Scandinavia-based gold exploration and boutique mining company Akobo Minerals has reached an agreement with South African company IW Mining to operate the underground mine at Segele, Ethiopia. IW Mining is a highly experienced mining contractor with years of underground mining experience in the South African mining arena, Akobo says.
This fundamental agreement secures Akobo access to personnel and competence for mining the Segele gold ore. Mining is expected to start in October, with the first gold extraction to begin in the first quarter of 2023. Full production is expected to be reached by the end of the second quarter of 2023.
In line with Akobo’s environmental, social, and governance (ESG) guidelines, IW Mining will recruit and train Ethiopian personnel to work at the Segele mine. Akobo says considerable planning and preparation have been undertaken together with IW Mining for the last few months ahead of the signing of the agreement.
Sourcing of mining equipment has already begun and first shipments are to be dispatched imminently. IW Mining will mobilize an experienced mining team from South Africa that will travel to Segele within weeks. Akobo is now ramping up activities in all areas for the preparation of mining operations. With the newly secured convertible loan and signing of Solo Resources on plant design and production in May, all tasks are said to be on track.
Solo Resources has already completed design work, the process plant is now under fabrication, and deliveries of the parts will begin shortly. The final project funding is also moving forward with several positive dialogues ongoing.
About Akobo Minerals
Akobo Minerals is a gold and mining company focused on projects along the Akobo River in southwestern Ethiopia, a productive area with extensive alluvial gold production. Our story started in 2009 with the launch of alluvial production and exploration in the Akobo area.
Initial alluvial mining continued until 2013 when the decision was made to focus on exploration rather than production. Since then, until October 2021, Akobo Minerals has been a pure exploration company and our team has collected extensive data from the area. Extensive and successful drill programs have been planned and started. In October 2021, Akobo Minerals received a large-scale gold mining license for the Segele area.
The company is perhaps one of the cleanest exposures to gold you have on the Oslo Stock Exchange. The company has enormous assets waiting to be recovered in Ethiopia. The company led by Jørgen Evjen is priced today at an option for future extraction. Large gold reserves have been proven in the Segel area and the company is increasing drilling capacity significantly in 2022 and has solid finances.
Bonanza conditions in Akobo
Akobo Minerals has used its time in Ethiopia well. During twelve years in the country located in northeast Africa, the company has laid stone by stone and built a solid foundation with attractive exploration licenses and employees picked from the country’s top shelf. Building relationships with the government and the local population has been an important and time-consuming task that has paid off in the form of trust. Transparency and a responsible approach have created a good collaborative climate and provided long license periods in both the exploration and mining segments. Since the listing on Euronext Growth in the summer of 2021, the milestones have come like pearls on a string for Akobo Minerals. The Segel mine has time and again exceeded the estimates and the latest core samples taken from the mine show world-class gold content. Few gold mines in the world have a gold density per ton of mass like what has been proven in Segele . Gold mines around the world normally operate with an average of five to eight grams of gold per tonne of mass and over eight grams is considered a very high concentration of gold. Segelmine’s latest estimates show a gold density of 40(!) grams per ton of mass, which is classified by The World’s Gold Council as Bonanza grade and occurs very rarely.
The sail mine is a so-called underground mine and will be operated in a simple, traditional way with a mine passage of three by three meters, railway tracks, and dump trucks. The company expects positive cash flow as early as Q1 2023, which can further finance new exploration missions and dividends to shareholders. Investornytt wanted to know more about the exciting company and increase our knowledge in the fascinating field of gold mining, so we contacted the person who knows the industry and the company best.
Jørgen Evjen- The gold is just around the corner
Few managers can say they are sitting on a gold mine – literally. Jørgen Evjen, CEO of Akobo Minerals, can do that without batting an eye. Investornytt picked up the phone and called Ethiopia’s capital, Addis Ababa, to talk to Jørgen about the gold adventure and what it’s like to run a mining company in a foreign country.
Investornytt– Normally, a mine has very good profitability at an average grade of between 5-8 grams of gold per tonne of mass. The estimates for the Segele mine show an average of over 40 grams per tonne for large parts of the proven resource. Certain core samples have shown results of well over 10,000 grams per tonne.
Segele mine delivers really good test results and when we hear words like, Bonanza and world-class, you don’t have to be in the mining industry to understand that these are brilliant results from the core drilling.
Jørgen Evjen– It’s a bit like that I have to pinch my arm sometimes. Being a part of this adventure is simply incredibly exciting. The results from the Segele mine have exceeded expectations time and time again and the latest tests showed results that few if any, mines in the world can show.
Investornytt– Even if the test results from the core drilling are promising, the gold must be extracted. Surely it is an expensive and resource-intensive task?
Jørgen Evjen– Extraction is resource-intensive, but at the same time a relatively standard operation technically speaking, and it is the concentration of gold per tonne of mass that is the single most important factor for profitability. The price of gold is a given, and relatively stable, so then it is about the cost of taking up mass and separating gold from the mass. We have an estimated break-even cost of USD 250 per ounce and with a gold price of around USD 1,800 per ounce, the calculation turns out to be positive. The samples from the mine show that we hit the gold in a fairly early phase, which will then provide good cash flow early after start-up.
