Canadian miner African Gold is exploring debt and equity financing options to finance the Cubada gold mine project in southern Mali.
According to its managing director Danny Kalou in an interview with The Africa Report/Jeune Afrique, the company needs $165 million to start producing gold from the Cubada mine. Thus, the company wants to raise $110 million in debt and the remaining $55 million in equity. Talks with banks and suppliers This mezzanine Currently in progress.
Participation in the capital
According to Danny Callow, another possible way would be to transfer the project to a producer looking for new ventures or capital investment. According to him, “discussions are already underway” with producers who can add this project to their portfolio or take a share of the stock. “The deal will eliminate the need to raise money,” he says.
Danny Kalou says African Gold has no debt obligations so far and has not promised dividends to investors. In September, the Canadian company released an updated feasibility study, which its CEO said showed far more resources than expected.
The company aims for an average annual production of 100,000 ounces of gold in the first 10 years, and pre-tax cash flow of $733 million over the life of the mine.
While African Gold has so far drilled 4 km of the total 55 km available, other exploration sites have been identified at Cubada and Farada.
Hybrid power
The main shareholders of African Gold are Ixios Asset Management, Nero Resource Fund, L1 Capital and Pala Investments. The company owns 90% of the Cubada project, and the government finances 10%. According to Danny Kalou, the exploration area is in a safe location, about 126 km southwest of Bamako. “Mining companies like Baric are also present in southern Mali,” he adds.
However, as the specialists in this field lament, the insufficient electrical infrastructure in the region is an obstacle. Faced with this observation, Danny Calo specifies that African Gold will use a hybrid solar-thermal-PV plant with battery energy storage, funded by an independent electricity producer. This hybrid power generation will reduce fuel requirements by 43% compared to conventional thermal power plants, and reduce CO2 emissions by 39%.
‘quick response’ government
According to the head of African Gold, it was easy to negotiate with the Mali government.
“Mali is very responsive,” he said. If you want to meet the officials, you can do so easily, unlike in many African countries. Mali has been a breath of fresh air for us.”
The country’s new mining law mandates slightly higher taxes and shorter permits, says Danny Kalou. However, the company obtained its license in 2015 and the new law is not retroactive. “It’s a very fair law,” he said.
The company, listed on the Toronto Stock Exchange, raised C$5.1 million ($4.1 million) in early November, in a private placement oversubscription to help fund the Copada project.