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Asante Gold Corporation - Developing Gold Resources in Ghana

Asante Gold Corporation – Developing Gold Resources in Ghana

Overview

“Money is gold, and nothing else.” – JP Morgan

Asante Gold Corporation (CSE:ASE) is focused on developing its Kubi Gold Joint Venture to production and aggressively exploring its other high potential concession all located in the centre of Ghana’s golden triangle. It recently announced a C$19.5 million joint venture with BXC Company (Ghana) Ltd. and private placement to develop it’s Kubi Mining Leases to production – closing expected by year end 2016. Previous exploration on the property resulted in a NI 43-101 resource estimate identifying sufficient resources to attract a major joint venture partner and to begin developing Kubi.

Ghana is Africa’s second largest gold producer and the tenth largest in the world. The politically stable country has mining-friendly regulations, two mining colleges and a large workforce trained in geology, exploration methods and mining engineering. Ghana’s largest underground mine, AngloGold Ashanti’s Obuasi mine, has been in near continuous production for more than a century and has recorded production exceeding 32 million ounces of gold. Other major mining companies operating gold mines in Ghana include Kinross Gold Corporation (Chirano Mine), Gold Fields (Tarkwa Mine), Perseus Mining Limited (Edikan Gold Mine) and Newmont Mining Corp. (Ahafo and Akyem) and Ghana’s newest mine the Asanko Gold Asanko (Obotan) mine. This resource-rich region still remains under explored leaving excellent potential for discovering other large deposits.

Asante Gold also has a current Option and Sale agreement in place with Perseus Mining (Ghana) Limited for the acquisition of up to 100-percent interest in the Betenase Permit in Ghana, which adjoins the Kubi Mining lease to the east and where recent drilling of a large gold in soil anomaly has noted significant gold results.

Asante Gold recently entered a C$19.5 million 50:50 joint venture with BXC Company (Ghana) Ltd. and private placement for its Kubi Mining Leases. Subject to final closing, the company acquired Kubi and eight prospecting licenses in Ghana in August 2016. The company acquired the strategically located Keyhole Gold project in Ghana in September 2016.

The company is led by a proven management team passionately and financially committed to bringing Kubi into production. Asante Gold’s co-founder, President and CEO Douglas R. MacQuarrie was formerly CEO of PMI Gold Corporation, which developed the Obotan Gold project (now the Asanko Gold Mine). Bashir Ahmed, the company’s Vice-President of Production & Development, is a resident Ghanaian and a mining engineer with decades of experience including most recently as the Mine Manager at the world-class Obuasi Mine. Ned Goodman, a geologist and investment manager at the leading edge of Canada’s exploration, development and investment sectors for decades, is Chairman of the Board of Directors. Goodman, Deputy Chairman of the Canadian Securities Exchange, played a leadership role in the re-emergence of Canada’s gold-mining industry in the 1980s, becoming the largest shareholder and chairman of International Corona, which developed the Hemlo Mine in Northwestern Ontario, Canada.

Investment Highlights

  • Current NI 43-101 Measured + Indicated resources of 233,000 ounces gold @ 5.48 g/t; Inferred 115,000 ounces @ 5.31 g/t.
  • Excellent mining infrastructure, experienced labor available, near the center of major Obuasi mining camp.
  • C$19.5 million private placement and 50:50 joint-venture agreement with BXC Company (Ghana) Ltd. announced in October 2016.
  • 20-year renewable mining lease issued in 2008.
  • Big exploration discovery potential on Keyhole and Betenase option concessions – drilling planned to commence on closing of financing.
  • Track record of gold discovery with large exploration upside on other land packages.
  • Tight share structure: 45 million shares fully diluted, 35-percent management owned.
  • Kubi Mine JV 100% valued at $33 million based on cash cost of $16.5 million for 50% – implies valuation of US$75 per ounce of gold resources.

Key Property: Kubi Gold Joint Venture

The Kubi Gold JV consists of a large 52 square-kilometer land package and is located 15 kilometers south and along strike from AngloGold Ashanti’s 66 million ounce (pre-mining resource) Obuasi Gold Mine, and 23 kilometers to the northeast of Perseus Mining’s 6.6 million ounce (pre-mining resource) Edikan Gold Mine.

