PGXPF Pelangio Exploration Inc (PK)

Steven Ralston, CFA

Pelangio now owns 100% interest in Obuasi property

Pelangio Exploration (PX.V: TSX-V and PGXPF: OTCBB) announced that the final option payment of $750,000 was made on the Obuasi Property so that subject to Ghana’s legislated 10% carried interest upon commencement of mining operations, Pelangio now has a 100% interest in Obuasi property in Ghana.

In addition, Pelangio has entered into an agreement to acquire a 100% interest in the Akroma property, a 160 square kilometer parcel in the Brong Ahafo region of Ghana. The Akroma property is a very early stage exploration property with a reconnaissance license. Initial prospecting and geochemical and geophysical surveys have indicated the potential for significant exploration discoveries. The property is not expected to be drill-ready for at least a year.

During 2011, Pelangio continues the Manfo exploration program with extensive trenching, pitting, auger drilling, line cutting, prospecting and soil sampling. During 2010, Pelangio completed a first phase 2,379 meter diamond drilling program (16 holes) at Manfo and began a 10,000 meter second phase program, which has been since expanded to 25,000 meters. The high-grade near-surface mineralization was assayed from Pokukrom West in 2010 and high-grade gold mineralization continues to be encountered in 2011. The drill results at Pokukrom East in 2011 increased the strike length of low-grade gold mineralization to 660 meters versus prior indications of 400 meters; the estimated vertical depth continues to be 175 meters. The results at Nfante West in 2010 indicated the potential for bulk tonnage gold mineralization, and we await 2011 drilling results. Also, an initial non-resource National Instrument 43-101 report on the Manfo Property should be completed in 2011with the aid of SRK Consulting.

During 2010, Pelangio identified evaluated and prepared targets for the second phase diamond drilling program on Kyereboso No. 2, Kyereboso No. 3 and Meduma concessions on the Obuasi property. Exploration work included line cutting, prospecting pitting, geologic mapping, trenching, auger drilling and sampling of soils, outcrops and stream sediments. Geophysical and geochemical surveys on Ayaase and Bura/Tikal on the Kyereboso No. 2 concession suggest the continuation of the main Obuasi Mine trend. During the fourth quarter of 2010, Pelangio identified 37 prospective structural targets, 18 of which are on the Obuasi Mine trend with five priority targets at Ayaase, Bura, Tikal, Big Vein and Mount Kate South. The initial diamond drill program of approximately 5,000 meters began in March 2011. A follow-on drill program is planned for the second half of 2011.

So far in 2011, Pelangio has announced that $5,977,655 has been received from the exercise of warrants and compensation options. In addition, the company received $3,653,271 in the first quarter from a private placement. As of April 14th, cash on hand was approximately $11.6 million.
 
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 is $1.00.
 

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