About Toubani Resources

Toubani Resources is an exploration and development company with +3.1 million resource ounces in Mali. The Company’s principal asset is the Kobada Project in southern Mail. This is an advanced stage development project with a Definitive Feasibility Study (DFS), completed in 2021. Based on the DFS, the Kobada project has been de-risked and indicates compelling economics at current reserves. Further drilling and discovery of additional ounces will add value to the project.

Toubani Resources is targeting 100,000 ounces of gold production per year. As well as the Kobada Gold project, other exploration locations have been identified and results to date show potential for additional resource ounces. The Company will seek to start drilling at the beginning of the fourth quarter of 2022, targeting the potential upside of the properties.

The Company aims to develop an enhanced DFS on the completion of this sizeable drill programme in the next 24 months which will target an improved, economically attractive project with more output over a longer life of mine.

Summary

The project is fully permitted, debt free and large with a growing resource base.

The Kobada Gold project is strategically located in the centre of the Birimian greenstone belt, home to some of the largest mines in the region. Many major companies (Barrick, IAMGOLD, AngloGold Ashanti plus more) favour Mali for exploration and production. The Birimian rocks are major sources of gold extending through Ghana, Côte d'Ivoire, Guinea, Mali and Burkina Faso. Mali is the 4th largest gold producer in Africa, with output increasing year on year. It is a well-established and safe mining jurisdiction with political and social support. The Kobada project is 90% owned by Toubani Resources with the Mali government owning 10% of the equity as per the mining license conditions.

The team has experience in building and operating mines in Africa. Over the past 3 years, the company has grown the overall resource by 40% (to 3.1 million ounces Measured, Indicated and Inferred) and reserves by 144% to 1.2 million ounces.

The DFS has outlined the future installation of a solar, battery power plant for its full power needs, which reduces the carbon footprint substantially whilst reducing future operating costs.

The company has renewed environmental permits for the mining license, updated the project and renewed its two contiguous exploration permits over the past 12 months.

Thesis

At current market valuation of around US$3.40/ resource ounce versus ~US$20/oz for most of its peers, Toubani Resources represents an investment opportunity for growth, and has the potential to grow its resource base through targeted drilling in known mineralization.

There are approximately 300,000 ounces of inferred resources which can be infill drilled and easily converted to indicated resource, as well as additional infill opportunities within the adjacent targets. All of these opportunities are within areas that have already been drilled so mineralization and geological structures are known and understood.

With all of the metallurgical test work, process plant design and geotechnical studies complete, the ability to move rapidly from an explorer to a producer has been enhanced, and this gives the Company flexibility to adapt quickly to market conditions.

With most of the Company's peers trading at 2-10 times that of Toubani Resources' current market value, there is potential for a re-rate.

Funding

Toubani Resources has approximately C$2 million in cash and no debt on the balance sheet as of 15tAugust 2022. The Company has indicated its intention to seek a secondary listing on the Australian Securities Exchange (ASX) to open up further funding opportunities from Australian investors unable to invest on the TSXV. The intention is to raise additional funds at its ASX listing, aiming for Q4-2022, to focus solely on increasing resource ounces.

The Company is looking at ways to restructure its corporate overhead further, which could ensure that funding can be translated to the drill bit for additional exploration metres.

Metallurgy

The DFS outlined a proven Carbon-in-Leach (CIL) technology delivering 96% recovery in the oxides and 94% recovery in the sulphides. The metallurgical test work shows that any ore tested from existing drill holes across the property and different rock types could be treated through the same process plant.

The CIL process is the predominant process methodology in West Africa, and therefore availability of skills to operate the plant and availability of spares and consumables are readily available.

The DFS outlines a simple 95% free dig open pit operation, with crushing, milling, gravity separation and CIL to produce a Doré gold product. Test work was undertaken on the variability of ore and grades and the process plant designed is capable of treating recoveries.

The process plant was designed to be modular, so minimal design work would be required to increase throughput and therefore gold output should resource drilling continue to deliver increased ounces of gold.

Exploration Potential

One of the competitive advantages of the Kobada Project is the ability to sizably expand resource ounces at a very low drilling cost / per discovered ounce. From 2019, the increase of 40% in resources and 144% of reserve ounces has been achieved with only ~17,800 meters of drilling. Technical work has been completed on understanding the structural geology and orientation of the multiple faults and shear zones, which has enabled the company to convert drill holes into additional ounces.

The initial focus on resource upside will be in the existing Main Shear Zone where almost 20 kilometres of shear zone structures have been identified through methodical regional exploration techniques, mapping historical artisanal open pits and diggings. Only approximately 5 kilometres of the main shear zone have been drilled, showing potential upside for step-out drilling.

The parallel Gosso target area (where more than 750 metres have already been drilled on strike) offers a potential 8 kilometres strike length for step-out drilling. All of these shear zones are equidistant from the proposed process plant to allow trucking to a stockpile in front of the plant very straightforward.

In addition to these major shear zone structures, a further approximately 25 kilometres of zones within the mining permit area, and two contiguous exploration permits require further exploration.

In total there are a further 17 drill-targeted areas planned and laid out as part of a large exploration drilling programme along approximately 50 kilometres of shear zone strike length.

The opportunity based upon this to grow the resource base offers an opportunity for a re-rate on the existing market value and an opportunity to deliver a world-class resource relatively cheaply.

Risks

Exploration is a high-risk endeavor.

Being pre-production, the company is not self-funded and is therefore reliant on the equity capital markets to secure additional funds when required. Money lenders and equity providers will note that more exploration budget is required and that the capex required is significantly larger than the market capitalization of the company. The company needs to communicate its plan for managing this.

Mali has experienced 2 coups in the past 2 years, however, the interim government has recently announced democratic elections by March 2024, and as a result of this, all sanctions have been lifted. There appears to be no obstacles to financial flows into and out of the country. More recently, both B2Gold and Barrick announced increased resources and reserves at their Mali operations, which indicates continued support from the major gold producers.

FAQs
Become a better investor
What is Crux Investor?
Crux Investor an app that provides monthly stock recommendations from world-class analysts in quick, easy-to-understand Memos. The truth is – everyone wants to invest, but it's almost impossible to know what to invest in unless you’re a professional. Crux fills the gap and makes building a long-term investing portfolio effortless.
Continue
You might also like
Analyst's Notes: Sabina Gold & Silver
September 29, 2022
Troilus Gold - Company Note
September 9, 2022
Maverix Metals - Company Note
September 5, 2022
Energy Fuels - Company Note
September 5, 2022
American Lithium - Company Note
September 5, 2022
Become an investing expert
Invest like a professional with the top long-term stock pick every month, from WSJ "Best On The Street" winning analysts.
Continue