Description

WIA Gold                                                                      

Executive Summary

WIA is an ASX-listed gold exploration junior with a JORC compliant Resource of 1.3m ozs at its Kokoseb project in Namibia, in proximity to Osino Resources. Osino is the subject of a scheme merger with Dundee Precious Metals (DPM) that was announced in December. WIA also controls significant tenements that are contiguous to Osino’s exciting Eureka project. WIA has a compelling investment case as a standalone business, but the Osino merger raises the possibility of a quick return, should DPM also make a bid for WIA.

WIA recently raised A$11m in an over-subscribed offering, enabling the company to fast track its exploration at both Kokoseb in Namibia and its Bouafle project in Cote d’Ivoire. On a stand alone basis, we expect Kokoseb to be in production in less than 4 years, based on a low-cost heap leach of the oxidized top 30m layer of the ore body, followed by a standard Carbon-in-Leach treatment of the deeper sulphide ore body.

However, there is clear potential to co-operate with DPM and run a single centralized operation to treat ore from Ondundu and Eureka through the same plant. For DPM this would be a much more attractive proposition, than the Twin Hills project.

Kokoseb has a JORC compliant Inferred Resource of 1.3m ozs of gold at 1.0 g/t, defined within a modeled open pit with a low strip ratio and excellent metallurgical recoveries. The next Resource update should exceed 2m ozs, based on recent Borehole KRC086 yielding 47m at 7.92g/t for 372gm (gram x metres) from 234m and excellent continuity in mineralization reported in December.

The region stretching from Kokoseb to Ondundu and onwards to Eureka holds great promise to become a new gold field, based on the 2.2m ozs that have already been defined and the exciting borehole values that both companies are reporting on an ongoing basis.

The Bouafle project in Cote d’Ivoire is situated less than 30km from Perseus Mining’s flagship Yaoure mine. Bouafle has the potential to support a low-cost heap leach mine or to supply ore to Yaoure’s plant. With both projects lying on the banks of Lake Kossou, the ore could either be trucked or barged at minimal cost. This would be extremely profitable for WIA and require very little upfront investment. With Yaoure’s CMA open pit transitioning to an underground mine and satellite pits from 2026, Bouafle would fit like a hand in a glove.

WIA is trading at an EV of US$22.7m. While the sector has been under pressure over the past year, we expect great things from WIA. The company will be able to prosper as an independent business, but the obvious route to maximise value would be a take-over by Perseus or a project sale to DPM.

Perseus has a war chest of US$522m and DPM is likewise well funded and highly profitable. Either way we see tremendous upside in WIA. With AS$10m in the bank, WIA has doubled the number of drilling rigs at Kokoseb from 2 to 4 and is also stepping up the pace at Bouafle. The news flow should therefore remain strong, with a significantly upgraded Resource Statement on Kokoseb expected in March. 

Kokoseb Project (WIA : 80%  Epangelo 20% to DFS, Dilutable to 10% free carry)

The Kokoseb deposit is situated in the Damara Belt of Namibia, that hosts QKR’s Navachab and B2 Gold’s Otjikoto gold mines, as well as Osino Resources’ Twin Hills gold project.

Location of Kokoseb and WIA’s other tenements marked, all marked in red.

Source : WIA Gold, Maiden Mineral Resource Estimate at Kokoseb, 15 May 2023, p.3

The orebody consists of a number of wide intrusions surrounding a 3km x 3km granitic pluton. (See the red dotted line on the map below, showing the outline of the 0.1g/t soil geochem anomaly that led to the discovery of the resource).

The ore body exhibits excellent continuity of both width and grade over the preliminary pit shell outlines. This will reduce the number of boreholes required to upgrade the Inferred Resource to an Indicated Resource, that is a pre-requisite for the declaration of a Probable Ore Reserve. The following map shows the May 2023 Resource area in green and the individual boreholes as inverted triangles, colour coded for the richness and width (g/t x metres = gm) of each hole. The resource is shown against the original 100 ppb soil geochem outline denoted by the red dotted lines.

The Kokoseb Inferred Resource (in green) as defined in May 2023, prior to the inclusion of the recent high grade borehole results and follow-up drilling.

Source : Ibid, p.4

The quality of the ore body can be more fully appreciated from the following perspective view, showing the rich Northwest and Southern Zones and the helix of the Central and Western Zone. Since the map was compiled in May, the spectacular borehole, KRC 086, intersected 37m at 9.46g/t at the central nexus of the helix. This holds significant promise for the 2 pits to merge into a single pit, with a lower strip ratio and a rich core.

