UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 20-F
(Mark One)
[ ] | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
[✓] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2021
OR
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
[ ] | SHELL COMPANY PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Date of event requiring this shell company report __________________
Commission file number: 333-183376
(Exact name of Registrant as specified in its charter)
not applicable
(Translation of Registrant's name into English)
British Virgin Islands
(Jurisdiction of incorporation or organization)
Monte Carlo #7, Paradise Island, Nassau, Bahamas
(Address of principal executive offices)
James Longshore, 416-628-2881 (telephone), Shirley Street Plaza, Suite 2150, PO Box AP 59217
Nassau, Bahamas
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class |
Name of each exchange on which registered |
None |
Not applicable |
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
(Title of Class)
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Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
Common shares
(Title of Class)
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.
Title of each class |
Outstanding at December 31, 2021 |
Common shares |
46,687,517 |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. |
||||
[ ] | Yes | [✓] | No | |
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. | ||||
[ ] | Yes | [✓] | No | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. | ||||
[✓] | Yes | [ ] | No | |
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). | ||||
[✓] | Yes | [ ] | No |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer: See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):
|
Large accelerated filer [ ] |
Accelerated filer [ ] |
Non-accelerated filer [✓] |
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP [✓] |
International Financial Reporting as issued by the International Accounting Standards Board |
[ ] |
Other [ ] |
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TABLE OF CONTENTS
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Use of Names
In this annual report filed on Form 20-F, the terms "Xtra-Gold", "Company", "we", and "our" refers to Xtra-Gold Resources Corp., a British Virgin Islands company, and our wholly-owned subsidiaries, Xtra-Gold Exploration Limited and Xtra Oil & Gas (Ghana) Limited and our 90% owned subsidiary, Xtra-Gold Mining Limited.
Currency
Unless otherwise specified, all dollar amounts in this annual report are expressed in United States dollars.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This annual report, including all exhibits hereto, contains forward-looking statements and forward-looking information. Forward-looking statements are with reference to our financial condition, results of operations, business prospects, plans, objectives, goals, strategies, future events, capital expenditure, and exploration and development efforts. Words such as "anticipates", "expects", "intends", "plans", "forecasts", "projects", "budgets", "believes", "seeks", "estimates", "could", "might", "should", and similar expressions identify forward-looking statements. Although we believe that our plans, intentions and expectations reflected in these forward-looking statements are reasonable, we cannot be certain that these plans, intentions or expectations will be achieved. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements. These statements include comments regarding the establishment and estimates of mineral reserves and mineral resources, production, production commencement dates, productions costs, cash operating costs per ounce, total cash costs per ounce, grade, processing capacity, potential mine life, feasibility studies, development costs, capital and operating expenditures, exploration, the closing of certain transactions including acquisitions and offerings. All statements, other than statements of historical facts, included in this annual report, our other filings with the SEC and Canadian securities commissions and in news releases and public statements made by our officers, directors or representatives of our company, that address activities, events or developments that we expect or anticipate will or may occur in the future are forward-looking statements and forward-looking information.
The following, in addition to the factors described elsewhere in this annual report under "Risk Factors", are among the factors that could cause actual results to differ materially from the forward-looking statements:
● our ability to continue as a going concern
● the effect of COVID-19 on world economies and the company's operations;
● unexpected changes in business and economic conditions;
● significant increases or decreases in gold prices;
● changes in interest rates and currency exchange rates;
● unanticipated grade changes;
● changes in metallurgy;
● access and availability of materials, equipment, supplies, labor and supervision, power and water;
● determination of mineral resources and mineral reserves;
● availability of drill rigs; changes in project parameters;
● costs and timing of development of new mineral reserves; results of current and future exploration activities;
● results of pending and future feasibility studies; joint venture relationships;
● political or economic instability, either globally or in the countries in which we operate;
● local and community impacts and issues;
● timing of receipt of government approvals; accidents and labor disputes; environmental costs and risks; and
● competitive factors, including competition for property acquisitions; and availability of capital at reasonable rates or at all.
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CAUTIONARY NOTE TO INVESTORS CONCERNING RESERVE AND RESOURCE ESTIMATES AND OTHER MINING INFORMATION UNDER S-K 1300 AS COMPARED TO NI 43-101
Except where noted, the reserve and resource estimates in this Annual Report have been prepared in accordance with the requirements of SEC Regulation S-K (Subpart 1300) ("S-K 1300") which came into force on January 1, 2021 and replaces Industry Guide 7. S-K 1300 now aligns most mining disclosure for SEC registrants in accordance with the definitions provided by the Committee for Reserves International Reporting Standards ("CRIRSCO"). Investors are cautioned however, that all reserve and resource estimates previously furnished or filed by the Company with the SEC were initially prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101"). NI 43-101 is a rule developed by the Canadian Securities Administrators which establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. NI 43-101 was also developed in accordance with CRIRSCO guidelines.
S-K 1300 includes the adoption of terms describing mineral reserves and mineral resources that are substantially similar to the corresponding terms under CRIRSCO. As a result of the adoption of S-K 1300, the SEC will now recognize estimates of "measured mineral resources", "indicated mineral resources" and "inferred mineral resources". In addition, the SEC has amended its definitions of "proven mineral reserves" and "probable mineral reserves" to be substantially similar to CRIRSCO.
Investors are cautioned that while the above terms are substantially similar to CRIRSCO, there are differences in the definitions under S-K 1300 and CRIRSCO. Accordingly, there is no assurance any mineral reserves or mineral resources that the Company may report as "proven reserves", "probable reserves", "measured mineral resources", "indicated mineral resources" and "inferred mineral resources" under NI 43-101 would be the same had the Company prepared the reserve or resource estimates under the standards adopted under S-K 1300.
Investors are also cautioned that while the SEC will now recognize "measured mineral resources", "indicated mineral resources" and "inferred mineral resources", (i) a "measured mineral resource" has a higher level of confidence than that applying to either an "indicated mineral resource" or an "inferred mineral resource", it may be converted to a "proven mineral reserve" or to a "probable mineral reserve", (ii) an "indicated mineral resource" has a lower level of confidence than that applying to a "measured mineral resource" and may only be converted to a "probable mineral reserve", and (iii) an "inferred mineral resource" has a lower level of confidence than that applying to an "indicated mineral resource" and must not be converted to a "mineral reserve. Mineralization described using these terms has a greater amount of uncertainty as to their existence and feasibility than mineralization that has been characterized as reserves. Accordingly, investors are cautioned not to assume that any "measured mineral resources", "indicated mineral resources", or "inferred mineral resources" that the Company reports are or will be economically or legally mineable.
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Item 1 Identity of Directors, Senior Management and Advisors
This Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934 and, as such, there is no requirement to provide any information under this item.
Item 2 Offer Statistics and Expected Timetable
This Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934 and, as such, there is no requirement to provide any information under this item.
Item 3 Key Information
A. Selected Financial Data
The following financial information has been extracted from our consolidated financial statements for the years indicated and is expressed in United States dollars. Our consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). The historical data included below and elsewhere in this annual report is not necessarily indicative of our future performance. The financial information should be read in conjunction with our consolidated financial statements and related notes included in this annual report and "Item 5. Operating and Financial Review and Prospects - A. Operating Results and B. Liquidity and Capital Resources" of this annual report.
In this annual report, all currency refers to United States Dollars (US$) unless indicated otherwise.
The following table summarizes information relating to the operations of Xtra-Gold for the last five fiscal years ended December 31.
For the Year Ended December 31
2021 | 2020 | 2019 | 2018 | 2017 | |
$ | $ | $ | $ | $ | |
Operating revenues | Nil | Nil | Nil | Nil | Nil |
Consolidated pre tax income for the year | 2,045,713 | 2,297,023 | 2,388,347 | 1,539,294 | 453,932 |
Net gain attributable to non-controlling interest | (121,545) | (141,782) | (140,390) | (233,111) | (98,077) |
Income tax | (1,088,192) | (294,992) | Nil | Nil | Nil |
Net gain (loss) attributable to Xtra-Gold Resources Corp. | 957,521 | 1,860,249 | 2,247,957 | 1,306,183 | 355,855 |
Basic and diluted gain (loss) attributable to common shareholders per common share | 0.02 | 0.04 | 0.05 | 0.03 | 0.01 |
Total current assets | 9,127,160 | 7,739,823 | 5,438,857 | 3,258,955 | 1,825,755 |
Total assets | 10,758,031 | 9,340,942 | 6,875,325 | 4,790,576 | 3,328,082 |
Total current liabilities | 1,122,483 | 426,819 | 443,540 | 624,205 | 443,457 |
Total liabilities | 1,122,483 | 426,819 | 443,540 | 624,205 | 443,457 |
Working capital | 8,004,677 | 7,313,004 | 4,995,317 | 2,634,750 | 1,382,318 |
Capital stock | 46,688 | 46,817 | 45,844 | 46,246 | 47,782 |
Total equity | 9,635,548 | 8,914,123 | 6,431,785 | 4,166,371 | 2,884,625 |
Total Xtra-Gold Resources Corp. stockholders' equity | 9,826,744 | 9,226,864 | 6,886,308 | 4,761,284 | 3,712,649 |
Dividends declared per share | Nil | Nil | Nil | Nil | Nil |
Basic weighted average number of common shares outstanding | 46,779,574 | 46,645,387 | 46,095,232 | 47,089,027 | 47,948,596 |
Diluted weighted average number of common shares outstanding | 48,925,574 | 49,033,887 | 49,589,430 | 49,405,027 | 51,339,216 |
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This Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934 and, as such, there is no requirement to provide any information under this item.
