This article is a sponsored feature from Mining.com.au partner Toubani Resources. It is not financial advice. Talk to a registered financial expert before making investment decisions.
Toubani Resources (ASX:TRE) is tackling the development of its Kobada Gold Project from every angle, employing an approach aimed at moving it towards production in the near term while also shoring up its long-term viability.
The focus for the junior explorer in 2025 is to advance the 2.2-million-ounce project to a final investment decision in the second half of the year to place it firmly on the path to production in 2026.
Permitting improvements in Mali are allowing Toubani to enact the “de-risk” component of its strategy, with an investment framework having now been finalised with the Mali Government.
Managing Director Phil Russo tells Mining.com.au the framework establishes clear fiscal terms and permitting timelines, reducing uncertainty in a complex jurisdiction.
The recent partial lifting of a suspension of mining permits that has been in place since November 2022 points to an industry starting to normalise and sets the stage for improved collaboration between miners and government.
“This agreement will strengthen our position on the mining convention, fostering government support and community alignment,” Russo says.
“The investment framework for Kobada lays the critical foundation for operational and financial stability over Kobada’s life.”
The State of Mali has granted Toubani approval to complete the transfer of the Kobada mining licence to joint operating company Mines de Kobada SA.
Formalisation of the joint operating company for Kobada and the transfer of the mining licence to Mines de Kobada SA will mark a key derisking event for the project’s advancement.
“With this foundation in place and a clear and certain path forward established, we are accelerating our project readiness workstreams, including advancing our Environmental and Social Impact Assessment and project financing activities which remain on schedule, as we move toward a final investment decision later this year,” Russo said in late March following news of the agreement.
After reaching agreement with the government, Toubani updated its Definitive Feasibility Study to reflect the agreed fiscal terms.
The DFS outlines an operation producing 1.5 million ounces over an initial nine-year period, focusing first on mining the near-surface oxide ore.
Kobada is expected to be one of the lowest capital intensity development projects in the sector with an initial upfront capital of US$216 million ($346.6 million).
Strong bank interest in Kobada financing
Late last year Toubani appointed Endeavour Financial as its advisor for the project financing after the DFS generated interest from potential financiers. Russo says debt funding talks are advancing well.
“We’ve seen significant interest from regional banks, drawn by Kobada’s low capital intensity and robust economics,” he says.
“Talks are ongoing, with steps being taken towards formalising expressions of interest, and we’ll update the market as appropriate. It’s a competitive process, but the response reflects confidence in Kobada’s viability.”
An assumed gold price of US$2,200 an ounce – which is well below the current spot price of over US$3,000 – places the post-tax net present value of the project at US$500 million and the internal rate of return at 50%.
A higher gold price assumption of US$3,000 an ounce raises these metrics to US$951 million for NPV and 79% for IRR.
At the same time, all-in sustaining costs are anticipated to be low at between US$1,175 and $1,317 an ounce, enabling annual post-tax cash flows of between US$893 million and $1.61 billion based on the two assumed pricing points. This would see Kobada paid off in less than two years from the start of production. Russo dubs the project a rare asset.
“Its scale, technical simplicity and advanced stage distinguish it in a West African and global context where comparable opportunities are increasingly scarce,” he says.
“Kobada’s edge lies in its unique oxidate dominant, open pittable, free-dig properties that drive low capital intensity and operating costs.
“The US$216 million capex (inclusive of contingency) is lower than many regional peers, on an aggregate and unit per tonne of processing capacity basis. Our 2.2 million ounce resource, with growth potential, offers scale without excessive complexity.”
That does not mean there is not still room for improvement though, and this is where the “enhance” arm of Toubani’s strategy comes into play.
The emerging producer is undertaking additional test work to refine the process flow sheet and equipment sizing, which may lead to increased capital and operating efficiencies.
This will be accompanied by geotechnical drilling and related studies to confirm the pit wall designs across the 4.5km Kobada Main deposit.
The work involves core sampling and stability analysis to assess whether Toubani can safely steepen pit slopes in specific areas.
Russo notes that the steps Toubani is taking are practical and focused, aimed at strengthening the project’s efficiency without overcomplicating the plan.
Drilling to drive long mine life
Meanwhile, the explorer has identified opportunities to “grow” the resource via a dual-growth strategy to support a longer life operation.
Toubani plans to undertake a deep drilling campaign this year to test the free-milling fresh rock mineralisation beneath the Kobada Main deposit.
Reverse circulation drilling is aimed at pinpointing near-mine oxide targets that can deliver high-value near-term feed into the initial plant and outline zones for the final infrastructure location.
Meanwhile, diamond drilling from the western resource boundary and current pit design edge will target and delineate extensions of fresh mineralisation where open at depth, as well as gather geotechnical data for further pit slope optimisation.
This follows drilling last year that showed several standout intersections that were not closed off, including 51m @ 2.72 grams per tonne from 123m – which ended in mineralisation at the oxide/fresh rock contact.
“The goal is to confirm the continuity and grade of this mineralisation,” Russo notes.
“Short-term, we’re prioritising walk-up oxide targets to add higher-grade ounces early, maximising cash flow from the oxide-dominant phase and aiming to extend this high-margin phase for as long as possible.
“Long-term, deeper drilling tests fresh rock to extend mine life beyond the current 10 years.
“Down dip and down plunge extensions to mineralisation have never been systematically tested at Kobada, and we see potential to increase Kobada’s mine life beyond the 10-year mark.”
As Toubani shifts from oxide ore to fresh rock, the goal is to maintain a consistent oxide blend in the processing feed.
This approach maintains higher throughputs and leverages economies of scale, softening the cost impact of fresh rock processing.
Longer term the regional potential provides further opportunities for growth.
“The regional 50km shear zones remain a longer-term priority, with initial efforts targeting anomalies identified through historical data,” Russo says.
“It’s a two-pronged effort to grow both immediate and future resources.”
Around 90% of the 2.2-million-ounce resource is in the higher confidence indicated category, which has enabled Toubani to so far define an ore reserve of 1.56 million ounces.
This represents a roughly 78% overall conversion of the indicated resources at Kobada, with 82% of the ore reserve made up of oxide ore.
“The oxide focus can build on an already attractive initial project for Kobada as defined by the 2024 DFS, while fresh rock data shapes the project’s future,” Russo says.
“It’s a practical balance – leveraging today’s strengths to secure tomorrow’s growth without overextending resources.”
Write to Angela East at Mining.com.au
Images: Mining.com.au & Toubani Resources
