African Gold spends €3.3m on Ghana gold stake

AFRICAN Gold, headed by Dublin entrepreneur John Teeling, has bought 70% of the Konongo Owere 950,000 oz gold resource in Ghana for €3.3 million ($4m).

Payment will be made in two ways. An initial €1.66m ($2m) in cash to be followed immediately by €832,000 ($1m) in African Gold shares.

Then after 180 days, the Irish-based mining company will hand over a further payment of $1m to complete the deal. The resource covers 125 sq km in the Konongo Owere district of the Ashanti Gold Belt in Ghana and the company has an option to acquire an additional 10%.

The firm said an independent report indicates the licence area contains a resource in excess of 950,000 ounces of gold at an average grade of 2.30 g/t gold. Diamond drilling will commence in the near future.

Three other properties in the Ashanti Gold belt are under option to African Gold and are the subject of ongoing due diligence.

In a further development Oliver Baring has been appointed joint-chairman of African Gold along with Mr Teeling. He will focus on the development strategy of the company.

Mr Baring is executive chairman of First Africa Group, and recently retired as managing director of the corporate finance division of UBS, where he held responsibility for both Africa and mining.

In February 2004, African Gold raised stg£2.44m from a share placing to fund this latest venture.

Over 27m shares of 9p each were taken up by institutional and private investors. Just two months earlier in December the group also raised stg£500,000.

The company said the latest funds will be used for an active gold exploration programme as part of its plan to invest in gold mining projects in Africa.

Mr Teeling's survival as joint chairman contradicts earlier British press reports he was going to step aside.

The joint chairmanship looks to have been a compromise and the company said earlier it was keeping the make up of the board under review.