African Gold Group, Inc. (TSX-V: AGG) ("AGG" or the "Company") is pleased to announce the completion of the Feasibility Study for the Kobada Gold Project. The Study demonstrates the robust nature of the project, with an “All In Sustaining Costs” (“AISC”) of US$788 per ounce and free cash flow of US$122 million net of all capital expenditure, operating costs, royalties and taxation in Mali, at a gold price of US$1,200 per ounce.

The Feasibility Study establishes the maiden Mineral Reserve for the project, containing 511,000 ounces of gold within two oxide open pits. A body of comprehensive test work, undertaken as part of the study, confirms the project’s processing methodology and confirms the robust economic parameters established in the Preliminary Economic Assessment, published December 23, 2014.

The Company plans to use the Feasibility Study to support funding initiatives for the development of the Kobada Gold Project.

FEASIBILITY STUDY HIGHLIGHTS

  • Feasibility Study contemplated a mining and processing operation treating only oxide ore types.
  • Proved and Probable Reserve of 12.7 million tonnes at 1.25g/t Au, containing 511,000 ounces of gold;
  • Mining and processing supports gold production exceeding 50,000 ounces per annum over an eight year mine life;
  • Average cash costs of US$557 per ounce of gold produced;
  • All in sustaining cost (AISC) of US$788 per ounce produced;
  • Total cash flow of US$122 million net of all costs, royalties and taxes at a gold price of $1,200 per ounce;
  • Net present value at 5% discount rate (NPV5%) of US$86 million after taxes;
  • Internal rate of return (IRR) of 43% after taxes.
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Dclen Franzmann Q And A W MAGIC

 

As part of continuing research being conducted by Global Business Reports (GBR), Declan Franzmann, President & CEO of the African Gold Group had a question & answer session with Mining In Africa Country Investment Guide (MAGIC).

About MAGIC

Global Business Reports (GBR) and African Mining Indaba LLC is a partnership for the production of a comprehensive intelligence report on the continent’s mineral sector. The third edition of the Official Mining in Africa Country Investment Guide, will be launched next February 2016, as the only official publication providing country-specific information at Africa’s top mining event, the 2016 Investing in Africa Mining Indaba™ held in Cape Town, South Africa.

With 54 sovereign African nations, Africa is arguably the most culturally, politically and geological diverse continent in the world. MACIG aims to guide the global mining and investment community through the challenges and opportunities of this resurgent continent, explaining the issues they must be aware of, highlighting those governments who welcome their investment and emphasizing the sheer scale of the mineral wealth available.

Read More

 

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Kobada Exploration

Mine designs have been completed for the Mineral Resource detailed in the PEA. Three discrete pits were designed after optimisation using Whittle Software: South, Central and North Pits.

The parameters used in pit design include:

  • Batter height – 10m;
  • Batter angle - 50°;
  • Berm width – 6.5m;
  • Ramp width – 25m;
  • Ramp gradient – 10%;
  • Inter-ramp slope angle 36°

The inventory establish within these pit designs was estimated to be 24 million tonnes at 1.01 g/t Au and contained gold of 779,000 ounces.

The waste to ore strip ratio was estimated to be 1.9 to 1, with a total volume of waste estimated to be 69Mt.

Published in Mali

Stage 2 Process Flowsheet

Process Flowsheet

Stage 2 Plant

Mali Map

AGG plans to develop the Kobada Project in two stages. Both stages utilise similar processing technology. Stage 1 aims for the most effective use of pre-production capital expenditures while Stage 2 aims to optimise operating efficiencies (and hence operating expenditures).

Stage 2 is to target the production of more than 50,000 Au ounces per annum by processing 1.6 million tonnes of ore per annum.

The plan is to focus predominantly on the saprolite ore types. The aim is maximising throughput and gold recovery in order to maximise operating efficiencies and profit margins.

The processing concept is simple, with crushing of harder ore types (laterite and quartz) to -2mm before scrubbing, pre-concentration and gravity concentration. The run of mine ore feed to the plant is reduced to a bulk concentrate of around 2% of the original feed mass. This concentrate is expected to contain around 86% of the gold, which is then liberated by traditional grinding and leaching techniques.

The inclusion of the leaching circuit allows for the treatment of greater volumes of concentrate, which means that the process can achieve greater gold recovery.

In gravity separation of Kobada ores, there is a direct correlation between the amount of concentrate produced and recovery. That is, allowing more of the material to pass to the concentrate means more of the gold will also pass to the concentrate.

The ball mill and leaching circuit allows for the efficient treatment of this concentrate prior to electrowinning and smelting.

AGG anticipates gold recoveries of around 85% with this technology. Further information can be found in the Preliminary Economic Assessment from November 2014.

Published in Mali

Stage 1 Process Flowsheet

Process Flowsheet

Stage 1 Plant

Mali Map

AGG plans to develop the Kobada Project in two stages. Both stages utilise similar processing technology. Stage 1 aims for the most effective use of pre-production capital expenditures while Stage 2 aims to optimise operating efficiencies (and hence operating expenditures).

