Toubani Resources Kobada Gold Project presents upside potential, says Independent Investment Research
Tue July 16 2024
Independent Investment Research has run the ruler over Toubani Resources Ltd (ASX:TRE), which is updating the definitive feasibility study (DFS) for its wholly-owned Kobada Gold Project in Mali's prolific Birimian rocks. The project hosts 2.39 million ounces of gold with potential for expansion, thanks to soft, free-dig oxide ore, a probable low strip ratio and high 95% oxide recoveries through a standard gravity/CIL treatment plant.
Toubani and the research group see significant resource and production upside, considering additional oxide sources from the 50-kilometre strike length of prospective shears within the tenements and fresh mineralisation with recoveries in the low 90% range.
Toubani is leveraging the A$110 million already spent at Kobada, including 180 kilometres of drilling and previous development studies, including a DFS completed in 2021.
The project has been owned by Toubani (formerly African Gold Group) since 2005 and was previously listed on the TSX-V before delisting in May 2023.
New management aims to increase mill throughput from the previous 3 million tonnes per annum/100,000 ounces per annum plan to align more closely with proposed mining tonnages.
The previous scenario led to significant stockpile build-up over the first 10 years, affecting early-stage cash flows and requiring double handling. The revised operation will focus on treating low-cost free-dig oxide using a bulk mining approach to lower risk and cost, benefiting from economies of scale.
Recent drilling has yielded solid results, with an updated mineral resource estimate expected soon. This will inform the reserves and mining inventory for the updated DFS, anticipated in H2 CY24, with a development decision expected in 2025 and potential commencement in 2H25, subject to financing and final agreements.
“Significant value upside in Toubani”
Independent Investment Research highlighted the company's upside, citing significant advances at Kobada and current gold market strength. Toubani is currently valued at a A$10.10 enterprise value per ounce (EV/oz), as compared to its peers that range from A$5.64 to A$27.78 per ounce for an ounce weighted average of A$13.75 per ounce.
It also notes that transactions for similar grade projects in West Africa suggest potential valuations of A$41 to A$60 per ounce.
The report said, “Potentially we could see Toubani valued at a similar ratio, which would give the company a value in the order of A$0.40/ share to A$0.45/share.”
This compares to the $0.175 Toubani share price at the time of the report on June 25, 2024.
The research group views Kobada to be a straightforward project with soft, open-pittable oxide mineralisation, high recoveries and broad mineralisation zones, promising a low strip ratio, low-cost operation. The project benefits from experienced personnel, accessible infrastructure and Mali's proven status as a major gold producer.
“Considerable upside potential”
The project presents considerable upside exploration potential, with only 10 kilometres of the 50-kilometre strike of prospective shear zones drilled. Encouraging results from other targets warrant follow-up, further underscoring the region's prospectivity.
Source: https://www.proactiveinvestors.com.au/