African Gold Group, Inc. (TSX-V: AGG, OTCQX: AGGFF, FRA: 3A61)
(“
AGG” or the “
Company”) is
pleased to announce the results of the Definitive Feasibility Study
(the “2021
DFS” or the “
Study”)
for the Kobada Gold Project (the “
Project” or
“
Kobada”) in Southern Mali. The DFS was prepared
in accordance with National Instrument 43-101 Standards of
Disclosure for Mineral Projects (“
NI 43-101”) and
will be filed by the Company during October.
Highlights include:
- Significant Production
Potential
- 3 Mtpa operation
producing 1.2 Moz of gold over a 16-year
Life-of-Mine (“LOM”)
- Average annual gold production of
100,000 oz over the first 10 years
- Strong Economics
- Pre-tax
NPV5% of US$506
million with an IRR of 45%
-
Post-tax-NPV5% of
US$355 million (57% increase compared to 2020 DFS) with an
IRR of 38%
- Pre-production capital requirement
of approximately US$152 million (excl. working capital and
contingencies)
- Total project cash flow
pre-tax of US$733 million with net cash flow after tax and
capital expenditure of US$550 million
- Capital payback of 2.3
year upon production commencement
- Environmentally and Socially Responsible
- A hybrid thermal and solar photovoltaic power
plant with battery energy storage, will be funded by an
independent power producer
- Power rate of estimated US$0.20 per kWh results in estimated
savings annually resulting from a 43% reduction in fuel
requirement versus conventional thermal power plants
- Substantial reduction in greenhouse gas
emissions through utilisation of hybrid power plant,
including 39% less carbon dioxide, 34% less carbon monoxide, 39%
less sulfur dioxide and 26% less nitrogen oxides than conventional
thermal power plant
- Growing Resource with
Substantial Exploration Upside
- Total proven and probable
mineral reserve has increased to 1,252,522 ounces of gold,
a 66% increase from the mineral reserve estimate in the previous
definitive feasibility study report titled “NI 43-101 Technical
Report on Kobada Gold Project in Mali” with an effective date of
June 17, 2020 (the “2020 DFS”)
- Total measured and indicated
resource increase by 44% to 1.71 million ounces and a Total
resource (including inferred resources) increase to 3.1 million
ounces
- High measured and indicated resource
to reserve conversion rate of 73%
- Further potential remains to
significantly increase the resource and reserve along strike and
depth at the Kobada Gold Project
- Over 5,500 hectares
of prospective mineral trends within trucking distance yet to be
explored
- Over 50 km of new potential
mineralised shear zones identified on Kobada and Kobada
Est concessions
- Faraba concession renewed
for 3 years with early exploration indicating the potential to
extend shear zones even further
Danny Callow, CEO of African Gold Group,
commented:
“Over the past two years we have worked
tirelessly to demonstrate that the Kobada Gold Project has the
potential to be one of the largest new gold projects in West
Africa. Since the implementation of management changes in August
2019, and with new drilling campaigns totalling around 18,000
metres, we have managed to increase our reserve base by 144% (66%
increase over the 2020 DFS).
With our updated 2021 DFS we have shown that
Kobada has the potential to produce over 1.2 mln oz of gold over a
16 year mine life while delivering solid economics with post-tax
NPV5% of US$355 million and an IRR of 38%.
Kobada is a predominantly free-dig operation,
requires limited blasting, and processing of ore will be through a
very simple and proven gravity plus CIL plant with recoveries over
95% in both oxides and sulphides. The inclusion of sulphides in
this updated DFS, which are free milling and easy to process, opens
significant future opportunities within the sulphide resource as
well as continuing growth possibilities in the oxides. We are
confident in the capital estimates as compared to recent similar
completed projects in the region, and these costs remain very
competitive for a project of this size. The potential to produce
significant free cash flows after tax and low capital expenditure
highlights very attractive economics of our Kobada project.
Based upon our detailed understanding and
integrity of the current resource, on only 4 km of our 55 km of
identified shear zones we believe that there continues to be
significant potential to increase our 3.1 million ounce total
resource substantially further. Kobada is now positioned as a great
construction opportunity, in a prolific gold-producing area of West
Africa”
The 2021 DFS has been prepared with input from a
number of independent consultants:
Minxcon Group (South Africa) |
Mineral resources |
DRA Americas (Canada) |
Mining, mineral reserves |
Maelgwyn Mineral Services (South Africa) |
Metallurgical test work |
ABS-Africa (South Africa) |
Environmental and social |
Epoch Resources (South Africa) |
Tailings Storage facility |
SENET (South Africa) |
Processing plant and infrastructure including economic valuation
and report compilation |
Kobada Gold Project
Overview
The Kobada Gold Project is located in southern
Mali, approximately 125 km in a straight-line south-southwest of
the capital city Bamako and is situated adjacent to the Niger River
and the international border with Guinea.
The Kobada Gold Project is based on one mining
exploitation permit (Kobada) of 136 km2 and two exploration permits
(Faraba and Kobada Est) of 77 km2 and 45 km2, which are wholly
owned by AGG Mali SARL, the local Malian company, a 100% owned
subsidiary of African Gold Group.
