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Baobab Resources reports more significant drill results from Tete project

Published: 17:55 11 Jun 2010 AEST

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Baobab Resources (LON:BAO) has intersected significant widths of magnetite-ilmenite mineralisation at its on-going scout drilling campaign at the Tete iron-vanadium-titanium project in Mozambique. The company released the latest drill results from three holes  - TDH0024, 26 and 27, each with multiple significant intercepts with widths ranging from 12m to 26.5m, grades reached up to 62.8% Fe and 0.69% V2O5.

"The drilling campaign at Chimbala is progressing well and our technical team is beginning to build a robust geological framework for the prospect”, Baobab MD Ben James commented. “We are greatly encouraged by the latest round of results which have returned improved mass recoveries of up to 40%." 

The company began the latest phase of drilling on 10 March 2010, and nineteen diamond drill holes have been completed to date for an aggregate total of 3,963m. In terms of the geology being encountered Baobab said: “The drilling has intersected stacked packages of both cumulate and intrusive style magnetite-ilmenite mineralisation intercalated with gabbroic and anorthositic country rock.”

From the latest drilling results several significant intercepts stand-out. The highlight was TDH0027, which contained ten significant intercepts, totalling 102.5m. In the holes two stand-out intercepts, Baobab cut 14.5m grading 60.9% Fe and 0.68% V2O5 from a depth of 120.5m, with a 29.4% mass recovery, and deeper in the hole, from 191m, the company intercepted 26.5m at 61.2% Fe and 0.68% V2O5 with a 26.3% mass recovery.

The deeper intercept also included an 8m interval, grading 61.3% Fe, 0,67% V2O5, with a mass recovery of 40.2%.

In TDH0024, there were two significant intercepts totalling 24m, including 12m grading 60.6% Fe and 0.66% V2O5. The intercept was taken from a depth of 77m and it also had a mass recovery of 30.5%. In TDH0026, Baobab reported three significant intercepts totalling 28.5m, including 13.0m at 62.8% Fe and 0.69% V2O5 from 72m, and a mass recovery 34.5%.

TDH0024 is the easternmost hole in the principal traverse, TDH0026 and TDH0027 tested a discrete aeromagnetic target approximately 1km to the northeast.

Following the results, London-based stockbroker Astaire Securities issued a positive note. The broker told investors that the drill results give it increased confidence in the Tete iron ore project, highlighting that concentrate grades continue to exceed 60% Fe.

Astaire also emphasised the economic significance of the mass recovery encountered so far,  “the mass recovery numbers are generally very encouraging, with a number of significant widths returning very good values. We believe that if an average mass recovery of c.25% can be achieved across the project, then it would be comfortably economic at iron prices 30% below where they are today.”

Furthermore, the stockbroker noted that forthcoming metallurgical studies “should find ways of improving mass recovery, which would then be used in the design of a mineral processing plant”.

Baobab said that assay results from the next batch of holes are expected to be available next month.

The Tete project, covering an area of 632 square kilometres, is located immediately north of the provincial capital of Tete and shares licence boundaries with Vale and Riversdale's mega coal projects. The project is strategically located to access abundant, low tariff hydro-electric power from existing and developing schemes on the Zambezi River. The ports of Beira and Nacala are being refurbished, as are the rail corridors through to Tete.

The project contains two areas of magnetite-ilmenite mineralisation: the Singore area to the south; and the Massamba Group trend in the north. The 8 kilometre long Massamba Group trend is composed of a series of five prospects - Chitongue Grande, Pequeno, Caangua, Chimbala and South Zone - that have experienced little or no historical exploration.

Approximately 12,000 metres of combined diamond and reverse circulation (RC) drilling has been planned to assess the Chimbala and South zone prospects of the Massamba Group trend. The purpose of the campaign is to improve confidence in the 400 to 700 million tonnes exploration target and to clarify geological domains for continued metallurgical test work.

Three diamond drill holes were completed at the South Zone prospect in 2009 prior to the onset of the wet season, all of which intersected significant magnetite-ilmenite mineralisation, as announced in February. The scout drilling programme resumed in March this year starting at the Chimbala prospect due to late rains restricting access in the South Zone area.

The Chimbala prospect comprises the central portion of the Massamba Group trend and is underlain by a 3 kilometre long zone of strong aeromagnetic response. Limited historical exploration has taken place in the prospect area.

Previously, nine holes had been completed at the Chimbala prospect. Analytical results from the first four drill holes have returned significant mineralised intercepts recording concentrate grades, with highlights including:  17.5 metres at 65.2 percent iron and 0.76% vanadium oxide from 8.0 metres with a 15.2% mass recovery from hole TDH0020; 12.0 metres at 60.7% Fe and 0.65% V2O5 from 165.5 metres with 24.9% mass recovery from hole TDH0021; 18.0 metres at 63.7% Fe and 0.7% V2O5 from surface with a 19.2% mass recovery from hole TDH0022; and 33.0 metres at 61.2% Fe and 0.7% V2O5 from 61.5 metres at 21.3% mass recovery from hole TDH0023.

Baobab has entered into a strategic partnership with International Finance Corporation, the commercial arm of the World Bank, at both the corporate and project equity levels. The IFC participated in a placing to become Baobab’s second largest single shareholder with 6.92 percent in November 2008. Later in January 2009, the IFC acquired a 15 percent stake in the company’s Tete magnetite-ilmenite project for US$400,000.

Under the terms of the joint venture, the IFC is committed to annual pro-rata contributions to the development of the Tete project. As the operator and major stakeholder in the project, Baobab is required to fund the remaining portion of the exploration expenditures.

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