SOURCE: Vangold Resources Ltd.

October 29, 2007 18:46 ET

Vangold Awarded Block 3A in Kenya

VANCOUVER, BC--(Marketwire - October 29, 2007) - Vangold Resources Ltd. (TSX-V: VAN) ("Vangold") has signed a production sharing o (PSC) for Block 3A in the Anza Graben in the Eastern Province of Kenya, covering 12,192.12 sq kms.

At a signing ceremony in Nairobi on October 16, 2007 the Honourable Minister of Energy of the Republic of Kenya, Kiraitu Murungi, and the President and CEO of Vangold, Dal Brynelsen executed the PSC on Block 3A. Mr. Brynelsen said, "Vangold has chosen Block 3A on technical merit based on a study conducted by Vangold's technical team over the last year. This study found five prospects and one lead on Block 3A. The next phase will be to reprocess part of the seismic data with new Canadian technology to establish the detailed geometry of the prospects and to come up with the appropriate in-fill seismic program."

Under the terms of the PSC, in the Initial Contract Period of three years, in addition to a signing bonus of US$75,000,00 which has been paid, Vangold will expend a minimum of US$3,000,000 to conduct a technical study and plan to acquire 1000-line kilometer 2D seismic and 50 sq km 3D seismic. Provided these results are positive, during the third year of the Initial Exploration Period, Vangold will drill one exploratory well to a minimum total vertical depth of 3,000 meters with a minimum expenditure of US$6,000,000. A finder's fee of 200,000 common shares of Vangold will be paid subject to regulatory approval.

In 2006, Chinese National Oil Company (CNOOC Limited) announced that its subsidiary CNOOC Africa Limited signed PSCs for six blocks located in three basins in Kenya including the Anza Graben (Block 9) adjacent and to the north of Vangold's Block 3A. In total, the CNOOC acquired a total area of 115,343 sq kms. On October 4, 2007, Lundin Kenya B.V., a wholly owned subsidiary of Lundin Petroleum signed a PSC for Block 10A which covers an area on 14,748 sq kms also in the Anza basin and adjacent to CNOOC's Block 9. A news release dated October 5, 2007 stated: "Past exploration efforts dating back to the late 1980's have proven the existence of excellent quality, oil-prone source rocks, good quality sandstone reservoirs, and a multitude of structural traps which remain undrilled." Vangold intends to share technical resources and data with CNOOC and Lundin Petroleum.

Prospectivity of Block 3A acreage include Tertiary, Cretaceous and Jurassic petroleum plays which are equivalent to the plays found in Lamu, Anza and Mochesa basins. The three basins of Lamu, Anza and Mochesa converge in Block 3 acreage. Good reservoir development has been confirmed in Bahati-1, Anza-1 and Endela-1 exploratory wells drilled in Block 3A. Potential lacustrine and marine hydrocarbons source rocks of Upper Cretaceous age have been confirmed from these exploratory wells data in Anza Graben. Hydrocarbons trapping mechanism includes tilted fault blocks, faulted anticlinal closures and stratigrahic traps.

In the northeastern part of the Block 3A is the southwestern extension of the Mochesa basin into the block 3 acreage. Mochesa basin is a sub-basin within the Mandera-Lugh basin and has a frontier play with poor seismic coverage. Mochesa high is the basin's structural culmination that extends in to Block 3A and could be interpreted as an accommodation zone. Mochesa basin play is conceptualized as marine Jurassic carbonates and clastics with the Upper Cretaceous shales providing the effective seals across normal faults and tilted fault blocks closures. Mochesa basin prospect [Mocheas high] in Block 3 has limited data with no well control. Reconstruction of Madagascar with East Africa depicts Mochesa basin as equivalent to Majunga Basin in Madagascar where rich [TOC 11-19%] source rocks of Jurassic age have been encountered in the exploratory wells. In Majunga basin play, Lower Cretaceous sandstones units form the potential reservoirs.

The south-eastern continuation of the Anza Graben forms part of the Block 3A acreage to the northwest. Good hydrocarbon shows have been encountered within the Cretaceous sections in the wells Ndovu, Hothori and Anza drilled in southeast part of the Anza Graben. Potential lacustrine and marine hydrocarbons source rocks of Upper Cretaceous age have been confirmed in these exploratory wells. The northwest part of Block 3A therefore, occupies the south-eastern extension of the Anza Graben, where potential evaporite seals and lacustrine/estuarine hydrocarbons source rocks of Upper Cretaceous age may exist. Traces of residual oil or Gilsonite noted in the Upper Cretaceous sandstones in Anza-1 well further emphasizes the existence of Cretaceous source rocks in Block 3A.

Lower Tertiary good reservoir quality [10-19% porosity] fluvial-lacustrine sandstones units exist in southern Anza Graben and extend to Block 3A acreage as encountered in Endela-1, Anza-1 and Hothori-1 wells. The Tertiary play associated with Lamu basin in Block 3B has good reservoir facies in Lower Tertiary as encountered in Bahati and Wal Merer exploratory wells. The trapping is mainly structural, associated with a typical rift structural development setting. Source rocks include the Lower Tertiary Walu Shales encountered in Wal Merer [268m]. In Walu-1 well in Lamu basin, the thickness of Walu shales is approximately 2,000m.

