resample previously drilled core to prepare for an updated preliminary economic assessment and qualified resource updates.
These milestones are projected for sometime this month.
The project also boasts extensive infrastructure, and a significant stockpile of mineralized rocks left on surface by previous operator Cambior. In a 1999 filing, the Cambior recorded the stockpile as 248,000 ounces of gold at 0.85 g/t. By the mine's closure in 2006, this stockpile had grown and Mahdia says it is now looking at this opportunity for a possible fast-track to production.
Most of the stockpile was never mined because it was below the 1.6 g/t average grade at the time, when gold was at an average of $350 per ounce.
Aside from its main Omai asset, Mahdia also holds the Tiger River property in Guyana, consisting of 9 medium-scale permits near the Omai gold mine, and the White Creek project, consisting of 24 medium-scale permits near Port Kaituma, in the northwest.
The latter property was previously under a joint venture between Newmont Mining (NYSE:NEM) and Stratagold.
The Toronto-based junior company, which is listed on the smaller Canadian National Stock Exchange and was lately trading at 29 cents, is gearing up for a listing on the TSX Venture Exchange in the near future. Its stock has jumped more than 7 per cent in the last month.
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