African Gold Group, Inc. Mali Minister of Mines Grants Extension of Kobada License in Order to Complete Feasibility Study

African Gold Group, Inc., (TSX-V: AGG and OTC Other: AGGFF)  report today that the Government of Mali’s Minister of Mines, the Honourable, Monsieur Amadou Cisse, has formally granted AGG an extension of its Kobada, Mali exploration license.

AGG’s application for extension of the exploration license was granted to facilitate AGG completing a Feasibility Study for the Kobada (Mali) gold project. The extension of the exploration license calls for AGG to submit a Feasibility Study to the Ministry of Mines (Mali), on or before June 28, 2012. AGG anticipates submitting a positive Feasibility Study. The submission of a positive Feasibility Study is required for securing an Exploitation (Mining) License.

On July 14, 2011 AGG issued a press release announcing the results of its 43-101 compliant Preliminary Economic Assessment (“PEA”) for the Kobada (Mali) gold project. The PEA estimates an after-tax Net Present Value (NPV) of US$216.9 million from commencement of construction and an after-tax Internal Rate Of Return (IRR) of 90.57% using a base case of US$1,100 per ounce of Au and a discount rate of 5%. Kobada’s sensitivity to the price of gold is illustrated by a gold price variation to US$1,450 per ounce of Au which generates an after-tax Net Present Value of US$415.8 million from commencement of construction and an after-tax Internal Rate Of Return of 160.10% (all other variables remain constant).

With such a large incremental value jump in NPV from $1,100 per ounce to $1,450 per ounce gold, we can only imagine what the IRR and NPV numbers would be at today’s gold price north of $1,800. Needless to say, the profitability of this mine would be literally ‘off the chart’ and with African Gold continuing to extend the boundaries of this already sizable gold discovery at Kobada, we expect this project to get even better over the next few quarters. 

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