Avnel Gold Mining (AVK.TO) has announced a resource update on its 80%-owned Kalana gold project in Mali, Africa. The total amount of ounces in the indicated category now stands at roughly 2 million at an average grade of 4.36g/t (undiluted), with a pit-constrained resource estimate of approximately 1.9 million ounces. The project also has an additional 100,000 ounces in the inferred category. The deposit remains open at depth and laterally, and Avnel plans to start another drill program in Q1 2015 to drill-test some more prospective zones on the land package.
According to the company, Avnel is still on track to deliver a pre-feasibility study on Kalana by the end of this year. This PFS should confirm the findings of the Preliminary Economic Assessment which outlined a 14 year mine life wherein 1.46 million ounces of gold would be produced. The after-tax NPV10% was close to $200M, which means that Avnel’s 80% stake might be worth just over $150M. We will keep our eyes on Avnel, as the recent activity with Papillon Resources and Orbis Gold indicates there’s a lot of interest in West African gold projects at this moment.
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Disclosure: The author holds a long position in Avnel Gold. Please see our disclaimer for current positions.
