Sarama sees big future for South Houndé

Acacia Mining’s comparison of Western Australia’s Eastern Goldfields greenstone belt gold endowment with the southern Houndé belt in Burkina Faso at a London exploration forum last November underscored the scale and prospectivity of the latter, and raised a few eyebrows. It certainly hit home with Andrew Dinning, CEO of Acacia’s South Houndé project partner, Sarama Resources (TSX: SWA).

Sarama sees big future for South Houndé Sarama sees big future for South Houndé Sarama sees big future for South Houndé Sarama sees big future for South Houndé Sarama sees big future for South Houndé

Plenty of gold in the pipeline … Sarama and partners are drilling to add to resources totalling more than 3Moz

Dinning, a mining engineer who ran several WA gold mines including the prolific St Ives camp near Kambalda, has been president at Sarama since founding the company. His 25-plus years in mining also included stints in Russia, the UK, and the Democratic Republic of Congo, and he ran Moto Goldmines before it sold what is now Randgold-operated Kibali in the DRC.

“When I worked at Kambalda I use to drive from Kalgoorlie to Kamdalda every day, probably 55-60km, and I went past a lot of mines,” Dinning said.

“If I drive in a straight line from the bottom of South Houndé to the top of the Bondi area [which Sarama has acquired from Orezone Gold Corp] it’s probably 70-80km.

“Acacia’s point in the presentation was that this massively endowed greenstone belt around Kalgoorlie has produced all this gold, and while the Houndé belt in Burkina has a growing [12Moz] endowment, the South Houndé part it is involved with doesn’t have the mines yet. What it does have is the right rocks, the variation in styles of mineralisation,more than 3Moz already delineated, and an awful lot of smoke there.

“When we got to South Houndé [about five years ago] there had been no drilling; it was basically virgin territory. A lot of time and money had to be spent because the gold doesn’t stick out of the ground.

“It’s been an ongoing learning experience, and we’ve been paying a lot of school fees the last five years.”

What Sarama and its partners do have to show for the 100,000m or so of drilling and various other exploration programmes completed on the 1, of belt held is about 3.2Moz of gold resources, including 2.1Moz inferred at 50%-owned South Houndé (500,000oz in oxides), 700,000oz inferred at 31%-owned Karankasso, to the west of South Houndé, and now a further 430,000oz at the recently acquired and adjoining 100%-owned Bondi deposit.

Dinning (left) says 3,000m of diamond and RC drilling carried out in the December quarter by JV partner Savary Gold Corp, which returned results such as 2m grading 5.64gpt and 8m at 1.87gpt near surface, and 7m at 6.73gpt at depth, increased understanding of the mineralised system at Karankasso. The recent addition of extensive geophysical, geochemical and prospecting data has enhanced the picture provided by limited drilling to date and may add new targets outside the known mineralised system.

Follow-up drilling is expected to commence shortly.

“Again, if I look at the soil anomalies we’ve identified at Karankasso, it’s like driving from Kalgoorlie to Kambalda and having a soil anomaly next to you the whole way – continuous,” Dinning says.

As he says, lots of smoke.


It’s the quality of the ounces at Bondi that makes a real difference"


Sarama has proffered three possible development scenarios for the gold already identified in the ground at South Houndé, Karankasso and Bondi, where it is re-evaluating the historical 430,000oz measured, indicated and inferred resource on the property in the lead-up to new drilling that could start in the June quarter.

Already a low-cost, small oxide heap leach project could be used to kick-start commercial mining in the region.

“On the horizon” is a potential 100,000-120,000ozpa intermediate-scale oxide and hard-rock operation.

If an “Acacia-size … game-changing” deposit is found at South Houndé, a larger scale mine would join the likes of Mana, Houndé, and Yaramoko to the north.

While all these options hinge to a large degree on the success of current Acacia-funded exploration at South Houndé, where it has budgeted a further US$4 million spend this year, and certainly on finalisation of economic studies, Dinning makes the point that the “Acacia deal underwrites the project whether they go the distance or not”.