AGG has completed 114,357 metres of diamond,
reverse circulation, air core and auger drilling between 2005 and
2012. In 2015, AGG completed a further 1,398 metres of diamond core
drilling over 13 diamond drill holes. The current AGG exploration
re-commenced in August 2019 and an additional 18,000 metres of
exploration drilling has been completed.
Gold mineralization is present in the laterite,
saprolite, and quartz veins that comprise the project, and in the
sulphidic hard rock underneath. There are also placer style
deposits in the region.
2020 Drilling Campaign
The 2020 drilling campaign, running from
September 2020 until January 2021, consisted of 43 drillholes
totalling 6,364 m. Of these, 4 drillholes (522 m) were drilled at
the Gosso target and the remaining 39 drillholes (5,842 m) were
drilled in the “gap” area and northern extents of the northern
domain of the Kobada main shear. The drillholes at the Gosso target
were all completed using diamond drilling while the drilling at
Kobada was a combination of diamond drilling (8 holes @ 1,258 m)
and RC drilling (21 holes @ 2,890 m) with selected RC drillholes
being completed with diamond tail (10 holes @ 1,221 m RC and 473 m
diamond) to drill into the sulphides.
The main focus of the drilling was to confirm
and improve the confidence in the geological model to enable
additional mineral resource conversion of the oxides to the
measured and indicated resource categories. The drilling was also
used to test and confirm the depth extension of the saprolitic
(soft) material, the transition zone and the sulphides at
depth.
For the Kobada main shear drilling, 34
drillholes intersected the mineralised zones and had an average
accumulated mineralisation width of 29 m @ 1.22 g/t. The drilling
campaign has significantly contributed to the increase in the
indicated resource in the northern domain of the Kobada main shear,
and also highlighted areas of deeper weathering with oxide material
extending further down to a depth of approximately 160 m in places,
approximately 60 to 80 m deeper than originally anticipated.
The drillholes at Gosso target confirmed the
mineralisation observed in the historical drillholes with the 4
drillholes having an average accumulated mineralisation width of 12
m @ 1.11 g/t.
Figure 1: 2020 Drilling Campaign is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/68c8ecaf-6dd4-4025-b26d-8cb2db71dc3c
Figure 2: Section views of the Mineral Resource
Classification of the Main Orebody is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/d071587a-9c81-45c5-8d2b-2f069af9434b
Status of Exploration
Upside potential remains in the short term at
the Kobada Main Shear to upgrade some additional inferred mineral
resources to the indicated category. In addition to this, the
Project has significant upside potential in the 55 km strike length
of potential mineralised shear zones. These shear zones are shown
in Figure 3. Of these, the Gosso target is considered the most
prospective due to its similar mineralisation profile to Kobada
Main Shear and close proximity to the processing plant. To date,
only limited drilling has been completed (21 drillholes) at Gosso,
with exciting drill results such as 1.15 g/t Au over 12.5 m,
including 7.19 g/t Au over 1.3 m. In addition, initial field
investigations by the AGG geologists, in early 2021, have
highlighted significant upside potential at the Kobada Est targets
where artisanal mining has exposed mineralised structural
features.
The Faraba exploration permit, renewed in August
2021 for a further 3 years, shows potential continuation of the
Main Shear zone in a north-north-east direction opening up further
exploration potential.
Figure 3: Exploration Potential is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/ad0d5a84-28ba-4725-b231-3edef0674d64
Mineral Resource
Resource Classification |
Tonnage(Mt) |
Grade(g/t) |
Contained Gold(kg) |
Contained Gold(koz) |
Measured |
21.40 |
0.83 |
17,784 |
572 |
Indicated |
40.15 |
0.88 |
35,425 |
1,139 |
Measured & Indicated |
61.54 |
0.86 |
53,209 |
1,711 |
Inferred |
42.03 |
1.06 |
44,564 |
1,433 |
Notes:
- Mineral Resource cut-off of 0.35
g/t Au applied.
- A gold price of USD1,800/oz was
used for ultimate optimisation.
- Columns may not add up due to
rounding.
- Mineral Resources are stated as
inclusive of Mineral Reserves.
- Mineral Resources are reported as
total Mineral Resources and are not attributed.
- Geological losses have been
applied.
|
Table 1: Kobada`s Mineral Resource Estimate as of
1 July 2021
Mine Planning
DRA Americas undertook the mine planning
process, based on the measured and indicated mineral resources
delineated to date at the Kobada Gold Project. Pit optimizations
were undertaken using the following parameters:
Gold price |
US$1,610/oz (base case) |
Mining Costs |
US$ 2.5/t to US$3.0/t |
Processing Costs |
US$ 9.41/t to US$15.08/t |
Mining dilution |
5% |
Mining recovery |
95% |
Pit slopes |
40° overall slope angle |
Metallurgical recovery |
Laterite Oxide ore |
96.5% |
Saprolite Oxide ore |
96.5% |
Transitional ore |
90.5% |
Sulphide ore |
95.4% |
Table 2: Pit Optimization Parameters
The Kobada Gold Project deposit is planned to be
mined utilising standard open-pit mining methods using articulated
trucks and a hydraulic loader (hydraulic shovel or excavator).
