ASX-listed Chesser Resources has been focused on gold exploration in Senegal since 2017, when the company was offered three projects in the highly prospective Kédougou-Kéniéba Inlier (KKI) – a Northwest extension of the world-class Birimian greenstone belt – which runs along the border with Mali on the Eastern side of the West African country. Until recently, multi-million ounce gold discoveries have been confined to the Mali side of the KKI, but the Senegalese segment is now emerging as an equally rewarding stretch of terrain with the same favourable underlying geology, following a series of breakthrough discoveries.
Chesser’s flagship 100%-owned Diamba Sud project is located to the West of the regionally significant Senegal-Mali Shear Zone (SMSZ) and is in close proximity to numerous mines, including Barrick Gold’s Loulo and Gounkoto operations, plus B2Gold’s Fekola mine. The project is also directly West of the Bambadji JV, where Barrick has announced a very early stage discovery in partnership with IAMGOLD.
Since acquiring the project three years ago, Chesser has conducted 25,000 metres of auger drilling and 15,000 metres of RC drilling, while also committing to a refresh at board level in order to meet the challenges of exploration in this prolific gold region. Earlier this year, experienced investment banking professional Robert Greenslade was appointed non-executive director and more recently Mark Connelly was brought in as the company’s new chairperson.
“Mark is probably one of the most successful mining executives in West Africa,” says Chesser’s managing director and CEO Mike Brown. “He was chairman of West African Resources, who have just put their plant into operation under budget and under time schedule. He was also chairman of Toro Gold, which was sold last year to Resolute Mining.
“He has a wealth of experience on-ground in Senegal from his time with Toro Gold. Mark was also the CEO of Papillon Resources, who discovered the Fekola mine which was then sold to B2Gold. Fekola has gone on to become the mainstay producer of B2Gold, it’s an incredible deposit.”
The importance of having a chairperson with Connelly’s elite level of experience in the West African gold space is not lost on Brown, who describes how the appointment has helped Chesser on many levels, not just through his reputation and industry connections, but also down to the day-to-day running of the company, even at its current early stage of the exploration cycle.
“If we can do the right things early on to de-risk the project as we move into development cycle, Mark is the perfect person to have steering the ship,” says Brown.
Exploring for gold elephants
Prior to Chesser taking over the Diamba Sud project, there had been minimal exploration work carried out by the former owners. In fact, only a small amount of soil sampling and 10 RC drill holes had been completed, and none of those had been followed up as the thinking at the time favoured the Eastern side of the SMSZ, where all the major deposits were located.
However, Chesser’s board made a calculated decision to focus on the opposing Western side of the trend and the risk paid off as a succession of drill programmes identified multiple large high-grade gold anomalies over significant extents, with a significant discovery made last year.
“The alteration styles and the rock style that we have discovered in the drilling are very similar to Guonkoto which is 7 km due East. Also, the drilling has shown the same type of alteration assemblages present at Fekola and also some of the same rock types.
“Every phase of drilling is a new chapter for us as the project is largely undercover, so we are really drilling blind,” Brown stresses. “We have a bit of geophysics on the surface and we have auger geochemistry over the whole property, which has been really key in the discovery.”
Auger drilling has also been a critical weapon in the company’s exploration arsenal at Diamba Sud, where the terrain is more amenable to auger than soil sampling. The anomalies detected by Chesser using auger drilling have even changed the approaches of other companies in the region, with Barrick also adopting auger as an exploration tool at nearby Bambadji.
In addition, Chesser also commenced its fourth phase of drilling – a 4,000 metres RC drill campaign – in May. The programme was completed prior to the onset of the wet season in late July, with results from 12 of the 42 holes reported at the time of writing.
“We discovered a new mineralised structural orientation in the main area of our discovery, which we call Area A. Having two sets of structural orientations is normally quite favourable to deposit formation, and it’s what is seen at Loulo and Gounkoto.”
Several of the 30 remaining holes to report are from areas that Chesser hasn’t drilled before, so Brown is anticipating some exciting results to come, and the company is well cashed up to resume drilling once the wet season breaks in October, following a $6 million capital raise in July.
Cash in the bank
“The raise was critical for us because it sets us up for the next round, which we see as having two main objectives, regardless of what the results are of the remaining holes,” says Brown.
“The first of those is start infilling, gain some higher geological knowledge and do some diamond core [drilling] in the main Area A footprint. The second part is to look at this new structural trend and start extending that within the main area we’ve drilled to date and also looking for extensions to the Southwest.”
In addition, the company will also look to follow up on any attractive results from its recent drill campaign and various hits at other trends that are parallel to the Western Splay system previously identified in geophysics.
“We’ve got a splay structure running through the property that appears to be a controlling feature. Those splays are what host Fekola, Loulo and Gounkoto. We’ve got one and have a number of parallel structures to it.
“There’s a lot of work in front of us for highly prospective exploration on these parallel structures that we are only just starting to get a handle on as we slowly extend the drilling.”
Throughout its exploration programmes so far, Chesser has used two of the three established in-country drilling companies – FTE and IDC – although the open door policy with Mali and the broader region should allow for the possibility of bringing in equipment from other jurisdictions should it be required.
“The good thing about the next programme coming up in dry season is it will be a large enough programme to possibly bring new players into the area and create a more competitive environment for the drilling.”
Live by the code
Although Senegal’s mining industry is less developed than neighbouring Mali’s, recent modifications to the 2003 Mining Code in 2016 have assisted in the sector’s development and helped the country foster a reputation as a strong mining jurisdiction, supported by a stable democratic system.
“It’s a very workable code for the exploration. We haven’t got to the exploitation side of it yet but we essentially have 11 years on the area (subject to work commitments) and then we can approve renewals along the way to advance that property. Equally important is the relative low jurisdictional risk that Senegal enjoys relative to West Africa and especially Arica as a whole.
“We’re coming up to five years into that tenure, so we’ve still got quite a bit of runway to push this forward. These projects take time as wet seasons can get in the way, and you need to raise money, so you need those longer time frames,” explains Brown.
When quizzed about Chesser’s long-term ambitions at the Diamba Sud project, Brown reveals that the firm has no pre-set as to how the project will be developed, only that the board’s number one priority is to advance it in a way that will maximise shareholder value.
“Whether that is taking it into production, selling to a major or getting a major involved through an earn-in/JV, we’ll essentially be trying to develop it far enough so we can maximise the potential value at the given market at a given time.
“Having an early stage discovery within a strategic operational belt for Barrick, who may have a discovery on their neighbouring property, is potentially helpful in creation of value. At this stage it’s fair to say that our current market value is severely lagging what we see as the potential endowment value- although most CEOs will claim this!”
The next major company milestone will be the compiling of a resource estimate for Diamba Sud, which Brown believes can be achieved by 2021, barring any major hiccoughs. At present, the company has located shallow high-grade gold in flat terrain – favourable conditions for quickly advancing a resource.
Finally, Chesser’s boss highlights how now is a great time to be invested in gold as the price continues to climb during a tumultuous 2020, subsequently making more capital available for juniors to advance exploration.
“The operations in this part of the world are generally relatively cheap on an AISC basis, which sets up West Africa as the perfect place for developing large scale deposits. Hopefully, the stars stay aligned and we can push through a resource,” concludes Brown.