C. Reasons for the Offer and Use of Proceeds
This Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934 and, as such, there is no requirement to provide any information under this item.
D. Risk Factors
The securities of our company are considered speculative due to the nature of our business and the present stage of our development. Only those persons who can bear the risk of the entire loss of their investment should participate. An investor should carefully consider the risks described below and the other information that we file with the Securities and Exchange Commission and with Canadian securities regulators before investing in our common shares. The risks described below are not the only ones faced. Additional risks that we are either unaware of, or we are aware of, but we currently believe are immaterial, may become important factors that affect our business. If any of the following risks occur, or if others occur, our business, operating results and financial condition could be seriously harmed, and the investor may lose all of their investment.
Risks Associated with our Company and our Operations
Our company is currently in the exploration stage with respect to all our projects. The chance of ever reaching the production stage at our projects is uncertain. Our company cannot predict whether we will successfully effectuate our company's current business plan.
If our company does not obtain new financings, commencing from 2022, the amount of funds available to our company to pursue any further exploration activities at our projects could be reduced and our company's plan of operations may be adversely affected.
Our company has relied on private placement financings and an initial public offering completed in Canada in November 2010 to fund our exploration programs, including our drilling programs at our Kibi project. Commencing from 2022, our company will continue to require additional financing to complete our plan of operations to carry out any further exploration activities on our projects. Any impairment in our company's ability to raise additional funds through financings would reduce the available funds for such exploration activities, with the result that our company's plan of operations may be adversely affected.
Substantial additional capital may be required commencing from 2022 to continue exploration activities at all of our projects. If our company cannot raise additional capital as needed, our ability to execute our business plan and fund our ongoing operations will be in jeopardy.
Commencing from 2022, our company may need to explore various financing alternatives to meet our projected costs and expenses. Our company cannot assure our stockholders that we will be able to obtain the necessary financing for our projects on favorable terms or at all. Additionally, if the actual costs to execute our company's business plan are significantly higher than expected, our company may not have sufficient funds to cover these costs and we may not be able to obtain other sources of financing. The failure to obtain all necessary financing would prevent our company from executing our business plan and would impede our company's ability to sustain operations or become profitable, and our company could be forced to cease our operations.
To date, we have not generated revenues from operations and our company will continue to incur operating losses and there is no guarantee that we will achieve operating profits.
Our company has incurred operating losses on an annual basis for a number of years, primarily arising out of the costs related to continued exploration and development of mineral resource properties, including costs written off on properties no longer being pursued by our company. As of December 31, 2021, our company had an accumulated deficit of $21,793,376. It is anticipated that our company could experience an operating loss for fiscal 2022 until our company discovers economically mineable mineralized material and successfully develops a mine. There can be no assurance that our company will ever achieve significant revenues or profitable operations.
Our auditors have raised substantial doubts as to our ability to continue as a going concern.
Our financial statements have been prepared assuming we will continue as a going concern. Since inception we have experienced recurring losses from operations, which losses have caused an accumulated deficit of $21,793,376 as of December 31, 2021. These factors, among others, raise substantial doubt about our ability to continue as a going concern for one year from the issuance of the financial statements. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. We anticipate that we may continue to incur losses in future periods until we are successful in generating revenues which are significant enough to pay our expenses and fund our exploration efforts. There are no assurances that we will be able to raise our revenues to a level which supports profitable operations and provides sufficient funds to pay our obligations as they are incurred. If we are unable to meet those obligations, we could be forced to substantially curtail our operations and planned exploration efforts, which would have a material adverse effect on our business and operations in future periods.
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Our company's projects are in the exploration stage and may not result in the discovery of commercial bodies of mineralization which would result in our company discontinuing that project. Substantial expenditures are required to determine if a project has economically mineable mineralized material.
Our company's projects are all in the exploration stage. Mineral exploration involves a high degree of risk and few properties which are explored are developed into producing mines. The exploration efforts of our company on our projects may not result in the discovery of commercial bodies of mineralization which would require our company to discontinue that project. Substantial expenditures are required to determine if a project has economically mineable mineralized material. It could take several years to establish proven and probable mineral resources or reserves. Due to these uncertainties, there can be no assurance that current and future exploration programs will result in the discovery of mineral resources or reserves.
Our company currently depends significantly on a limited number of projects.
Our company's activities are currently focused on our Kibi and Kwabeng projects. Our company will as a consequence be exposed to some heightened degree of risk due to the lack of property diversification. Adverse changes or developments affecting our Kibi or Kwabeng projects would have a material and adverse effect on our company's business, financial condition, results of operations and prospects.
Our company is subject to factors beyond our control which may impact our company's title in our projects.
Although our company has obtained title opinions with respect to all of our projects and has taken other reasonable measures to ensure proper title to these projects, there is no guarantee that title to any of our projects will not be challenged or impugned. Third parties may have valid claims underlying portions of our company's interests. Our projects may be subject to prior unregistered liens, agreements, transfers or claims and title may be affected by, among other things, undetected defects. In addition, our company may be unable to operate our projects as permitted or to enforce its rights with respect to our projects.
Our company's activities are and will be subject to complex laws, significant government regulations and accounting standards that may delay or prevent operations at our projects and can adversely affect our company's operating costs, the timing of our company's operations, ability to operate and financial results.
Business, exploration activities and any future development activities and mining operations are and will be subject to extensive Ghanaian, United States, Canadian, British Virgin Islands and other foreign, federal, state, territorial and local laws and regulations and also exploration, development, production, exports, taxes, labor standards, waste disposal, protection of the environment, reclamation, historic and cultural resource preservation, mine safety and occupational health, reporting and other matters, as well as accounting standards. Compliance with these laws, regulations and standards or the imposition of new such requirements could adversely affect our company's operating and future development costs, the timing of our company's operations, ability to operate and financial results. These laws and regulations governing various matters include:
● environmental protection;
● management of natural resources;
● exploration, development of mines, production and post-closure reclamation;
● export and import controls and restrictions;
● price controls;
● geopolitical risks could affect the import of consumables;
● taxation;
● labor standards and occupational health and safety, including mine safety;
● historic and cultural preservation; and
● generally accepted accounting principles.
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The costs associated with compliance with these laws and regulations may be substantial and possible future laws and regulations, or more stringent enforcement of current laws and regulations by governmental authorities, could cause additional expense, capital expenditures, restrictions on or suspensions of our company's operations and delays in the development of our projects. These laws and regulations may allow governmental authorities and private parties to bring lawsuits based upon damages to property and injury to persons resulting from the environmental, health and safety impacts of our company's past and current operations, and could lead to the imposition of substantial fines, penalties or other civil or criminal sanctions. In addition, our company's failure to comply strictly with applicable laws, regulations and local practices relating to permitting applications or reporting requirements could result in loss, reduction or expropriation of entitlements, or the imposition of additional local or foreign parties as joint venture partners. Any such loss, reduction, expropriation or imposition of partners could have a materially adverse effect on our company's operations or business.
Our company may not be able to obtain, renew or continue to comply with all of the permits necessary to develop each of our projects which would force our company to discontinue development, if any, on that project.
Pursuant to Ghanaian law, if our company discovers economically mineable mineralized material, we must obtain various approvals, licenses or permits pertaining to environmental protection and use of water resources in connection with the development, if any, of our projects. In addition to requiring permits for the development of our mineral concessions where our projects are located, our company may need to obtain other permits and approvals during the life of our projects. Obtaining, renewing and continuing to comply with the necessary governmental permits and approvals can be a complex and time-consuming process. The failure to obtain or renew the necessary permits or licenses or continue to meet their requirements could delay future development and could increase the costs related to such activities.
The development of all of our company's projects may be delayed due to delays in receiving regulatory permits and approvals, which could impede our company's ability to develop our projects which, absent raising additional capital, could cause it to curtail or discontinue development, if any.
If our company discovers economically mineable mineralized material, our company may experience delays in developing our projects. The timing of development at our projects depends on many factors, some of which are beyond our control, including:
● taxation;
● the timely issuance of permits; and
● the acquisition of surface land and easement rights required to develop and operate our projects, (in particular, our company is required to acquire surface land through expropriation in connection with our mineral concessions).
These delays could increase development costs of our projects, affect our company's economic viability, or prevent our company from completing the development of our projects.
Our company's activities are subject to environmental laws and regulations that may increase our company's costs of doing business and may restrict our operations.