Source : Ibid, p.2

Kokoseb is almost unique in the Namibian context, in that the ore body outcrops on surface, with no more than 1-2 meters of soil cover in places. This is in contrast to gold mines like Navachab, Otjikoto and the Twin Hills project that are covered by up to 40m of incredibly hard calcrete matrix.

The following cross section shows the well mineralized ore outcropping on surface, with the “soft” oxide ore continuing for 20m – 30m to the base of weathering.

The oxide ore reduces the intensity of drilling, blasting, and milling. But more importantly, holds the promise of a potential Heap Leach operation to kick-start the mine at very low capital and operating cost. The amenability of the ore to a heap leach is easy to test in a laboratory with column leach and bottle roll tests, so we will soon know if this is a possibility.

A heap leach mine can be built in stages, with a first stage costing as little as $28m (Minera Alamos : TSX.V:MAI, Cerro de Oro PEA Economic Summary, January 2023), compared to $365m for a standard Carbon in Leach (CIL) mine like Twin Hills (Twin Hills Definitive Feasibility Study, July 2023). Generally speaking, the cost per ton treated is also much lower, with $5.13/ton for Cerro de Oro compared to $28.16/ton for Twin Hills. This lowers the cut-off grade and makes it possible to treat ore that would otherwise have been sterilized. Financiers are eager to back heap leach operations, as the cash flows are more dependable. So, the outcome of the column leach tests could be a game changer.

The metallurgical tests performed on Kokoseb’s ore, suggest a positive outcome, with greater than 91% gold extraction achieved in 2-4 hrs, which is faster than Cerro de Oro’s 4 hrs. It’s also six times faster than standard Carbon in Leach ore bodies and compares to 48 hrs for Twin Hills and 72 hrs for Otjikoto.

The Navachab gold mine recently commenced a 4mt p.a. heap leach to monetize their low-grade ore and even the mammoth Swakop Uranium mine (Rossing South) has commenced a heap leach trial. The reason why these mines in Namibia are going the heap leach route, is not only the large cost savings, but also the reduction in water consumption. A standard metallurgical plant consumes 1 kl (ton) of water per ton of ore, whereas a heap leach consumes just 0.15 kl per ton of ore. Even an expensive filtered tailings process (dry stack tailings), still consumes 0.2 – 0.3 kl per ton.

Heap leach mines also benefit from not requiring a tailings dam, as the heap is already plastic lined, while the much coarser particle size and solvent irrigation eliminates the problem of wind-blown dust. Wind blown mine dust is a major problem in Namibia where wind gusts of over 30m/s (108km/h) are common. The heap leach also doesn’t require cyanide detoxification that is otherwise performed prior to tailings deposition.

Osino’s recent discoveries

Osino Resources (TSXV:OSI) recently announced important borehole results from their Ondundu & Eureka projects. These 2 projects are proximal to WIA’s Kokoseb and other tenements, as can be seen from the following map.

Map showing WIA’s tenements in olive green and Osino’s rights in light blue

Source : Osino Investor Presentation, September 2023, slide 24.

At Ondundu two recent shallow boreholes reported 109m at 2.3g/t (251gm) and 157m at 1.5g/t (236gm), while at Eureka a medium depth borehole recently intercepted 47m at 5.9g/t (277gm). The Eureka borehole (ORD005) is noteworthy for several reasons. The specific area has never seen any prior exploration, so the gram metre value as well as the absolute richness of the ore at an open pit depth qualifies it as a globally significant discovery hole.

Borehole ORD005 was preceded by hole ORD 001, that returned 2m at 39.8 g/t at 150m depth. This demonstrates excellent tenor, meaning that the project has the ability to host exceptional ore grades. It’s most unusual for a first borehole to strike visible gold (+30g/t). Osino is still awaiting assay values from Eureka’s hole ORD 009, that likewise struck visible gold. These together with the 47m intercept in ORD 005, suggest a very robust system.

Borehole ORD 001 from Eureka showing extreme gold enrichment (above the orange pen).

Source : Osino Resources : Eureka Greenfields Discovery, 9 August 2023, p.4

What’s so exciting about these discoveries, is that Eureka is contiguous with WIA’s tenements and that the discovery has been made right on the Welwitscha Lineament and less than 2km from the northern border of WIA’s license area. The Welwitschia Lineament continues for a further 55km in a southerly direction over WIA’s ground (see map below).

Map showing WIA’s tenements in pink, bisected by the Welwitschia Lineament, continuing northwards to the exact position of Osino’s Eureka discovery (light blue tenements).

