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African Gold Group – 2020 will be a busy year for this gold development play

Proactive's mining analyst, Dr Ryan Long, catches up with African Gold’s Daniyal Baizak, who provides an introduction to the company’s assets and its extensive plans for 2020.

African Gold Group, Inc. - African Gold Group – 2020 will be a busy year for this gold development play

African Gold Group, Inc. (CVE:AGG) is focused on moving its flagship Kobada Gold Project, located in southern Mali (Figure 1), into production by 2021.

Daniyal Baizak is the vice-president of corporate development for the company. He was previously an analyst with the mining and metals department of the Forbes & Manhattan Group. He has a BSc in Commerce from the University of Toronto.

Figure 1: Location of the Kobada Gold Project

Source: African Gold Group

The African Gold Group holds a 90% interest in the Kobada Gold Project. The project has a total NI 43-101-compliant mineral resource estimate of 2.2 million ounces of gold at a grade of 1.1 grams per tonne. Kobada is an orogenic gold deposit, located within the Kobada Main Shear Zone, which is contained within the western limb of the Man Shield, a Birimian Greenstone Belt.

The mineral resource estimate comes from a four-kilometre (4km) central section of Kobada Main Shear Zone, which has been mapped over an additional 8km, remaining open to both the northeast and southwest (Figure 2).

Figure 2: Regional structures within the Kobada Gold Project

Source: African Gold Group

In addition to the potential to extend the scale of the deposit from additional exploration along the Kobada Main Shear Zone, the company has also mapped another five parallel structures that when combined with the Kobada Main Shear Zone cover a total strike of around 34km (Figure 2). These shear zones contain extensive artisanal workings indicating that some level of gold mineralisation is present.

A feasibility study completed at the project in 2016, defined a post-tax net present value of US$126mln and an internal rate of return of 55%, at a gold price of US$1,400 per ounce (oz); the current gold price is US$1,556/oz giving further upside to these metrics. The feasibility study defined average annual production levels of 50,000oz gold (Au) over an eight-year mine life. The initial capital expenditure (capex) for the project was relatively low at US$45.4mln and the all-in sustaining costs (AISC) was also low at US$788/oz Au. The low-capex and opex (operating expenditure) nature of the project is due to the deep weathering profile, with an extensive free-digging oxide zone down to depths of c. 160 metres (m).

This feasibility study was based on a gravity recovery circuit, African Gold Group is planning additional metallurgical and processing studies to see if a different processing route could further improve the project's economics.

During 2020, the company has an extensive 15,000m infill and exploration drilling programme planned. This programme is designed to increase the size of the mineral resource estimate and also the confidence level of the estimate. This is expected to be followed by a bankable feasibility study in the second quarter of this year.

With a valid mining licence, strong project economics and plenty of potential to expand the project's scale, the company is well-positioned to make the transition from developer to producer.

Quick facts: African Gold Group, Inc.

Price: 0.29 CAD

TSX-V:AGG
Market: TSX-V
Market Cap: $36.82 m
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