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Ofoase Concession
In late 2005, PMI Gold optioned this 84 square kilometre concession from Goknet Mining Company of Accra, Ghana. It is located 20 kilometres due west of Newmont's 7 million ounce Akyem gold project and 45 kilometres northeast of AngloGold Ashanti's 30 million ounce Obuasi mine.
The concession is primarily underlain by: Tarkwaiian meta-sedimentary rocks including quartz pebble "Banket" type conglomerates, quartz (tourmaline, ilmenite, pyrite) sandstones and siltstones; Birimian meta-volcanics; and granite -- on the south and west margin of the Banso batholith.
Previous regional work conducted by the Ghana Geological Survey outlined gold anomalies in silt samples from streams draining the concession area. In 1999, a further 33 stream sediment samples were taken. Fire assay results on the 2kg samples were reported to range from 0.019 to 16.074 g/t Au, with 20 samples assaying greater than 1.0 g/t Au.
Since acquiring the Ofoase option, PMI Gold has completed 516 line kilometres of helicopter borne high resolution DIGHEM V EM/Magnetometer surveys over the entire concession, and in the southeastern corner of the concession near the highly anomalous 16 g/t silt sample - 1242 soil samples, test lines of IP/Resistivity surveys, geological mapping and trenching, and 3 short diamond drill holes totalling 271 metres.
The holes were drilled to test down dip from surface trenching where gold grades to 4.2 g/t in grab samples of Tarkwaiian conglomerate had been noted. Results from this drilling were discouraging with no further work planned on this particular target area.
Further work on the Ofoase and Bankame properties were planned for 2008 but with Golder Associates currently completing their initial assessment of the mining potential of our Kubi Gold Project and an initial resource estimate at our Obotan Gold Project, in January 2008, we entered into a letter agreement with Golden Lion Resources (Ghana) Ltd. ("Golden Lion") and Goknet Mining Company (Ghana) Limited ("Goknet"), whereby Golden Lion will purchase a 100% interest, subject to the government of Ghana's 10% free carried interest, in these concessions. Adansi is the operator and currently holds an option interest in the concessions. Mono Minerals Limited ("Mono"), the registered owner of Ofoase, has also agreed to assign all its underlying rights in the Ofoase concession to Golden Lion.
Golden Lion Resources Ltd., a company to be listed on the Australian Stock Exchange, has agreed to pay one million shares in its capital stock and a 2% NSR royalty interest, as to 50% to each of Adansi and Goknet, within 14 days of the listing of GLR on the ASX. This agreement is subject to the entering into of a Final Agreement incorporating the terms of the letter agreement; the listing of GLR on the ASX; and the requisite consent of the Minister of Lands, Forestry and Mines of Ghana. The GLR shares issued pursuant to this agreement may also be subject to an escrow period pursuant to the rules of the ASX.
The Company has the option to acquire a 60% interest in the Ofoase concession from Goknet, by paying the underlying vendor US$4,000 per quarter; paying Goknet US$10,000 per year and, if then warranted, completing a feasibility study within five years. The Company has the additional option to increase its interest to 70% by financing Goknet's share of the capital expenditures to build a mine or to 80% by purchasing all of Goknet's interest for US$1 million plus a 2% Net Smelter Return interest.
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