Approximately 66% of the raw material to be mined is contained in
the saprolite and laterite ores, and the vast majority will be free
digging with no blasting required.
The final pit design for the Kobada Gold Project
deposit is approximately 4.3 km long, with a maximum width of 500 m
and a maximum depth of 180 m as shown in Figure 4.
Figure 4: Kobada Final Pit Design is available
at
https://www.globenewswire.com/NewsRoom/AttachmentNg/bb003886-2e9a-4f12-a67e-ac16f0177eb0
The open pit mining operation will last
approximately eleven years, during which the lower-grade material
will be stockpiled on a pad close to the primary crusher
location.
The mine plan targets higher grade oxide ore
zones at the early phase of the project to feed into the process
plant in order to produce an average of 100,000 oz per annum for
the first 10 years, and thereafter lower production output as the
grade drops and stockpiles are treated. Further targeted drilling
will aim to improve the output from Years 11 to 16 by drilling the
inferred resources in and around the existing pit shell. Management
remains confident that further drilling will yield additional
measured and indicated ounces to convert into additional
reserves.
Over the life of the Project, 45 Mt of ore will
be mined and delivered to the processing facility, and a total of
158 Mt of material will be mined and placed on the waste dumps,
representing a life of mine stripping ratio of 3.5:1.
The mining operations will be undertaken by a
specialized contractor selected by the Company. This contractor
will be responsible for the management and maintenance of its own
mining fleet and operators, while AGG will oversee the mine
planning and geological grade control aspects of the operation.
There remains an option for owner mining through leasing of mining
equipment, and these options will be looked at as part of the
detailed engineering design process.
Mineral Reserve
This updated mineral reserve and resource
estimate at the Kobada Gold Project, as summarized in Table 1 and
Table 3, was prepared in accordance with the Canadian Institute of
Mining, Metallurgy and Petroleum “CIM” (2014) Definition Standards
incorporated by reference in NI 43-101 and is the result of 17,355
meters (108 drill holes) of drilling completed by the Company
between H2-2019 and H1-2021 in addition to the historical drilling
completed in previous years.
Reserve Classification |
Tonnage 1(Mt) |
Grade(g/t) |
Contained Gold(kg) |
Contained Gold(oz) |
Proven 2 |
20.26 |
0.91 |
14,963 |
527,800 |
Probable 2 |
24.77 |
0.87 |
20,545 |
724,700 |
Proven and Probable 2,3,4 |
45.03 |
0.87 |
35,508 |
1,252,522 |
Notes:
- Numbers may not add due to rounding.
- Mineral reserves were estimated using a gold price of US$1,610
per ounce of gold.
- The cut-off grade used to estimate the mineral reserves was
0.35 g/t, with a dilution of 5% and mining recovery of 95%.
- Only laterite, saprolite, transition and sulphide material from
the measured and indicated resource categories were considered for
the reserve estimate.
|
Table 3: Kobada`s Mineral Reserve Estimate
Mine Schedule
The mining schedule has focused on maximising
gold production at an average annualized rate of 100,000 oz per
annum, but also targeting the lower capital-intensive oxides
initially before mining and processing the sulphides. The updated
optimised mining schedule is indicated in Figure 5.
Figure 5: Gold Production over LOM is available
at
https://www.globenewswire.com/NewsRoom/AttachmentNg/808904cf-69d6-4f57-b8f3-9c90abc0d57e
Processing
In 2019/2020 comprehensive metallurgical tests
inclusive of variability were conducted on saprolite/laterite ore
types to establish the optimum processing route. This test work was
conducted by Maelgywn Mineral Services (“MMS”) in
South Africa under SENET’s supervision. Results from this test work
indicated that the saprolite/laterite ore:
- Easy to treat, with expected
recoveries in the order of 96% for both saprolite and laterite ore
types.
- The ore is extremely soft (low
hardness and abrasion), which will result in low power requirement
and low wear on liners and mill media.
- Low deleterious elements resulting
in low reagent use, and lower operating cost.
- Low oxygen demand which will not
require oxygen sparging in the leach tanks.
- Low reagent consumption.
In 2021, further comprehensive metallurgical
tests were conducted on the sulphides which previously were not
tested. The test work involved investigating the suitability of the
processing route using the flowsheet developed for
saprolite/laterite and conducting variability tests. Results
obtained for sulphides showed the following:
- The ore is easy to treat with
expected recoveries in the order of 95%.
- The ore is medium hard which will
result in moderate milling power demand.
- Low deleterious elements resulting
in low reagent use, and lower operating costs.
- Low oxygen demand will not require
oxygen sparging in the leach tanks.
- Low cyanide and lime
consumptions.
