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.
Several mining heavyweights have reached deals with the Mali Government, another indicator that the West African country is keen to nurture its mining sector and overcome the hurdles faced in recent times.
Barrick Gold (TSX:ABX) just last week announced it and the government had agreed to find a resolution to the existing claims and disputes between the government and the gold giant’s Loulo and Gounkoto mining companies.
Details of the agreement are yet to be finalised, however Barrick CEO Mark Bristow says the company’s mutually beneficial relationship with Malian governments has endured for 30 years and “occasional differences with successive regimes had always been amicably resolved”.
Bristow also noted in July that Barrick had been engaging with the National Directorate of Geology and Mines to grow its exploration footprint in Mali.
This follows news in mid-September that Vancouver-based B2Gold (TSX:BTO) had reached an agreement with the Mali Government regarding the continued operation and governance of its Fekola Complex.
The exploitation permits for the Fekola Regional area and approval of the exploitation phase of the Fekola underground will be expedited under the new agreement.
These positive movements in the country potentially signal a stabilisation of the sector following a few years of uncertainty as the Mali Government worked to finalise the introduction of a new mining code.
Phil Russo, CEO of Mali-focused gold explorer Toubani Resources (ASX:TRE), says he expects there to be further announcements ahead as other companies frame new mining agreements with Mali.
“In recent weeks not only has B2Gold reached an agreement with Mali but so have several other companies,” he tells Mining.com.au.
“This supports our view that the sector is reopening up again for investment following a period of discussions between stakeholders.
“These agreements provide a pathway for Toubani and our Kobada Gold Project to move forwards as the next gold mine for Mali.”
Investors return to Mali
This improved sentiment appears to be reflected in an uptick in investment interest in Mali-focused companies as well.
Over the course of June, Sydney-based fund manager Paradice Investment Management acquired a 9.9% stake for $3.6 million in Toubani, making it a substantial shareholder in the emerging gold producer.
The fund manager, established by David Paradice in 1999, manages over $14.5 billion worth of investment capital for a range of investors — including institutional, private wealth, family offices and individual investors — across six different funds.
In July, small cap investment firm Nero Resource Fund raised its substantial stake in Toubani to 14.7% after acquiring a further 9.8 million shares on market over a period of 12 months.
In August, Toubani – which has a market capitalisation of about $57 million – raised $10 million (roughly 17.5% of its current market value) to advance its 2.2-million-ounce Kobada Project after receiving binding commitments for a two-tranche placement.
“I would argue our institutional register is second to none in small cap land given our institutional investors run very deep now towards 50% of total shares outstanding,” Russo notes.
Toubani non-executive Chairman Scott Perry is also a repeat on market buyer of the company’s shares.
Perry is among the top 20 shareholders with a holding of 3.3 million shares and 400,000 options, exercisable at $0.35 before 6 September 2026.
Toubani’s management and directors collectively hold a 5.4% stake in the company.
Toubani has earmarked the funds raised from the placement for the completion of an updated Definitive Feasibility Study (DFS) for the Kobada Project.
An earlier 2021 DFS targeted an operation producing around 100,000 ounces per annum, at a mining rate of 24 million tonnes per annum (Mtpa) and processing rate of 3Mtpa. It also outlined estimated stockpiles of about 18 million tonnes over the first 10 years.
The DFS update will assess the potential for a higher processing rate, and consequently increased annual gold production, with an initial oxide-focused project phase followed by the inclusion of fresh material later in the mine plan.
Nearly 80% of the existing resource is near-surface oxide mineralisation, with depths averaging 65m and extending beyond 120m in some areas of the pit, which Toubani says is well beyond other oxide deposits in West Africa.
“We will complete our Feasibility Study which is centred on Kobada being seen as a project of scale and one of the few oxide-dominant projects still left in the sector,” Russo says.
Oxide ores form much closer to the surface and can be economically mined via an open pit, whereas refractory ores, which host the higher grade sulphides, are found at greater depth.
Toubani has so far invested $100 million on exploration and development of its Kobada Project.
Margin over grade
The company is primarily focused on the Kobada Main Deposit, which is a large continuous deposit extending over 5km at surface level, but is also simultaneously exploring and testing the adjacent strikes.
Kobada hosts free dig, soft oxide that can be easily mined and processed at favourable economics compared to a hard rock operation.
Oxide-dominant projects at scale offset grade, achieving “wide operating margins and strong cash flow profiles”, according to Toubani.
This is largely due to the increased availability and reduced equipment wear and tear, higher throughput efficiencies, lower consumables and reagent consumption and reduced power consumption.
Russo says there will likely be numerous avenues to optimise the project further, while Toubani is funded to undertake some drilling at the property where the deposit is open at depth.
“In 2025 this project will be shovel-ready, which we think is a significant milestone in today’s market and where continued value for our shareholders can be realised,” he says.
In 2025 this project will be shovel-ready, which we think is a significant milestone in today’s market.
The Kobada Project is heading towards production at the same time the gold price continues to hit new records.
Gold is Mali’s largest economic contributor, accounting for around 9% of the country’s GDP, 70% of export revenues and 21-28% of tax revenues. Mali is the third largest gold producer in Africa and continues to increase its output.
Over the past year, the spot gold price has rocketed over 44%, reaching a peak of US$2,668 ($3,862) an ounce, before edging back slightly to around US$2,660.
As expectations of further interest rate cuts intensify and geopolitical tensions create continued uncertainty, the gold price is set to rise further.
“We are still yet to see and understand the bear case for gold here. All the fundamentals driving it aren’t about to change anytime soon,” Russo notes.
“Gold is the centre of attention and undervalued development assets are getting more and more attention.
“We are at an exciting juncture right now and I feel we are a differentiated story as well.”
Images: Mining.com.au & Toubani Resources
