Canadian gold producer and investment company AfroCan Resources Gold aims to acquire a Tanzanian property with a 112 000 oz inferred resource.

AfroCan CEO Brian Barrett tells Mining Weekly that the company is evaluating exploration company Tanzania Royalty Exploration Corporation’s (TREC’s) Luhala gold project, located 65 km south of Mwanza, in northern Tanzania.

The evaluation of the project will be complete in the next three months, after which the company will upgrade its expression of interest that has been made to TREC CEO and president Jim Sinclair to an agreement for acquisition of the project.

“The Luhala project has a NI 43-101 technical report, which was prepared by consulting firm Venmyn Deloitte in 2012. We, subsequently, appointed mining consultancy Vela Mining Concepts to undertake a concept study report on Luhala to determine the project’s techno-economic viability,” Barrett explains.

Based on the findings of Vela’s report, AfroCan solicited a proposal from multinational testing and verification company SGS to undertake certain metallurgical testing to evaluate the project’s amenability to leaching.

Barrett says the company’s resident geologist at the project, Phillip Kaniki, has developed a drill programme for six diamond core drill holes of up to 60 m in depth to provide the sample material.

“We have also engaged Mwanza-based drilling company Super Core Drilling to undertake the drill work on the project,” he adds.

Barrett says the company intends to start working on the due diligence report and undertake further exploration work on the site as part of the process of finalising the transaction with the TREC.

He adds that AfroCan has briefed Johannesburg-based law firm Falcon & Hume to draft the transaction documents for Luhala.

The cost of the acquisition has yet to be determined, as negotiations are ongoing. However, Barrett tells Mining Weekly that the acquisition is “bound to include a net smelter return or royalty”.

He notes that the initial capital expenditure required to establish a 60 000 t/y operation at Luhala is estimated at $191 000, based on Vela’s concept study report.

“We have received a quote for the environmental-impact assessment (EIA) from Dar es Salaam-based mining consultancy Efficient Consultants, which says that, based on a four-month timeframe, the EIA will cost $13 000.”

Barrett states that AfroCan is aiming for Luhala to come on stream during the second quarter of 2016 and that the project will be a good addition to AfroCan’s existing resource base.

“Our target is to have properties containing 2.5-million ounces in production by the end of 2017,” he adds.

AfroCan targets tailings, gravel beds, shallow high-grade reefs and alluvials.

The company deploys fully scalable, low-capital cost, energy efficient and environment-friendly production solutions.

“AfroCan uses proprietary modelling to drive its rapid mine production strategy and displays an extraordinary discipline to drop marginal projects quickly. This is facilitated by the deployment of modular mobile equipment that is quickly relocated to other viable sites,” states Barrett.

He says each of the company’s projects is a structured, standalone economic unit, which, therefore, benefits from centralised expertise, procurement and support services.

“At cash costs of about $400/oz, AfroCan’s unique quick development to a cash flow business model stands out in the tough and globally gloomy junior gold mining sector,” Barrett avers.
Barrett, who will also give a presentation – How To Attract Investors Back To The Mining Sector – at the Turkey Eurasia Mining Show, in Istanbul, in September, says “it is a new world out there and mining companies, in particular, need to be more versatile now than ever before”.