African Gold Group Announces 66% Increase in Mineral Reserve to 1.25m Oz at the Kobada Gold Project

TORONTO, Sept. 27, 2021 - African Gold Group Inc. (TSX-V: AGG, OTCQX: AGGFF, FRA: 3A61) ("AGG" or the "Company") is pleased to announce an updated Mineral Reserve Estimate for its Kobada Gold Project (the "Project" or "Kobada"). The reserve estimate is an update to the reserve disclosed in the National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") report titled "NI 43-101 Technical Report on Kobada Gold Project in Mali" with an effective date of June 17, 2020 (the "2020 DFS"), and will be the basis for the updated feasibility study (expected to be delivered before mid-October 2021) (the "2021 DFS").

Highlights from the reserve update include:

• Proven and Probable Mineral Reserves increased by 66% for a total of 1,252,522 ounces of gold; an increase of 497,772 ounces from the previous reserve estimate in the 2020 DFS.
• Growth highlights significant upside potential at Kobada, with the updated mineral reserve estimates expected to increase already attractive economics.
• Life of mine ("LOM") has increased to 16 years, with the potential to deliver average production of 100,000 ounces of gold per annum for the first 10 years.
• Inclusion of sulphides within new pit shells, opens the potential for a substantial sulphide resource below the oxides.
• Optimised pit shell and mine plan to deliver optimal free cash flow.
  

Danny Callow, CEO of African Gold Group, commented:
"We are delighted to announce these results from our upcoming 2021 DFS at the Kobada Gold Project in Mali. With the inclusion of significant exploration drilling within our oxides and fresh rock, we have achieved a massive 66% increase in delivered gold ounces and now have an asset that can deliver an average of 100,000 ounces of gold per annum for the first 10 years, with a mine life of 16 years. Furthermore, the introduction of sulphides into the mine plan opens the possibility for a substantial sulphide resource below the oxides as the Project develops.

As well as the material increase in reserve, these results have demonstrated that there is clearly significant upside potential at Kobada in the short-term. With more than 50 km of shear zones yet to explore, as well as an additional estimate of more than 280,000 inferred ounces within the new pit shell that requires minimal drilling to convert into measured and indicated resource.

We have spoken at length about the upside potential of the Kobada asset, and the delivery of 1.25 million ounces of reserves from 3.1 million ounces of measured, indicated and inferred resources is a validation of the quality of the Kobada Gold Project. Based upon just these near-term convertible ounces, there remains the potential to further increase the measured and indicated resources and thereby increase shareholder value."

Pit Optimisation Parameters

Open-pit optimisation was conducted on the deposit to determine the economic limits of the pit. The optimisation was conducted during the initial stage of the Project using initial cost, the gold sale prices, and pit and plant operating parameters.

The pit optimisation was conducted using GEOVIA Whittle™ software to provide guidance as to the economic pit limit of the Kobada deposit. The optimiser operates on a net present value ("NPV") calculation for all the blocks in the model, which is the revenue from the sales of products less the operating cost. The principal aspects to consider for a NPV estimation are as follows:

• Product Tonnage = Mineralised Tonnage ? Recovery ? Grade of Feed/Gold Grade
  

• Revenue = Product Tonnage ? Sales Price
• Net Value = Revenue - (Mining Cost + Processing Cost + Transportation Cost + General and Administration ("G&A") Cost)

The optimiser software establishes the pit limits where the revenue from the ore and the waste stripping costs, balance each other. The result is that the sum of all the blocks contained within this optimal pit shell will report the optimal economic value, if the pit is smaller, some value is left in the ground, and if the pit is bigger, some value is "destroyed" due to the additional stripping.

Once this pit shell is generated, it is used as a guide to design the engineered pit incorporating berms, benches, and haulages roads. This engineered pit is used for the development of the Mine Schedule, to determine the ore quantity and grades mined for each period of the LOM.

