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African Queen Mines: Developing Strategic Assets in Target African Nations

When looking at potential junior mining and exploration companies, many investors shy away from those looking at African assets, with fears of political uncertainties and a less developed legal and political system, creating for some, a bias against this resource rich continent. However this should not necessarily be the case. Many African countries have undergone significant changes and developments in the past decade, becoming politically and financially more stable, having strong legal systems put in place, and for many, having a ‘mining friendly’ push across much of their system. As we have seen in recent months in Australia, even the most developed of mining nations have an aspect of politic risk. But as this implies, one doesn’t need to have a particularly harsh view of Africa. For a company that focuses its assets on the more developed, ‘politically safer’ African countries, this continent can have untold value for mining and exploration companies. African Queen Mines Ltd (TSX: AQ) is one company that believes in the potential of Africa, and has developed a portfolio of properties across its more political stable countries, such as Ghana and Kenya.

African Queen Mines is a Canadian exploration and development company, initially focusing on exploration for diamonds in Botswana and Namibia, and gold in Mozambique, Kenya and Ghana. Specifically, it focuses on areas deemed to have relatively high potential for mining success and relatively low political risk. The company has a market capitalisation of C$27.8 million, with 42.7 million shares in issue, with 2.9 million options and 4.3 million warrants, for a fully diluted 49.9 million. The company has around C$586,000 available in cash and cash equivalents, and has a working capital of around C$2.1 million.

AQ’s primary assets include the King Solomon and African Eagle Gold Projects in Mozambique, the Noyem Gold Project in Ghana, the Tsau Kimberlite Project in Botswana and the Namibian Kimberlite Project in Namibia. In addition to these properties, the company has around C$10,000 in equipment. Currently the majority of focus for the company is on their Mozambique based gold projects, particularly the King Solomon project, which recently received a NI 43-101 compliant resource update. The company have also recently made moves to further progress in Ghana, appointing Gregory Nowak as the new full time manager of the company’s activities in the country.

In July 2009, AQ entered into an earn in and joint venture agreement with Swiss based Opti Metal Trading Limited, covering exploration and development over an area of approximately 230 square kilometres in the centre of the Fingoe Belt, now called the King Solomon Project. Under the terms of the agreement, the company may earn up to an 85% interest in the license and related project, by funding prescribed stages from exploration through feasibility. Optimetal has the right to participate at its election pro-rata after the company has reached 51% ownership interest.

The King Solomon project itself consists of two contiguous prospecting licences, covering 380.8 square kilometres, and is located in the Tete Province of west-central Mozambique. The nearest supply centre is Tete, the capital city of Tete Province, about 200km east – south – east of the project. A highway links Tete to Fingoe, a distance of around 286km from the project via secondary roads. A number of small villages also have fuel available, and old trails have been brushed and reactivated to allow access to the area. The project area is also situated near Lake Cahora Bassa, southern Africa’s largest hydropower project, which should bring comparative ease of access to power.

A number of historical gold and copper showings are recorded within the license for the King Solomon Project, some of which have been mined in the past, although very little documented data is available. A significant number of exploration trenches and artisanal diggings have been excavated throughout the site, and numerous rivers within the area, in particular the Kaponda River, are currently being mined by informal miners for alluvial gold.

As previously highlighted, the company recently received a NI 43-101 compliant technical report on the projects viability and potential, which concluded that King Solomon is a property of merit, that justifies a ‘Phase 1A’ diamond drilling program, which would represent a worthwhile investment by African Queen. For the preliminary work program, 8136 samples were collected over eleven potential targets, three of which (Eiland, Kazito and Mankombiti) proposed as Phase 1 drill targets because of strong surface mineralization and extensive soil copper, zinc, gold and lead soil anomalies.

The Eiland Target is contiguous with the Kazito Target, and the entire zone demonstrates areas of enhanced copper, zinc, and lead, with associated silver and gold. Specifically, chip samples in the report showed over 0.6 metres, the same contained 42 grams per tonne (g/t) gold and 50.5g/t silver, with 1.67% copper. The Kazito target also produced strong gold, copper and zinc response, with the report suggesting over a 0.6 metre chip sample area, results showed 1.71% copper, 12.9% zinc, 5.3g/t gold and 22.7g/t silver. These results have led the writer of the report to recommend an initial scout drilling program to test the more advanced showings at these three sites.

African Queen is in the process of undergoing preparations to begin Phase 1 of the recommended exploration program, hoping to begin as Mozambique’s rainy season tails off. The recommended Phase 1A program would include some road or trail improvement to expedite drill moves, with 2,000 metres of scout drilling recommended over 15 to 20 sites, with costs for the phase estimated to be around C$800,000. Phase 1B of the program, which is contingent on the success of the Phase 1A, should consist of 5 to 10 diamond drill holes totalling 1,000 meters, further testing mineralization indicated in the Phase 1A program, and should extend the scout drilling to other targets based on a refined geological and geophysical model for the mineralization. Estimated costs for this phase are in the region of C$280,000.

The move towards this exploration program is likely to help better asses the true potential of the King Solomon Project as results begin to come through. Initial signs are encouraging, and with AQ’s portfolio of assets spanning many of Africa’s most significant mining regions, this company for one, knows Africa is not a continent to be avoided.