Michael Nikiforuk at African Gold Group (TSX: V.AGG, Stock Forum) has been plugging away for eight years in Mali and Ghana.
The CEO’s timing in West Africa is good. Several prospectors, including one upon which I have staked my Ticker Trax legacy, are printing significant gold intercepts in Ghana, Mali, Burkina Faso and elsewhere on that part of the African continent.
Yet Mr. Nikiforuk, based in Toronto, is just starting to receive investor kudos for rock at its Mali project -- rock that might be worth $85 a metric ton and perhaps more.
“With almost 20,000 meters of drilling under our belt, I am convinced the market will come around to our Kobada project,” he tells me. “We have that conviction, all of us on the team.”
Now, I’ve heard that kind of talk before. I’ve been busted by bravado on more than one occasion in the past 25 years. Still, Mr. Nikiforuk is referred to me by several researchers and investors who share his zeal.
If they were folks I did not know, or respect, I would throw the Mike out with the reverse-circulation dirt bags. Happily, that is not the case …and after many moons of discussion, I have agreed to tour African Gold Group’s 12 concessions, the most advanced being Kobada. The Big K in Mali shares its first letter with the Big K in Ghana, the Kibi Gold Belt. Kobada’s Canada-compliant resource amounts to 740,000 ounces of the metal.
I asked Michael, ahead of my visit later this month (a tour that he is hosting, along with two or three other companies on the continent), what it will take to get AGG’s Canada-traded shares above the $1 level, a notch they have not seen since early 2008. The market cap of AGG fully diluted is about $60 million.
Mr. Michael N., by the way, had his company take the step of lending money to directors so that they could exercise (and presumably purchase the underlying stock) 15-cent warrants. The stock right now is about 75 cents Canadian. See the pact.
Michael Nikiforuk: “In October of 2010 we commissioned a Montreal based engineering firm to undertake a Scoping Study or Preliminary Economic Assessment for AGG’s Kobada gold project. AGG anticipates that the Study will be delivered to AGG on or before PDAC in Toronto (early March). AGG is optimistic the Scoping Study will be positive and therefore will include the recommendations of the Engineering Firm to advance the project through the Feasibility Study stage. Moving forward, AGG’s strategy will be to continue to develop the project with the conviction that the addition of tonnes and ounces will be reflected by an increase in AGG’s market cap. In the event an attractive offer presented itself that met with the approval of the majority of shareholders (20% management / 70% large firms / 10% individual investors) the project would be sold.”
I asked Michael N. when was the last time a Newmont (NYSE: NEM, Stock Forum) or an AngloGold Ashanti (NYSE: AU, Stock Forum) visited the property? He responded, “Goldfields (NYSE: GFI, Stock Forum) of South Africa is our immediate neighbour, having purchased the remaining 90% of Glencar Mining in July 2009. Any and all AGG ounces would be incremental to a Goldfields project, where they had five rigs operating in 2010. AGG has a significant number of Confidentiality Agreements with mining companies and as a result of this, we are not at liberty to disclose the names of these companies. What we can say is AGG has hosted a significant number of site visits to Kobada, Mali, in 2010 … and AGG remains in continuous discussion with a number of these companies. An arms-length regional producer independently drilled the project and the results were announced in March of 2010. (See those results.)
Thom C: What can make this property stand out against some of the many other projects out there in West Africa?
Mike: “The outstanding characteristics of AGG’s Kobada gold project are as follows: the oxide profile or depth of oxidation at Kobada frequently reaches 100 vertical meters from surface. AGG has only explored 10% of the 216 sq km footprint. Artisanal gold diggings are present throughout the entire footprint, which bodes extremely well for additional ounces and tonnes. Preliminary Metallurgical Testing indicates that a gravity plant could recover in excess of 90% of the gold (without cyanide treatment). AGG conducted an airborne geophysical survey that identified six geophysical anomalies of which six are coincident with Potassium anomaly, indicative of hydrothermal alteration and coincident with significant local gold diggings.”
As for what the industry calls “blue sky,” an overused term if you ask me, but hey, whattya?
“We believe our potential in the oxide profile alone, the first 100 vertical meters from surface, is three million ounces. We are generating mineralized intercepts of up to 100 meters,” he said. As for West Africa comparables, Michael N. mentioned Avion with its Tabakota & Segala project; and Orezone (TSX: T.OZN, Stock Forum) and Volta Resources (TSX: T.VTR, Stock Forum) in Burkina Faso.
I do not own AGG shares. Maybe I should. We’ll learn more later this month on site … and at the Ghana concessions.
- For more on our Mexico research into the next Osisko Mining – Latino style – please subscribe to Ticker Trax. I’m just back from the site. This week, we are off to Colorado to see a mine that might be another LODE in terms of one-month return to risk-oriented investors.
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THOM CALANDRA of Ticker Trax helps his audience find value in a quagmire of investment choices. Thom was founding editor of MarketWatch, CBS MarketWatch and FT MarketWatch. He was the voice of Thom Calandra's StockWatch and The Calandra Report. Thom has been covering life-sciences and natural resources since 1988.
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