African Gold teams up with Newmont in Ghana

African Gold Group (AGG-V, AGGFF-o)is joining hands with Newmont Mining (NMC-T, NEM-n) to develop its Mankranho gold project in Ghana.

Under the arrangement, Newmont can earn up to a 70% interest in African Gold’s Mankranho concession by spending up to US$8 million on exploration.

The Mankranho concession is in the Brong Ahafo region of Ghana at the northeastern end of the Sefwi gold belt.

Mankranho’s 108-sq.-km property surrounds on three sides the northern extension of Newmont’s Ahafo project. The 20-million-oz. gold project started production in July 2006 and produces 500,000 oz. gold each year.

In order to earn a 51% stake in Mankranho, Newmont must spend US$4 million on exploration in the first 42 months of the option agreement.

Newmont can earn an additional 19% by spending another US$4 million within two years of signing the joint-venture agreement.

The government of Ghana is entitled to receive 10% of the net cash flow from operations under the deal.

“Mankranho is ideally situated to benefit from its proximity to Newmont’s considerable infrastructure at Ahafo,” African Gold’s president, Michael Nikiforuk, said in a statement.

Drill highlights from Mankranho so far have included intersections such as 16.5 metres of 2.82 grams gold per tonne from a depth of 95.5 metres; 1.5 metres of 5.21 grams gold starting at 132.5 metres; and 16 metres of 1.86 grams gold from 60.5 metres.

The Toronto-headquartered African Gold Group controls 12 gold concessions that have been consolidated in five standalone exploration projects in West Africa. Three of the projects are in Ghana and the remaining two are in Mali.

Africa Gold shares recently traded at about 17 apiece; the company has 32.63 million shares outstanding.

The stock has traded at between 10 and $1.25 per share over the last year.