Gold Mining Industry In Tanzania :Tipping Point For Tanzania’s Gold Industry

Wed, Apr 4, 2012

Tanzania Gold Industry

Tanzania’s gold industry is at a major tipping point.Tanzania’s Gold Industry

The USGS estimates Tanzania has 48 million ounces of gold.

The country produces 1.5 million ounces of gold.

Tanzania News says the country has “huge mineral reserves, most of them are still untapped.”

Tipping Point for Tanzania Gold

And the combination of high gold prices, a relatively underexplored gold-producing region, and a hot new, cashed-up and well-positioned exploration company is on the verge of sparking a renewed gold rush in Tanzania.

The Tanzania gold story starts with one of the largest gold mines in the world, the Bulyanhulu Mine.

Bulyanhulu (pronounced: bull-yan-hoo-loo) is owned and operated by African Barrick (LSE:ABG). The mine is one of the highest grade mines in Tanzania and is hosted in greenstones within the Lake Victoria Greenstone Belt. The deposit is described as steeply dipping reefs with widths typically in the two to five meter range.

It has an 11 million ounce reserve (after having been mined since 2001 – more than 20 million ounces in all) and produced 260,000 oz. in 2010 with an average head grade of 9.2 g/t.

This highly profitable mine cost only $280 million to build and is producing gold at $539 an oz. cash costs.

The Bulyanhulu mine is similar in style, grade and width to some of the other mines in the Lake Victoria region and possibly to some of the other archean greenstone belt deposits in Sub-Saharan Africa.

tanzania gold mining industry

Thomas Brigandi points out in African Barrick Finds High Grade Gold in Greenstone Belts, “Bulyanhulu represents the bulk of African Barrick value. Compared to African Barrick’s other mines, North Mara (also greenstone), Tulawaka (greenstone) and Buzwagi (porphyry), Bulyanhulu is larger and of higher grade [see chart below]. Beyond what has been discovered, African Barrick is also focused on the untapped exploration potential available in the region.”

The greenstone belt that lies southeast of Lake Victoria. It potentially extends northwest into the Democratic Republic of Congo. And it has provided confirmed discoveries of more than 57 million ounces of gold to date.

New companies are also joining the effort to discover and extract more gold from this prolific region.

The Tanzania “Tipping Point”

One of those companies is Tembo Gold (TSX-V:TEM).

Tembo (Swahili for Elephant) recently listed in February 2012. It has a 125km2 contiguous area consisting of 80km2 of active licenses and 45km2 of pending applications located adjacent to African Barrick’s 20Moz Bulyanhulu Mine in the prolific Lake Victoria Greenstone belt.

Currently there are over 2,000 artisanal miners on Tembo’s property operating over 100 shafts with limited capital and technology, and are mining grades of 9 to 20 g/t according to Tembo Gold.

In the past 12 months, Tembo has successfully raised over $15 million privately and through their listing financing in order to recapitalize the company and fund their 2012 exploration program.

Historic drilling on the property has demonstrated encouraging results including 9.8 g/t over 3.4 m, 10.25 g/t over 3.5 m, and 36.0 g/t over 1.0 m according to the company website.

These historic drill results, combined with the extensive underground artisanal workings and airborne geophysics have identified several high priority targets to be tested with their 87,000m drill program.

The company’s management team and founders, who together own 30% of the issued and outstanding common shares, are composed of successful professionals with extensive and firsthand local experience.  CEO David Scott has 32 years experience including 13 in Tanzania of which part of was as the technical services manager at the neighboring Bulyahulu mine.

Tembo’s Chairman, Dave Anthony was the former COO of African Barrick and has 30 years experience with 10 in Tanzania.

Tembo has a strong, well financed management team working a prime gold region should bear strong shareholder gains in today’s Gold Environment.

Keep an eye on Tembo. If the company has any success in its upcoming 87,000 meter drill program, you can bet there’s going to be many, many more companies to follow.

Regards,

 

Michael Cooper

Michael Cooper is the Founder and CEO of Cooper Financial Research based on Bay Street in Toronto. He has researched the gold markets extensively and has become a leader in research coverage in Africa. His past research can be found at www.cfmonitor.com.

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