The proposed process plant design is based on a
proven and established gravity/carbon-in-leach
(“CIL”) technology, which consists of crushing,
milling, and gravity recovery of free gold, followed by
leaching/adsorption of gravity tailings, elution and gold smelting,
and tailings disposal. Services to the process plant will include
reagent mixing, storage and distribution, water, and air services.
The plant will treat 3 Mtpa of saprolite/laterite/sulphide ore to
produce an average of 100,000 oz per annum. The crushing and
milling circuits will be constructed in two phases: the first phase
will be to treat oxide ore only, followed by a second phase later
in the life of mine to treat sulphides and/or a blend of sulphides
and oxides.
When treating oxide ore, only the primary
crushing stage will be in use while three crushing stages will be
required when treating the sulphide ore. When treating
saprolite/laterite, the milling circuit will utilize a single-stage
ball mill while an additional secondary mill will be added in the
later part of the mine life to treat sulphides. The process plant
was designed on the following principles:
- Simplified, compact process plant,
minimising the requirement of expensive and long lead front-end
process equipment.
- Easy to upgrade in future.
- Simple to operate and cost
effective, in terms of capital and operating costs.
- The flexibility to exceed 100,000
oz per year of output based upon input feed grade and tonnage.
- Highly flexible process able to
treat varying ore grades and ore types with no significant increase
in reagent consumption.
Figure 6: Process Plant Flowsheet is available
at
https://www.globenewswire.com/NewsRoom/AttachmentNg/9f1cbea8-2686-49eb-9ff7-9b9efcca93c4
Power
Due to the relatively poor electrical
infrastructure in the region, tying into the national grid is not a
feasible solution. SENET therefore undertook studies to investigate
the potential for a standalone 21 MW power plant for the 2021
DFS.
An in-depth study found that the development of
a hybrid solar photovoltaic (“PV”), battery energy
storage system (“BESS”) and thermal power plant
funded by an Independent Power Producer (“IPP”) to
be the best option. This will reduce the CAPEX required, lowering
the initial investment as the equipment is owned by the IPP an in
addition lowers the operational risk with a very competitive power
purchase rate.
The inclusion of the hybrid solar PV along with
the thermal power plant will not only save on energy cost but will
also significantly reduce the mine’s environmental footprint in the
region. The BESS will provide additional redundancy to the thermal
plant and the system will be fully integrated with mining
operations to ensure de-risked mining revenue generation.
This option will not only compliment AGG’s
environmental strategy, but also presents an opportunity to reduce
costs over the life of the Kobada Gold Project with improved
reliability, cost-effectiveness, and redundancy to the total power
requirements.
Highlights of the hybrid power system include
significant emissions reduction compared to a conventional thermal
plant with:
- 43% less fuel consumption,
- 39% less carbon dioxide,
- 34% less carbon monoxide,
- 22% less unburned
hydrocarbons,
- 39% less sulfur dioxide and
- 26% less nitrogen oxides.
In addition to the environmental benefits, the
significant fuel offset from the renewable energy component of the
hybrid power system also de-risks the mine against fuel cost
fluctuations.
Water
Raw water supply shall be achieved by a
combination of raw water abstraction from the Niger River, and
supplementary water supply from the eight open pit outer perimeter
dewatering boreholes.
The water from these supplies shall be stored in
a newly constructed 20,000 m3 raw water buffer dam located
mid-way between the process plant and the Niger River. The process
plant shall feature additional water storage facilities in terms of
a 3,500 m3 raw water pond, a 10,600 m3 process water pond
and a 4,500 m3 stormwater pond, respectively. Process water
will be supplied by pumping supernatant water back from the TSF (as
defined below).
Tailings Management
Epoch Resources (Pty) Ltd undertook the study
design associated with the Tailings Storage Facility
(“TSF”). The TSF is a HDPE lined, full containment
valley type arrangement, with a LOM tailings storage requirement of
45.15 Mt at a deposition rate of 3 million dry tonnes per annum.
The TSF infrastructure includes a slurry distribution pipeline,
catchment paddocks, toe drain system, underdrainage system, curtain
drain system, blanket drain system, solution collection pipeline,
collection sumps and manholes, seepage cut-off trench, storm-water
diversion trenches, emergency spillway, access roads and perimeter
fence-line. A floating barge decants supernatant tailings slurry
water and stormwater from the TSF back to the plant.
The TSF is to be constructed in phases over the
LOM, utilizing open pit overburden material, in five downstream
lifts following the construction of the initial starter embankment.
The construction of Phase 1 has been split into Phase 1A in the
first year of construction and Phase 1B in the second year of
construction.
The full containment TSF design was adopted to
take cognisance of the Global Tailings Standards and International
Commission on Large Dams Tailings Dams Safety, the latter in draft
status, both refer to robust TSF designs and potentially
liquefiable tailings.
Accessibility and
Transport/Logistics
SENET and Bolloré Logistics have undertaken
surveys with detailed analysis of access routes to the Kobada
project site for plant and equipment as well as ongoing production
materials and consumables.
