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If it's Mali, it must be Monday

Bob Moriarty
May 31, 2010

In two weeks, earlier this month, I flew over 60 hours. I literally got to the point that I was thinking, if it's Monday, it must be Mali, just as if I was with a tourist group on a bus. But on Monday I was in Mali. And it was dead interesting.

The African Gold Group (AGG-V) has major projects in both Mali and Ghana. I went to see what they have in Mali this month and in two weeks I'm going to go visit their Ghana projects. On the drive in to the Kabada project, my guide stopped at a river crossing a few miles short of the project so we could watch some artisan miners pan for gold. I took my pan down and did some panning of my own. I picked up a likely looking bit of quartz and sure enough, it had a chunk of gold in it. That's always a good sign.

AGG has three gold projects in Mali and three more in Ghana. I went to visit their primary Mali project this month and will be traveling to Ghana to visit their primary Ghana project in a few days.

The company is tightly held with over 60% of the shares in institutional and insider hands. Their flagship Mali project is the Kobada gold prospect. They are in the process of drilling and expect to be releasing more drill results shortly. Prior drill results released in March were spectacular with grades up to 7.04 g/t over 18 meters.

Most of the times when I write about a company, I suggest the reader take responsibility for their own due diligence and I try to send the potential investor to the company's web site. In this case, don't bother. The company last updated the website in 2007 and the information is terribly out of date. Management assures me the site is in the process of being redone and all I can say is, “I hope so.”

It was an interesting visit. Mali was a major trading power in west central Africa 500 years ago mostly on the strength of the gold literally coming from the area around AGG's Kobada property. In one area of heavy artisanal mining two years ago, there were 30,000 miners working in about one square mile.

Traditionally, throughout history, local miners mine about 1 gram per person per day. 30 kilos per day of gold is a lot of gold. But artisan miners get bored easily and move on just as quickly as they show up. The area is deserted today with little more than a lot of ground pockmarked with thousands of holes boring 10 meters into the earth until the miners reached the water table.

The project has some barn burning results to date. It will take a lot more drilling to prove up a resource but a major is sniffing around quite seriously to the point of funding part of the drilling. The prospect appears to be a shear zone hosted epithermal deposit. I've seen similar deposits in Brazil where again, the artisan miners showed the way to big gold deposits.

In Brazil, especially at the Amapari gold mine, clay in the saprolite near surface material prevented efficient heap leaching. I spent some time discussing the problem with AGG geologist Pierre Lalande.

First discovered by Anglo American in 1994, Amapari went through a whole heap of owners before falling into the hands of an Australian junior named Beadell Resources recently. Wheaton River built it and was taken over by GoldCorp before being sold to Peak Gold, in turn taken over by New Gold before being put into care and maintenance in early 2009.

I visited Amapari about two and a half years ago and wrote about it. I actually haven't reread the piece since I first wrote it 30 months ago but it was a very good call. I predicted problems at Amapari and that Peak Gold would be very attractive. Amapari got shut down and Peak was merged into New Gold.

When you are mining saprolite ore, you get a lot of VG and some big gold near surface. That is exactly what the artisan miners were working near Kobada. One specimen mined two years ago by the locals was 2.2 kilograms. African Gold wanted to buy it but it got split up and sold shortly after reaching the surface.

Pierre Lalande is the Qualified Person for AGG on the Kobada prospect. He understands the ore. Interestingly enough, he plans on doing exactly what I suggested Peak Gold do some 30 months ago. Run the clay-laden material through cyclones and put the fines through a Falcon. Avion Gold is in Mali and had similar ore. They get 65% recovery with a simple and cheap gravity recovery system that only cost $750,000.

I don't want to offend AGG because I like the company but it's fairly valued today at about $30 million market cap. They have enormous potential and I see stock appreciation coming with more drill results being announced and eventually a nice 43-101 number. The "POTENTIAL" is great but it's still just potential. However the company has $4 million cash, excellent geological staff and I believe will be a home run down the road.

We always encourage investors to take the responsibility for their own due diligence. Feel free to get into contact with management and visit the website once it's been updated.

African Gold Group
AGG-V $.43 (May 28, 2010)
75.2 million shares
African Gold Group website


Bob Moriarty
President: 321gold

321gold Ltd