viewAfrican Gold Group, Inc.

African Gold Group has its sights on gold production while expanding the Kobada project resource


The company believes its Kobada Gold Project in Mali, West Africa could become a three million to five million ounce gold deposit

African Gold Group, Inc. -

Quick facts: African Gold Group, Inc.

Price: 0.165 CAD

Market: TSX-V
Market Cap: $24.58 m
  • Large landholding in a prolific West African gold belt
  • Feasibility Study indicates low-cost production
  • Recent drilling has found high-grade gold outside the known resource area

What African Gold Group does:

African Gold Group, Inc (CVE:AGG) is on track to become Africa’s next mid-tier gold producer with the company targeting production of 100,000 gold ounces per year from its Kobada Gold Project in Mali, West Africa, by 2Q 2022. West Africa has a long history of developing high-grade gold mines.

African Gold Group has a landholding that encompasses more than 460 square kilometres (km2 )across Mali and Burkina Faso in West Africa`s prolific Birimian Greenstone Belt, while less than 15% of the identified shear zones in Kobada property have been drilled.

The company also has an option on a second project, the Madougou Gold Project in Burkina Faso.

Mali is Africa’s third-largest gold producer, with a long and successful history of gold production. Well-established mining companies, such as AngloGold Ashanti and IAMGOLD, have been operating in the country for decades.

African Gold Group CEO Danny Callow is the former head of African Copper Operations for Glencore PLC and the former chief executive officer of Katanga Mining, who has over 25 years of experience in building and operating mines in Africa, and he has overseen more than $2.5 billion in greenfield and brownfield mining projects from conception through to full production.

How is it doing:

In June 2020, African Gold released results of a Definitive Feasibility Study for the Kobada Gold Project, which estimates total gold production of 728,654 ounces over a 9.4 year mine life, based on current reserves, at all-in-sustaining costs of US$782 per ounce. It also models a pre-tax net present value (using a 5% discount rate) of US$283.9 million with an internal rate of return of 45.5%.

Kobada has a current estimated Proven & Probable reserve of 754,800 gold ounces at 0.87 grams per tonne (g/t), a Measured & Indicated resource of 1.2 million gold ounces at 0.86 g/t, and an Inferred resource of 1.1 million gold ounces at 1.33 g/t. 

African Gold began its Phase 3 exploration drilling in September 2020, with the goal of increasing its resources through strike length extension drilling and upgrading certain Inferred Resources to Indicated. 

The company noted that three “step-out” holes drilled in February 2020, which were not included in the current resource estimate, showed grades as rich as 5.25 g/t gold over 22.20 metres from 78.40 metres to 100.6 metres, which it says indicates strong potential for a high-grade extension. 

The company also reported new drill results from the Gosso shear zone in October 2020, including 2.6 g/t gold over 8.3 metres, which it says confirms gold mineralization at surface and at depth along the Gosso zone with similar characteristics to the parallel Kobada shear zone.

The group hopes to upgrade the 575,000 ounce Inferred resources in oxides to the Measured & Indicated category with a target to reach one million ounces of gold reserves. This new drilling is expected to lead to an updated resource/reserve estimate by March 2021.

On November 12, the company released more drill results from Kobada that “exceeded” expectations as recent infill drilling “both confirmed grade and extended oxides to greater depths” that should allow it to upgrade a large portion of its Inferred Resources into the Measured & Indicated category.

The group believes the high-grade nature of the holes, as well as the unexpected gold encountered at depth, are all positive indicators in the size and quality of the Kobada Project.

African Gold closed an C$11.1 million equity financing in August 2020, at a price C$0.25 per unit, which it says will be used to fund the Phase 3 exploration drilling program.  

The company anticipates that mine construction at Kobada will begin in 2H 2021.

Inflection points:

  • Targeting initial gold production at Kobada in 2022   
  • Additional exploration and infill drilling to expand the current resource
  • Updated resource/reserve estimate expected by March 2021

What the boss says:

Following the start of its Phase 3 drill program in September 2020, African Gold Group CEO Danny Callow said in a statement: “The delivery of the robust DFS, demonstrating a project with potential to produce 100,000oz per annum, with highly favourable financial deliverables, was a major milestone in the ongoing development of our flagship, ready for construction, Kobada Gold Project.”

He added: “Despite some of the recent challenges in Mali, we have succeeded in mobilising and commencing exploration drilling. We look forward to re-commencing targeted exploration drilling to bolster the properties significant blue-sky potential by expanding resources and proving the upside potential of what could be a 3 to 5 million ounce deposit.”

Contact Sean at sean@proactiveinvestors.com

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