Based on the international routes and climate
conditions, as well as size of cargo to be transported, either of
the two major routes (i.e., from Abidjan or Dakar) will be used for
the project to gain access to Bamako and the Kobada site. These
routes are via:
- International ports to Abidjan
(Côte D’Ivoire) by sea, and Abidjan to site by road freight (for
containers).
- International ports to Dakar
(Senegal) by sea, and Dakar to site by road freight (for abnormal
loads/break bulk).
- Alternatively, international
airports to Bamako Airport (Mali) via commercial airlines (for
airfreight).
From Bamako, transportation of materials and
consumables to the site will be via the existing roads that link
Bamako to Kobada village and the AGG camp comprising two distinct
access routes. The preferred access route to the Kobada site is
accessible in approximately 3–4 hour’s drive in a south-west
direction from Bamako. After crossing the Niger River by barge
there is approximately 8 km of untarred roads.
An alternate access route from Bamako to the
Kobada mine site is via the RN7 (Bamako–Sikasso) for 80 km to the
Sélingué road junction, thereafter an additional 60 km of paved
road to Sélingué. Thereafter there is 52 km of laterite road to
site. The construction of a new low-level bridge across the Fié
River was addressed in the 2021 DFS and included in the capital
expenditure.
Refining
There is no gold refining capability in Mali and
thus doré produced at Kobada is to be refined outside the country,
either in South Africa, Europe, or Dubai. Initial discussions have
been held with refineries and although no agreements have been
entered into, it is anticipated that the doré will be treated at
the Rand Refinery in South Africa.
Environmental and Social
Aspects
ABS Africa (Pty) Ltd (“ABS
Africa”), together with Africa and Business Consulting
Mali (“ABCOM”) and Insuco Limited
(“Insuco”), have been appointed to undertake an
Environmental and Social Impact Assessment
(“ESIA”) for the Kobada Gold Project. The ESIA for
the Kobada oxides feasibility study was completed during Q3 2021
and is currently awaiting approval. Delays to this were due to the
global coronavirus pandemic during 2020 and part of 2021 and
subsequent lockdowns which prevented community consultation taking
place. These consultations were completed with overwhelming support
for the Kobada Gold Project, and the final ESIA report has been
submitted to the Malian Government. The assessment included the
undertaking of a series of baseline studies, as well as the
undertaking of an impact assessment and associated management plan,
together with the required consultation and disclosure process.
Consultations with the relevant interested and
affected parties indicated positive support for the project, while
the ESIA has been accepted by the relevant authorities, with the
permitting process being finalised.
An ESIA amendment only is required for the
Kobada sulphide feasibility study. Various specialist studies have
been completed as part of the sulphide feasibility study, and the
ESIA amendment will be commissioned and once the oxide ESIA is
approved an environmental permit updated.
Key Impacts
Key environmental and social impacts identified
to date as part the ESIA process, are summarized as follows:
- Employment opportunities during the
construction and operational phase. This will translate into an
improved standard of living for those hired and their
families.
- National, regional, and local
businesses and contractors will benefit both directly and
indirectly from Kobada Gold Project-related construction and
operational activities due to the purchase of goods and
services.
- Project development has the
potential to provide increased availability and opportunity for a
wide range of skills development and job training, particularly for
women and local youth.
- During all the phases of the Kobada
Gold Project, payment of dividends, tax on taxable income,
royalties and surface rent will contribute to the fiscus.
- Implementation of a Resettlement
Action Plan and Livelihood Restoration Plan for community members
directly affected by the project infrastructure.
- Impacts on the biological, physical
and social environment that can be mitigated as part of the
Environmental and Social Management Plan.
In order to achieve the appropriate
environmental management standards and ensure that the findings of
the environmental studies are implemented through practical
measures, the recommendations from the ESIA have been used to
compile an Environmental and Social Management Plan
(“ESMP”). The role of the ESMP is to assist AGG in
reducing potential impacts and risks and achieving its
environmental objectives as well as fulfilling its commitment to
the environment. The ESMP will be used to ensure compliance with
environmental specifications, monitoring and management
measures.
AGG will develop a series of Environmental
Action Plans, in order to manage anticipated impacts as per the
requirements of the IFC`s Sustainability Framework.
Capital Costs
The tables below summarize the estimated capital
costs for the Kobada Gold Project as estimated by the independent
consultants. These costs were in almost all cases built up from
quotations and proposals from equipment and service providers.
The 2021 DFS costs currently utilize a
contractor owned and operated mining fleet. The contractor mining
option was found to be the preferred option for the project given
the lower upfront capital cost.
The process plant will be developed in two
phases; first phase will enable processing of saprolite/laterite
ore for the first 7 years and additional crushing and milling
capacity will be added to enable processing of sulphides and/or
blend of oxides and sulphides.
The TSF will be developed in five distinct
phases corresponding to “lifts” of the full containment dam wall.
This has allowed for the costs to be allocated to the initial
capital expenditure budget for the first phase and for sustaining
capital for phases two and three.
All financial analysis for the life of mine
includes the total design, construction and commissioning,
production, sustaining and closure.
