African Gold pushes Kobada ahead at no extra cost

African Gold Group (AGG-V) has found a way to drive its Kobada project in Mali forward without having to spend extra cash.

The Toronto-based company released drill results that were fully funded by an un-named company that further defines mineralization at the project as well as giving clues to the metallurgy that will be needed to extract it.

“We can categorically say that we have moved the project forward at no cost to us and we’re under no obligation to do a deal,” African Gold’s president Michael Nikiforuk says.

The unusual situation arose thanks to the financial meltdown of 2008. By 2009 African Gold realized that it didn’t have the funds to advance its projects and began to look for a well-funded third party that could.

Nikiforuk says the key to attracting such interest was the hypothesis of the company’s director and technical advisor Pierre Lalonde.

Lalonde surmised that mineralization at Kobada would be amenable to extraction via gravitational methods — a scenario which if proven correct would dramatically reduce extraction costs.

Companies became interested, and in May 2009 African Gold signed a confidentiality agreement with one such company. The agreement allows the company to do due diligence on the project while providing African Gold with drill results to put into its technical database.

While the agreement prevents African Gold from disclosing the name of the third party, Nikiforuk says both mid-tier and senior gold companies have shown interest.

Thus far, the un-named company has put 22 reverse circulation holes and 2 diamond drill holes into the ground at Kobada. The goal of such drilling was not only to better understand mineralization but also to generate samples to test the metallurgy.

Nikiforuk says a full metallurgical report should be done within the next month.

Drill results in the latest program came from a zone African Gold has released a compliant resource on, and prospective areas to the north but along strike from the zone.

Drilling inside the zone 1 area was seen on 100-metre sections and was highlighted by intercepts of 42 metres grading 1.91 grams gold; 18 metres grading 7.04 grams gold; 8 metres grading 6.13 grams gold and 11 metres grading 2.42 grams gold.

In all 24 holes were drilled in the zone — two of which were diamond drill holes.

The remaining 13 holes were drilled to test for “blue-sky” potential outside of the zone and were highlighted by 21 metres grading 4.89 grams gold and 10 metres grading 1.06 grams gold.

All of the above intercepts came from separate holes but do not represent true widths.

African Gold says the drill program shows the potential to increase overall grade and in situ gold content in the saprolite by up to 39%.

As for the resource estimate completed by African Gold on zone 1 in May 2008, it put 8.4 million tonnes grading 1.72 grams gold for 470,461 total oz. in the inferred category using a cutoff grade of 0.5 gram gold.

On the metallurgical side, the company reports that gravity and cyanide leach testing was done on 280 kg of reverse circulation drill chips and core rejects. African Gold says early results show that both processing routes provide high gold recovery.

When asked if the company currently doing work on the project was interested only in the Koboda asset or in African Gold as a whole, Nikiforuk said it could go either way.

He said the company has also expressed interest in its Asankrangwa gold belt holdings in Ghana.

Asankrangwa represents a massive land package, expanding over 456 sq. km and it sits on strike with Keegan Resources (KGN-T) Esaase project, which currently has 1.45 million oz. gold in the inferred category.

Since early February, African Gold Group’s shares have traded between 40¢ and 49¢. The company has a 52-week trading range of 8¢- 95¢ per share and 65 million shares outstanding.