Asanko Gold scores at Akwasiso and boosts production guidance
News that Asanko Gold has increased production guidance and secured positive drill results from a new exploration site at its Ghana mine project spurred positive comments from four analysts following the company.
Asanko Gold Inc.'s (AKG:NYSE.MKT; AKG:TSX) H2/16 production increased from 90,000–100,000 ounces to 100,000–105,000 ounces, the company announced in a Sept. 15 press release. Asanko also reported that its mills were operating "at 10% over design capacity at 3.3Mtpa," and that gold recoveries were "exceeding plan."
Following that, on Sept. 19 Asanko announced what it called "highly encouraging results from new near-mine exploration target, Akwasiso." The company drilled 81 new holes, uncovering "visible gold intercepts and extensive mineralized intersections of similar style to main Nkran pit."
In a Sept. 19 research report, Raymond James analyst Chris Thompson noted "the Akwasiso target is well positioned to provide supplemental ore to the plant during 2017/18. . .with widths in excess of 10m with significant grades, the initial results from Akwasiso are encouraging and reflect the Nkran shear corridor's exploration potential."
Nana Sangmuah of Clarus Securities, in a Sept. 20 research report, stated, "We believe that the near-mine exploration success coupled with throughput expansion should enable AKG to deliver a significant production boost in 2017 and 2018 before ore from the Esaase is accessed." Esaase represents Phase 2 of the Asanko Gold Mine's development.
Commenting on the news of increased production guidance, analyst Jeff Killeen of CIBC, in a Sept. 15 research report, commented that, "Positively, milled grades for July and August were 2.1 g/t and 2.0 g/t, respectively, representing a significant step up on the Q2 average grade of 1.69 g/t. . .we expect that the increase in grades will be of the most significance to the market today and will help to alleviate any overhang on the stock in relation to the lower grades recorded by AKG in Q2."
Geordie Mark of Haywood Securities was also positive on the guidance announcements. "We deem these new data and H2/16 production projections as highly positive as mining and milling operations appear to be exceeding forecast levels," he wrote in a Sept. 15 research report. "We believe that these operational details bode well for future operational performance."
The analyst also stated that Haywood's investment thesis for Asanko "is built on our belief that the company holds a critical mass of gold resources and reserves at Esaase and Obotan that can be developed to provide Asanko Gold with growth capacity and processing optimality to start initial production on a low cost basis to weather potential commodity price volatility."
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Source: The Gold Report (9/22/16)