Asante Gold Corporation - Developing Gold Resources in Ghana

Kubi Gold Project in Dunkwa, South West Ghana

Excellent mining and transportation infrastructure in the region of the Obuasi mining camp makes it the ideal location for developing Kubi into a custom 500 tpd milling and direct shipping operation. The proposed Kubi Gold JV is projected to produce 30,000 to 40,000 ounces gold per year (500 – 650 tpd @ 6 to 8 g/t gold) from a decline in a previous pit from which AngloGold Ashanti mined 58,696 ounce gold @ 3.65g/t from surface oxide ore.

Asante Gold Corporation - Developing Gold Resources in Ghana

Composite Assay Long Section

An October 2014 NI 43-101 Technical Report details an estimated US$30 million in exploration and development work at Kubi since the mid-1980s. The report includes a resource estimate showing Measured Resources of 0.66 million tonnes of @ 5.30g/t gold for 112,000 ounces gold; Indicated Resources of 0.66 million tonnes @ 5.65g/t gold for 121,000 ounces gold; and Inferred Resources of 0.67 million tonnes @ 5.31g/t gold for 115,000 ounces gold.

The technical report also highlights data from previous drilling indicating high-grade (+10g/t gold) steeply plunging gold mineralized shoots with grade increasing to depth. The Joint Venture plans to target these high grade shoots by drilling from the decline.

Asante Gold Corporation - Developing Gold Resources in Ghana

Ashanti Goldfields – Mining at Kubi pit, circa 2005

“The opportunity at Kubi is represented by the potential for much higher grades than currently indicated,” explained MacQuarrie. “Grade is king. Higher grade means lower per ounce production costs. High grade mines survive market downturns and pay out cash to shareholders over the entire life of the mine. High grades will succeed. The philosophy of Asante Gold is to identify and develop gold projects that are high grade, small capex, near production, and close to established infrastructure.”

On closing of the joint venture, expected 31 December 2016, work going forward will center on permitting, engineering, portal construction and driving an exploration decline to circa the -200 meter level for resource definition drilling, bulk sampling and further metallurgical testing. The objective of the planned definition drilling is to develop high grade stopes >8 g/t gold for early production and payback.

Kubi Mining Leases Acquired

Asante Gold entered an agreement with Goknet Mining Company Ltd. in August 2016 for the acquisition of the Kubi Mining Leases on terms as detailed in the February 2015 Kubi Definitive Option Agreement, closing set for 28 December 2016. Asante will acquire the leases by issuing seven million treasury shares and reserving 8,000 ounces of gold from future production for Goknet, which will thereafter also earn a one-percent Net Smelter Return royalty. Royal Gold Inc. of Denver holds a three-percent Net Proceeds of Production royalty, and the Ghana government a statutory 10-percent free carry equity and five-percent NSR royalty interest.

Asante Gold and their JV partner BXC plan to explore and develop Kubi, located on major deep-seated auriferous structures, as a custom milling and direct shipping underground operation. Asante will also acquire on closing Goknet’s interests in up to eight prospecting licenses: two totaling 38 square kilometers adjoining to the west of the Kubi Mining Leases; and six contiguous licenses totaling 270 square kilometers located on the Asankrangwa Gold Belt 15 kilometers to the southwest and along strike of the new Asanko Gold Mine. All licenses have had considerable exploration work completed and many have drill-ready targets. Goknet retains a two-percent Net Smelter Return royalty on each license acquired by Asante Gold.

“Acquiring Kubi at a cost of circa C$46 per ounce of NI 43-101 gold resources, and funding its development with a $19.5 million joint venture partner is a major step forward for the company,” said MacQuarrie. “Construction at Kubi is planned to start in early 2017. Kubi has an excellent location and considerable grade and resource ounce upside. AsanteGold share dilution has been minimized by using gold forward, NSR royalty and joint venture financing. The addition of the southern half of Goknet’s highly prospective Ashanti II concessions to our current Keyhole and Betenase options, and our Fahiakoba concession give us exceptional discovery upside and growth opportunities.”