Description |
Capital Cost |
Contingency |
Total Capital Cost |
US$ |
US$ |
US$ |
Initial Capital |
Mining Pre-Production and Establishment |
27,094,882 |
352,000 |
27,446,882 |
Plant and Infrastructure |
82,883,293 |
5,788,140 |
88,671,434 |
TSF Phase 1 |
26,750,301 |
2,675,030 |
29,425,331 |
Owner`s Cost |
14,198,934 |
2,150,949 |
16,349,883 |
Working Capital |
4,348,043 |
434,804 |
4,782,847 |
Total Initial Capex |
155,275,453 |
11,400,924 |
166,676,377 |
Table 4: Total Initial Project Capital Costs
Description |
Capital Cost |
US$ |
Mining |
7,002,058 |
TSF Phases 2 and 3 |
28,458,836 |
Mine Wide -Resettlement |
60,833,324 |
Mine Wide-Rehab and Closure |
25,435,654 |
Mine Wide Post Closure Costs |
5,641,917 |
Total Sustaining Capital |
127,371,789 |
Table 5: Total Sustaining Project Capital
Costs
Figure 7: Capital Cost Comparison is available
at
https://www.globenewswire.com/NewsRoom/AttachmentNg/5bcb5942-2a47-482a-b3da-9801c005a88b
Operating Cash Costs
The following operating cash costs were
estimated and incorporated into the financial analysis:
|
LOM |
|
US$/t processed |
US$/oz |
Mining |
11.25 |
421.24 |
Processing |
8.55 |
320.39 |
G & A |
2.23 |
83.34 |
Refining & Transport |
0.10 |
3.70 |
Royalties |
1.40 |
52.46 |
Total |
23.53 |
881.13 |
Table 6: Total Operating Cash Costs LOM
“OPEX has increased based upon significantly
higher global costs of steel and fuel, which impacts power
generation and mining costs specifically. Mining costs have
increased by around $120/oz. The main contributor to this increase
is the additional direct cost of mining waste and ore, accounting
for approximately 50% of this increase. In addition, the impact of
an extended life of mine and the contractor overheads associated
with this, additional grade control, and drilling and blasting
costs in more competent ore accounts for a further 25% increase.
Finally, the impact of an increase in diesel cost used as an input
parameter accounts for a further 25% increase. Despite these global
increases the project delivers a very impressive post-tax free cash
flow of US$550 million,” commented Danny Callow, CEO of African
Gold Group.
Financial Analysis
The Kobada Gold Project financial analysis was
prepared using the discounted cash flow model. In preparing this
model there have been several assumptions and material factors that
have been employed which are presented in Table 7.
Description |
Unit |
Assumption |
Revenue |
|
|
Gold Price |
US$/oz |
1,750 |
Refining Losses |
% |
0.08% |
Discount Rate |
% |
5.0% |
Fuel Prices |
|
|
Diesel Price |
US$/L |
0.797 |
HFO Price |
US$/L |
0.68 |
Fiscal |
|
|
Government Royalty |
% |
3% |
Tax Holiday |
yrs |
3 |
Tax Rate (after tax holiday) |
% of profits |
30% |
Tax Rate if there is loss |
% of annual turnover |
1% |
Dividend Tax |
% |
10% |
Depreciation |
% |
10% over 10 years |
|
|
|
Kilograms to Ounces |
kg/troy oz |
32.1505 |
Diesel SG |
t/m3 |
0.85 |
HFO SG |
t/m3 |
0.97 |
Other Charges |
|
|
Bullion Transport & Refining Costs |
US$/oz |
3.70 |
Exchange Rates |
Rand/US$ |
14.50 |
US$/£ |
0.93 |
US$/A$ |
1.57 |
US$/C$ |
0.81 |
CFA/€ |
655 |
CFA/US$ |
561 |
Table 7: Financial Model Assumptions
The findings of the model are summarized in
Table 8.
DESCRIPTION |
|
PRE-TAX |
AFTER TAX |
LOM Tonnage Ore Processed |
t (000) |
45,028 |
45,028 |
LOM Feed Grade Processed |
g/t |
0.868 |
0.868 |
Production Period |
yrs |
16 |
16 |
LOM Gold Recovery |
% |
95.6% |
95.6% |
LOM Gold Production |
Oz (000) |
1,202 |
1,202 |
LOM Payable Gold After Refining Losses |
Oz (000) |
1,201 |
1,201 |
Gold Price |
US$/oz |
1,750 |
1,750 |
Revenue |
US$ million |
2,102 |
2,102 |
LOM Operating Costs |
US$/oz |
881 |
881 |
AISC |
US$/oz |
972 |
972 |
NPV |
US$ million |
506 |
355 |
IRR |
% |
44.8% |
37.6% |
Discount Rate |
% |
5.0% |
5.0% |
Discounted Payback Period |
Years |
2.33 |
2.33 |
Project Net Cash |
US$ million |
773.1 |
549.9 |
Table 8: Summary of Financial Findings
Figure 8: Cash Flow Projections is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/d280160c-5202-44c8-8bfe-c73282ed0593
The following tables detail the NPV and IRR
sensitivities of the project to gold price, CAPEX, OPEX, recovery
and feed grade. Before these the sensitivity analysis percentages
are shown.
