Coin stacks and chart graphs on a chessboard background. Horizontal composition with selective focus and copy space.
  • 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 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:

African Gold 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 Kobada by the second quarter of 2022. The company believes Kobada could become a three million to five million ounce gold deposit.

After spending the early part of 2021 working diligently at advancing the project, focusing mainly on increasing the reserve base and optimizing the free-milling sulphide metallurgical testing, African Gold announced positive test results on March 31, 2021, which means it can convert some of its existing resources into reserves. 

The company said the metallurgical findings provided “great confidence” that the Kobada sulphides can be treated easily through the company’s existing gravity and carbon-in-leach (CIL) process with very good recoveries.

Following the encouraging results from the exploration drilling campaign and sulphide metallurgical testwork, African Gold said in April that it had received board approval to initiate an update to the July 2020 Definitive Feasibility Study (DFS) to incorporate sulphides. The goal now is to increase the production profile and overall project economics beyond the robust results of the previous DFS.

More specifically, African Gold said the DFS is being updated to also reflect the improved optimisation work on the processing plant, increase in reserve base and gold price environment. The company believes an update of the feasibility study will further enhance the economics of the project.

While it advances the Kobada project, African Gold has also been making progress with corporate social responsibility (CSR) projects. In a June announcement, the company said these included the rehabilitation of a key crossing on the Niger river.

The Samaya river crossing is a major access route from Mali’s capital Bamako to the mine site and every year crossing points become flooded. Now, substantial improvements to the road and a fully concreted ramp to the pontoon on the Samaya side are being constructed, African Gold said.

In addition, works on repairing the roads through Kobada village and repairing bridges have resulted in smooth passage along critical routes for goods and people in the last six months. Ongoing work is now focused on drainage channels before the onset of the rainy season.

On the financing front, in February 2021, African Gold Group closed a C$4.6 million oversubscribed equity financing, with the net proceeds aimed at continuing exploration activities at its flagship Kobada Gold Project in southern Mali while targeting an increase in resources and reserves in the near term.

The company also announced at the same time that it will investigate the merits of a dual listing on the Australian Stock Exchange, as it believes this could provide a larger pool of investors to support the project.

Inflection points:

  • Targeting initial gold production at Kobada in 2022   
  • Board approval to initiate an update to the July 2020 Definitive Feasibility Study (DFS) to incorporate sulphides
  • Corporate Social Responsibility (CSR) projects include the rehabilitation of a key crossing on the Niger river

What the boss says:

Following April’s update on the development of the Kobada Project, African Gold Group CEO Danny Callow said in a statement: “We are continuing our progress towards improving the scale and economics of the Kobada project through an update to the July 2020 Definitive Feasibility Study.

“Our target is to deliver more reserve ounces, which should show improved life of mine and economics. The updated study requires significant work as we will need to review resources and reserves, an updated mine optimisation and schedule, additional refinements to the processing plant and a larger tailings dam. In addition, we will work through the updates to the ESIA.”

Contact the author at stephen.gunnion@proactiveinvestors.com