Toubani moves to finance African gold play

Toubani Resources has received significant interest from parties looking to fund its Kobada gold project in Mali and has now appointed resources financial specialist Endeavour Financial to vet the various approaches it has received to fund the project.

Endeavour, which operates out of both London and Vancouver has a track record of securing funding amounting to billions of dollars for other resource projects, some of which were in Mali.

In an attempt to blow out the existing 9-year predicted mine life at Kobada, Toubani is also launching a deep drill program and will look to add more shallow oxide ounces to the project courtesy of the drill bit.

The appointment of the well-regarded Endeavour follows the release of Toubani’s definitive feasibility study on the project that presented an outstanding set of numbers highlighting the project’s cost-efficiency, long mine life and significant production potential. The DFS also triggered funding interest in the project.

Kobada is forecast to produce 162,000 ounces of gold per year using an all-in sustain cost base of just US$1004 per ounce (A$1520) to deliver $US166 million (A$246m) in annual pre-tax cash flows across an initial 9.2-year mine life.

The study assumed a US gold price of US$2200 (A$3333) per ounce against a capital expenditure backdrop of US$216 million (A$327 million). Notably, the project generates a post-tax net present value (NPV) of US$635m (A$962m).

If a gold price closer to today’s rate of US$2600 (A$3939) was applied, the NPV could jump to as high as US$897m (A$1.360 billion).

Toubani says Endeavour has an impressive list of projects it has worked on in the past in Mali such as the 7.5 million ounce Morila mine, Barrack Gold’s Loulo deposit and Resolute Mining’s massive Syama.

As part of the plan to move Kobada towards development, Toubani also initiated an update of its environmental and social impact assessment to reflect the altered project parameters which have arisen from the DFS.

Toubani’s flagship 2.2m ounce gold project is already proving to be a substantial find for the company, however management believes the project still holds massive upside exploration potential at depth and along strike.

Given 40km of the 50km strike length remains undrilled, the drilling program has also been designed to test for additional high-margin oxide resources along strike. It will also probe for deeper extensions as 76 per cent of the free-milling oxide resource lies within 150m of the surface.

The campaign will also be used to finalise the pit design and processing methods to de-risk the project and optimise production plans ahead of construction and “shovel-ready” status in 2025.

Toubani’s management says it continues to engage in discussions with the Malian government to finalise investment agreements and its partnership arrangements for the project that it says will ultimately provide an economic contribution of more than US$1.2b (A$1.86b).

Commenting on recent concerns around Mali, the company says its operations continue uninterrupted and it has no tax liabilities in-country or disputes with the government.

Given the current rampant price of gold of US$2621 (AUD$4059) per ounce, it’s an exciting time to be a gold explorer.

With a substantial low-cost, free-milling orebody and a strong DFS, Toubani says it has received funding interest from both African Banks and credit funds – all of whom Endeavour will no doubt now have on speed dial.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au