Many mining companies rely on high tech data and analysis from surveys and exploration to prove that there is gold in the ground. But Tembo Gold Corp has a much more traditional method – it relies on the years of traditional artisanal mines that already exist to prove there is gold on its property.
Tembo Gold Corp. (TSX-V: TEM) is a Canadian-based gold exploration company that owns gold exploration properties in Tanzania. Tanzania is located on Africa's east coast and the Tembo property is located in the northwest of the country, in the Sukumaland Greenstone Belt, adjacent to Barrick Gold's Bulyanhulu project.
Recently, we spoke to Tembo Gold CEO David Scott, who joined Tembo Gold in 2011. Mr. Scott has 30 years of industry experience and has worked as a Technical Services Manager for Barrick Gold’s subsidiary Kahama Mining Corporation. At the end of 2003, he left Barrick to become an independent consultant, mainly working in gold. He worked around Africa, advising junior explorers on gold projects and started managing companies who wanted to get started in Tanzania.
With his experience in mining and exploring Tanzania, as well his many successes with other companies he's worked with, he was a natural fit to work with Tembo. At the time, the fledgling company was just starting up, having grown out of a restructuring from a previous company called Lakota.
Mr. Scott was already familiar with the area where Tembo's property was: "In 1997, I was looking for joint venture opportunities for Avgold a South African gold mining group and walked on this ground then. As it turned out, we didn't conclude a JV agreement, but this was for non-technical reasons. In 1997 when visiting Bulyanhulu mine for the same group, I said 'I would love to work on this mine, it's a geologist's dream'… Tembo has the entire geological package of Bulyanhulu… There are so many targets – at least 25 really strong structures."
One facet of the Lake Victoria goldfield exploration that few people consider is the transported soil cover that masks gold-bearing geology. "There's up to 10 meters of cover," said Mr. Scott, "so conventional geological methods and particularly soil geochemistry don't work as well." But what makes all the difference on Tembo is the analysis of the presence and extent of artisanal miners. These small-scale local miners have done a lot of the preliminary work – without relying on the latest technological analysis – and by initial chance discovery of quartz float they have found gold. Mr. Scott said, "So artisanal mining is valuable because it has shown that there's gold there. Even an uninformed person would say that if an artisanal mine is there, there must be gold there."
Early in the project, initial surveys led the Tembo Gold team to believe that they had 3.5 kilometers of mining. But since then, additional surveys have revealed more good news: "A year ago we were talking about having about 3.5 kilometers of artisanal workings on the property," said Mr. Scott, "but from a LIDAR survey, which produces a very high res colour orthophoto and digital elevation model, we now know we have 11 kilometers."
Then Mr. Scott told us about the survey and mapping work being done on the property: "Since August of 2011, we've had people in the field and we've been doing our own reconnaissance mapping. We took the old database and reprocessed and reinterpreted the magnetic survey in conjunction with the soil analysis. We took the results of the previous survey campaign of what we now know to be 11 kilometers of known mineralization, and we put it all together and looked at the artisanal mining and decided where our best targets are. There are 'umpteen' other structures that could be mineralized, too; but we've found our targets for the next 12 months."
With targets identified, thanks to a combination of high-tech and traditional artisanal miners, Tembo is ready to move forward with their drilling program. Mr. Scott explained: "We will be doing diamond drilling of 30,000 meters and reverse circulation drilling of 60,000m over the year on those artisanal mining areas. If we find we're hitting gold down to 200 meters, we'll keep going. Hopefully by the end of the year, we'll have a decent resource." Drilling has already begun with 3,500 meters completed so far.
The company's drill program is mostly funded. They had previously raised $5 million, "which got us out into the field and started on exploration," said Mr. Scott. Then they ramped up marketing in September to raise more money: "We started our marketing in September of 2011. We raised $13.5 million, which closed just a couple of weeks ago. So we have $13.5 million in the kitty, which should cover most of our drill program for the year. We expect to go back to the market in the next couple of months to get another round of funding."
Although this project is promising, it's not without its challenge: Timing is an issue. "From a technical point of view, turnaround time is critical", he said when talking about the time it takes to explore, then drill, then analyze results. "We want to be able to make decisions quickly." Along with that timing challenge, is a related one – the rainy season. "The rainy season comes around March, April, and May. We don't think this will stop us from working but if there is a flood we might struggle to move the heavy equipment. But that's pretty straightforward to deal with," explained Mr. Scott.
With the artisanal miners on-site, some might be concerned that they could pose a problem for future expansion, but Mr. Scott doesn't think so. "We have a good relationship with those miners; we don't anticipate marching people off the grounds. We'll work with these miners and develop a solution with them so that one day when we develop a mine where they are mining we'll be able to work it out with them." One page on Tembo Gold's site is dedicated to community development and the company's close-knit relationship with these artisanal miners.
Just recently, on March 2nd, the company announced the results of some of its samples from artisanal workings. We took large size chip samples from several artisanal shafts and analysis has shown grades up to 58.47 grams per ton gold.
The stock price, which has a 52-week range of $1.20 to $2.10, was up at the time of this writing to $2.08, just two cents off of its 52-week high.
Mr. Scott is confident that this is just the beginning for Tembo. He credits the exploration project's proximity to other mines, the great team of people, the right project, a clear strategy and the funded treasury as being great reasons for investors to take a closer look at Tembo.
In other mines, previous mining success is a big factor that investors pay attention to. With Tembo and their artisanal miners, current mining success will certainly capture the attention of investors.
Tembo Gold Corporation
67 Yonge Street, Toronto, Ontario, Canada, M5E 1J8
+1 (416) 907 4148