Drilling gathers pace at Frontline’s Niaouleni Project, gold project in Turkey offers potential upside
www.frontlinegold.com • 416.414.5825
President & CEO
Frontline Gold’s (TSXV: FGC) advanced stage Niaouleni project in Mali, Africa is surrounded by 12 operating mines and a host of active gold exploration projects. This fact, and Mali’s position as Africa’s third largest gold-producing country, both underscore Frontline’s potential for gold discovery. The advanced-stage gold project is surrounded by 12 operating mines and a host of active gold exploration projects, underscoring its potential for gold. “Our neighbours, from the west to the north to the east, are identifying gold potential in the area in addition to what we’ve been able to do in our drill program,” Walter Henry tells Resource Intelligence. Mr Henry discusses the flagship project’s progress and why Frontline’s gold property in Turkey could also reap rewards for shareholders sooner than later.
Resource Intelligence: Your two-tranche private placement that closed on February 10 raised about $4.5 million. What does this tell you and what are your priorities with
Walter Henry: The success of our offering tells us that investor interest in the project is certainly high. The gross $4.5 million we raised will fund our 2011 program both at Niaouleni and our BC projects. Frontline also has 1 million shares in Merrex Gold, which currently has a market value of $600,000. Our plan is to sell those shares and use the proceeds to fund a $0.5-million program at our Turkish property, which is adjacent to Eldorado Gold Corp’s Efemcukuru gold mine.
RI: Speaking of investor interest, what can you tell us that would help investors evaluate the Niaouleni project’s potential?
WH: The value and the potential of the property lie in the fact that it has 94 sq kms under one permit; it is in a known gold zone with a gold structure that runs about 25 kms from the top adjacent permits down to our property connecting to another permit below with gold resources in the area. As an example, African Gold Group has come up with a discovery of about 500,000 ounces of inferred gold at 3 grams, just 3 to 5 kms north of our property. The results that we released last year from our 2010 RAB drilling program showed very good intersections, which allowed us to raise, via the private placement, the $4.5 million. That’s a significant amount of money given that at the time of the financing our market cap was near $10 million. Our neighbours, from the west to the north to the east, are identifying gold potential in the area in addition to what we’ve been able to do in our drill program.
RI: You are in the prolific West African gold belt. How does this impact the project costs and potential profitability?
WH: First of all, gold is gold; it is not determined by what belt you’re in. However, the fact that the gold belt is prolific and that there are several operating mines surrounding our property certainly help sell the story that there is potential for gold. It certainly allows us to raise money to continue to advance our project. Where the gold belt is located in relation to infrastructure is extremely important and impacts the project costs. Lower project costs should translate to higher project profitability. Like other gold mines in the vicinity, we envision this to be an open-pit mine with low costs. The property is accessible by road and we are about two hours south of Mali’s capital. There is power at the site and there is a power grid that could be developed very shortly. We have most of the key infrastructure that will help reduce the project costs.
RI: How is Mali as a mining jurisdiction? Is it politically stable?
WH: It is very stable. It has had democratic elections and there is an upcoming election in 2012 that I believe will be equally democratic.
RI: Which senior producers are around the area you are exploring?
WH: Iamgold and Anglo Gold Ashanti are two of the senior producers in the area. There are other large companies active in the country, among them Goldfields and Newmont. There is a wide spectrum of companies both on the operational and exploration level.
RI: When do you expect to have your 43-101?
WH: I would like to have a resource estimate in the summer of 2011. Our current drill program, which we started in the first quarter of 2010, will end in June. From there, we will take the assay results and see if we can come up with a resource estimate in our next 43-101, which I hope to have in either July or August 2011.
RI: What makes Frontline a unique proposition?
WH: What makes us a unique proposition unlike other junior mining companies is that we have already identified zones and drill locations. While it is grassroots exploration, it’s not pure prospecting grassroots exploration. The soil samples have already been done. Compared to others in our peer group of junior exploration companies, Frontline has a leg up. We also have the ability to accumulate additional land around our property. Besides, Frontline is 100% owned. Some of the other junior mining companies don’t own 100%.
RI: Will you be focusing on all your projects equally this year?
WH: Niaouleni is the cornerstone property. There is the potential to build on the land position and add to the historical drilling what we did last year and what we are doing this year. Our Poly/Stewart project in British Columbia, while it is a very big land package, is still at a very early stage. In our Turkey gold project, we’re at the stage where we have to evaluate the soil and do some trench work and then we will identify some drill targets. Certainly, Niaouleni is the most advanced and where we are closest to having a resource estimate.
RI: What immediate value do you provide to investors?
WH: The potential in the short term is to add value to our shareholders by possibly joint venturing the Turkish property. A number of companies have approached us and expressed interest on a joint venture with us on our Turkish property. Turkey is not even a factor in our share price right now and our market cap is $14 million. If the company were to receive a joint venture offer for Turkey for $4 million at 50% each, that values Turkey at $8 million, which means potentially adding $8 million to our market cap.
RI: You haven’t done much on the Turkey property. What do you think made these companies approach you?
WH: I think it is simply this: Eldorado Gold Corp’s Efemcukuru mine is forecasted to start production by April 2011. It’s projected to be a very profitable mine based on proven and probable mineral reserves of 1.5 million ounces of gold at 9.10 g/t. That mine was built on one vein structure. Eldorado has identified a second vein structure that is 400 metres to the northeast of this existing vein structure. That vein structure runs even closer to our property. While the first vein structure was less than a kilometre from our boundary, the new vein structure they identified is less than 250 metres from our property. In addition to that, Eldorado issued a press release on June 17, 2010 announcing that they drilled 12 holes all within a 1-kilometre range, ranging from 250 to 1000 metres from our boundary. They released the assay results of significant intersections. As an example, there is a hole identified as KV 355, within 250 metres of our property boundary, and they came up with just under four metres at 12 g/t of gold and 20 g/t of silver.
RI: Where do you see Frontline Gold in three to five years?
WH: I would certainly like to see the Niaouleni with a multi-million ounce resource. There is a real potential to buy or option other surrounding land packages that are adjacent to our property and I am optimistic that in the next year I could build on our land package. If I am able to consolidate the land package there, I could come up with a multi-million ounce resource.
RI: Give me three reasons why I should be looking at Frontline Gold if I were an investor.
WH: Niaouleni is in a well-known gold area and is a large property with the potential to add additional land and it has had a historical drilling. In addition to all of that, Frontline has three additional prospective properties – in Turkey, British Columbia, and Ontario – to provide more upside gold potential.
RI: Is there anything else investors should know?
WH: We’ve got an experienced management team that has over 40 years of management experience within Africa. We have excellent relationships that run our properties. We also have significant shareholders, among them Iamgold, which owns just under 2 million shares of Frontline.
- Niaouleni Project, Mali
- Stage: Exploration
- Commodity: Gold
- Market cap: $15,787,169 as of February 8, 2011
- Share price: $0.19 as of February 8, 2011
- Cash: $1.95 million as of February 8, 2011
- World-class gold exploration upside with properties in world-class gold regions
- Extensive land properties, 100% ownership, in Mali, Turkey and British Columbia with opportunities to consolidate surrounding land plays
- Significant African mining experience at both Management and Board of Directors level
- Strong local technical teams in Mali, Turkey and British Columbia
- The Niaouleni gold project in Mali is well located within a world gold-producing region and with mineralization that is similar to other gold deposits in the Birimian greenstone belt