Compass Gold Corporation was formed in late 2017 through its acquisition of five gold exploration permits in Mali, located within the highly prospective Sikasso region, which contains several multi-million ounce gold projects. The TSXV-listed company is led by a group of exploration and mining veterans with over 30 years of experience working in Mali, and is tightly owned by the management team along with another 30+ shareholders who collectively control almost 80% of Compass Gold. Not long after securing the five concessions at the Sikasso Property, the company raised $6 million through a private placement and immediately launched its first exploration drilling campaign in December 2017.
Rooted in Mali’s gold sector
The leadership of Compass Gold has been involved in the Malian exploration sector since 1989, when several members of the management team and board of directors were part of the formation of IAMGOLD Corporation – including president and CEO Larry Phillips, who co-founded IAMGOLD.
Those individuals delivered hugely successful returns for IAMGOLD through the discovery of the large scale Sadiola Gold mine, which remains in operation to this day as part of a joint–venture agreement with AngloGold Ashanti.
Another key member of Compass Gold’s leadership team, Dr Madani Diallo, was the general manager of AngloGold’s Mali operations, adding another layer of experience to Compass Gold’s advantage in the West African country.
“Dr Diallo has also worked extensively with the Mali Chamber of Mines, and in that context he had access to and participated in almost all of the regional work on gold exploration in Mali,” says Phillips.
“He has had a hand in some of the largest deposits that have ever been discovered in Mali and has corporate experience through the AngloGold years too. Dr Diallo brings not only technical expertise to Compass Gold, but a good reputation with the government, technical service providers and other important subcontractors in-country.”
As the company’s head of exploration, Dr Diallo has also assembled a first-class technical team to drive the exploration campaigns at the Sikasso Property, taking two senior geologists from the Sadiola mine who had been working with the IAMGOLD-AngloGold JV for nearly 10 years.
“We’re an all–Malian exploration group. We don’t need to be sending expats into the country, so that gives us continuity, tremendous local knowledge technically and a great set of relationships that our team has built in-country over the last 20 years.”
During this period, the basic structure of Mali’s mining legislation, including its tax regime and investment benefits, has remained largely the same. This legislative stability has proven to be an attractive proposition for several high-profile investors, including B2 Gold, Resolute Mining and Hummingbird Resources, all of whom have recently commenced production at new gold mines.
These new operations contributed to a 23% increase in gold production to 60.8 tonnes in 2018, which helped Mali enter the top tier of Africa’s gold producers, behind only Ghana and South Africa last year.
Diving into exploration
After securing the Sissako exploration permits, Compass Gold wasted no time heading to the market in order to raise funds for exploration. The plan was to raise enough to fund the first year of exploration, and this was achieved through a single $6 million private placement. This allowed the company to begin its phase 1 exploration programme in December 2017.
“We were able to lay out a plan for the year with the money in hand and moved very aggressively in terms of assembling the right equipment and people. That was where having the local people and relationships played a big part,” notes Phillips.
During the campaign, Compass Gold completed nearly 4,000 metres of auger drilling covering an area of almost 1,000 km², which identified wide mineralised zones and intercepted significant gold grades in several areas. Most notably, the programme identified 19 bedrock drilling targets within the Oussada and Farabakoura permits.
“We made an extraordinary amount of progress in the first year and were able to significantly narrow down our targets for the next phase of drilling. Regardless of the amount of money available, I don’t think this could have been achieved by another group that was not on the ground and ready to go with all the contacts in place.”
Just one month after completing its phase 1 exploration programme, Compass Gold embarked upon phase 2 in December 2018, which involved a first ever bedrock drilling campaign at the Sikasso permits.
Thanks to the identification of drilling targets at Farabakoura in the phase 1 programme, the company was able to take a selective approach across the large mineralised zone throughout phase 2. Despite drilling minimal metres in the campaign, the results revealed broad mineralisation that was enhanced by several high grade intercepts.
“We had 60 metre intercepts which averaged 1.42 g/t of gold. This is the kind of broad, open pit–able, near surface grades that are exactly what we were looking for in our search for a deposit here in Mali. And, within that same initial zone, we had an intercept of 80 metres at 20.69 g/t, which is extremely high grade, especially for an open pit mine.
“The combination of broad mineralisation in the right type of geology, as well as the indication that there may be these sweetener zones, in terms of high grade structures, make it very exciting and that’s where we are focusing our next drilling programme.”
Now into phase 3 of the drilling campaign following on oversubscribed $2.6 million private placement in April 2019, Compass Gold hopes to complete 3,000 metres of RC drilling at Farabakoura before the rainy season arrives in late June, when it becomes difficult to undertake operations efficiently and safely.
The aim of this programme is to extend the current known strike length of the mineralised zone beyond 700 metres, while also targeting high grade structures to the North of the zone, Phillips reports.
The initial drilling programmes were conducted by Target Drilling SARL, an independent and well respected exploration drilling company based in Mali’s capital Bamako, with solid ties to the Australian exploration drilling industry. Since May 2019, Compass Gold has used London-listed Capital Drilling as its new partner of choice.
“Capital Drilling is set up with permanent installations in Mali and is very active in many both development and operating projects. They’ve also taken on the role of strategic partner after they made an investment into Compass Gold through our most recent private placement,” Phillips says.
Following the conclusion of the rainy season at the end of Q3, Compass Gold aims to begin resource definition and infill drilling at Farabakoura, although this is contingent on the results of the current programme and the analysis conducted in the next few months.
In addition, the company has identified more targets within the Sankarani zone, having seen extremely high, near–surface grades at the Sodala prospect, as well as in a collection of artisanal pits at Yanfolila South.
“We’d like to see those targets advanced with drilling in the fall after the rainy season and we’d like to get them to the same stage as Farabakoura.”
Looking towards the long term, Phillips believes Compass Gold could potentially replicate the path taken by his former company, IAMGOLD, in progressing from explorer to developer and finally to becoming a gold producer. However, he warns that this process takes time and comes with a series of challenges.
“One thing to note is that in 1991 there was nobody around us in Mali. Today, we are in the middle of a mining district with multiple mines in close proximity that are operated by quality producers who know us.
“So, we might find ourselves working with a partner that already has infrastructure and capital investment, which offers advantages in terms of how quickly we can bring our discoveries to account for our shareholders.
“It’s too early to tell which direction makes the most sense, but I think we can say with confidence that whatever results we are able to achieve under the ground, we’ll do the right and prudent thing on behalf of the shareholders above the ground.”