SMALL CAPS FOCUS: Cluff Gold has high hopes for Ivory Coast

Cluff Gold is considering a relaunch of its operation in the Ivory Coast to provide funds for a deeper exploration programme on its Angovia prospect in the country.



Cluff put Angovia onto a care and maintenance basis last year but finance director Pete Gardner said that the prospect in the Ivory Coast still represents a real opportunity.



He told Proactive Investors that there is 'a short-term opportunity to recommence mining in the zone,' adding: 'Diamond drilling is showing visible gold in ore in multiple locations and that’s pretty exciting.'

Golden touch: Gardner says 'every hole we are putting in, we are seeing gold'



'It’s a bit of a challenge in terms of the assays because it’s quite ‘nuggety gold’ and we have to be much more systematic than with finely disseminated ore body.'



He said Cluff has to assay more to get a representative sample and results so far are only provisional results and from the first three holes, but adds that 'every hole we are putting in we are seeing gold'.



Angovia also has a hydro electric power plant next door, abundant water and an existing mining infrastructure so capital expenditure would be lot lower than other locations.



He adds developing Angovia would help put a third leg under the company.

At present, Cluff is producing from the short-life Kalsaka mine in Burkina Faso, though the long term potential lies at Baomahun in Sierra Leone.

Cluff had hoped to start the earthworks for construction of a mine at Baomahun in the first quarter of 2012, but this timetable been put back due to a delay in approval for the environmental impact assessment (EIA).



The hold-up, caused by the definition of a forest boundary around the site, means that the feasibility study for the project has also been put back.



Brokers have suggested it will take three months to resolve the situation with the Sierra Leone government, after which Cluff will move to complete the feasibility study and finance the project. First gold from Baomahun is expected in the first half of 2014.



Gardner said the delay in the feasibility study did not 'take away from the economic robustness of the project or the timeline for the development of the project'.



'Our plan is effectively to use the time that the government has given us to make sure the project is as good as it can be,' he added.



'When we announce it, we want investors to see the true potential of Baomahun. It is a nice strong grade, decent-sized property and it will form the basis of a robust mine.'



He said that Cluff’s current view is that it will produce about 135,000 ounces per year for an eight-year mine life.



'Within the open pit there are 100,000 ounces of inferred resources and the delay in the feasibility study it gives us time to drill that bring it up to the indicated category,' Gardner added.



'We will also go through all of the assumptions in respect of capital expenditure and will make sure that anything that can be improved, will be improved. '



'That doesn’t mean it’s not good enough as it stands today, but we want to put the optimal mine plan on the table and raise the finance.'



He says negotiations have started with debt finance providers and the group now has time to talk to development banks as well as commercial banks.



'It is very important our equity investors get the full benefit of the rising gold price,' he said, though he adds in current markets debt is an attractive option.



Exploration is also underway at Kalsaka, Cluff’s producing mine in Burkina Faso. The mine had a storming third quarter with 23,000 ounces poured, but Gardner says that was exceptional and output will drift back towards the annual target of 70,000 ounces year on average.



As at 31 December 2010, Kalsaka only had an estimated 186,000 ounces of proven and probable reserves and Gardner says the critical factor is expanding reserves at the mine.



'I’m positive there will be a mine life extension at Kalsaka,' he said.



'The mine is cash positive, but we would have liked to have been 12 months ahead in terms of exploration. We have time and have a lot of good targets to follow up.'



Cluff at a Glance