Joint-Venture Agreement

Asante Gold entered into an agreement with BXC Company (Ghana) Ltd. in October 2016 to form the Kubi Gold JV, a 50:50 joint venture (JV) to develop the Kubi Mining Leases in Ghana towards production. BXC, a wholly-owned subsidiary of Beijing Fuxing Xiao-Cheng Electronic Technology Stock Co. Ltd., has agreed to provide C$19.5 million in funding to earn 50 percent of the Kubi Gold JV and a 30-percent equity interest in Asante Gold. BXC has also committed to fund construction of additional facilities such as a production shaft, full processing facilities or expansion by funding future loans to the Joint Venture.

Asante Gold has agreed to pay from its share of the JV revenue the two underlying Kubi royalties: the Goknet one-percent Net Smelter Returns and the Royal Gold, Inc. three-percent Net Proceeds of Production royalty. New mining leases in Ghana also carry on behalf of the Ghana government a five-percent NSR and a 10-percent interest in any paid out dividends.

“We are extremely pleased to welcome BXC as our JV partner and major shareholder to move Kubi forward to production,” said MacQuarrie. “Their successful operating history in Ghana and strong balance sheet will complement our strengths in gold exploration, discovery and development. Their commitment to secure future debt funding for the joint venture gives Asante a non-dilutive path forward to fully develop the potential of Kubi.”

Keyhole Gold Project

Asante Gold reached an agreement with Ghanaian Sikasante Mining Company Ltd. in September 2016 to earn up to 100-percent interest in its Keyhole Gold project. The Keyhole area is surrounded by the company’s potential Ashanti II Gold project and is strategically located at the intersection of three major regional gold mineralized trends.

Over the last 40 years, a six-kilometer stretch of the Ankobra River in the Keyhole area has been the subject of intensive local alluvial mining and blocked for large-scale mining licenses. The alluvial gold resources have largely been exhausted and/or are unworkable resulting in the area being opened for staking for the first time since the early 1980s. Sikasante controls two contiguous reconnaissance licenses covering a combined area of 2.52 square kilometers. No modern drilling has occurred in the Keyhole area.

To determine drilling targets, Asante Gold is proposing 80 line kilometers of geophysical induced polarization (“IP”) surveying to cover the Keyhole and adjacent areas targeting the main Asankrangwa shear zone, the heavily mined alluvial areas and multiple intersections of the major regional structures. An initial program of 1200 meters of drilling is also planned to test the historical MEM workings where grades up to 8g/t gold over 8 metre widths have been reported.

To earn up to 50 percent interest in the Keyhole Gold project, Asante Gold has agreed to issue to Sikasante 250,000 shares in its capital stock on receipt by Sikasante of all necessary permits required to commence a drilling program on the licenses, and to complete $500,000 in work over the next four years. Asante Gold may earn an additional 50 percent interest by reserving for Sikasante a 2-percent net smelter returns royalty and a final payment of one million shares in Asante Gold.

Option and Sale Agreement for the Betanase Permit

Asante Gold entered an Option and Sale Agreement with Perseus Mining (Ghana) Ltd. to earn a 100 percent interest in the Betenase Permit in Ghana, adjoining the Kubi Mining lease to the east. The Betenase permit encompasses an area of 12 square kilometers on the extension to the northeast of the Kubi gold trend, and also a strong gold in-soil anomaly located five kilometers to the east of the Kubi Gold JV.

Asante Gold Corporation - Developing Gold Resources in Ghana

Drilling at Betanase

Previous work conducted on the Betenase permit area outlined a strong 700-meter long gold in soil anomaly and numerous ground IP geophysical targets. Initial drilling of the gold in soil anomaly intersected six intervals with gold values greater than 1.0 g/t gold, with the best intersection of 3.14 g/t gold over 4.0 meters. The mineralization is associated with pyritic quartz stringers in strongly altered Tarkwaian quartzites. Additional IP surveying and drilling is planned to commence as soon as funding is secured.

