Pelangio discovers high-grade gold at depth

Pelangio Exploration announced results from nine additional drill holes on the Pokukrom West on the Manfo Property in Ghana. High-grade gold mineralization continues to be encountered, specifically 5.79 grams per tonne (g/t) Au over 8 meters in hole SPDD-130 and 14.10 g/t Au over 7 meters in hole SPDD-131. Also bulk mineralization of 0.99 g/t was assayed over 22 meters in SPDD-132. The results confirm a strike length of 100 meters at Pokukrom West to a depth of 110 meters.

Interestingly, management has consistently compared Pokukrom West to the multi-million ounce, near-surface, bulk tonnage mineralization found at Ahafo and Chirano, where Newmont Mining and Kinross, respectively, operate pit mines. However, both also contain million-plus ounce high-grade deposits starting at depth, similar to the discovery in SPDD-131, whose hole length is 173 meters and where 14.1 g/t Au was assayed at depth between 131 and 138 meters. Management believes that this high-grade intersection at depth is indicative of significant high-grade gold zone, which will be investigated with further drilling.

Pelangio is a Toronto-based junior gold exploration company proceeding with a second phase drilling program in Ghana, where the company has two properties: Manfo and Obuasi. The company is proceeding with the diamond drilling program of over 10,000 meters. Currently, the program is focused on the company’s Manfo property. During the second half of 2011, drilling is expected to commence at the Obuasi property, which is located adjacent to and on strike with the Obuasi Mine, the world’s largest vein hosted gold deposit. The Obuasi Mine has produced over 30 million ounces of gold since 1897 and still holds another 29.5 million ounces in reserves and resources. Management believes that the Obuasi Mine may have a series of high grade gold ore shoots with strike lengths of 80 to 200 meters and widths of three to 20 meters that extend into the company’s property. The discovery of these high grade shoots would have dramatically positive ramifications for the stock’s valuation.

We reiterate our Outperform rating based upon the attractive valuation level of the stock and the expectation of continued announcements of drilling results, both at Manfo and Obuasi, throughout 2011. Our target remains $1.25.