Caracal Gold – Increased production at Kilimapesa in Q1 with full year targets on track

May 20, 2022 | Posted by

By Dr. Michael Green

News seems to be coming thick and fast from Caracal Gold, the gold producer with operations in East Africa. In the latest announcement, the company has shown that rapid progress has continued in the first quarter of 2022, especially at the Kilimapesa Gold and Mining Operations in Kenya.

Amongst the Q1 2022 highlights were increased production and processing output compared to Q4 2021 as Caracal targets production of 24,000 ounces of gold per annum, along with the acceleration of the final phase of the 3-phase operational plan at Kilimapesa to improve efficiencies. A big achievement was the successful commissioning of the first 5,000t pilot heap leach pad, which is seen to be a crucial milestone to increase processing capacity. Certainly, the initial recoveries are in line with the metallurgical test work results, which all bodes well for the future in realising production targets.

At the same time, the exploration drilling programme on the Kilimapesa Hill deposit continued with 871 metres of Diamond Drilling and 3,420m of Reverse Circulation drilling completed in Q1. This drilling work is aimed at increasing the overall project resource from 670,000 oz to more than 2Moz gold. Apparently, results received to date confirm strike and depth extensions as have been targeted.

Meanwhile in Tanzania, Caracal’s acquisition of the advanced Nyakafuru and Simba Gold Projects looks as though it is satisfactorily going through the regulatory approvals process.

Also, there have been big changes in the boardroom and senior management to lead not only the growth and expansion of exploration and mining operations in Kenya but also in Tanzania and elsewhere in East Africa. Hon. Ambassador Dan Kazungu and Rachel Johnston have been appointed as Non-Executive Directors, with Riaan Lombard joining the team as General Manager, Franck Bizouerne becoming Caracal’s new Group Exploration Manager, and Paul Reeves being appointed as Chief Financial Officer.

There looks as though there is going to be no let up in the pace of progress in Q2 2022, which promises us a bumper flow of news over the next six weeks. This is because the strategy for Q2 includes advancing the mining plan at Kilimapesa. The quarter will also see the advancement of the heap leach operation with the completion of the test pads and making progress towards the construction of the full-scale operation.

Additionally, later in Q2 2022 should bring the release of the RC and DD results from exploration at Kilimapesa Hill and the updated Mineral Resource Estimate for Kilimapesa. To cap it all, the board expects to see the finalising of regulatory approvals on the Tanzanian gold asset acquisitions.

Also to watch out for in Q2 2022 is news on advancing the proposed listing on the Nairobi Stock Exchange. Caracal is at an advanced stage of this process, assisted by advisers Faida in Kenya and VSA Capital. To this end, the board was able to report that Caracal had received immense support from both the Government of Kenya and the markets.

What is plainly obvious for all to see is that all the numbers are up. Gold sales in Q1 2022 were 1,226 ounces, up from 1,047 oz in Q4 2021. Tonnage from the underground mine was up. Tonnage from the opencast mine was up. Tonnage through the plant was up. The heap leach concept has been proven and the initial 5,000t pad has been expanded to a 20,000t pad.

Clear progress has been made on all fronts, with 2,000 ounces per month on schedule to be achieved in December 2022. Momentum is being clearly displayed every month and every quarter without fail. The new heap leach works and now they just have to scale that. At the same time the team seems to have also mastered the management of the tailings.

It is worth pointing out that between now and December there are likely to be some good months and some bad months gold production wise depending on which parts of the operation are being upgraded and improved. The board has made it perfectly clear that it is now not a question of if and how they will achieve 2,000 ounces per month but just a case of implementation.

2,000oz per month will require 40-50,000 tonnes of ore a month going on the heap leach from the current 20,000t. The material remains on the pad for 90 days when 60% recovery looks achievable, with some 30-40% recovery in the first 14 days. The company has enviable specialists advising on the heap leach in Technical Consultant Gordon McCrae and General Manager Riaan Lombard. They have experience of running big 500,000t heap leach operations for Anglos. The heap leach operation was not put out for a contractor and was all done in house, with a Heap Leach Foreman now in place who is able to look after this crucial operation.

Certainly, the team at Caracal has been tremendously strengthened with the arrival on the scene of Riaan Lombard, Frank Bizouerne and Paul Reeves, which speaks volumes of the potential here. They all worked for major African gold companies and have now joined the company. All these men have impressive CVs and tremendous experience but have joined Caracal as they are excited by a junior doing a lot in East African gold – not one of those juniors siting around waiting for markets to turn (not mentioning any names here). We find it hard to believe that a company with such potential can today be valued at a measly £12 million market cap – far less than some gold exploration plays.

Align Research initiated coverage on Caracal Gold in February 2022 with a Conviction Buy stance when the shares were trading at 1.15p with a target price of 2.73p. At the current price of 0.725p we are more than happy to confirm our stance.


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