An independent technical report on LSE-listed Contango Holdings' Garalo project, in Mali, has determined a potential gold resource of 1.8-million ounces, at an average grade of 1 g/t.

This is about 460% higher than a previous estimate, Contango reported on December 15.

The technical report was compiled by international mineral exploration consultancy Birima Gold Resources Consulting.

“Garalo was acquired with the intention of bringing into production a small but highly profitable gold mine. The publication of this report, which included both reinterpretation of historic data as well as information not previously incorporated in the historic 320 000 oz figure, has made it clear that Garalo is significantly larger than first envisaged, with the potential to be a sizeable, multimillion-ounce standalone mine, rivalling some of our neighbours in this world-class gold producing region.
 
“The resource quantum now being contemplated at Garalo suggest the company should bypass the previously reported initial 10 000 oz/y development scenario, instead bringing a larger +30 000oz/y heap leach operation on stream from the shallow oxides and providing Contango cash flow from Garalo in late 2021.

"With an estimated profitability of about $1 000/oz at current gold prices, this would enable not only capital returns to shareholders potentially as early as 2022, but also fund a comprehensive exploration campaign focussed on realising the asset’s multimillion-ounce potential," said Contango executive director Carl Esprey.
 
Contango is continuing detailed core re-logging and field geological and structural mapping at Garalo and will soon initiate further tighter line-spacing airborne and radiometric surveys, ahead of fast-tracking a confirmatory drilling programme before progressing with the development.
 
“This is an exceptionally exciting development for Contango, and we are committed to identifying the best development route through which to maximise the value of this asset for all stakeholders, combining the desire for early cash flow with discovering the full potential Garalo offers.

"Following our recent capital raise, the company is in a solid financial position to react to this development at Garalo while also advancing development of our Lubu coal project, in Zimbabwe, where we expect to commence mine pit construction in January," said Esprey.