Table 1 highlights the pit optimisation parameters used in the 2021 DFS of the Kobada Project.

Table 1: Pit Optimisation Parameters

Mining Dilution and Recovery

Within all mining operations it is not possible to accurately separate the mineralised and waste material from one another due to the scale and the use of the drilling and blasting equipment.

Therefore, to account for this, a mining recovery of 95% and a mining dilution of 5% is applied.

The original sub-blocked model has been re-blocked to 5.0 m ? 5.0 m ? 5.0 m block with sub-block of 5.0 m x 5.0 m x 2.5 m in the X, Y and Z directions, respectively to enable the use of HxGN MinePlan™ 3D software.

This regularisation process induced an external dilution because a portion of each regularised block contained some waste material on the edge of the mineralised zones. As highlighted in Table 2 the total dilution induced by the regularisation process has been estimated at 2.3% for ore. An additional 3% dilution factor has been applied to the reserves to achieve the 5% dilution target.

Table 2: Dilution Induced by Regularisation

Final Pit Results

The optimal open-pit mining limits were established using GEOVIA Whittle™, which uses the Lerchs-Grossmann algorithm for pit optimisation. The results of the pit optimisation evaluation conducted on the deposit for varying revenue factors are summarised in Table 3 and Figure 1.

Mining optimisation was conducted over the geological model produced by Minxcon geologists. The NPV sensitivity analysis was used as the main criterion to select the optimal pit in the optimisation software, together with a range of nested pit shells generated, so that the most economically viable pit is selected.

Notably the NPV in this optimisation summary does not consider the capital costs and is used only as a guide for shell selection and the determination of the mining shapes.

As part of the optimisation process, a stockpiling strategy has been defined to feed the process plant with the higher-grade material at the start of the operation and stockpile the lower-grade material to be processed in the later years. The goal, therefore, was to optimise the pit for the high-grade ore and process the low-grade ore contained inside the pit at the end of the LOM.

The results are highlighted in Table 3 and Figure 1.

Table 3: Pit Optimisation Evaluation is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/2c73a295-2473-4e4b-897b-2db8b304ad17

Figure 1: Project Evaluator Optimisation Results is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/392e4676-2c3c-4bec-a5c6-ed3844d6de1b

Sensitivities

During the optimisation process, additional sensitivity runs were examined to determine the sensitivity of the resource to certain parameters. The following main parameters were changed as part of the sensitivity runs:

• Gold price ranges: from US$1,450/oz to US$1,750/oz

Table 4 shows the results of the sensitivity runs.

Table 4: Results from Sensitivity Runs

This result shows that the Kobada resources are relatively robust to withstand changes in the optimisation parameters; therefore, even if the commodity price fluctuates or if the physical or cost parameters change, the defined engineered pit will not vary drastically.

Cut-off Grade ("COG")

The COG is used to determine whether the material being mined will generate a profit after the mining, processing, and administrative costs have been paid. Material that is mined below the COG is sent to the waste dump. The COG has been calculated using the following formula:

The marginal COG has been defined as the total ore cost excluding mining costs, but including a rehandling cost divided by the net recovered gold price.

The total marginal ore, as defined above (with a grade higher than the marginal COG), approximates to 19.8 Mt at an average grade of 0.46 g/t. This material will be stored in a designated area (low-grade stockpiles), lifted, and processed at the end of the LOM.

Table 5: Cut-Off Grade

The COG used to determine if the material will be fed directly to the mill has been calculated to maximise the gold production for the first five years of the LOM and reach an average of 100 koz/a of gold production, given the mill throughput constraint of 3 Mt/a of material.

Figure 2 shows a grade tonnage curve of the in-pit material prior to applying any dilution and mining recovery parameters. When using a 0.6 g/t COG and a throughput of 3 Mt/a of mill feed material, a target of 100 koz/a of gold production can be reached.