Figure 9: NPV and IRR Sensitivities is available
at
https://www.globenewswire.com/NewsRoom/AttachmentNg/7958c9a9-30fc-49d3-a4e6-97cc04a4020a
Average Gold Price (US$/oz) |
US$/oz |
1,488 |
1,575 |
1,750 |
1,925 |
2,013 |
NPV @ 5% (After Tax) |
US$M |
191 |
246 |
355 |
465 |
520 |
IRR |
% |
23.2% |
28.1% |
37.6% |
47.0% |
51.7% |
Cash Flow Payback |
Years |
3.87 |
3.22 |
2.33 |
1.76 |
1.55 |
Maximum Funding |
US$M |
170.29 |
169.99 |
169.37 |
168.76 |
168.46 |
Table 9: Key project metric sensitivity to gold
price
NPV @ 5% (After Tax) |
Discount Rate |
US$M |
|
0% |
5% |
10% |
Ave Gold Price US$/oz |
1,488 |
324 |
191 |
109 |
1,575 |
399 |
246 |
150 |
1,750 |
550 |
355 |
234 |
1,925 |
700 |
465 |
317 |
2,013 |
776 |
520 |
359 |
Table 10: Gold price and discount rate
sensitivity analysis
NPV @ 5% (After Tax) |
Average Gold Price (US$/oz) |
US$M |
|
1,488 |
1,575 |
1,750 |
1,925 |
2,013 |
Average Head Grade g/t |
0.738 |
46 |
93 |
189 |
281 |
328 |
0.782 |
95 |
145 |
244 |
343 |
392 |
0.868 |
191 |
246 |
355 |
465 |
520 |
0.955 |
286 |
346 |
466 |
587 |
648 |
0.999 |
333 |
396 |
522 |
648 |
712 |
Table 11: Gold price and head grade sensitivity
analysis
NPV @ 5% (After Tax) |
Average Gold Price (US$/oz) |
US$M |
|
1,488 |
1,575 |
1,750 |
1,925 |
2,013 |
Change in OPEX |
-15% |
272 |
327 |
436 |
546 |
601 |
-10% |
246 |
300 |
409 |
519 |
574 |
0% |
191 |
246 |
355 |
465 |
520 |
10% |
136 |
192 |
301 |
411 |
466 |
15% |
108 |
164 |
275 |
384 |
439 |
Table 12: Gold price and operating costs
sensitivity analysis
NPV @ 5% (After Tax) |
Average Gold Price (US$/oz) |
US$M |
|
1,488 |
1,575 |
1,750 |
1,925 |
2,013 |
Change in CAPEX |
-15% |
214 |
268 |
377 |
487 |
542 |
-10% |
206 |
261 |
370 |
480 |
535 |
0% |
191 |
246 |
355 |
465 |
520 |
10% |
177 |
231 |
341 |
450 |
505 |
15% |
169 |
224 |
333 |
443 |
498 |
Table 13: Gold price and capital costs
sensitivity analysis
NPV @ 5% (After Tax) |
Average Gold Price (US$/oz) |
US$M |
|
1,488 |
1,575 |
1,750 |
1,925 |
2,013 |
Recovery % |
80.6% |
49 |
96 |
192 |
285 |
332 |
85.6% |
96 |
147 |
246 |
345 |
394 |
95.6% |
191 |
246 |
355 |
465 |
520 |
96.6% |
201 |
256 |
366 |
477 |
532 |
98.6% |
210 |
265 |
377 |
489 |
545 |
Table 14: Gold price and percentage recovery
sensitivity analysis
Project Opportunities
The DFS has been completed based upon drilling
of only 4 km of the main shear zone. Several other geologically
similar shear zone structures totalling more than 55 km have been
identified on the concession and these are yet to be drilled. There
exists a significant opportunity to increase the size of the
measured and indicated resource through targeted limited infill
drilling in the inferred resources which would be an opportunity to
increase mine life.
The Company, with the assistance of SENET, has
advanced the engineering of the project past the level that is
required for a DFS. A large part of the process plant is designed
to a detailed engineering level, including earthworks and civil
engineering drawings issued for construction. Ongoing schedule
optimization may result in reducing the construction schedule and
bringing first gold forward by a number of months.
Development Timetable
Construction of the process plant and associated
infrastructure including Phase 1 of the TSF for the Kobada Gold
Project is expected to take 19 months. First gold will be achieved
where after the process plant will be ramped up to produce
nameplate capacity within the following 2 production months. The
mine is designed with ease of construction and operation as a
priority. The simplified and compact process plant flowsheet
minimizes the requirement for expensive and long lead process
equipment, thereby substantially reducing the construction
time.