All of our company's exploration activities in Ghana are subject to regulation by governmental agencies under various environmental laws. To the extent our company conducts exploration activities or undertakes new exploration or future mining activities in other foreign countries, our company will also be subject to environmental laws and regulations in those jurisdictions. These laws address emissions into the air, discharges into water, management of waste, management of hazardous substances, protection of natural resources, antiquities and endangered species, and reclamation of lands disturbed by mining operations. Environmental legislation in many countries is evolving and the trend has been towards stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and increasing responsibility for companies and their officers, directors and employees. Compliance with environmental laws and regulations may require significant capital outlays and may cause material changes or delays in our company's intended activities. Our company cannot assure our stockholders that future changes in environmental regulations will not adversely affect our company's business, and it is possible that future changes in these laws or regulations could have a significant adverse impact on some portion of our company's business, causing our company to re-evaluate those activities at that time.
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In addition, our company may be exposed to potential environmental impacts during any full scale mining operation. At such time of commencement of full scale mining, if ever, our company plans to negotiate posting of a reclamation bond to quantify the reclamation costs. Our company anticipates that the dollar amount of reserves established for exposure to environmental liabilities, at December 31, 2021, will be $93,343, as to $33,943 for our Kwabeng project, $20,363 for our Banso and Muoso Projects, and $39,034 for our Pameng project, as estimated to meet the regulatory requirements of the Environmental Protection Agency of Ghana. Our company is currently unable to predict the ultimate cost of compliance or the extent of liability risks.
Our company is unable to predict the remediation costs for potential environmental liabilities.
The costs of remediation may exceed the provision that our company has made for such remediation by a material amount. Whenever a previously unrecognized remediation liability becomes known, or a previously estimated cost is increased, the amount of that liability or additional cost could adversely affect our company's exploration activities and our financial condition. At December 31, 2021, the company had accrued $93,343 for repair of environmental damage during alluvial operations. These costs are supported by the environmental bond of $296,322 posted as required by the Ghanaian government.
There may be instances where certain events occur that our company is not insured against.
Our company maintains insurance policies to protect itself against certain risks related to its operations. This insurance is maintained in amounts that our company believes to be reasonable depending upon the circumstances surrounding each identified risk. However, our company may elect not to have insurance for certain risks because of the high premiums associated with insuring those risks or for various other reasons; in other cases, insurance may not be available for certain risks. Some concern always exists with respect to investments in parts of the world where civil unrest, war, nationalist movements, political violence or economic crisis are possible. These countries may also pose heightened risks of expropriation of assets, business interruption, increased taxation and a unilateral modification of concessions and contracts. Our company does not maintain insurance policies against political risk. Occurrence of events for which our company is not insured could adversely affect our company's exploration activities and its financial condition.
Our company is subject to the potential of legal claims and the associated costs of defense and settlement.
Our company is subject to litigation risks. All industries, including the mining industry, are subject to legal claims, with and without merit. Defense and settlement costs of legal claims can be substantial, even with respect to claims that have no merit. Due to the inherent uncertainty of the litigation process, the resolution of any particular legal proceeding to which our company is or may become subject could have a material effect on its financial position, results of operations or our company's project development operations.
Our company is subject to fluctuations in currency exchange rates, which could materially adversely affect our financial position.
Our company's primary currency for operations is the United States dollar and, to a lesser extent, the "Cedi", the Ghanaian currency and the Canadian dollar. Our company maintains most of its working capital in Canadian dollars. Our company converts its Canadian funds to foreign currencies as certain payment obligations become due. Accordingly, our company is subject to fluctuations in the rates of currency exchange between the United States dollar and these foreign currencies and these fluctuations, which are beyond our control, could materially affect our company's financial position and results of operations. A significant portion of the operating costs of our projects are in Cedi. Our company obtains services and materials and supplies from providers in West Africa. The costs of goods and services could increase or decrease due to changes in the value of the United States dollar or the Cedi or other currencies. Consequently, exploration and development of our projects could be costlier than anticipated.
Our company's business is impacted by any instability and fluctuations in global financial systems.
Any credit crisis and related instability in the global financial system, has had, and may continue to have, an impact on our company's business and our company's financial condition. Our company may face significant challenges if conditions in the financial markets do not continue to improve. Our company's ability to access the capital markets may be severely restricted at a time when our company wishes or needs to access such markets, which could have a materially adverse impact on our company's flexibility to react to changing economic and business conditions or carry on our operations.
Our company is subject to the effects that historically high inflation rate may have on its results.
Our company's mineral properties are located in Ghana, which has historically experienced relatively high rates of inflation. High inflation rates in Ghana could cause the prices of materials obtained within Ghana to be slightly higher. As our company maintains our funds in U.S. and/or Canadian currency, the effect due to Ghanaian currency fluctuations is minimal.
The Government of Ghana has the right to increase its current ownership interest of 10% in our company's subsidiary, Xtra-Gold Mining Limited ("XG Mining"), through which our company holds, among other things, its interest in our Kibi project and our other projects, for a consideration agreed upon by the parties or by arbitration and has a right of pre-emption to purchase all minerals produced by XG Mining. If the Government of Ghana were to exercise any of its rights, our company's results of operations in future periods could be adversely impacted.
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The Government of Ghana is granted a 10% free carried interest in all mining operations and has no obligation to contribute to development or operating expenses. The Government of Ghana currently has a 10% free carried interest in XG Mining, one of our Ghanaian subsidiaries that holds all of the mining leases securing our interest in all of the concessions where our projects are located. The Government of Ghana also has:
● the right to acquire an additional interest in XG Mining for a price to be determined by agreement or arbitration;
● the right to acquire a special share (as defined in the Minerals and Mining Act, 2006 (Act 703), as amended by the Minerals and Mining Act, 2010 (Act 794) (the "Mining Act (Ghana)") in XG Mining at any time for such consideration as the Government of Ghana and XG Mining might agree; and
● a right of pre-emption to purchase all minerals raised, won or obtained in Ghana.
While our company is not aware of the Government of Ghana having ever exercised such right of pre-emption, our company cannot assure our stockholders that the Government of Ghana would not seek to exercise one or more of these rights which, if exercised, could have an adverse affect on our company's results of operations in future periods. If the Government of Ghana should exercise its right to either acquire the additional interest in XG Mining or its right to acquire the special share, any profit that might otherwise be reported from XG Mining's operations would be proportionally reduced in the same percentage as the minority interest attributable to the Government of Ghana in that subsidiary would be increased. If the Government of Ghana should exercise its right to purchase all gold and other minerals produced by XG Mining, the price it would pay may be lower than the price our company could sell the gold or other minerals for in transactions with third parties and it could result in a reduction in any revenues our company might otherwise report from XG Mining's operations.
Our company currently relies on the continued services of key executives, including the directors of our company and a small number of highly skilled and experienced executives and personnel. The loss of their services may delay our company's exploration activities or adversely affect our business and future operations.
Due to the relatively small size of our company, the loss of these persons or our company's inability to attract and retain additional highly skilled employees may lead to our company having to delay our exploration activities or adversely affect our business and future operations.
Our company may experience difficulty in engaging the services of qualified personnel in connection with our technical operations at our projects.
If the loss of any of our company's key technical personnel occurs at any of our projects, our company may have difficulty finding qualified replacements. Our company's inability to hire and retain the services of qualified persons for these positions in a timely manner could impede our company's exploration activities at any of our projects which would have a material adverse effect on our company's ability to conduct business.
Our company is subject to changes in political stability in West Africa.
Our company conducts exploration and development activities in Ghana, West Africa. Our company's projects in Ghana may be subject to the effects of political changes, war and civil conflict, changes in government policy, lack of law enforcement and labor unrest and the creation of new laws. These changes (which may include new or modified taxes or other government levies as well as other legislation) may impact the profitability and viability of our properties. The effect of unrest and instability on political, social or economic conditions in Ghana could result in the impairment of exploration, development and mining operations. Any such changes are beyond the control of our company and may adversely affect our business.
In addition, local tribal authorities in West Africa exercise significant influence with respect to local land use, land labor and local security. From time to time, the Government of Ghana has intervened in the export of mineral concentrates in response to concerns about the validity of export rights and payment of duties. No assurances can be given that the co-operation of such authorities, if sought by our company, will be obtained, and if obtained, maintained.
The Government of Ghana also announced that it will be engaging companies to address the issue of dividend payment, exemptions and the mining sector fiscal regime, generally. As a result of these discussions, the Government of Ghana could amend the Mining Act (Ghana) or other regulations resulting in a material adverse impact on our company including increases in operating costs, capital expenditures or abandonment or delays in development of mining properties.
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The mining industry is a competitive industry and our company may compete with larger, more established competitors for gold acquisition opportunities.
Significant and increasing competition exists for the limited number of gold acquisition opportunities available. As a result of this competition, some of which is with large established mining companies with substantial capabilities and greater financial and technical resources than our company, our company may be unable to acquire additional attractive mining properties on terms we consider acceptable.
The marketability of our company's minerals may be influenced by various industry conditions.