Figure 2: Grade Tonnage Curve is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/140e8771-679f-4056-afc0-781657f1afe7

Mineral Reserve Estimate

The Mineral Reserves for the Project are estimated at 45.0 Mt of Proved and Probable Mineral Reserves at a grade of 0.87 g/t Au based on the marginal cut-off grades of 0.35 g/t. To access these reserves, 157.9 Mt of waste rock will need to be removed. This results in a stripping ratio of 3.5 to 1 (waste/ore).

Table 6 highlights the open pit Mineral Reserves for the Project.

Table 6: Kobada Mineral Reserve Estimate

Inferred resources have been excluded from the mineral reserve estimate. Table 7 shows the total amount of inferred resources included inside the ultimate pit limit.

Table 7: Kobada Inferred Resources Inside the Ultimate Pit Plan

These resources can be drilled by an in-fill drilling program, similar to the Phase 4 drill program completed in January 2021. It is highly probable that this will increase the size of the measured and indicated resource, and therefore conversion to reserves within the optimized pit shell. It is recommended that this drilling is prioritized prior to the start of production to increase the ounces available for processing.

Optimised Mine Plan

The mine plan has been optimised for targeted mining tonnes of 20 million tonnes per annum ore and waste, with a flow through of 3 million tonnes of feed to the mill, generating 100,000 ounces of finished gold. There is further opportunity for additional optimisation, especially following further drilling of inferred ounces within the ultimate pit shell, which could add additional gold ounces without increasing the amount of waste material.

The optimised mine plan is presented in Table 8, with the mill delivered tonnes shown in Figure 3 and total material movement shown in Figure 4.

Table 8: Optimised Mining Schedule

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¹ Pre-production and Year 1 each consist of a 6 month period.

Figure 3: Mill Schedule and Delivered Ounces is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/88ca784a-6adb-45e5-b688-f9082941ec05

Figure 4: Total Material Movement Life of Mine is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/af5fecb2-b76c-4f93-956f-30326f56f3bc

Qualified Person

The scientific and technical information contained in this press release has been reviewed, prepared and approved by Dr. Andreas Rompel, PhD, Pr. Sci. Nat. (400274/04), FSAIMM, Vice President Exploration of AGG, who is a "Qualified Person" as defined by NI 43-101 and by Mr. Uwe Engelmann (BSc (Zoo. & Bot.), BSc Hons (Geol.), Pr.Sci.Nat. No. 400058/08, MGSSA), a director of Minxcon (Pty) Ltd and a member of the South African Council for Natural Scientific Professions.

Mr. Ghislain Pr?vost, M.Sc.A in Mining Engineering, OIQ membership No. 119054, a Principal Mining Engineer with DRA Americas Inc, is the qualified person for the mineral reserve and mining methods sections. Mr. Prevost is an independent Qualified Person as defined by the NI 43-101 guidelines.

About African Gold Group

African Gold Group is a TSX Venture Exchange (TSX-V: AGG) listed exploration and development company with a focus on building Africa's next mid-tier gold producer. The Company has a highly experienced board and management team with a proven track record in the African mining sector operating mines from development through to production. AGG's principal asset is the Kobada Gold Project in southern Mali, which is in an advanced stage of development having completed the 2020 DFS and is targeting gold production of 100,000 oz per annum. As well as the initial Kobada Gold Project, other exploration locations have been identified on the Kobada, Farada and Kobada Est concessions, offering potential for an increase in resource. For more information regarding African Gold Group visit our website at www.africangoldgroup.com.

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Cautionary statements

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements regarding the mineral reserve estimate, the 2021 DFS, upside potential at the Kobada Gold Project and drilling and exploration plans of the Company. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of AGG to be materially different from those expressed or implied by such forward-looking information, including but not limited to: receipt of necessary approvals; general business, economic, competitive, political and social uncertainties; future prices of mineral prices; accidents, labour disputes and shortages and other risks of the mining industry. Although AGG has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. AGG does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

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