Stage 1 is to target the production of 20,000 Au ounces per annum by processing 750,000 tonnes of ore per annum.

The plan is to focus predominantly on the laterite ore types and shallow, high grade quartz veins and saprolite that the resource is comprise of. The aim is maximising high early cash flow by mining shallow (low strip ratio) and higher grade parts of the resource.

The processing concept is simple, with crushing of harder ore types (laterite and quartz) to -2mm before scrubbing and gravity concentration. The concentrate is further separated on a shaking table prior to smelting to produce gold bars as dore’.

AGG anticipates that the coarse nature of the gold will allow gold recoveries of around 75% with this technology. Total pre-production capital expenditures are expected to be in the order of USD12 million.

Published in Mali

Plan View of Kobada Exploration Concession

Kobada Exploration

As a result of the exploration and resource growth potential, the Company believes that it can quickly add shallow and economically mineable resource into the production plan.

This is an important facet of the Kobada Project, particularly in light of the low (but consistent) tenor of gold grades that comprise the Mineral Resource Estimate.

Significant value can be added to the project by maintaining a sub 1 to 1 strip ratio (that is waste to ore ratio). This allows the final pit cut backs to be scheduled later in the mine plan, improving cash flows and all economic measures (such as NPV and IRR).

The deployment of exploration drills to test the extensions of the main shear zone, splay and parallel structures, initially down to a depth of 25m may significantly alter the projects economics within a short period from the commencement of mining operations.

This is about adding low cost mineable ounces.

Published in Mali

Plan View of Kobada Exploration Concession

Kobada Exploration

The Kobada Project represents a significant opportunity for resource growth, and the Company believes that the resource target may well be in excess of 5 Moz, although significant additional work, in the form of resource drilling, is required to achieve this.

The Company’s strategy is to establish an operating gold mine on the current resource, and grow the resource by funding drilling from operational cash flows.

The primary target is outcropping or shallow oxide ore types down to a maximum depth of 25m.

There is significant opportunity to establish these shallow resources along the main Kobada Shear Zone, bit there is also significant opportunity on the splays and parallel shear zones that occur elsewhere on the 215km2 lease holding.

Published in Mali

Kobada Gold Project Mineral Resource Estimate Above 0.3 g/t Au

Resource Category Mt Au g/t Au koz
Measured Mineral Resource 10.8 1.06 367
Indicated Mineral Resource 25.2 1.04 843
Total M&I Resource 36.0 1.05 1,210
Inferred Mineral Resource 39.0 1.0 1,205

Plan View of Mineral Resource

Resource Collar

Section View of Mineral Resource

Mali Map

The Kobada Measured and Indicated Mineral Resource totals 36 Million tonnes at 1.05g/t Au, containing 1.2 million ounces of gold.

The Inferred Mineral Resource contains a further 39 million tonnes at 1.0g/t Au for an additional 1.2 million ounces of gold.

The Kobada Mineral Resource stretches over 4km of strike, although the mineralised structure has been mapped over 12 km of strike.

The resource has been established from the drilling of more than 1,095 individual drill holes on the property, predominantly of diamond and reverse circulation drilling methods.

The total quantity of drilling completed to date is more than 126,000 metres (126km or 78.6 miles).

The resource comprises four main ore types:

  • Laterite ore, overlaying the main deposit;
  • Oxide ore types consisting of ultra-weathered saprolite containing quartz veins;
  • Transitional and fresh ore types consisting of partially and un-weathered sedimentary rocks and quartz veins.

The Kobada deposit is unusual for the depth of weathering, with the base of oxidation occurring up to 120m below surface in some locations.

Published in Mali
Mali Map 150206

The Kobada Gold Project lies on the western limb of the Man Shield. The Man Shield consists of Birimian Greenstone Belts and Proterozoic granites. It is host to a number of significant gold deposits including:

  • Siguiri 4.9 Moz, 84km west;
  • Kalana 1.5 Moz, 105km ssw;
  • Morila 5.9 Moz, 187km east;
  • Syama 5.2 Moz, 290km ese.

All of these existing mines are located in Birimian Greenstone Belts similar to Kobada.

Published in Mali

Introduction

This Management Discussion and Analysis (“MD&A”) is an explanation through the eyes of management, of how African Gold Group, Inc. (the “Company” or “AGG”) performed during the periods covered by the audited consolidated financial statements filed concurrently with this MD&A, and of AGG’s financial condition and future prospects. The MD&A covers the year ended December 31, 2014 and the subsequent period up to the date of the filing. The MD&A compliments and supplements the consolidated financial statements of AGG. For a full understanding of the financial position and results of operations of the Company, the MD&A should be read in conjunction with the Consolidated Financial Statements for the year ended December 31, 2014 and 2013 and notes thereto. The Company’s interim consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). All dollar amounts are stated in U.S. dollars, unless otherwise noted.

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