African Gold teams up with Newmont on Mankranho, Ghana

African Gold Group (AGG-V) is joining hands with a subsidiary of Newmont Mining (NEM-N) to develop its Mankranho gold project in Ghana.

Under the arrangement, Newmont Ghana Gold can earn up to a 70% interest in African Gold’s Mankranho concession by spending up to US$8 million on exploration.

The Mankranho concession is in the Brong Ahafo region of Ghana at the northeastern end of the Sefwi gold belt.

Mankranho’s 108-sq-km property surrounds on three sides the northern extension of Newmont’s Ahafo project. The 20 million oz. gold Ahafo project started production in July 2006 and produces 500,000 oz. gold each year.

In order to earn a 51% stake in Mankranho, Newmont must spend US$4 million on exploration in the first 42 months of the option agreement.

Newmont can earn an additional 19% by spending another US$4 million within two years of the signing of the venture agreement.

The government of the Republic of Ghana is entitled to receive 10% of the net cash flow from operations under the venture agreement.

“Mankranho is ideally situated to benefit from its proximity to Newmont’s considerable infrastructure at Ahafo,” African Gold’s president, Michael Nikiforuk, said in a prepared statement.

Drill highlights from Mankranho so far have included intersections such as 2.82 grams gold per tonne from a depth of 95.5 metres to 111.98 metres at a length of 16.48 metres; 5.21 grams gold per tonne between depths of 132.50 metres to 134 metres over a length of 1.5 metres; and 1.86 grams gold per tonne from depths of 60.50 metres to 76.48 metres and a length of 15.98 metres.

The Toronto-headquartered African Gold Group controls 12 gold concessions that have been consolidated in five standalone exploration projects in West Africa. Three of the projects are in Ghana and the remaining two are in Mali.

African Gold is currently trading at about 17 per share and has 32.63 million shares outstanding.

Over the last year, the company has traded at between 10 and $1.25 per share.