Trading in Cardinal Resources (ASX:CDV) shares was halted last week as the company was getting ready to publish a maiden resource estimate at its Namdini gold project in Ghana. The total resources came in at 4.1 million ounces at an average grade of 1.2 g/t gold (using a cutoff grade of 0.4 g/t), with approximately 95% of the tonnage situated in the inferred resource category.
What’s really interesting here is the fact that if you’d use a higher cutoff grade of 0.6 g/t gold, the average grade increases to 1.4 g/t gold, with a total resource of 3.6 million ounces. This higher cutoff grade might actually be necessary as the preliminary metallurgical test work at Namdini was a little bit disappointing (compared to the preliminary results last year).
The current recovery rate (using a conventional mill-flotation-concentrate regrind-CIL procedure) is just 75-76% and even though it’s possible to boost these recoveries to 86-87% by roasting the sulphides, we think this might not be the most economical solution as the 14-15% increase in recovery rate might not warrant the additional capital expenditures. Of course, Cardinal still has a lot of work to do and is planning an extensive metallurgical test program, so we hope the company will be able to boost the recovery rates towards the 80% level.
This maiden resource estimate is better than we expected when we first identified the company in August last year (yes, that’s a year before Canadian brokerage outfit Haywood Securities initiated coverage on Cardinal Resources), and a 3.6 million ounce resource estimate (using a recovery rate of 75%, we feel the cutoff grade of 0.4 g/t might be too optimistic) is an excellent first step to unlock more value at Namdini.