Following the publication of the recently updated definitive feasibility study (DFS) African Gold Group is now preparing to secure the required development finance to commence construction at its Kobada Gold Project, located in Southern Mali (Figure 1).
Figure 1: The Location of the Kobada Gold Project
Source: African Gold Group
Kobada has a NI 43-101 compliant total mineral resource estimate of 3.1 million ounces of gold (Figure 2) at an average grade of 0.95 grams per tonne gold (g/t Au), of which 1.5 million ounces of gold is contained with the laterite, oxide and transition zone. The deposit also has a total mineral reserve estimate of 1.25 million ounces of gold at an average grade of 0.97 g/t Au, of which 946,000 ounces are in the laterite, oxide and transition zone.
Figure 2: Kobada Resource Estimate
Source: African Gold Group
Having such a large proportion of the resource and reserve contained within the weathered and oxide zones is critical for African Gold Group’s low-capex and opex strategy.
Oxide gold ore is free-digging, meaning it does not require expensive drilling and basting. It is also soft and friable so it also doesn’t require high levels of expensive comminution such as crushing and grinding. As a result, oxide ounces tend to be higher-margin than sulphide ounces and have a higher value placed on them by investors.
The updated DFS defined a pre-production capital expenditure (capex) of US$152 million to build a gold mine that will produce over 1.2 million ounces of gold over a 16-year mine life (Figure 3), all at a low all-in sustaining cost (AISC) of US$972/oz Au. Based on the current gold price of US$1,780/oz Au, that’s a margin of 45%.
Figure 3: Kobada Production Schedule
Source: African Gold Group
As a result of the oxide focus, the Kobada DFS returned a post-tax NPV5 (net present value - 5% discount rate) of US$355 million and a post-tax IRR (internal rate of return) of 38%, using a gold price of US$1,750/oz Au. An oversubscribed placing was completed in November this year raising C$5,144,200, giving the company funds to advance the project or pursue other corporate options.
With a high-value, development-ready gold project, and a low-market valuation African Gold Group looks like an attractive proposition.