The marketability of minerals, if any, which may be acquired or discovered by our company, will be affected by numerous factors beyond the control of our company. These factors include market fluctuations, the proximity and capacity of mineral markets and processing equipment and government regulations, including regulations relating to prices, taxes, royalties, land tenure and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in our company not receiving an adequate return on invested capital. The probability of our company not receiving an adequate return on invested capital will be, to a significant extent, dependent upon the market price for gold. Gold prices fluctuate dramatically and are affected by numerous industry factors, such as interest rates, exchange rates, inflation or deflation, fluctuation in the value of the United States dollar and foreign currencies, global and regional supply and demand for precious metals, forward selling by producers, central bank sales and purchases of gold, production and cost levels in major gold producing regions and the political and economic conditions of major gold, copper or other mineral-producing countries throughout the world. Moreover, gold prices are also affected by macro-economic factors such as expectations for inflation, interest rates, currency exchange rates and global or regional political and economic situations. The current demand for, and supply of, gold affects gold prices, but not necessarily in the same manner as current demand and supply affect the prices of other commodities. The potential supply of gold consists of new gold mine production plus existing stocks of bullion and fabricated gold held by governments, financial institutions, industrial organizations and individuals. Since mine production in any single year constitutes a very small portion of the total potential supply of gold, normal variations in current production do not necessarily have a significant effect on the supply of gold or its price.
It may be difficult for our shareholders to enforce any judgment obtained in the United States against us or our officers or directors, which may limit the remedies otherwise available to our shareholders.
The majority of our directors and officers are residents of countries other than the United States and all or a substantial portion of such persons' assets are located outside the United States. As a result, it may be difficult or impossible for our shareholders to:
● effect service of process on our directors or officers, or
● enforce any United States judgment they receive against us or our officers or directors in a foreign court, or including judgments predicated upon the securities laws of the United States or any state thereof. In addition, there is uncertainty as to whether foreign courts would be competent to hear original actions brought in such foreign court against us or such persons predicated upon the securities laws of the United States or any state thereof. Consequently, you may be effectively prevented from pursuing remedies under U.S. federal securities laws against us or our officers and directors. The foregoing risks also apply to those experts identified in this Annual Report that are not residents of the United States.
Risks Relating to our Common Shares
Broker-dealers may be discouraged from effecting transactions in our common shares because they are considered a penny stock and are subject to the penny stock rules.
Rules 15g-1 through 15g-9 promulgated under the Exchange Act impose sales practice and disclosure requirements on certain brokers-dealers who engage in certain transactions involving a "penny stock". Subject to certain exceptions, a penny stock generally includes any equity security not listed on a stock exchange that has a market price of less than $5.00 per share. Our common shares have traded below $5.00 per share throughout its trading history.
A broker-dealer selling penny stock to anyone other than an established customer or "accredited investor", generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse, must make a special suitability determination for the purchaser and must receive the purchaser's written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the United States Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer's account and information with respect to the limited market in penny stocks. The additional sales practice and disclosure requirements imposed upon broker-dealers may discourage broker-dealers from effecting transactions in our common shares, which could severely limit the market liquidity of our common shares and impede the sale of our common shares in the secondary market.
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The price of our common shares is likely to be highly volatile and possibly illiquid, which could cause the value of investments to decline.
The market price of our common shares may be highly volatile and possibly illiquid. Our shareholders may not be able to resell their common shares following periods of volatility because of the market's adverse reaction to volatility. Factors that could cause such volatility may include, among other things:
● actual or anticipated fluctuations in our quarterly operating results;
● large purchases or sales of our common shares;
● additions or departures of key personnel;
● investor perception of our company's business prospects;
● conditions or trends in other industry related companies;
● changes in the market valuations of publicly traded companies in general and other industry-related companies; and
● world-wide political, economic and financial conditions.
The markets for our common shares is limited.
There is currently only a limited trading market for our common shares. Our common shares trade on the OTC Bulletin Board under the symbol "XTGRF" which is a limited market in comparison to the NASDAQ Global Market, the NYSE MKT LLC and other national securities exchanges. Our securities are also listed on the Toronto Stock Exchange (the "TSX") under the trading symbol "XTG". The market for our securities on the TSX commenced in November 2010 and, to date, trading has been limited. There is no assurance that the market for our common shares on the OTC Bulletin Board or TSX will develop into active trading markets.
In connection with future stock offerings, the value of our company's common shares may become diluted as more of our common shares are issued and outstanding.
Our company may undertake in the future additional offerings of our common shares or of securities convertible into our common shares. The increase in the number of our common shares issued and outstanding and the possibility of sales of such common shares may depress the price of our common shares. In addition, as a result of such additional common shares, the voting power of our company's existing shareholders will be diluted.
We are authorized to issue up to 250,000,000 of shares without prior shareholder consent which will be dilutive to our shareholders.
Xtra-Gold is authorized to issue up to 250,000,000 of common shares with a par value of $0.001 of a single class which may be issued by our Board of Directors without further action or approval of our shareholders. While our Board of Directors is required to fulfill its fiduciary obligation in connection with the issuance of such shares, the shares may be issued in transaction with which not all shareholders agree, and the issuance of such shares will cause dilution to the ownership interest of our company's shareholders.
We have never paid cash dividends on our common shares.
We have never paid dividends on our common shares and do not presently intend to pay cash dividends on our common shares. Any future decisions as to the payment of dividends will be at the discretion of our Board of Directors, subject to applicable law.
Risks Related to our Company Post Continuation
In November 2012, as a result of the adoption by our shareholders of certain resolutions, at a special meeting of shareholders held on November 16, 2012 and a plan of conversion (the "Plan of Conversion") under Chapter 92A of the Nevada Revised Statutes filed with the Nevada Secretary of State and the subsequent filing of a memorandum of association and articles of association (the "Memorandum and Articles") with the Registrar of Corporate Affairs in the British Virgin Islands (the "BVI"), both of which were filed on November 30, 2012, we changed the jurisdiction of incorporation of our company from Nevada to the BVI (the "Continuation").
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We will still be treated as a U.S. corporation and taxed on our worldwide income after the Continuation.
The Continuation of our company from Nevada to the BVI was for corporate purposes a migration from Nevada to the BVI. Transactions whereby a U.S. corporation migrates to a foreign jurisdiction are considered by the United States Congress to be a potential abuse of the U.S. tax rules because after the migration the foreign entity is not subject to U.S. tax on its worldwide income. As a result, Section 7874(b) of the Code was enacted in 2004 to address this potential abuse. Section 7874(b) of the Code provides generally that a corporation that migrates from the United States will still remain subject to U.S. tax on its worldwide income unless the migrating entity has substantial business activities in the foreign country in which it is migrating when compared to its total business activities.
Section 7874(b) of the Code applies to the migration of our company from Nevada to the BVI, causing our company to be subject to United States federal income taxation on our worldwide income because our company does not have substantial business activities in the BVI when compared to its total business activities. Our administrative functions and our business operations are primarily located outside of the BVI. Substantially, all of our shareholders reside outside of the BVI and historically most of our funds have been raised outside of the BVI. Accordingly, we believe that our company will continue to be treated as a U.S. domestic corporation under Section 7874 of the Code after the Continuation.
Moreover, while we believe we have addressed the material U.S. federal income tax considerations as to the exchange of the shares of common stock of our company, as a Nevada company for shares of our company, as a BVI company pursuant to the Continuation, we cannot assure Holders that we have addressed the material U.S. federal income tax consequences to persons who may be subject to special provisions of the U.S. federal income tax law based on their individual circumstances. Holders should review the discussion under "Material United Federal Tax Consequences" in its entirety, including the definitions of "U.S. Holder" and "Non-U.S. Holder" described therein.
Under the BVI Business Companies Act, 2004 (the "BVI Act"), the number of shareholder votes required to approve certain fundamental matters, including amendments to our articles and business combination transactions, may be less than under Nevada law with the result that these transactions may more easily be approved under the BVI Act than under Nevada law.
Under the BVI Act, shareholder approval by resolution, being a majority approval, is required to approve certain fundamental changes, including amendments to our articles and mergers, which are the equivalent of mergers under Nevada law. Under the BVI Act, the majority approval is determined based upon those shareholders present at the meeting and entitled to vote on the fundamental change. While majority approval is required, the number of shares required may be significantly less than 50% of the outstanding share capital, which is the requirement under Nevada law, due to the fact that the quorum requirement for shareholders meetings is only two individuals present in person, each of whom is a stockholder or a proxyholder entitled to vote at a meeting.
Pursuant to the Memorandum and Articles of our company, our shareholders will have greater rights of dissent, with the result that dissenting shareholders may impede our ability to make fundamental corporate changes or increase the cost to us of making these changes.
