The Strength of a Junior

By Ellsworth Dickson    February 27, 2003 www.resourceworldmag.com

It’s no secret that the majority of economic mineral deposits are found by junior exploration companies or individual prospectors. There are good reasons for this. Junior explorers are not slow-moving bureaucracies like many senior companies. This makes juniors able to make fast decisions both in the boardroom and in the field. Senior resource companies generally have a different role to play, namely, to fund and place into production deposits discovered and developed by juniors. But perhaps the most important reason juniors make most discoveries is the talent, motivation and dedication of their management.

As is often the case, juniors are managed by men and women who have had success working for both senior and other junior companies. So why would a someone want to be a director a junior company that has no revenue and sometimes not even a decent salary to offer? It’s the huge potential rewards. Senior companies may bring good salaries and an attractive pension plan, but it is the exploration success of junior companies that can seriously improve one’s lifestyle. The share prices of Teck, Barrick or Placer Dome are unlikely to double, triple or more under any circumstances; however, a junior exploration company can easily return enormous capital gains – not just for directors with large share positions, but also for its fortunate shareholders. In the life cycle of a resource company, it is the discovery stage that provides the chance for great share price increases. By the time a company reaches the feasibility and mine construction stage, the big move in the share price is over.

In a sense the shareholder is putting his or her faith in the abilities of management to find and develop an economic orebody - if there is one waiting to be found on the mineral property. Make no mistake; in my experience working with men and women who manage junior companies, it is obvious that most are absolutely driven to succeed – not just for the substantial monetary rewards – but also for the thrill of discovery and sense of accomplishment.

Such is the case for PMI Ventures Ltd. [PMV-TSXV], a junior exploration company exploring a large prospective gold project in Ghana, West Africa. Headed by Arthur Fisher, P.Eng., a career mining executive credited with bringing four mines to production, he is a professional mining engineer with over 40 years experience in North and South America as well as Australia.

Arthur Fisher, P.Eng. President, PMI Ventures Ltd.

"We have a number of senior mining companies surrounding us - Ashanti, Gold Fields and Newmont," says Fisher. "We believe that given our exploration results to date, our share price has a good chance of increasing, after all, our market cap is only about $8 million and we are in the ‘discovery stage’ of our company’s life cycle. Our mineral land holdings are actually larger than Ashanti’s ground position."

PMI’s mineral lands are adjacent to the southwest of the Obotan gold mine that has recovered some 800,000 ounces of gold in shallow mining operations from a 3 million-ounce gold reserve. As can be seen from the accompanying map, about 40 km to the east the Ashanti and Tarkwa gold mines have produced about 40 million ounces of gold with some 40-50 million ounces in known gold resources. Just 30 km to the west the Sefwi Gold Belt hosts three producing gold mines that have recovered about 5 million ounces and have resources totalling 12 million ounces. In fact, past production and current known resources total more than 100 million ounces of gold all located within 100 km of the PMI property. At the present time, Newmont is developing two gold mines in Ghana at a capital cost of $450 million.

Fisher explains that the PMI concession has had some US $9 million spent on exploration in the past by Tristar, Nevsun and others. Those companies drilled shallow holes about 10 years ago in hopes of developing an open pit operation. Then the price of gold fell and no follow-up exploration was carried out. Due to these circumstances, PMI was able to acquire the mineral lands inexpensively from Goknet Mining which held the mineral rights to the area. Goknet Mining was created by Vancouver geophysicist Douglas MacQuarrie, P.Geo., who had worked for Tristar, along with some Ghanaian businessmen. MacQuarrie is currently Vice President of Exploration for PMI’s Ghana exploration program. Under the terms of acquisition, PMI can earn an 85% interest by paying $260,000 and issuing 3 million shares over three years. The government of Ghana will retain a 10% non-participating interest in the project. The land package extends for 50 km along the 150-km long Asankrangwa Gold Belt and encompasses 486 square km.

"I became involved in the project when I took a look at the earlier drill results that included 2.4 grams gold/tonne over 23 metres at a depth of 29 metres and 12 grams/tonne over 9 metres at a depth of only 14 metres in the Fromenda Grid "B" area. In Ghana, 2-gram/tonne material in this area is economic," says Fisher. "Since the cost of living and wages in Ghana are very low, a modest gold deposit can become a viable mining operation."

Fisher says the current drill program is designed to confirm the results of previous drill programs and to extend zones of known gold mineralization, including any down-dip extensions. "We have visible gold in the latest drill core," says Fisher. "There are numerous, parallel and steeply-dipping gold-bearing quartz stringers similar to the geological setting at the Ashanti Mine. This is an indication that we have the potential for a repetition of an Ashanti-style gold deposit on our ground."

After receiving results from the current 1,000-metre drill program, the next step would be to discern the most promising areas for follow-up work. "Right now, we have about 10 good targets over a very large area. We want to narrow things down and spend our exploration funds on the best targets," notes Fisher. "We have also received successful trenching results that have uncovered previously unknown gold-bearing quartz veins that we want to drill."

Fisher has been encouraged by the first assays from the latest drill program that comprises eight to 10 holes. The first drill hole has increased the grade and thickness of the targeted zone by some 40% as compared to the earlier rotary percussion drilling done in 1999. Drill hole 03FBDDH1 intersected 30 metres grading 2.63 grams gold/tonne (using a 0.5 g/t cut-off). This intercept included 17.0 metres grading 3.59 grams gold/tonne (using a 1.0 g/t cut-off. The hole was drilled in the Fromenda Grid "B" area for a total length of 86 metres at a -45º angle. The reported width of the intercept is approximately the true width of the gold-bearing zone and starts at about 20 metres below surface. The gold values are hosted in highly altered and oxidized greywacke crosscut by sheared quartz stringers. Greywacke is a sedimentary rock that was built up and formed under water.

Fisher says that follow up drilling to test both strike extensions as well as the down-dip extension of the gold-bearing zone is now underway. He adds that bottle roll testing of the mineralized material is planned in order to test its leachability for a possible heap leach mining operation. Further assays of the current drill program will be released as received.

While some countries in Africa present difficult situations for foreign explorers, Ghana with its stable democratic government welcomes exploration and mining projects. There is easy road access to the project where low-cost, skilled labour is available.

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