Source : Tanga Resources, Investor Presentation, June 2021, Slide 11

Historical exploration near Eureka

Previous exploration by Phelps Dodge in 1972 was focused on copper, with geologists not even assaying the boreholes for gold. A soil geochem sampling programme by Tanga Resources (WIA’s precursor company) returned elevated gold values close to the border with Eureka, as well as a central core 30km to the south of Eureka. As can be seen in the map above, this central core coincides with the point where the east/west Otjihorongo Thrust (jagged tooth line) intersects with the north/south Welwitschia Lineament. Globally, such points of intersection are famous for yielding bonanza grades.

The Otjihorongo Thrust hosts B2 Gold’s Otjikoto gold mine and Gold Fields’ historic Kombat copper/lead/silver mine. Otjikoto is guided to produce 200k ozs of gold at an AISC of US$1,110/oz in calendar 2023 from 3.4mt at 1.87g/t. (B2 Gold : MD&A 6 months to June 2023). Kombat is currently being revived by Trigon Metals Inc. (TSX V : TM) with backing from Sprott. Kombat was a rich mine that yielded 17.8% Cu in it’s early years and by 1985 still produced 330kt of ore at 4.0%Cu, 1.4%Pb and an ounce of Silver per ton. (Kombat Copper Inc. Investor Presentation November 2013, Slide 16).

Map showing elevated gold in soil geochem values along the Welwitschia Lineament on WIA’s tenements, south of Eureka. Subsequent to the date of this map, the tenements were expanded to the north up to the oblique line bounding the northern point of the outlier block of soil geochem and flush with Eureka’s southern boundary.

Source : Tanga Resources Investor Presentation June 2021, Slide 12

The heart of the Namibian thesis

The ongoing results from Ondundu and Eureka are providing valuable clues about the resource potential on WIA’s adjacent tenements, in the same way that Kokoseb’s 1.3m oz Resource declaration appears to have spurred Osino to embark on the exploration campaign at Eureka. Osino’s CEO, Heye Daun, recently spoke of the Eureka discovery saying that it heralds “a new gold district”, based on Eureka, Ondundu and WIA’s Kokoseb deposit (Osino Eureka announcement, 9 August 2023, p.1).

A notable feature of the recent significant boreholes at Ondundu, is that they are all situated to the east of the previous drilling by Gold Fields and B2 Gold. Given the much wider reef and excellent grades to the east, we expect the Ondundu resource to grow handsomely from the October 2022 Resource of 0.9m ozs at 1.1g/t.

The gold at Ondundu is very coarse, making it possible to upgrade the Run-of-Mine ore by a factor of 20 times through a basic milling and jigging process, while still recovering 72% of the gold. (CSA Global 43-101 Ondundu Gold Project, December 2022). This means that the Ondundu concentrate will run at roughly 20g/t and could easily be transported to a central hub, for instance at Kokoseb. It’s also worth mentioning that the main north/south Ruacana/Windhoek 220kV power line runs between Ondundu and Damara, while the paved Khorixas/Outjo road runs east/west just north of Eureka.

With Kokoseb and Eureka both awaiting assay values from boreholes containing visible gold, the critical mass of these projects will keep growing and at elevated grades. It’s reasonable to assume WIA will start following up on the soil geochem sweet spots along the 55km stretching south from Eureka.

Cote d’Ivoire

WIA owns several tenements in Cote d’Ivoire at Bouafle, Mankono, Issia and Bokanda as part of 80% Joint Venture farm-in projects. These all show degrees of promise, but Bouafle is the star asset.  

Map of WIA’s tenements in Cote d’Ivoire, showing the proximity of Bouafle to the Gold Heap Leach mines at Abujar (planned) and Yaoure (started as heap leach now CIL).

Source : WIA Investor Presentation, February 2022. Slide 6.

The Bouafle Sud license hosts a 17km Birimian gold bearing shear zone, with numerous artisanal gold workings. The license lies 50km northwest of Yamoussoukro, the official capital of Cote d’Ivoire and 25km northwest of Perseus Mining’s flagship Yaoure mine. (ASX : PRU).

WIA’s chief geologist, Pierrick Couderc, is producing a string of exceptional assay values at Bouafle. His thorough and low-cost approach is to start with termite mound sampling, followed by cheap auger drilling, then air core drilling and trenching. These are cross referenced with geophysical anomalies to develop targets for RC drilling and finally for diamond drilling. Couderc previously led the teams that discovered the 5.4m oz Doropo and 2.2m oz ABC deposits for Centamin PLC in Cote d’Ivoire. (LSE : CEY).

The newly discovered North East Zone (NEZ) has delivered 16 auger samples with grades in excess of 0.5g/t, including 5.5g/t, 4.3g/t, 2.8g/t, 2.6g/t and 2.0g/t. What is noteworthy, is the widespread occurrence of the high-grade samples. (See map below).