Pursuant to our Memorandum and Articles, our shareholders will have the right to dissent when we amend our articles to change any provisions restricting or constraining the issue, transfer or ownership of shares of that class. Our shareholders will also have dissenters' rights when we propose to amend our articles to add, change or remove any restrictions on our business or businesses that we may carry on, merge (other than a vertical short-form merger with a wholly-owned subsidiary), continue to another jurisdiction, sell, lease or exchange all or substantially all of our property, or carry out a going private or squeeze-out transaction. The exercise by shareholders of their dissent and appraisal rights when we attempt to complete any of these fundamental changes could impede our ability to make fundamental corporate changes or increase the cost to us of making these changes.
The stock price of our common shares may be volatile. In addition, demand in the United States for our common shares may be decreased by the change in domicile.
The market price of our common shares may be subject to significant fluctuations in response to variations in results of operations and other factors. Developments affecting the mining industry generally, including general economic conditions and government regulation, could also have a significant impact on the market price for our common shares. In addition, the stock market has experienced a high level of price and volume volatility. Market prices for the stock of many similar companies have experienced wide fluctuations which have not necessarily been related to the operating performance of such companies. These broad market fluctuations, which are beyond our control, could have a material adverse effect on the market price of our common shares. We cannot predict what effect, if any, the Continuation will have on the market price prevailing from time to time or the liquidity of our common shares. The change in domicile may decrease the demand for our common shares in the United States. The decrease may not be offset by increased demand for our common shares in the BVI.
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While we are subject to Section 15(d) of the Exchange Act, we do not have a class of securities registered under Section 12(g) of the Exchange Act. Consequently, we file more limited reports with the SEC than do companies whose shares are registered under Section 12(g). For example, as a company reporting under Section 15(d) of the Exchange Act, we are not subject to the SEC's proxy rules and our officers, directors and principal shareholders are not required to file reports under Section 16(a) of the Exchange Act, and such persons are not subject to the short-swing profit rules of Section 16(b) of the Exchange Act.
Following our Continuation into the BVI, we have qualified as a foreign private issuer under U.S. securities laws and we have elected foreign private issuer status. While we will remain subject to limited reporting obligations under U.S. federal securities law, as a foreign private issuer:
we are not required to file quarterly reports on Form 10-Q with the SEC; although since our securities are listed on the TSX we are a reporting issuer in Canada and subject to the rules of the Canadian securities administrators (the "CSA") which includes the applicable provincial securities commissions in the provinces of British Columbia, Alberta and Ontario, we will file quarterly reports containing unaudited interim financial statements and MD&A with the CSA via SEDAR (System for Electronic Delivery of Analysis and Retrieval) and, in accordance with SEC rules, post copies of such reports on our website;
we are not required to file current reports on Form 8-K; although we are required to file current reports on Form 6-K but for less mandatory items than are required under Form 8-K, and since our securities are listed on the TSX and subject to the rules of the CSA, we will file material change reports with the CSA via SEDAR and, under SEC rules, post copies of such reports on our website;
our officers, directors and principal shareholders are not subject to Section 16 of the Exchange Act, which otherwise requires them to file ownership reports with the SEC and subjects them to "short-swing" profit liability;
we are not subject to the SEC's proxy rules; and
we are not subject to the provisions of Regulation FD which is designed to prevent selective disclosure of material information.
While we believe that the disclosure requirements of the TSX and the CSA, and SEC regulations applicable to foreign private issuers, will collectively provide transparency to the investment community and allow informed investment decisions to be made by investors in our securities, there is no assurance that the reduced transparency afforded to foreign private issuers will not also reduce the information available to investors and make investment decisions in our securities more difficult.
Item 4 Information on Xtra-Gold
A. History and Development of Xtra-Gold
On November 30, 2012, we completed the Continuation to the BVI which resulted in the change of the jurisdiction of incorporation of our company from Nevada to the BVI.
B. Business Overview
We are engaged in the exploration of gold properties exclusively in Ghana, West Africa in the search for mineral deposits, mineral resources and/or mineral reserves which could be economically and legally extracted or produced. Our exploration activities include the review of existing data, grid establishment, geological mapping, geophysical surveying, trenching and pitting to test the areas of anomalous soil samples and reverse circulation (RC) and/or diamond drilling to test targets followed by infill drilling, if successful, to define a mineral resource and, perhaps ultimately, a mineral reserve.
Our mining portfolio currently consists of 225.87 square kilometers comprised of 33.65 square kilometers for our Kibi project, 51.67 square kilometers for our Banso project, 55.28 square kilometers for our Muoso project, 44.76 square kilometers for our Kwabeng project, and 40.51 square kilometers for our Pameng project, or 55,873 acres, pursuant to the leased areas set forth in our mining leases.
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Our interests in our projects are held by our Ghanaian subsidiary, XG Mining, through mining leases granted by the Government of Ghana and registered to XG Mining for leased areas located within and upon concessions in Ghana. A concession is a grant of a tract of land made by a government or other controlling authority in exchange for an agreement that the land will be used for a specific purpose. The mining lease areas for our projects total approximately 226 square kilometers and are located at the northern extremity of the Kibi Gold Belt which is a greenstone belt, as defined in all the geological publications in Ghana, and is one of the four main greenstone belts located in Ghana.
Development of our Business During 2021
Exploration expense was incurred in 2021 as the company actively worked on its properties. Exploration activities for the 2021 year continued to focus on the Kibi Gold Project (Apapam Mining Lease). With exploration efforts highlighted by the release of an updated Mineral Resource Estimate for the Company's flagship Kibi Gold Project in the December 2021 quarter (see the Company's news release of November 1, 2021). Seventy-five (75) diamond core boreholes totalling 11,343 metres were completed by the Company's in-house drilling crews in 2021 with drilling efforts primarily targeting resource expansion opportunities within Zone 3 of the Kibi Gold Project.
We did not conduct any exploration activities on our Kwabeng, Pameng, Banso and Muoso projects during the 2021 year.
As at the date of this annual report, we have the following five projects all of which are in the exploration stage.
Kibi Project. Our flagship Kibi Gold Project is located on the Apapam concession and is our only material project.
On November 1, 2021, the Company announced the results of an updated Mineral Resource Estimate for its Kibi Gold Project located on the Apapam Mining Lease. The updated resource estimate, with an effective date of September 30, 2021, was prepared in accordance with the Definition Standards for Mineral Resources and Mineral Reserves set out by the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM"). The Mineral Resource Estimate was filed in accordance with National Instrument 43-101 (NI 43-101) requirements with the Technical Report entitled "Xtra-Gold Resources Corporation Kibi Gold Project", jointly prepared by Pivot Mining Consultants (Pty) Ltd and Tect Geological Consulting of Johannesburg and Somerset West, South Africa, respectively, and dated November 16, 2021, filed under the Company's profile on SEDAR at www.sedar.com.
The updated Mineral Resource incorporates an additional 212 diamond core boreholes (25,198.55 m) completed since the October 2012 Maiden Resource Estimate. This includes 158 holes (21,321.45 m) completed from February 2018 - June 2021 by Xtra-Gold's in-house drilling crews on resource expansion targets within the Zone 1 - Zone 2 - Zone 3 resource estimate footprint area. The resource estimate encompasses drill hole and trench data available as of July 30, 2021.
The new Mineral Resource encompasses updated resource estimates for the following five (5) deposits: Big Bend, East Dyke, Mushroom, South Ridge and Double 19; and initial resource estimates for the following three (3) deposits, which were at an early exploration stage at the time of the 2012 resource estimate: Road Cut, Gatehouse and Gold Mountain. In aggregate, these eight (8) gold deposits lying within approximately 1.6 kilometres of each other are estimated to contain an Indicated Mineral Resource of 623,700 ounces of gold based on 13,893,000 tonnes at an average grade of 1.40 grams per tonne ("g/t") gold and an additional Inferred Mineral Resource of 180,700 ounces of gold based on 5,694,000 tonnes at an average grade of 0.96 g/t gold (at a base case 0.5 g/t cut-off).
In comparison to the 2012 Maiden Resource Estimate, the updated Mineral Resource represents increases of 124.4% in the Indicated category and 22.9% in the Inferred category. Approximately 73% of the Indicated Mineral Resources (456,200 oz.) is contained within the essentially contiguous Big Bend and East Dyke deposits.
Gold mineralization within the Mineral Resource footprint area consists predominantly of tensional arrays of auriferous quartz-carbonate veins hosted by folded diorite bodies with an interpreted Belt-type granitoid affinity. The gold-bearing zones occupy the hinges and limbs of predominantly anticlinal fold structures. Over 20 significant gold occurrences hosted by Belt (Dixcove)- and Basin (Cape Coast)-type granitoids are known in Ghana, with a number constituting significant deposits. These deposits represent a relatively new style of gold mineralization for orogenic gold deposits within the West African Birimian terrain. Belt-type intrusion-hosted gold deposits include Newmont Mining's Subika deposit at their Ahafo mine and Kinross Mining's Chirano deposit within the Sefwi gold belt, as well as the former Golden Star Resources' Hwini-Butre deposit at the southern extremity of the Ashanti gold belt.
