The tightly held Askari Metals Ltd (ASX:AS2) has taken a significant step in its African growth strategy with the acquisition of the advanced-stage Nejo Gold Project in central-western Ethiopia.
The company has secured 100% of the issued capital of Xingxu Mining International Investment Co Ltd, a Hong Kong-based entity that owns the Nejo Project, through a binding share purchase agreement with Xingguang Group Ltd. The acquisition gives Askari full ownership of the 1,174-square-kilometre tenement on the underexplored but highly prospective Arabian-Nubian Shield, which is a highly prospective geological region known for its significant gold endowment, hosting large-scale multi-million-ounce discoveries across Egypt, Sudan, Eritrea, Ethiopia, Saudi Arabia and Yemen.
The Nejo Project is located in a globally significant gold and copper mineral province and lies within the same greenstone belt as the 3.4-million-ounce Kurmuk Mine (Allied Gold, TSX: AAUC), and adjacent to the 1.7-million-ounce Tulu Kapi Mine (Kefi Gold and Copper, LSE: KEFI).
Map depicting the locality of the Askari Metals “Nejo Gold Project” in relation to the major gold deposits of Ethiopia.
Nejo hosts 10 proven gold targets and spans over 60 kilometres of strike along the Tulu Dimtu Shear Belt. Despite substantial historical exploration, including trenching, soil and rock sampling, and diamond and reverse-circulation drilling, no systematic exploration has been conducted to date.
Key historical results include:
- Dina: 7.1 metres at 30.3 grams per tonne (g/t) gold from 69.6 metres in a diamond drill hole, with no follow-up since 2011.
- Soyoma: 14.2 metres at 8.18 g/t gold in a trench, including 2 metres at 42.6 g/t gold, with no additional trenching or drilling.
- Guji: Multiple intercepts including 44 metres at 1.7 g/t gold (RC), and 10m @ 2.85g/t Au and 10.3m @ 2.23g/t Au, including 2.3m @ 6.24g/t Au and 10m @ 2.26g/t Au in diamond drill holes with visible gold observed.
Additional prospects include:
- Kobera: 5.8 metres at 8.0 g/t gold from a surface trench, with minimal trench testing and no follow-up drilling.
- Komto 1 & 2: 7 metres at 7.27 g/t gold from a surface trench with no subsequent exploration.
- Yubdo West: RC drilling returned 16 metres at 3.49 g/t gold including 5 metres at 5.8 g/t gold, and 8 metres at 1.21 g/t gold — with no follow-up work since 2013.
Map depicting the locality of the ten (10) gold target areas that have been identified at the Nejo Gold Project surrounding the high-grade Tulu-Kapi mining area. The Tulu-Kapi mining area is clearly outlined in the solid blue fill area in the map above. Source: Kefi Minerals – New Gen Gold Conference Presentation – 14 November 2017. Askari Metals has not yet verified the drilling, sampling, or assay techniques and therefore treats the information as historical and visual observations are considered qualitative and indicative only.
The project is prospective for both gold and high-grade copper mineralisation. A systematic confirmatory drilling campaign is being designed to underpin a potential JORC (2012) Mineral Resource Estimate. Data compilation is currently underway.
Photograph of the Komto breccia zone along a N-S direction at the Guji priority area, Nejo Gold Project, Ethiopia. Source: Golden Prospect Mining Company Limited “Evaluation of the mineral potential of the selected areas” dated July 2005.
“This transformational acquisition represents an outstanding opportunity for the company to position ourselves at the forefront of one of Africa’s most exciting gold regions in the district of Ethiopia,” Askari executive director Gino D’Anna said.
“East Africa is fast becoming a world-renowned jurisdiction for the development of major mining operations including Perseus Mining’s Nyanzaga Gold Mine in Tanzania and the Meyas Sand Gold Project in Sudan.
“Nejo offers everything we look for in a flagship asset — scale, high-grade gold upside, proven mineralisation, and proximity to major gold operations on a globally significant greenstone belt.”