Management

Douglas R. MacQuarrie, P.Geo.BC, B.Sc.- President & CEO

A resident of Vancouver, Douglas MacQuarrie has 40 years’ mineral exploration experience, including 22 years in West Africa. He has been responsible for the discovery, acquisition and development of many significant gold deposits both in Canada and in Ghana. As the former CEO of PMI Gold Corporation he oversaw the acquisition of all the PMI mineral titles including Obotan and Kubi, and was responsible for raising over $45 million for exploration and development. MacQuarrie is a co-founder of Asante Gold Corporation; and the Managing Director of Goknet Mining Company Limited – a private Ghanaian exploration company he co-founded in the year 2000 with Ghanaian Nationals Godfried Kesse (former Director Ghana Geological Service), Thomas Ennison (LLB), and Eric Ewen (Canadian Prospector and discoverer of Keegan Esaase orebody).

Bashir Ahmed — Director & Vice-President, Production & Development

A resident of Obuasi, Ghana, Bashir Ahmed, a Ghanaian national, is a mining engineer with over 30 years of experience in mine operations, planning, production and management. This wealth of expertise gained him the position as Mine Manager at Obuasi, one of the world’s foremost underground gold mines, producing up to 1.8 million tonnes per year (~4,900 tpd). In this capacity, Ahmed managed a workforce of over 1,000 and an annual budget of US$100 million.

Ned Goodman, MBA, B.Sc. Geo.—Chairman of the Board

Ned Goodman is a geologist and an investment manager and has been active at the leading edge of the Canadian gold exploration, development and investment sectors for many decades. Goodman played a leadership role in the re-emergence of Canada’s gold-mining industry in the 1980s, ultimately becoming the largest shareholder and chairman of International Corona which developed the Hemlo Mine – now the Williams Mine (Barrick Gold Corporation ABX:TSX, NYSE). He was involved in the creation of Kinross Gold, Repadre (later IAMGOLD) and Dundee Precious Metals, and was an early backer of FNX Mining Company Inc. (later Quadra FNX Mining). Goodman is the Deputy Chairman of the Canadian Securities Exchange, co Chairman of Osisko Mining Inc., President and CEO of International Corona Corporation and Rockland Minerals Corp, and a director of DREAM Unlimited Corp., Dundee Corporation, Dundee Acquisition Ltd., Dundee Sustainable Technologies Inc., Goodman Gold Trust, and Excellon Resources Inc.

His recent investments include those which perform well under hard asset deflationary conditions and include gold and other precious metals, and agriculture and with a new focus on Africa where they are both abundant and locally underinvested.

Florian Riedl-Riedenstein—Independent Director

A resident of Vienna, Austria, Florian Riedl-Riedenstein is a former investment banker working in both New York and Austria. He has over 30 years’ corporate experience as a Director and Officer of Canadian listed companies. Riedl-Riedenstein’s specialty is the successful introduction of Canadian resource companies to European investors. He is also a co-founder of Asante Gold Corporation and has more than 20 years’ experience in Ghana.

Philip Gibbs, B.Compt., MBA, CMA — Chief Financial Officer

A resident of Toronto, Philip Gibbs has extensive experience in the financial management of major international corporations and Canadian listed mining and mineral exploration companies. Gibbs is also CEO and Chief Financial Officer of KILO Goldmines Ltd., and CFO of Macusani Yellowcake Inc., operating in the Democratic Republic of Congo and Peru respectively.

Alex Heath—Independent Director

Alex Heath is a graduate of the UBC/Sauder School of Business. Recent experience includes eight years with Salman Partners Inc. in their investment banking department as an analyst, Associate and VP. In that capacity, he provided equity financing and financial advisory services to corporate and individual clients including public and private equity offerings, valuations, fairness opinions, and in merger and acquisition advisory work. He was the lead banker on numerous financings and complex M&A transactions.

Janet Horbulyk—Corporate Secretary

A resident of Vancouver, BC, Janet Horbulyk has 30 years’ experience with securities and stock exchange regulatory matters including seven years with the listings department of the Vancouver Stock Exchange.

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