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African Gold Group initiates updated feasibility study of flagship Kobada Project in Mali to incorporate sulphides

The company's board agreed to update the July 2020 Definitive Feasibility Study following highly encouraging results from the exploration drilling campaign and sulphide metallurgical testwork

African Gold Group, Inc. - African Gold Group Inc initiates updated feasibility study of flagship Kobada Project in Mali to incorporate sulphides
The goal now is to increase the production profile and overall project economics beyond the robust results of the 2020 study

African Gold Group Inc (CVE:AGG) has provided an update on the development of its flagship Kobada Project in Mali, saying it has received board approval to initiate an update to the July 2020 Definitive Feasibility Study (DFS) to incorporate sulphides.  

During the past months, the company said it has been working diligently at advancing the project, focusing mainly on increasing the reserve base and optimizing the free-milling sulphide metallurgical testing.

African Gold said its board agreed to the updated DFS following highly encouraging results from the exploration drilling campaign and sulphide metallurgical testwork. The goal now is to increase the production profile and overall project economics beyond the robust results of the previous DFS.

READ: African Gold Group reveals positive metallurgical results indicating high gold recoveries from its Kobada project in Mali

Highlights of July 2020 DFS:

  • Average annual production of 100,000 ounces of gold per annum for the first 5 years of operation.
  • Total gold production of 728,654 ounces over 9.4 years Life of Mine (LOM), based on current reserves.
  • Average total operating cash costs US$704/oz for LOM.
  • LOM All-In Sustaining Cost of US$782/oz.
  • Pre-tax NPV5% of US$283.9 million with an IRR of 45.5% and a post-tax NPV5% of $226 million with an IRR of 41.1% at US$1,530/oz gold.
  • Kobada Gold Project capital expenditure of US$125 million (plus a contingency of US$11 million).

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

“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,” said African Gold CEO Danny Callow in a statement. 

“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.”

Callow added: “Throughout the past 19 months we have undertaken a systematic process to review and clean up historical data, drill close to 20,000 exploration metres, optimise oxide and sulphide test work and deliver a Definitive Feasibility Study that produces a world-class project, with substantial economic returns to shareholders. The update of the DFS is the next step in our programme to continue to increase the value and free cash flow in this project.”

African Gold said SENET (Pty) Ltd, a DRA Global Group Company, has been awarded the contract to deliver a DFS update. SENET is one of the leading project management and engineering firms in the field of mineral processing. 

Contact the author: patrick@proactiveinvestors.com

Follow him on Twitter @PatrickMGraham

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TSX-V:AGG

Price: 0.145 CAD

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