African Eagle (AIM:AFE, AltX:AEA) and Randgold Resources' (LSE:RRS, Nasdaq:RRS) Miyabi gold project in Tanzania stands to benefit from operator Randgold Resources' continued involvement as the company will remain in the Miyabi joint venture and take the project forward. This comes as Randgold Resources has completed a geological model of the 500sqkm project area that has identified new conceptual gold targets.
African Eagle managing director Mark Parker said today Randgold has decided to enter the second and earn-in phase of exploration at Miyabi Gold as it has completed a smart geological model of the 500 square kilometre area that gave the company a better understanding of the area's geology.
Parker said the company (Randgold) was exercising its option to continue with exploration here to earn a 50% stake in the project as its work over the past year had established good, solid geology at Miyabi. The company was following the same approach here as it did in West Africa where it conducted careful geological studies of known deposits in order to develop models of geology that allowed drilling out conceptual targets.
He said the next step at Miyabi was to investigate the conceptual targets in order to build on the 500 000 ounce gold resource that had been established here. Parker added that Randgold Resources was a good partner to have on the project as the company was technically driven and had achieved great success in West Africa with this particular geological approach.
Tanzania was currently in its dry season and African Eagle expected the operator of the project to drill out the conceptual targets until September. Parker said Randgold Resources' work gave the joint venture a much better idea of the area's geology as there were no outcrops in most of the Lake Victoria goldfields area, which necessitated exploration through drilling.
African Eagle itself had the advantage of a meaningful land position in the Lake Victoria goldfields in Tanzania where mining licences were fragmented and often in the hands of local speculators.
We have been able to build up a large position in a critical area of the greenstone belt that lies astride a shear zone corridor. Parker said the company had been able to achieve this through its range of contacts and its track record in the area.
The African Eagle managing director said this company envisaged building the resource to 1m ounces before a prefeasibility study is started and production started in two to three years.
Randgold Resources signed an agreement with African Eagle in May 2007 to assess the gold potential of the project beyond the 520,000 ounce resource defined by African Eagle. Parker said the intention was not to add to the existing resource, but rather to assess the project from a geological and structural angle. Randgold Resources spent about $1m on this first phase of exploration.
Randgold Resources is now exercising its option to earn a 50% interest in the joint venture by funding all project costs up to the completion of a pre-feasibility study. On completion of the prefeasibility study, African Eagle can either retain a 49% stake in the joint venture by co-funding a feasibility study or reduce its stake to 35% if Randgold Resources funds this step.