African Gold upsizes financing to $5 million
African Gold Group Inc. [AGG-TSXV, AGGFF-OTCQX, 3A61] said it has upsized a previously announced non-brokered private placement, with proceeds earmarked for the company’s Kobada Gold Project in Southern Mali.
The company said the upsized private placement will be for gross proceeds of up to $5 million via the sale of up to 35.7 million units priced at 14 cents each. The previous target was $3.5 million.
Under the terms of the private placement, each unit consists of one common share of the company and one half of one common share purchase warrant. Each warrant entitles the holder to acquire one additional common share of the company at an exercise price of $0.25 for 24 months from the date of issuance. Closing is expected to occur by November 8, 2021.
If at any time after four months and one day from the closing of the offering, the common shares trade at $0.50 or higher (on a volume weighted adjusted basis) for a period of 10 consecutive days, the company will have the right to accelerate the expiry date of the warrants to a date that is 30 days after the company issues a news release announced that it has elected to exercise this acceleration right.
News of the financing comes after African Gold announced that the Ministry of Environment, Sanitation and Sustainable Development of the Republic of Mali has approved the Environmental and Social Impact Assessment (ESIA) for the Kobada Gold project and issued an updated Environmental Permit.
Back in September, 2021, African Gold announced the results of a definitive feasibility study, which envisages a 3.0 million tonne per-year operation, producing 1.2 million ounces of gold over a 16-year mine life, with average annual gold production of 100,000 ounces in the first ten years.
The pre-production capital requirement is forecast to be US$152 million.
The Kobada deposit is expected to be mined as an open pit operation, utilizing articulated trucks and a hydraulic loader. Approximately 66% of the raw material to be mined is contained in saprolite and laterite ores.
However, due to the relatively poor electrical infrastructure in the region, tying to the national grid is not feasible. So, the company has looked to deploy a standalone 21-megawatt power plant.
Studies indicate that the development of a hybrid photovoltaic, battery energy storage system and thermal power plant funded by an independent power producer is the best option.
Construction of the process plant and associated infrastructure is expected to take about 19 months.
African Gold recently increased the total proven and probable reserves at the project to 1.23 million ounces of gold, a 66% increase from an earlier feasibility study dated June 17, 2020.
Total resources, including inferred resources have increased to 3.1 million ounces, the company said.
On November 4, 2021, Africa Gold shares jumped 11% or $0.015 to 15.5 cents on volume of 268,410. The shares are currently trading in a 52-week range of were trading at 14 cents in a 52-week range of 21 cents and 11 cents.