Investornytt -How should this cash flow be distributed?
Jørgen Evjen– We have an exploration license on a 180 km2 large area with enormous potential, so part of the cash flow will finance further exploration operations with several proprietary rigs. It also gives us the opportunity to pay dividends to our shareholders.
Investornytt– You have been in Ethiopia for twelve years and for us from the outside looking in, it is especially in the last year that things have really started to fall into place. How far are you from being able to start production?
Jørgen Evjen– We have worked tirelessly to form relationships and get the licenses we need in place. The invisible work we do behind the scenes often takes a very long time. Now that work is starting to pay off. We have just completed one of the biggest milestones in the company, and that was the ordering of processing facilities. It is expected to be in operation during the first quarter of 2023.
The volume and potential are enormous. The working area for the mine is one hundred by fifty meters and there are lots of potential targets in nearby areas within our license area. The mine shaft has an opening of only 3×3 meters.CEO Jørgen Evjen is excited about the future prospects of the massive area included in the exploration license of Akobo Minerals.
Investornytt-There are many trigger points for positive price movements in the company’s shares, and much of the license risk is taken out in the form of long license periods. What is the biggest downside risk for the company’s shareholders?
Jørgen Evjen– There are always conditions we cannot control that can affect the share price, but there are three important conditions that will affect our cash flow – gold price, that the gold estimates are correct and that production is going as expected. We are quite confident about all three conditions. Over the past two years, the gold price has varied in the range of 1,700 to 2,000 dollars per ounce, with an average of around 1,850 dollars. As mentioned, our calculations are at USD 1,800 per ounce. Other conditions we cannot guarantee are whether our analyzes will deviate from what we actually get out of gold. It may be more or less, but we have been keen to report realistically and with objective three-party verification. Then you have the practical conditions surrounding the setup and operation of the mine, and that we are able to achieve the efficiency we have calculated in terms of time and capacity.
Investornytt -Mining and extraction of natural resources has historically had a fringe reputation, but Akobo Minerals has already been recognized for its ESG work in Ethiopia. How does it strengthen you as a company?
Jørgen Evjen– For us, it is very important to establish good relations with the local population. Akobo Minerals is the first international exploration and mining company in Ethiopia and that puts us in an excellent position to create a good culture in the country regarding the relationship between the local population and foreign companies. We do this through our ESG work. We have hired Dr. Cathryn MacCallum to lead this department and our goal is to leave Ethiopia in a better state than when we arrived in the country. Cathryn is the biggest profile in this field in the industry and enjoys great respect globally. Her approach is that good ESG work is also good for business. We are already seeing the effects of this.
Recently, Akobo Minerals was rewarded for its ESG work when we were nominated in the category Best ESG company in the mining industry 2021, by Mines and Money London. This has been noticed by international investors and the rest of the industry. Agriculture, training of the local population, and a focus on health, environment, and safety must be stimulated. In this way, a sustainable ecosystem is built, with bustling wildlife and rich plant life. The region will continue to flourish long after we have left the area.
Investornytt– How is the accessibility to the rural mining area from the capital Addis Ababa?
Jørgen Evjen– Previously, it was a long, demanding trip by car on a bumpy dirt road that began a meter after we came out of the capital. The trip of over 700 kilometers took several days by car, but now the travel time has been dramatically reduced with better roads and a new airstrip that we have financed and built. The airstrip was opened earlier this year and makes the area more accessible, it also opens up the possibility of flying in supplies and medicine to the people who are staying in the region.
Investornytt– What would you say are the strengths of Akobo Minerals as a company?
Jørgen Evjen– The short answer is that we have the best people down here. We have good and orderly relations with local communities and the government, and we hold licenses in a large area with a lot of gold. Collectively, this forms the basis for profitable development for many years.
The seal mine is just the beginning. Ethiopia is a country rich in resources and its natural resources are not only gold. There are other raw materials such as copper, nickel, and other precious metals that give the area enormous potential.
Our active work with ESG will make a difference down here. It creates a lot of good energy around us and with us, and we notice that it makes us a desired player in Ethiopia. With the appointment of the renowned Dr. MacCallum, Akobo Minerals shows that it takes its ESG to work seriously.
The company’s core samples from the Segele mine have shown fantastic results and the infrastructure in the area is improving as activity increases. There is internet and mobile access in the area, for now with somewhat unstable lines. But competing telecommunications companies are being established in Ethiopia, which will be good for the country and good for Akobo Minerals.
Jørgen Evjen is careful not to call it Klondike conditions in the region, but with gold production just around the corner, there are many, excited, local eyes directed at Akobo Minerals. When the sparkling raw material is transported out of the mine tunnel and onto the processing plant, Ethiopia as a country together with the shareholders of Akobo Minerals will benefit from it.