And Bondi, which Dinning says “puts Sarama in a unique position to play a key role in the consolidation of the area”, has only strengthened the company’s hand.

“If Acacia exits stage right then at a minimum we’ve got a low capex heap leach that we could put into play to give us cash flow,” he says.

“If Acacia decide to go all-in then we’ve got another major bargaining chip [in Bondi] that is really key to the development of those deposits in the area.

“It’s the quality of the ounces at Bondi that makes a real difference – it provides a step change in the economics of a heap leach or carbon-in-leach [CIL] operation with 2.7g/t in the oxides and 3g/t in the fresh, and free milling, so quite high-value ounces.

“You could potentially see cash costs of mining and extracting [that type of material] around the US$600/oz mark, or better given the grades. So it’s all highly accretive: the pre-tax cash out of those ounces is going to be plus-$120 million at US$1,200/oz gold.

“It’s added to that optionality we had with South Houndé [and Karankasso] pending what Acacia does long term.”

Acacia is looking to add to current resources and define a 1.6Moz reserve through expenditure of US$14 million, to earn up to 75% of South Hounde. Burkina Faso is again where the producer has its biggest budgeted exploration spend in 2017 outside of its operational base in Africa, in Kenya.

Acacia made the point in London that as well as drilling, extensive mapping, soil sampling, rock chip sampling, and ground and airborne geophysics had been completed in 2016 to improve its understanding of the Houndé belt. A number of multi-kilometre gold-in-soil anomalies had been outlined and gold mineralisation was identified on “all targets drilled to date”.

The 2017 South Houndé programme, managed by Acacia and expected to run to July, will include at least 12,000m of diamond, 10,000m of RC and 28,000m of aircore drilling, as well as trenching, mapping and surface sampling, as the company targets significant high-grade resource extensions at the main Tankoro deposit, and “material new regional discoveries”.

Dinning says much work was done in 2016 to better understand geological controls and test a “few theories” on structures that appeared to be associated with higher grade gold occurrences.

“We’ve got a better 3D structural model now – a lot more detailed with the data that has gone into it,” he says.

“Geologically there is a lot going on. There is not a lot of outcrop, not a lot of exposure, so they [Acacia] have their work cut out for them. Tankoro was effectively a blind discovery. We got onto the main zone through soils – and not super strong soils – but the MC [zone] was completely blind: no soils, no surface expression … it was drilled off IP.

“I think that’s one of the interesting things with the land package we’ve got, and one of the reasons Acacia got involved, is there are a lot of different styles of mineralisation in the package and again that is what we’ve seen in the WA greenstone areas.

“We’ve got [at South Houndé] some sediment hosted, some quartz-vein hosted, some’s in granodiorites, some basalt; we’ve got some stuff coming up with quartz; we’ve got porphyry dykes. And then Bondi is different again. There are actually seven trends of mineralisation as you go across this part of the belt.

“In the last couple of years there has been some significant discoveries [in Burkina Faso] that were perhaps a little bit different to the standard analogue … [including Semafo’s] Siou deposit; Yaramoko; even Natougou [ex-Orbis Gold] for that matter. That’s a flat quartz vein and typically most of the stuff we’ve seen is sub-vertical.

“So I think it’s going to be one of those areas where once you’ve got a mine established you’ll just keep finding more, and that is certainly analogous to St Ives, and Agnew, and many other things we’ve seen in the Western Australian goldfields.

“The hard part is getting over that initial hurdle.”

Sarama Resources – at a glance

HEAD OFFICE: 245 Churchill Rd, Subiaco, Western Australia, 6008

Telephone: +61 8 9363 7600



DIRECTORS: Sean Harvey, Andrew Dinning, Simon Jackson, Dave Groves

QUOTED SHARES ON ISSUE: 121.13 million

MARKET CAP (at Jan 25, 2017): C$18.7 million

MAJOR SHAREHOLDERS: Management (about 20%), Sun Valley Gold (15%), Gold 2000 (8%), Kinross Gold (5%)




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