PGXPF Pelangio Exploration Inc (PK)

Steven Ralston, CFA

Pelangio increases the strike length at Pokukrom East again

Pelangio Exploration (PX.V: TSX-V and PGXPF: OTCBB) announced two important discoveries on its Manfo property in Ghana. First, the strike length of the Pokukrom East bulk tonnage mineralization gold zone has been increased to 850 meters from 660 meters. Second, a new low-grade gold zone has been confirmed through the company’s diamond core drilling program. Since it is between Nfante East and Nfante West, the zone has been dubbed Nfante Central.

During the last twelve months, Pelangio has confirmed five near surface discoveries on the Manfo property: Pokukrom East, Pokukrom West, Nfante East, Nfante West and now Nfante Central. Part of the aggressive 25,000+ meter drilling program is designed to expand the identified zones at Manfo, both along strike and at depth. Pelangio owns a 100% interest in the Manfo property, having made all the necessary option payments and work expenditures.

Pokukrom East is a geochemical gold anomaly within Pelangio’s Manfo property, which lies on the Bibiani shear in the Sefwi greenstone belt. The drill results at Pokukrom East last year confirmed a 400 meter strike length and an estimated vertical depth of 175 meters. Step-out drilling extended the strike to 660 meters earlier this year, and the most recent results confirmed the depth of 175 meters and increased the strike length to 850 meters. Since the geochemical anomaly at Pokukrom East is approximately 1,200 meters in length, further step-out and confirmatory drilling is planned.

Nfante Central is a geochemical anomaly approximately 800 meters in length. Pelangio drilled two holes, both of which confirmed bulk tonnage gold mineralization, with one hole intersecting 0.73 g/t gold over 34 meters, including 1.05 g/t over 11 meters, and the other intersecting 0.66 g/t gold over 7 meters. Step-outs 100 meters to the north and south have been drilled in order to trace the zone along strike. The assay results are pending.

During the second half of 2011, Pelangio will continue the Manfo exploration program with extensive diamond drilling. In July, a second drilling rig was added. With two rigs currently turning, management plans to add a third in the fall. Given the aggressive drilling program this year and the significant results announced, we expect a resource report on the Manfo property will be completed sometime in 2012.

We reiterate our Outperform rating based upon the expectation of continued announcements of drilling results, both at Manfo and Obuasi, throughout 2011, along with the attractive valuation level of the stock. Our target is $1.00.
 

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