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Cautionary Note on Mineral Resources: Mineral Resources are not Mineral Reserves and by definition do not demonstrate economic viability. The Mineral Resource Estimate disclosed herein includes Inferred Mineral Resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as Mineral Reserves. There is also no certainty that these Inferred Mineral Resources will be converted to the Measured and Indicated resource categories through further drilling, or into Mineral Reserves, once economic considerations are applied. The stated figures for contained gold are in-situ Mineral Resources.
Exploration activities for the first half of 2021 focussed on resource expansion drilling on the Double 19 resource body (3,292 m) and exploration drilling targeting resource expansion opportunities within Zone 3 of the Kibi Gold Project (2,150 m). The Zone 3 target generation drilling program was designed to follow up on early-stage gold shoots / showings discovered by previous drilling / trenching efforts (2008 - 2012) and to test prospective litho-structural gold settings identified by recently completed 3D geological modelling. The assay results for the 36 boreholes (5,982 m) completed from January to June 2021 (#KBDD21379 - #KBDD21414), were reported by the Company on April 14 and August 11, 2021, including the following highlights:
- 48.8 m at 0.76 grams per tonne gold ("g/t Au"), including 6.9 m at 1.91 g/t Au, from 134.0 m in hole #KBDD21387; and 15.1 m at 1.24 g/t Au from 200.0 m in undercut hole #KBDD21391 (Double 19 - Resource Expansion Drilling)
- 13.5 m at 1.92 g/t Au from 138.5 m in hole #KBDD21384; 11.6 m at 1.00 g/t Au and 17.1 m at 1.13 g/t Au from 92.0 m and 121.9 m respectively in #KBDD21386; and 7.6 m at 2.12 g/t Au and 8.75 m at 1.03 g/t Au from 101.0 m and 125.25 m in respectively in # KBDD21390 (Double 19 - Resource Expansion Drilling)
- 65.0 m at 1.03 g/t Au, including 13.5 m at 2.42 g/t Au, from 33.0 m in hole #KBDD21411; and 43.1 m at 0.75 g/t Au, including 3.0 m at 3.65 g/t Au and 9.0 m at 1.29 g/t Au, from 28.5 m in #KBDD21402 (Boomerang West Target - Exploration Drilling)
- 7.3 m at 1.93 g/t Au from 70.7 m in hole #KBDD21409; and 15.0 m at 1.02 g/t Au from 99.0 m in undercut hole #KBDD21410 (Twin Zone Target - Exploration Drilling)
Exploration activities for the second half of 2021, corresponding to exploration drilling conducted after the late July 2021 database close-out date for the updated Mineral Resource Estimate, continued to target resource expansion opportunities along the southwestern (Zone 3) segment of the over three-kilometre-long Zone 2 - Zone 3 anticlinal fold structure. With the exploration program focussing on follow up drilling of the early-stage Boomerang East, Boomerang West, and Twin Zone (formerly JK East) targets positioned along similar second-order fold hinge structures as the neighbouring Double 19 resource body, and scout drilling of prospective litho-structural gold settings identified by recently completed detailed 3D geological modelling. The assay results for the 39 boreholes (5,982 m) completed from late July to December 2021 (#KBDD21415 - #KBDD21453), as well as five (5) boreholes completed in January 2022 (#KBDD22454 - #KBDD22458), were reported by the Company on February 18, 2022, including the following highlights:
Boomerang East Target
- 6.0 metres ("m") at 6.19 grams per tonne gold ("g/t Au"), including 2.6 m at 13.82 g/t Au, from 52.0 m in hole #KBDD21434
- 33.5 m at 1.22 g/t Au, including 7.5 m at 3.76 g/t Au, from 31.5 m in hole #KBDD21453
- 16.5 m at 6.23 g/t Au, including 6.5 m at 13.74 g/t Au, from 1.5 m in hole #KBDD22455
- 13.5 m at 1.64 g/t Au, including 6.0 m at 3.35 g/t Au, from 0.0 m in #KBDD22458; followed by second interval of 21.0 m at 1.46 g/t Au from 39.0 m, including 11.0 m at 2.49 g/t Au
- gold mineralization at Boomerang East target traced over an approximately 400 m section across the southeastern limb of the NE-trending Zone 2 - Zone 3 anticlinal fold structure; with the mineralization predominantly being spatially associated with a series of apparent second-order (parasitic) fold structures
Boomerang West Target
- 29.0 m at 1.04 g/t Au, including 4.5 m at 3.27 g/t Au, from 50.0 m in #KBDD21423
- 6.0 m at 3.12 g/t Au from 9.0 m in hole #KBDD21425
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- Boomerang West target occupies a NE-plunging, tight to isoclinal, anticlinal fold hinge zone; with gold mineralization traced over an approximately 240 m trend-length and 80 m width of the anticlinal fold structure, and down to a vertical depth of approximately 165 m
Twin Zone Target
- 13.2 m at 1.07 g/t Au from 161.0 m in hole #KBDD21419
- 4.0 m at 3.53 g/t Au from 157.0 m in hole #KBDD21448
- gold mineralization at the early-stage Twin Zone target intermittently traced over an approximately 275 m down-plunge distance, and down to a vertical depth of approximately 150 m, along the limbs of two parallel, NE-trending, second-order (parasitic) fold structures
See "Kibi Project - Prior Exploration by Xtra-Gold" for exploration activities conducted by our company during the two years preceding the fiscal year.
As at the date of this annual report, during 2022, we plan to conduct:
● follow-up trenching of Zone 1 - Zone 2 - Zone 3 early stage gold shoots / showings to guide future mineral resource expansion drilling efforts;
● prospecting, reconnaissance geology, hand augering and/or scout pitting, and trenching of high priority gold-in-soil anomalies and grassroots gold targets across the extent of the Apapam concession; and
● a diamond core drill program of approximately 15,000 metres, at an estimated cost of $750,000, to be implemented utilizing the Company's in-house operated drill rigs; consisting of a combination of follow up drilling of early stage gold targets and scout drilling of prospective litho-structural gold settings within the mineral resource footprint area; and scout drilling of new grassroots gold targets across the Apapam concession.
Kwabeng Project. Our Kwabeng project is located on the Kwabeng concession.
During the fiscal year for which this annual report is being filed, lode gold exploration activity on the Kwabeng project was limited to airborne geophysical survey compilation and satellite remote sensing imagery.
See "Kwabeng Project - Prior Exploration by Xtra-Gold" for exploration activities conducted by our company during the two years preceding the fiscal year.
As at the date of this annual report, during 2022, we plan to conduct:
● ongoing geological compilation, prospecting, soil geochemical sampling, hand augering and/or scout pitting, and trenching to identify and/or further advance grassroots targets; and
● the continuation of placer gold recovery operations at this project (commenced in March 2013).
Pameng Project. Our Pameng project is located on the Pameng concession.
During the fiscal year for which this annual report is being filed, lode gold exploration activity on the Pameng project was limited to airborne geophysical survey compilation and satellite remote sensing imagery.
As of the date of this annual report, during 2022, we plan to conduct an exploration program consisting of:
● ongoing geological compilation, prospecting, soil geochemical sampling, hand augering and/or scout pitting, and trenching to identify and/or further advance grassroots targets.
Banso Project. Our Banso project is located on the Banso concession.
During the fiscal year for which this annual report is being filed, lode gold exploration activity on the Banso project was limited to airborne geophysical survey compilation and satellite remote sensing imagery.
We did not conduct any exploration work on the Banso project during the two years preceding the fiscal year
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● ongoing geological compilation, prospecting, soil geochemical sampling, hand augering and/or scout pitting, and trenching to identify and/or further advance grassroots targets; and
● the continuation of placer gold recovery operations at these projects (commenced in 2015).
Muoso Project. Our Muoso project is located on the Muoso concession.
During the fiscal year for which this annual report is being filed, lode gold exploration activity on the Muoso project was limited to airborne geophysical survey compilation and satellite remote sensing imagery.
We did not conduct any exploration work on the Muoso project during the two years preceding the fiscal year.
As of the date of this annual report, during 2022, we plan to conduct an exploration program consisting of:
● ongoing geological compilation, prospecting, soil geochemical sampling, hand augering and/or scout pitting, and trenching to identify and/or further advance grassroots targets; and
● the continuation of placer gold recovery operations at these projects (commenced in 2015).
As at the date of this annual report, we have estimated $500,000 for the cost for soil sampling, hand augering and/or scout pitting, and trenching at our Kibi, Kwabeng, Pameng, Banso and Muoso projects in 2022. We estimate a cost of $750,000 to complete a 15,000 metre drill program at Kibi in 2022.
Gold Recovery Operations. We continued with placer gold recovery operations at our Kwabeng, Pameng Banso and Muoso projects during the fiscal year. We recovered 4,113 ounces of raw placer gold (Kwabeng - 568 ounces, Pameng - 2,703 ounces, Banso - 593 ounces, and Muoso - 249 ounces) and sold 4,318 ounces of fine gold for net proceeds of $4,074,170. As at the date of this annual report, during 2022, we plan to continue placer gold recovery operations at these projects.