With this acquisition, Askari gains a well-advanced brownfields project with significant exploration upside in a Tier-1 geological setting.
Acquisition terms
The acquisition terms include an upfront payment of A$200,000 in cash, A$200,000 in Askari shares, and the issue of 20 million unlisted options exercisable at 6 cents over three years.
Under the terms of the Agreement, the acquisition comprises the following:
(a) Initial Consideration:
- A$200,000 in cash;
- A$200,000 in fully paid ordinary shares in the company; and
- 20 million unlisted options, each with an exercise price of A$0.06 and a three-year expiry.
(b) Deferred Consideration:
- A$200,000 in cash and A$200,000 in shares, subject to the achievement of specified JORC (2012) resource milestones;
- A further A$150,000 in cash and A$150,000 in shares, payable 12 months following completion of the Agreement.
(c) Royalty:
A 1% gross revenue royalty on all gold concentrates (or other products) produced and sold from the Project, capped at a total of A$7,000,000.
“This project not only surrounds KEFI’s 1.7-million-ounce Tulu Kapi Mine, but also hosts direct extensions of its mineralised system, giving us a compelling opportunity to potentially discover a major gold deposit in the same district,” D’Anna said.
“Historic results demonstrate outstanding gold grades over wide intercepts across multiple targets — and yet, much of the tenement remains underexplored. With a large-scale landholding, extensive historical data, and clear targets, we have the ingredients to fast-track Nejo toward a maiden JORC resource. This acquisition elevates Askari into a new growth phase, one where discovery and resource definition can drive significant value for shareholders.
“Ethiopia is fast emerging as a Tier-1 jurisdiction, and we are committed to building a strong, locally integrated presence in-country.
“We are excited to unlock the full potential of this project and deliver meaningful exploration milestones in the near term and emerge as a major African Gold Developer.”
Strategic brownfields potential - more about Nejo
The Nejo Gold Project is an advanced brownfields exploration opportunity comprising three contiguous, granted exploration licences. The tenements directly surround the 1.7-million-ounce Tulu Kapi Gold Project, owned by Kefi Gold and Copper (LSE: KEFI), and are valid until 23 March 2028.
Nejo is positioned as a mine extension exploration project, interpreted to host structural and mineralised extensions of Tulu Kapi’s high-grade gold system. In addition to gold, the project is considered highly prospective for copper, based on previous exploration activity including drilling, trenching and rock chip sampling.
Multiple examples of visible gold were reported in the diamond drilling at the Guji gold target.
Location and infrastructure
Situated approximately 520 kilometres west of Addis Ababa, accessible via sealed highway, the licences lie around 9 kilometres south of the village of Kelley on the main road between Gimbi and Dembi. Nearby towns Ayra and Gimbi, located 20 kilometres to the west, are accessible by road.
The project is located on the same greenstone belt as Allied Gold’s (TSX: AAUC) 3.4-million-ounce Kurmuk Gold Project.
The project benefits from established road access to key population centres, facilitating efficient logistics, equipment mobilisation and access to a skilled workforce.
Supporting funds
Askari intends to undertake a capital raising to support exploration activities across its African and Australian projects, and to fund completion costs related to the acquisition of the Nejo Gold Project.
Details regarding the structure and pricing of the capital raising are yet to be finalised and will be communicated to shareholders in due course.
The proposed 12-month exploration budget is outlined in the table below:
Future work and planned exploration
Askari Metals has its eye on a strategic, cost-effective exploration program that rapidly advances high-priority drill targets at the Nejo Gold Project. The planned activities include:
- Compiling and reviewing the historical exploration database;
- Conducting an initial field reconnaissance visit to verify previous drilling and trenching outcomes;
- Undertaking extensive on-ground exploration, including geological mapping, trenching, soil geochemistry and rock sampling;
- Commencing initial reverse circulation (RC) and diamond drilling campaigns at high-priority targets identified through historical data, with a focus on validation and verification; and
- Progressing the Nejo Gold Project towards the delineation of a Mineral Resource in accordance with the 2012 JORC Code through systematic drilling and staged exploration.