“Utilising known technology to develop a robust
plant flowsheet suitable for West African conditions, yet simple
and flexible in design, has allowed us to fast-track the
development of the engineering to a stage where much of the plant
is now at detailed design level. This allows us to shorten the
schedule significantly and save on engineering costs” says Danny
Callow, Chief Executive Officer of AGG.
The Company also intends to outsource key
specialised components of the plant from the best-in-class
providers, including a state-of-the-art hybrid, solar PV, thermal
and BESS, fuel storage and supply, and the mining and TSF
contract.
Qualified Person
This DFS was prepared under the supervision of
Nick Dempers, Principal Process Engineer at SENET and a “Qualified
Person,” as such term is defined in NI 43-101.The contents of this
press release have been reviewed and approved by:
- Nicholas Dempers, MSc Eng (Chem),
BSc Eng (Chem), BCom (Man), Pr.Eng (RSA), Reg.No 20150196, FSAIMM
(RSA), Principal Process Engineer of SENET (Pty) Ltd with respect
to processing and infrastructure,
- Uwe Engelmann, BSc (Zoo. &
Bot.), BSc Hons (Geol.), Pr.Sci.Nat. No. 400058/08, MGSSA, a
director of Minxcon (Pty) Ltd. with respect to mineral
resources,
- Ghislain Prévost, BSc Eng.
(Mining), MScA Eng. (Mining) and P. Eng. (OIQ #119054), a Principal
Mining Engineer with DRA Americas Inc. with respect to mineral
reserves and mining methods,
- Guy John Wild, BSc Eng., MSc Eng.
and P. Eng (#940269), a Director and Senior Tailings Dam Engineer
at Epoch Resources with respect to the tailings dam,
- Stephanus Coetzee, B.Sc Hons
(Environmental Management), Pr.Sci.Nat. No 40044/04, Director of
ABS Africa with respect to the ESIA.
Each of the aforementioned individuals are
independent Qualified Person as defined by NI 43-101.
About African Gold Group
African Gold Group is a TSX Venture Exchange
(TSX-V: AGG) listed exploration and development company with a
focus on building Africa’s next mid-tier gold producer. The Company
has a highly experienced board and management team with a proven
track record in the African mining sector operating mines from
development through to production. AGG’s principal asset is the
Kobada Project in southern Mali, which is in an advanced stage of
development having completed the 2020 DFS and is targeting gold
production of 100,000 oz per annum. As well as the initial Kobada
Gold Project, other exploration locations have been identified on
the Kobada, Farada and Kobada Est concessions, offering potential
for an increase in resource. For more information regarding African
Gold Group visit our website at www.africangoldgroup.com.
For more information:
Danny CallowPresident and Chief Executive Officer+
(27) 76 411 3803Danny.Callow@africangoldgroup.com |
Daniyal BaizakVice President, Corporate
Development +1 (647) 835
9617Daniyal.Baizak@africangoldgroup.com |
|
|
Scott EldridgeNon-Executive Chairman of the
Board+1 (604) 722 5381Scott.Eldridge@africangoldgroup.com |
Camarco (Financial PR)Gordon Poole / Nick Hennis
+44 (0) 20 3757 4997AfricanGoldGroup@camarco.co.uk |
|
|
Cautionary statements
This press release contains “forward-looking
information” within the meaning of applicable Canadian securities
legislation. Forward-looking information includes, but is not
limited to, statements regarding, the 2021 DFS, production
potential and economics of the Project, upside potential of the
Project, drilling and exploration plans of the Company, mine plan,
mine schedule, processing of materials, power and water
infrastructure, tailings management, logistics, refining,
environmental and social aspects, key impact, capital costs,
operating costs, financial metrics, project opportunities and
development timetable with respect the Project. Generally,
forward-looking information can be identified by the use of
forward-looking terminology such as “plans”, “expects” or “does not
expect”, “is expected”, “budget”, “scheduled”, “estimates”,
“forecasts”, “intends”, “anticipates” or “does not anticipate”, or
“believes”, or variations of such words and phrases or statements
that certain actions, events or results “may”, “could”, “would”,
“might” or “will be taken”, “occur” or “be achieved”.
Forward-looking information is subject to known and unknown risks,
uncertainties and other factors that may cause the actual results,
level of activity, performance or achievements of AGG to be
materially different from those expressed or implied by such
forward-looking information, including but not limited to: receipt
of necessary approvals; general business, economic, competitive,
political and social uncertainties; future prices of mineral
prices; accidents, labour disputes and shortages; available
infrastructure and supplies; the COVID-19 pandemic and other risks
of the mining industry. Although AGG has attempted to identify
important factors that could cause actual results to differ
materially from those contained in forward-looking information,
there may be other factors that cause results not to be as
anticipated, estimated or intended. There can be no assurance that
such information will prove to be accurate, as actual results and
future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue
reliance on forward-looking information. AGG does not undertake to
update any forward-looking information, except in accordance with
applicable securities laws.
NEITHER TSX VENTURE EXCHANGE NOR ITS
REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE
POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR
THE ADEQUACY OR ACCURACY OF THIS RELEASE.
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