The gravity anomalies in Block 3A range from -20 to -50 mGals around Meri and northeast of Habaswein -80mGals. The gravity data strongly suggest that the Anza Graben continues to Block 3 acreage to the northwest. Cross sections of bouguer gravity along latitudes 0o 00, 0o30N and 1o 00N in Block 3A reveal sharp subsurface gravity variations indicating heterogeneity in physical features such as the thickness of sediments, basement depth and direction of shallowing and deepening. The bouguer gravity values ranging from -30 to -40 mGal, indicates the presence of subsurface of low-density sedimentary rocks. The increasing gravity negativity from Habasweni to Meri areas indicates the down-warping of the upper mantle in that direction and thickening of the sedimentary sections. Contouring the top of the basement shows the deepening from west [0-10km] towards the centre of graben structures in Block 3A along the west-east 0o 30N profile. A steep rise of the basement to the east of Bahati well location becomes progressively gentler and deeper towards Meri depression. The variations in basement depths suggests existence of series of approximately North-South oriented intra-basin block faults within the Block 3A acreage that have affected both basement and upper mantle. A basement gravity high separates the Endela and Meri depressions and Mochesa basement high separates the Meri depression [part of Lamu basin] from the southern margin of the Anza Graben. The Mochesa high is probably an accommodation zone with a Cretaceous-Jurassic structural culmination. The early [Karroo-Jurassic] generation of the hydrocarbons in Mochesa basin may have been trapped in the Mochesa high. Endela and Meri basin depressions have relatively thick sediments raging from Jurrasic-Cretaceous to Quaternary age Seismic data in Southern Anza Graben also confirms the continuation of the Anza Graben extensional rift structural setting in to Block 3A. However, the seismic is too widely spaced to permit detailed mapping of structural closure units. The available seismic data can only manage to image the large tilted fault blocks but with the combination of the gravity data additional high standing blocks can possibly be delineated.


Hydrocarbons trapping mechanism in Block 3 includes tilted fault blocks, faulted anticlinal closures and stratigrahic traps. Faulting in Block 3 was initiated in the Mesozoic and has intermittently been activated through Tertiary with structures being filled with chiefly fluvial-lacustrine and deltaic sediments. Evidence of Marine incursion into the southern margin of the Anza Graben including Block 3A acreage from Lamu Embayment include the presence of Upper Cretaceous-Tertiary deep marine facies encountered in the wells Anza-1, Duma-1 and Ndovu-1 drilled in Blocks 3A and 9 respectively.


Reservoirs in the Lower Tertiary section are expected to be porous sandstones equivalent the thick Tertiary sands penetrated in the Anza-1 well. The Anza-1 Well reservoir facies has porosities from 12-20%. In Sudan continental rift basins, Cretaceous reservoirs with porosities ranging from 20-30% and permeability 500-5,000 millidarcies have been encountered in some wells. Prospective sandstone reservoirs having similar porosities are expected to be present in the Lower Tertiary and Cretaceous sections in Block 3A. Analogies may be drawn to the Gulf of Suez, where the rift in-fill sediments include porous reservoir quality sandstones, both beneath and within the evaporite sequence such as found in the El Morgan field.

Jurassic Carbonate and deeper Karroo sandstones sections could also provide additional reservoir objectives when found on highstanding tilted fault blocks in Mochesa High. Several horizons of Jurassic oolitic grainstones with moldic porosity have been mapped in southern margin of the Anza Graben and Mandera-Lugh Basin. Similar porous Jurassic carbonates should provide an attractive exploration objective where located in the subsurface such as interpreted on the seismic line K75-6 in Block 3A.

Source Rocks

Geological conceptual model recognizes that lacustrine oil prone source rocks are likely to have been deposited in the deeper part of the Anza basin extending in to Block 3A. Rich, organic shales are expected to have accumulated in the lakes and shallow marine estuary environments in which evaporites were probably deposited at later stages. It is interesting to note that there were no significant source rocks encountered in Anza-1 and Bahati-1 exploratory wells. The reason being the two wells were drilled on a Cretaceous high along the margin of the restricted Anza rift Graben located in the northwest area of block 3A. The geologic conceptual model suggests oil prone source rocks concentrate in the deeper basin and would not be expected to occur along the basin margin where the two wells were drilled. Endela -1 well was drilled closer to the actual basin depression but unfortunately the well was terminated at 2,800m before reaching the prospective Cretaceous section.


Bahati prospect in Block 3A was matured for drilling to test the Lower Cretaceous fluvial-lacustrine sandstones sourced by intra depositional lacustrine claystones. The cap rock being the shales of Upper Cretaceous. The Bahati-1 well penetrated an interval in the Lower Tertiary of fair source rocks at 2410-2510m. Though immature in Bahati-1 well, these potential source rocks could have been mature in the deeper part of the Lamu Basin or in other parts of Block 3A. The well terminated at 3,420m in the Lower Tertiary-Upper Cretaceous and failed to test the prospectivity of the Cretaceous section.

Available Geophysical Data

--  Chevron shot 3,437 line km of seismic in Blocks  3 and 2  [SEG -B]
    1,967 line km in Block 3
--  Amoco shot  50  line-km  of seismic in the current Block 2 -[SEG Y]
--  Gravity and magnetic data available

Wells drilled

--  Anza, Endela, Bahati, & Meri [stratigrahic well]
--  Deep wells close to the Blocks 3B Walmerer-1 and 3A Hothori-1


--  Geological and Landsat data interpretation available

To find out more about Vangold Resources Ltd. please visit our website at or contact Dal Brynelsen at (604) 684-1974 or by email

On Behalf of the Board of

"Dal Brynelsen"

Dal Brynelsen
President and CEO

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this news release. The statements made in this News Release may contain certain forward-looking statements. Actual events or results may differ from the Company's expectations. Certain risk factors may also affect the actual results achieved by the Company.

Contact Information

  • P.O. Box 11622, 1730 - 650 West Georgia Street
    Vancouver, British Columbia
    Canada, V6B 4N9
    Phone: 604-684-1974
    Fax: 604-685-5970