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Wednesday March 07, 2012
Keegan Resources: Gold in Ghana
by Brien Lundin, editor Gold Newsletter Keegan Resources (KGN) continues to expand the potential of its flagship Esaase gold project in southwest Ghana. It is doing so in spite of the fact that the project is already massive (over 5.19 million ounces of gold in all categories) and well-advanced (the company plans to produce a Definitive Feasibility Study on Esaase by the end of 2012). Separately, Keegan announced results from initial drilling at the Bilpraw Zone, a key target within the Asuowin concession that the company recently added to Esaase. This area of historic underground mining is located four kilometers south of the project’s Main Zone. The company is presently drawing up its 2012 drilling game plan, which will seek to expand the known resources at Esaase. In management news, Keegan Director Shawn Wallace has replaced Maurice Tagami as the company’s CEO. In his acceptance of his appointment, Mr. Wallace noted that the company has over $200 million in its treasury and that one of his key goals is to maximize shareholder value via strategic use of this strong cash position. Wallace helped get Keegan going from the start and has been integral to the company’s success at every step along the way. I believe he will deliver results for shareholders during this critical phase in Esaase’s development. I expect the company to continue to generate positive drilling results in 2012, but the focus will clearly be on cleaning up the project’s economics in advance of the DFS and a possible sale (or production decision). Given the growing resources, the likelihood of better economics in the feasibility study and the rising gold price, I see little downside risk in Keegan at this point. Looking at the upside, I see steady growth back to previous levels likely, plus the distinct possibility of a takeover offer. Considering all this, Keegan is a buy. Learn more about this financial newsletter at Brien Lundin's Gold Newsletter. Related articles: 
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