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Physical Gold is the Only Asset Class with No Counterparty Risk

Douglas R. MacQuarrie, President, Asante Gold Corporation, discussed about the company’s project in Ghana, investment environment in Ghana, increased production cost etc. while interviewed by Bullion Bulletin. Excerpts…

  1) Tell us in brief about your new project in Ghana.

Asante has entered into a term sheet to form a joint venture on the Kubi Gold project with Goknet Mining Company Limited of Accra, Ghana (subject to final closing).  Kubi has had over $30 million in exploration since the mid 1980's - resulting in a recent NI43-101 mineral resource estimate by SEMS Exploration Services Ltd: Measured Resources 0.66 million tonnes@5.30g/t for 112,000 ounces; Indicated Resources 0.66 million tonnes@5.65g/t for 121,000 ounces; and Inferred Resources 0.67 million tonnes@5.31g/t for 115,000 ounces (see www.sedar.com).   The mineral resources are contained in a steeply dipping, 1 to 5 metre wide garnet bearing and silicified zone associated with a major structural break - a splay of the famous Ashanti shear zone which hosts the +60 million oz Obuasi gold ore bodies just 20 km to the north of Kubi.

2) Your joint venture with Goknet will cost you $15 million in two years. How did you conceive the idea that mine was worthy enough to invest?

Worldwide, underground gold resources grading above 5 g/t have insitu values averaging circa $50 per oz. (US$1200 god price). This measure suggests an insitu valuation for Kubi of circa US$17 million. Given its excellent infrastructure and availability of nearby milling facilities, this is a resource which, with further positive results from underground development and bulk sampling, could easily be brought into production.

3) How is the environment for investment in gold mining projects in Ghana and rest of West Africa (From regulation, labour law, royalty, taxation and so on)?

Ghana is a mining friendly country with more than 1000 years of mining history. It is currently the second largest gold producer in Africa producing 3 to 4 million oz annually.  Royalty and taxation levels are average - however the mining mentality of the Country and its elephant sized ore bodies - are second to none. Ghana and Ghanaians understand gold and mining and its benefits. This is why Asante continues to focus its operations and future in Ghana.

4) With escalating mining operation cost and tumbling gold price, how difficult is to sustain?

Physical gold is the only asset class which has no counterparty risk. It is the only real money - worked for the Egyptians and still works today.  As a commodity, it has the lowest volatility.  On this basis, the current gold price is too low and will, as it always does,  "revert to the mean" at a much higher valuation vis a vis fiat currencies such as the US$. High gold prices and the right project will return large profits to gold mining companies and their shareholders.  Low gold prices - as we have now - require the input of sustaining capital and patient shareholders.  This is the history of gold mining.

5) What is your expectation of global mine supply in 2015?

Global gold mine supply will probably drop in 2015 and for the next few years, as a result of too low gold prices squeezing margins and killing exploration for new deposits.

Douglas R. MacQuarrie- P.Geo.BC, B.Sc. Combined Honours Geology & Geophysics

A resident of Vancouver, Mr. MacQuarrie has 36 years' mineral exploration experience, the last 18 years in West Africa. He has been responsible for the discovery, acquisition and development of many significant gold deposits both in Canada and in Ghana, West Africa. As the former CEO of PMI Gold Corporation he was responsible for raising over $45 million for Ghana gold exploration and development. Mr. MacQuarrie is a co-founder of Asante Gold.

Disclaimer: Views are personal and not the views of the publisher.