Map showing the North East Zone high grade soil geochem anomaly of ~10km² on Lake Kossou, and Perseus’ Yaoure mine to the southeast. Yaoure’s exploration tenements stretch all the way to the eastern boundary of WIA’s SE Zone.

Source : WIA Drill Ready Targets at Bouafle, 18 July 2023 p.2

The most striking feature of the large scale map of NEZ, is the remarkable area of more than 2km x 2km over which termite mound samples of higher than 20ppb were collected (hatched gray). The extent of the 20ppb area and the pervasive high grade auger values, suggest a large target could be in sight.

Large scale map showing the North East Zone on Lake Kossou. The faint dashed lineament lines (southwest/northeast) project a megaphone-like widening in the mineralized ore zone to potentially encompass a majority of the top half of the map.

Source : Ibid, p.2

The South East Zone (SEZ) is smaller than the NEZ, but according to the announcement shares geological similarities with Yaoure. Upon closer inspection of the coordinates, the SEZ in fact borders on Yaoure’s tenements, and the structure appears to be a western extension of a geochem anomaly that starts at Yaoure. (See maps below).

Map of the SEZ showing the anomaly centred at approximately 784000N,204000E.

Source : Ibid, p.3

Map of soil geochem values at Yaoure mine and prospecting tenements. See anomaly in the northwest corner centred at approximately 784000N,205000E.

Source : ASX Announcement :  Perseus discovers more high grade gold at Yaoure mine, 13 April 2022, p.10

WIA will commence a drilling programme at NEZ in the next few weeks, once the rainy season has ended. Given the shallowness of the drilling, we can expect the first results as early as December.

The likelihood of a significant gold discovery at Bouafle comes at an opportune moment for Perseus, as the ore in the main CMA pit at Yaoure is almost exhausted. The mine will transition from the current open pit to an underground mine, augmented by feed from the old Yaoure Pit and a number of satellite open pits.

Yaoure Life-of-Mine production forecast showing the partial replacement of the CMA open pit by the Yaoure Pit, Satellite Pits and CMA Underground.

Source : Perseus Mining Corporate Presentation, 18 September 2023, Slide 22.

As can be seen from the graph, the feed from CMA Underground will not be immediately available to replace the decline in production at CMA Pit. This will cause a temporary dip in F26 and F27 (June year-end), with production again declining after F29. The plant will therefore be underutilized from F26, running at well below capacity, with utilization reducing to 50% and less after F30.

Any feed from Bouafle would therefore be welcome both as a source of profit, but also to reduce unit costs. The mining cadastre of Cote d’Ivoire shows that Perseus’ licenses are contiguous to WIA’s Bouafle licenses. This means that any costs incurred on a joint basis will be able to utilize Yaoure’s significant tax shield.

As mentioned, NE Zone and Yaoure both lie on the banks of Lake Kossou at a distance of ~25km. Any ore from NE Zone could therefore easily be barged to the Yaoure plant. Barging is much more cost effective than trucking, especially in the rainy season. It is therefore a widely used mode of transport in equatorial Africa. Lake Kossou is an artificial lake and integrated hydro electric power project that delivers 174MW. Yaoure utilizes the hydro electricity and has made investments in the hydro plant and transformers.

The CEO of Perseus, Jeff Quartermaine, in a recent interview told the Australian Financial Review that the group is looking to acquire projects in Africa in the predevelopment stage, because “Africa is where our advantage is.” (AFR 7 Sep 2023). With a war chest of US552m and strong cash flows, the cost of acquiring WIA would be an easy decision.

We therefore believe that WIA will be able to convert any resources delineated at Bouafle, no matter how modest.

Picture of Yaoure mine in the middle distance, showing the proximity of the plant to Lake Kossou.

Source : Perseus Mining website

Conclusion

WIA converted Kokoseb from a mere soil geochem anomaly to a JORC compliant resources of 1.3m ozs in two years and at a total discovery cost of just $2/oz. That’s an almost unheard of achievement that should give investors great confidence in the company’s ability to speedily unlock the value of Bouafle.

With the visible gold assays on the way, the news flow from Kokoseb and Eureka is likely to draw a lot of attention to this new emerging gold field. The strong growth in the absolute resource size, good ore grades, and superior metallurgy of Kokoseb ensures that this resource will be speedily unlocked.

WIA is a classic example of a mispriced micro-cap, where investors stand to earn outsize gains in spite of the current macro headwinds.

Catalyst

• Exploration Results
• New Resource Estimate in March