Proactive's interview with Danny Callow African Gold Group Inc has unveiled the latest definitive feasibility study (DFS) for its flagship Kobada gold development project in Mali, which it said highlights the asset's "very attractive economics".
The study incorporates the recently announced 66% increase in the proven and probable reserve at the potential mine, which could generate over 1.2 million ounces of gold over 16 years, averaging 100,000 ounces in the first ten years.
The pre-tax net present value (NPV) was pegged at US$506 million, while the internal rate of return (IRR) was put at 45%.
"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," noted African Gold CEO Danny Callow in a statement.
"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," Callow added.
The pre-production capital required was put at around US$152 million, according to the DFS, which does not include working capital and contingencies, while the total project cash flow pre-tax was put at US$733 million with net cash flow after tax and capital expenditure of US$550 million. Once output begins, the capital payback was estimated at 2.3 years.
Notably, the project will be run by a hybrid thermal and solar power plant, funded by an independent power producer, which will substantially reduce greenhouse gas emissions, said the company.
There is also the potential to significantly increase the resource and reserve along strike and depth at the asset.
CEO Callow noted: "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."
Kobada lies in southern Mali, around 125 kilometres (km) km in a straight-line south-southwest of the capital city Bamako and is adjacent to the Niger River and the international border with Guinea.
It consists of one mining exploitation permit (Kobada) of 136 square kilometres and two exploration permits (Faraba and Kobada Est), which are wholly owned by AGG Mali SARL - a 100% owned subsidiary of African Gold Group.
African Gold Group posts impressive updated DFS for Kobada project in Mali - YouTube