Net proceeds from gold recoveries to the end of 2021, from all properties, amounted to $24,862,401.
As of the date of this annual report, we have:
● have achieved a series of losses since inception, although we reported a profit in 2021, 2020, and 2019;
● have minimal operations, and
● relied upon the sale of our securities and the proceeds derived from our recovery of placer gold operations to fund our operations.
Principal Capital Expenditures/Divestitures over the last Three Fiscal Years
Our company has not had any principal capital expenditures or divestitures over the last three fiscal years. We purchased three new pickup trucks in 2021. We purchased a second exploration drill, a bulldozer, a genset, and three new pickup trucks in 2020. We purchased a trommel in 2019.
C. Organizational Structure
The following organization chart sets forth our significant subsidiaries.
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S-K 1300 Compliance
The hardrock, lode gold exploration technical information relating to our mineral properties contained in this annual report on Form 20-F is based upon information prepared by or the preparation of which was supervised by Yves Clement, P.Geo., our Vice-President, Exploration. The information was initially prepared under NI 43-101 but, where required, adjustments and additional disclosures have been made in accordance with S-K 1300.
Location of Operations
Except for the land upon which our field camp is located in Kwabeng, Ghana, we do not own any real property. We own the mineral rights on our projects located in the Kibi Gold Belt where all of our exploration activities are currently conducted. Mining leases granted by the Government of Ghana and registered to our Ghanaian subsidiary, XG Mining, grant us the right to operate at our Kibi, Kwabeng, Pameng, Banso and Muoso projects and are described elsewhere in this annual report.
We conduct administrative activities from our Corporate Office, located at Monte Carlo #7, Paradise Island, Nassau, Bahamas. Since there is no mail delivery service in Bahamas, our Company requires a P.O. Box at Village Road Shopping Plaza, Suite #2150, P.O Box AP 59217, Nassau, Bahamas. We pay rent of $2,700 monthly.
As of the date of this annual report, our technical and administrative activities are conducted at our field camp. We do not pay any rent as we own our field camp.
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Map of Projects and Operations
The map below shows the locations of our Kibi, Kwabeng, Pameng, Banso and Muoso projects all of which are described in further detail in this annual report.
Xtra-Gold Mining Concessions Located in the Kibi Gold Belt
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Xtra-Gold Mining Leases Located in the Kibi Gold Belt
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Overview of Projects
With the exception of our Kibi project, all our other projects are currently at an early stage of evaluation with no identified mineral resources or mineral reserves.
A maiden Mineral Resource Estimate was produced by Xtra-Gold for its Kibi Gold Project on October 26, 2012. The maiden Zone 2 - Zone 3 resource estimate, including the Big Bend, East Dyke, South Ridge and Mushroom deposits in Zone 2, and the Double 19 deposit in Zone 3, represented the first ever Mineral Resource generated on a lode gold project within the Kibi Gold Belt. Collectively, these five gold deposits lying within approximately 1.6 kilometres of each were estimated to encompass an Indicated Mineral Resource of 3.38 million tonnes grading 2.56 grams per tonne ("g/t") gold for 278,000 ounces of contained gold and an additional Inferred Mineral Resource of 2.35 million tonnes grading 1.94 g/t gold for 147,000 ounces of contained gold (@ base case 0.5 g/t cut-off). The above mineral resource estimate was filed in accordance with National Instrument 43-101 (NI 43-101) requirements with the Technical Report entitled "Independent Technical Report, Apapam Concession, Kibi Project, Eastern Region, Ghana", prepared by SEMS Explorations and dated October 31, 2012, filed under the Company's profile on SEDAR at www.sedar.com.
On November 1, 2021, the Company announced the results of an updated Mineral Resource Estimate for its Kibi Gold Project located on the Apapam Mining Lease. The updated resource estimate, with an effective date of September 30, 2021, was prepared in accordance with the Definition Standards for Mineral Resources and Mineral Reserves set out by the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM"). The Mineral Resource Estimate was filed in accordance with National Instrument 43-101 (NI 43-101) requirements with the Technical Report entitled "Xtra-Gold Resources Corporation Kibi Gold Project", jointly prepared by Pivot Mining Consultants (Pty) Ltd and Tect Geological Consulting of Johannesburg and Somerset West, South Africa, respectively, and dated November 16, 2021, filed under the Company's profile on SEDAR at www.sedar.com. A copy of the Technical Report is attached as Exhibit 1.5 to this Form 20-F.
The updated Mineral Resource incorporates an additional 212 diamond core boreholes (25,198.55 m) completed since the October 2012 Maiden Resource Estimate. This includes 158 holes (21,321.45 m) completed from February 2018 - June 2021 by Xtra-Gold's in-house drilling crews on resource expansion targets within the Zone 1 - Zone 2 - Zone 3 resource estimate footprint area. The resource estimate encompasses drill hole and trench data available as of July 30, 2021.
The new Mineral Resource encompasses updated resource estimates for the following five (5) deposits: Big Bend, East Dyke, Mushroom, South Ridge and Double 19; and initial resource estimates for the following three (3) deposits, which were at an early exploration stage at the time of the 2012 resource estimate: Road Cut, Gatehouse and Gold Mountain. In aggregate, these eight (8) gold deposits lying within approximately 1.6 kilometres of each other are estimated to contain an Indicated Mineral Resource of 623,700 ounces of gold based on 13,893,000 tonnes at an average grade of 1.40 grams per tonne ("g/t") gold and an additional Inferred Mineral Resource of 180,700 ounces of gold based on 5,694,000 tonnes at an average grade of 0.96 g/t gold (at a base case 0.5 g/t cut-off).
In comparison to the 2012 Maiden Resource Estimate, the updated Mineral Resource represents increases of 124.4% in the Indicated category and 22.9% in the Inferred category. Approximately 73% of the Indicated Mineral Resources (456,200 oz.) is contained within the essentially contiguous Big Bend and East Dyke deposits.
Gold mineralization within the Mineral Resource footprint area consists predominantly of tensional arrays of auriferous quartz-carbonate veins hosted by folded diorite bodies with an interpreted Belt-type granitoid affinity. The gold-bearing zones occupy the hinges and limbs of predominantly anticlinal fold structures. Over 20 significant gold occurrences hosted by Belt (Dixcove)- and Basin (Cape Coast)-type granitoids are known in Ghana, with a number constituting significant deposits. These deposits represent a relatively new style of gold mineralization for orogenic gold deposits within the West African Birimian terrain. Belt-type intrusion-hosted gold deposits include Newmont Mining's Subika deposit at their Ahafo mine and Kinross Mining's Chirano deposit within the Sefwi gold belt, as well as the former Golden Star Resources' Hwini-Butre deposit at the southern extremity of the Ashanti gold belt.
Cautionary Note on Mineral Resources: Mineral Resources are not Mineral Reserves and by definition do not demonstrate economic viability. The Mineral Resource Estimate disclosed herein includes Inferred Mineral Resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as Mineral Reserves. There is also no certainty that these Inferred Mineral Resources will be converted to the Measured and Indicated resource categories through further drilling, or into Mineral Reserves, once economic considerations are applied. The stated figures for contained gold are in-situ Mineral Resources.
We have the following lode gold exploration activities planned for 2022:
Our strategic plan is, with respect to our mineral projects, to conduct an exploration program, consisting of the following:
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at our Kibi project:
● follow-up trenching of Zone 1 - Zone 2 - Zone 3 early stage gold shoots / showings to guide future mineral resource expansion drilling efforts;
● prospecting, reconnaissance geology, hand augering and/or scout pitting, and trenching of high priority gold-in-soil anomalies and grassroots gold targets across the extent of the Apapam concession; and
● a diamond core drill program of approximately 15,000 metres, at an estimated cost of $750,000, to be implemented utilizing the Company's in-house operated drill rigs; consisting of a combination of follow up drilling of early stage gold targets and scout drilling of prospective litho-structural gold settings within the mineral resource footprint area; and scout drilling of new grassroots gold targets across the Apapam concession.
at our Kwabeng project:
● ongoing geological compilation, prospecting, soil geochemical sampling, hand augering and/or scout pitting, and trenching to identify and/or further advance grassroots targets; and
● the continuation of placer gold recovery operations at this project (commenced in March 2013);
at our Pameng project:
● ongoing geological compilation, prospecting, soil geochemical sampling, hand augering and/or scout pitting, and trenching to identify and/or further advance grassroots targets; and
at our Banso and Muoso projects:
● ongoing geological compilation, prospecting, soil geochemical sampling, hand augering and/or scout pitting, and trenching to identify and/or further advance grassroots targets; and
● the continuation of placer gold recovery operations at these projects (commenced in 2015);
As at the date of this annual report, we have estimated $500,000 for the cost for soil sampling, hand augering and/or scout pitting, and trenching at our Kibi, Kwabeng, Pameng, Banso and Muoso projects.
