Hallgarten + Company Initiates Coverage on Kobo Resources With $0.85 Price Target

Christopher Ecclestone of Hallgarten & Company initiated coverage today on Kobo Resources (TSXV: KRI) with a 12-month price target of $0.85/sh, 143% above the current share price of $0.35/sh.

Kobo is a company we also highlighted in our Golden Compass Series focused on the best gold producing countries in West Africa.

Below are some highlights from the initiation.

The Listing

In early 2023, Kobo Resources Inc. (formerly Meteorite Capital Inc.) listed on the TSX-Venture via a reverse takeover (ranking as a Qualifying Transaction). The name was changed to Kobo Resources Inc. with trading commencing on the TSXV on the 31st of March 2023.

Concurrently to the listing, a financing in the amount of CAD$4.676mn was achieved. Two institutional investors participated in the financing, Gold2000 of Switzerland and Delbrooke Capital based in Vancouver, BC.

Comments on the Neighboring Yaoure Mine

At the very least this neighbouring gold mine shows the potential of the area to host enormous deposits of the Yellow Metal. However, from a more strategic point of view, it is important to review this operation because of its potential to form and dictate the future of Kobo Resources and its targets in Côte d’Ivoire that are in such close proximity (less than 6 kms) from Kobo’s main target concession.

In a very astute move, Kobo hired Chris Picken as their Exploration Manager. He has over 35 years exploration and development experience in Africa and elsewhere but critically, acted as Geological Superintendent at the Yaouré Mine for four years when Perseus was completing the feasibility study prior to the mine going into production.  He was instrumental in the geological process at Yaouré managing up to 12 drill rigs and oversaw over 160,000 m of drilling.  He oversees the day-to-day exploration activities at site.

Soil Mineralization for Yaoure (left) and Kossou (right)

History of Yaoure

In September 2023, Perseus extended Yaouré’s operational life to 12+ years (to at least 2035). Yaouré is expected to produce ~210,000oz gold per year over the next five years of its mine life (to 2029) at an average AISC of ~US$1,104. Post-2029, when the open pits appear to be depleted, gold production drops to an average of ~110,000 oz per year.  Head grade processed will drop from around 2 g/t Au at the end of 2029 to 1.1 g/t Au in 2030 according to the Yaouré Life of Mine Plan.

Regional Geology

In the opinion of the company’s consultants (authors of the NI 43-101 Technical report on the QT) the Kossou Gold Project area is likely to host structurally controlled, greenstone hosted gold deposits similar in nature to many exploited elsewhere in the Birimian terranes of West Africa. These gold deposits are mesothermal or orogenic lode gold types associated with major crustal scale shear zones, which act as deep tapping pathways for mineralising fluids.

The consultants commented that “the style of mineralisation observed on the Kossou permit is similar to that reported in ‘steep structures’ by Perseus Mining at the Yaouré Gold Mine.”

Target Zones

Kobo is targeting four zones at the current time

  1. The Road Cut Zone (RCZ)
  2. The Jagger Zone
  3. The Kadie Zone
  4. The Contact Zone

Target Map

Source: Kobo Resources

Upcoming Exploration & Next Steps

Kobo will be initiating a 4,000 to 5,000 m diamond drilling program in March 2024. We would note that the main rainy season is May/June/July but that does not hamper drilling for Kobo.

This program will be DD vs previous RC, driven by the recommendations of Dr Ghislain Tourigny.  The team will drill 5 or 6 holes (2,000 m) on the Jagger Zone to test the northwest trending high-grade V2 vein sets and their intersection with the N-S shear zones. Drilling will be at 070 degrees, again as recommended by Dr Tourigny to hopefully intersect both structures in at better angles. Kobo hopes this shows better drill result that compare more with the trenches.

On another front, Kobo will drill for the first time the Kadie Zone – 8-12 holes, 1,000 m.  This will be in the same orientation of 070, working with the same concept.

Finally, the team will continue to map, sample and trench its key targets, where warranted, and other targets (Kilo and Shadow zones). They shall also continue soil geochemistry surveying as warranted to look for extensions to known zones and new zones.

The drill program is fully funded at this point with drilling and sampling expected to cost around CAD$1mn.

Duane Hope is a Partner at Capital 10X, he brings over 15 years of communications and research experience to the firm. His research and writing have appeared in publications for North American, European and Asian audiences.


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