African Gold Group – Signs an agreement with Newmont for Newmont to earn 70% interest in Mankranho, Ghana

23rd Oct 2008, 12:00 am by Sam Kiri It is good news all round for Canadian Venture listed African Gold Group (TSX.V: AGG). In what could be an important development, AGG (Ghana) Ltd. and Newmont Ghana Gold Limited (“NGGL” or “Newmont”), a subsidiary of Newmont Mining Corporation (NYSE:NEM) have agreed on the commercial terms of an Option Agreement and a Venture Agreement that would provide for NGGL to earn up to a 70% interest in AGG’s Mankranho, Ghana concession. NGGL is required to spend up to US$8,000,000 on Mankranho exploration.

The 108 sq km Mankranho concession is located in the Brong Ahafo region of Ghana and is situated at the north-eastern end of the Sefwi Gold Belt. Mankranho shares nine common borders and surrounds the northern extension of Newmont’s Ahafo project on three sides. The 20 million oz Ahafo project commenced production in July, 2006 and is producing approximately 500,000 oz Au per annum.

The agreement further confirms the potential Mankranho has in store. Companies such as Newmont do not sign agreements lightly and is a show of confidence in the project. AGG for its part is fully committed to its West Africa and has already made considerable progress in its development endeavours. The company has nine gold concessions that are consolidated into five separate exploration projects – three in Ghana and two in Mali –in sought after districts and next to large mining companies such as Newmont and AngloGold Ashanti.

As per the terms of the Option Agreement, in order to earn a 51% interest in AGG’s Mankranho, Ghana license, Newmont shall be required to complete exploration expenditures in the total amount of four million dollars (US$4,000,000) on or before forty-two months following the Effective Date of the Option Agreement.

The ensuing terms of the Venture Agreement shall grant Newmont the right to earn an additional nineteen percent (19%) participating interest by funding an additional four million dollars (US$4,000,000) in exploration expenditures within two years following the effective date of the Venture Agreement.  

The Parties acknowledge that the government of the Republic of Ghana will be entitled to receive ten percent (10%) of the net cash flow from operations conducted under the Venture Agreement, and that these payments will be made by the Venture manager and paid by the Venture participants on a pro-rata basis in accordance with their respective Participating Interests at the time of payment.  

“Mankranho is ideally situated to benefit from its proximity to Newmont’s considerable infrastructure at Ahafo. We are pleased that we could conclude the Option and Venture Agreements with Newmont and eagerly await the results of their exploration initiatives, recognizing that NGGL’s regional expertise and knowledge of the Sefwi Belt is without comparison.” States AGG President, Michael A. Nikiforuk.

In addition to Mankranho, AGG’s project is in the northern segment of the Asankrangwa gold belt, which is located midway between the Ashanti and Sefwi gold belts in Ghana. Immediately to the south of AGG's Manso Nkwanta concession in the Asankrangwa project, Resolute Resources mined approximately 30 million tonnes of ore grading 2.0 g/t Au from a number of pits. In Mali, AGG’s Kobada concession is located in the Kangaba region and hosts a significant anomaly defined by 12 km of strike length with a corresponding width of 1 km. AGG acquired Bagoe East and West concessions also in Mali in June 2005.

About African Gold Group
African Gold Group, Inc., is engaged in the identification, acquisition and exploration of prospective gold projects that are situated along significant gold trends within West Africa. To date, the Company controls a total of twelve gold concessions that are consolidated in five distinct standalone exploration projects, of which three projects are located in Ghana and the remaining two are located in Mali, West Africa