On Sept. 22, Raymond James analyst Chris Thompson reported on Asanko Gold Inc.'s (AKG:NYSE.MKT; AKG:TSX) progress at its Asanko gold mine in Ghana.
"AKG is on track to meet its revised production guidance for the year (revised lower in August due to lower than expected ore volumes in the near-surface portion of the Akwasiso satellite deposit). Grade reconciliation at the main Nkran pit has been improving," wrote Thompson. He noted that "AKG confirmed it is on track to meet its revised 2017 production guidance of 205-225 koz Au (revised down from 230-240 koz on Aug. 3), which compares with our full-year 2017 production estimate of 214 koz."
Thompson detailed that "reconciliation of the grade control model [Nkran pit] has been positive relative to the reserve model, showing 9% fewer tonnes and 18% higher grades (net 7% more ounces) for the last three months of mining (Jun-Aug). For the same period, the mill feed reconciliation relative to the reserve model was essentially in-line on tonnes, with 5% lower grades (net 6% fewer ounces). We note the mill feed reconciliation vs. the reserve model has been improving, from 82% of expected ounces in June, to 100% of expected ounces in August, primarily due to the addition of a blast monitoring system in July."
"Volumetric upgrades at the mill to achieve the planned 5 Mtpa throughput are in final commissioning, with daily throughputs exceeding 13.5 ktpd (4.9 Mtpa annualized and ahead of our 11.5 ktpd estimate for 3Q17E) despite a significantly higher percentage feed of hard-rock ore (93% vs. 60% design)," Thompson highlighted.
"Confirmation drilling at Akwasiso has firmed up the Akwasiso reserve model, which is expected to deliver 20kt per month through the end of 2017 (vs. RJL expectation of 30 ktpm), before ramping up fresh ore production in 1H18," Thompson continued. "Drilling at Akwasiso also discovered a new near-surface zone of mineralization along Akwasiso's eastern edge."
Thompson touched on Dynamite Hill, summarizing that "65 grade control holes were completed at Dynamite Hill, confirming the oxide ore volumes in the resource model and as such the mine plan remains unchanged. Dynamite Hill is expected to deliver 70 ktpm starting in 1Q18 (vs. RJL expectation of 60 ktpm), and the haul road linking Dynamite Hill to Akwasiso nearing completion ahead of first ore in 4Q17E." Thompson noted that "drilling at the Akwasiso and Dynamite Hill satellite deposits has increased confidence in the reserve models and drilling at Akwasiso has discovered near-surface mineralization."
Thompson concluded that "our thesis for AKG remains constructive, though we note the need for steady performance to regain market confidence."
Raymond James has an Outperform rating for Asanko with a price target of $3.50 per share. Asanko is currently trading at $1.26.
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1) Melissa Farley compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an employee. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Disclosures from Raymond James, Asanko Gold Inc., Company Brief, Sept. 22, 2017
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