Gold: $1839/oz
TSX-V: AGG
Last Price: 0.18
       

Kobada Gold Project, Mali

Overview

Kobada Gold Project, Mali

The Kobada Gold Project (“Kobada”) is an advanced stage gold development project located in Mali, Africa`s 3rd largest gold producing nation. The Company owns a 90% interest in the Kobada gold project with the Government of Mali retaining a 10% carried interest.

The Project is located approximately 126 km south-west of Bamako, the capital city of Mali, in the Birimian Greenstone belt, with excellent transportation links to the capital and excellent logistics routes via other West African ports.

Southern Mali is considered a politically stable jurisdiction and a home to a number of gold producers. These include Endeavour Mining, Barrick, AngloGold Ashanti and Resolute Mining.

Economically Attractive Project

  • Pre-tax IRR of 45.5% and NPV5% of US$284 mln
  • Post-tax IRR of 41.1% and NPV5% of US$226 mln

Near Term Gold Producer

  • Targeted start of construction in Q4 2020, first gold in Q2 2022
  • DFS completed to high engineering standard with firm quotes from equipment providers
  • 3 Mtpa plant with annual gold production of 100,000 ounces at an AISC of US$782/oz over LOM

Low construction cost and cost profile

  • Simple contractor driven mine plan and Gravity + Carbon-in-Leaching (“CIL”) processing plant with a total capital cost of US$136 mln (including contingency)
  • Predominantly a “free-dig” mining operation with LOM Operating Cost of US$704/oz
  • Once in production, AGG will be one of the lowest cost producers in West Africa

Large and Growing Mineral Resource

  • Measured & Indicated: 1.2 Moz Au @ 0.86 g/t
  • Inferred: 1.1 Moz Au @ 1.33 g/t
  • Proven & Probable: 754,800 oz Au @ 0.87 g/t

Fully Licensed and Permitted

  • Mining license is valid until July 31, 2045

Significant Upside Potential

  • Only 4 km within a larger 30 km shear zone has been drilled to date
  • Opportunity to quickly convert 575,000oz of inferred oxide resource

Definitive Feasibility Study

Mine Model Summary (After-tax)
LOM Tonnage Ore Processed t(000) 27,134
LOM Feed Grade Processed g/t 0.873
Production Period Years 9.4
LOM Gold Recovery % 95.7%
LOM Gold Production OZ(000) 728.7
Gold Price US$/oz 1,530
Revenue US$mln 1,114
Total Initial Capital Cost (including contingency) US$mln 136.1
LOM Operating Costs US$/oz 704
Discount Rate % 5%
Discounted Payback Period Years 3.82
Project Net Cash US$mln 325.7
AIS US$/oz 782
NPV US$mln 226
IRR % 41.1%

The mine plan targets higher grade ore zone at the early phase of the project to feed into the process plant in order to produce 100,000 oz per annum for the first 5 years, and thereafter lower production output as the grade drops and stockpiles are treated. Over the life of the project, 27.13 Mt of ore will be mined and delivered to the processing facility. Stripping ratio of 2.67:1 over LOM

Key Project Metrics Sensitivities to Gold Price
    Average Gold Price (US$/oz)
    1,301 1,377 1,530 1,683 1,760
NPV @ 5% (After Tax) US$mln 124 158 226 294 329
IRR % 25% 31% 41% 51% 56%
Cash Flow Payback Years 5.17 4.63 3.82 3.38 3.21
Maximum Funding US$mln 138.20 138.02 137.61 137.21 137.01

Mineral Resource & Reserve Estimates

Resource Classification Tonnage
(Mt)
Grade
(g/t)
Contained Gold
(kg)
Contained Gold
(oz)
Measured 24.63 0.79 18,379 590,910
Indicated 22.02 0.95 18,673 600,350
Measured & Indicated 46.66 0.86 37,052 1,191,270
Inferred 31.54 1.33 35,421 1,138,810

Notes:

  1. Pit constrained mineral resources were estimated at a cut-off grade of 0.35 g/t Au
  2. Mineral resources were estimated using long-term gold price of US$1,600 per ounce of gold
  3. Geological losses applied to mineral resource classification of 5% Measured, 10% Indicated and 15% Inferred
  4. A recovery of 95% for gold was used
  5. Only resources within the resource pit are declared
  6. The Mineral resource is inclusive of mineral reserves
  7. Numbers may not add due to rounding
Reserve Classification Tonnage 1
(Mt)
Grade
(g/t)
Contained Gold
(kg)
Contained Gold
(oz)
Proven2 11.04 0.95 10,460 336,300
Probable2 16.09 0.81 13,017 418,500
Proven & Probable2,3,4 27.13 0.87 23,476 754,800

Notes:

  1. Numbers may not add due to rounding
  2. Mineral reserves were estimated using a gold price of US$1,450 per ounce of gold
  3. The Cut-off Grade used to estimate the Mineral Reserves was 0.37 g/t, with a dilution of 5%
  4. Only Laterite, Oxide and Transition material from the Measured and Indicated Resource Categories were considered for the Reserve Estimate

Exploration Potential

With only a limited amount of additional drilling, the Company expects to convert further ounces from the inferred oxide resource category to the indicated category. With a resource to reserve conversion of 84%, and a total of 574,850 oz of oxide resource in the inferred category, it is expected that the overall reserve could increase significantly.

The drill results of Phase 1 and 2 (2019 – 2020) indicate that the deposit remains open at depth and along strike, with a significant extension being delineated to the north of the main mineralized shear zone.

While only 4 km of the main shear zone at the Kobada project were considered for the DFS, a further 26 km of shear zones have been identified on the concessions with high-grade satellite deposits at the Gosso target and Faraba. These targets represent an attractive potential for the future sources of production.

The Company is confident that with limited drilling and a high resource to reserve conversion rate, the inferred oxide resources can be converted into additional reserves. This will be a priority during 2020 and will result in mine life being extended. Additional exploration on the highly prospective northern main shear zone and the Gosso target is expected to further increase the probability of additional resources, and this will be a target during 2020-2021.

Exploration Potential Map

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