Title to Properties
The 30-year mining leases on our Kwabeng and Pameng concessions expired on July 26, 2019. The Company has applied to Minerals Commission for a renewal extension for the Kwabeng and Pameng mining leases and has submitted all the required documentation to renew and extend these leases for a further 15 years.
We are also renewing our Apapam concession, which expired on December 17, 2015. All required documentation has been filed for a 15 year renewal extension. We hold a 14-year mining lease on our Banso concession expiring on January 5, 2025 and a 13-year mining lease on our Muoso concession expiring on January 5, 2024.
Recovery of Placer Gold
In July 2010, we entered into agreements with independent Ghanaian contract miners to recover placer gold and produce the mineralized material from our Kibi and Pameng projects and an agreement with Ravenclaw Mining Limited (see footnote 8 following the compensation table under "Compensation - Directors and Senior Management Compensation Table"), to assist in overseeing the contract miners to limit our involvement in the placer gold recovery operations from July 2010 through December 2011 and enable our company to focus on lode gold exploration activities (see "Business Overview - Gold Recovery Operations" for further details).
During 2010 through 2012, we did not conduct any placer gold recovery operations at our Kwabeng project. From 2013 to 2021, we conducted placer gold recovery operations at our Kwabeng project, while adding placer gold recovery operations at Banso and Muoso in 2015 and at Pameng in 2020.
VTEM Survey
In 2011, an airborne Versatile Time-domain Electromagnetic ("VTEM"), Magnetic and Radiometric survey (the "VTEM survey") was completed by our company on our projects which are all located in the Kibi Gold Belt and encompassed approximately 4,000 line-kilometers at 200 meter line spacing, with approximately 490 line-kilometers of detail 100 meter line spacing coverage over our core Kibi project mining lease area. The VTEM system is renowned for its superior penetration depth of greater than 400 meters, low base frequency for enhanced penetration in conductive ground cover and high spatial resolution which permits the spotting of drill targets directly off the airborne anomalies. The primary purpose of the VTEM survey was to delineate auriferous graphitic or sulphidic shears but resistivity-depth data may also help further define and/or identify the granitoid bodies hosting the Kibi project mineralization In addition to helping map lithological contacts, including the gold prospective granitoid bodies, the aeromagnetic survey will permit the detection of low-magnetic domains possibly reflecting demagnetization resulting from intense gold-related hydrothermal alteration. The radiometric survey may also help further define and/or identify the gold-hosting granitoid bodies.
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The VTEM data was incorporated into the geological compilation following our receipt of the final survey interpretation data from Geotech Airborne Limited (see "Technical Reports - Interpretation Report of VTEM Survey" below for further details). This integrated survey, in combination with previous soil geochemistry and reconnaissance geology surveys will help further delineate known gold occurrences outside Zone 2 of the Kibi project, and evaluate the remainder of the Apapam mining lease area for the hosting of granitoid-hosted and Ashanti style shear zone gold mineralization. Similarly, the VTEM survey will help further define the extent and regional controls of the gold-bearing structures discovered to date by scout trenching on the Ankaase Gold Trend, located on the Muoso concession, and Banso Area No. 3 gold-in-soil anomalies; with the objective of guiding follow-up trenching designed to outline high priority, cost effective drill targets.
Technical Reports
Independent NI 43-101 Technical Report (Kibi Gold Project)
In November 2021, Tect Geological Consulting Ltd and Pivot Mining Consultants Ltd. prepared an independent technical report ("Technical Report") in support of an updated Mineral Resource Estimate on the Company's Kibi Gold Project located on the Apapam Mining Lease. The Technical Report was prepared in accordance with disclosure and reporting guidelines set forth in National Instrument 43-101 (NI 43-101) and companion Form 43-101F1 of the Canadian Securities Administrators' Standards of Disclosure for Mineral Projects.
The Technical Report summarizes the geology, past exploration activities and updated Mineral Resource Estimate on the Kibi Gold Project. With the updated Mineral Resource Estimate based on drilling completed since the October 2012 maiden Mineral Resource Estimate. The resource estimate was prepared in accordance with the Definition Standards for Mineral Resources and Mineral Reserves set out by the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM").
The Technical Report, entitled "Xtra-Gold Resources Corporation Kibi Gold Project", with an Effective Date of September 30, 2021, and dated November 16, 2021, was jointly prepared by Pivot Mining Consultants (Pty) Ltd and Tect Geological Consulting of Johannesburg and Somerset West, South Africa, respectively, under the supervision of Ken Lomberg, Director, Geology and Resources, of Pivot Mining Consultants (Pty) Ltd, an independent Qualified Person pursuant to NI 43-101. The Technical Report is available for review under the Company's profile on SEDAR (www.sedar.com). A copy of the Technical Report is attached as Exhibit 1.5 to this Form 20-F.
Updated Mineral Resource Estimate
The database for the Kibi Gold Project encompasses 468 boreholes totalling 74,286.39 metres, including 418 diamond core holes (69,571.39 m) and 50 reverse circulation (RC) boreholes (4,715 m), drilled by Xtra-Gold since 2008. This includes an additional 212 diamond core boreholes totalling 25,198.55 metres, completed since the 2012 Maiden Mineral Resource. The Kibi Gold Project database also incorporates 405 trenches totalling 17,544.8 metres, including an additional 95 trenches (3,018.7 m) completed since the 2012 resource estimate. This resource estimate encompasses drill hole and trench data available as of July 30, 2021.
The updated Mineral Resource Estimate encompasses eight (8) deposits collectively estimated to contain an Indicated Mineral Resource of 623,700 ounces of gold based on 13,893,000 tonnes at an average grade of 1.40 grams per tonne ("g/t") gold and an additional Inferred Mineral Resource of 180,700 ounces of gold based on 5,694,000 tonnes at an average grade of 0.96 g/t gold. Details for the Mineral Resource Estimate are outlined in the following table:
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Notes
1) CIM Definition Standards were followed for the Mineral Resource estimate.
2) The Mineral Resource estimate encompasses drill hole and trench data available as of July 30, 2021.
3) A cut-off grade of 0.5 g/t gold was applied to all resource estimates, after consideration for the reasonable expectation of eventual economic extraction, assuming initially open pit extraction with some deposits transitioning to an underground mining operation.
4) The capping value was established for each deposit independently, with assay capping values ranging from 15 g/t - 25 g/t gold for the respective deposits.
5) The estimation utilised Ordinary Kriging with each target being evaluated independently.
6) The understanding of the geology and specifically the structure underpinned the estimation.
7) Average density values for oxide, transition, and fresh (sulphide) materials were established for each deposit independently; with the indicated density values reflecting weighted averages for oxide, transition, and fresh materials for the respective deposits.
8) Mineral resource tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add due to rounding.
9) Mineral resource tonnage and grade are reported as undiluted.
10) The figures for contained gold are in-situ Mineral Resources.
11) 1 troy ounce equals 31.10348 grams.
12) Mineral Resources are not Mineral Reserves and by definition do not demonstrate economic viability.
13) Inferred Mineral Resources have a great amount of uncertainty as to their existence and as to whether they can be mined economically. It cannot be assumed that all or part of the Inferred Mineral Resources will ever be upgraded to a higher category.
14) The estimate of Mineral Resources may be materially affected by geological, environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.
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Three dimensional (3D) geological models were generated for each auriferous body, based on the known geology and identified structural trends for the respective bodies. The approach was based on the premise that gold-bearing fluids would have preferentially flowed through the defined structures, as depicted by the geological models. The detailed geological models, in addition to providing well-constrained mineralization envelopes for mineral resource estimation, also serve as guides for structurally-controlled mineralization zones that will be subject to further exploration targeting.
The new Mineral Resource encompasses updated resource estimates for the following five (5) deposits: Big Bend, East Dyke, Mushroom, South Ridge and Double 19; and initial resource estimates for the following three (3) deposits, which were at an early exploration stage at the time of the 2012 resource estimate: Road Cut, Gatehouse and Gold Mountain. No additional drilling was completed on the Big Bend and East Dyke deposits since the previous resource estimate, with the updated resources for these auriferous bodies based solely on new detailed structural analysis and 3D geological modelling.
These eight (8) auriferous bodies lying within approximately 1.6 kilometres of each other, including: the Big Bend, East Dyke, Mushroom and South Ridge deposits within Zone 2, with separations varying from almost contiguous to 200 metres; the Double 19 deposit in Zone 3, approximately 450 metres southwest of Zone 2; and the Gatehouse and Gold Mountain bodies situated in Zone 1, approximately 650 metres southeast of Zone 2. Mineralization remains open down-plunge for all auriferous bodies, with several bodies remaining open in multiple directions. Approximately 73% of the Indicated Mineral Resource (456,200 oz.) is contained within the essentially contiguous Big Bend and East Dyke deposits, with these auriferous bodies extending to approximately 650 metres and 500 metres, respectively, beneath the topographic surface.
Gold mineralization within the Mineral Resource footprint area consists predominantly of tensional arrays of auriferous quartz-carbonate veins hosted by folded diorite bodies with an interpreted Belt-type granitoid affinity. The gold-bearing zones occupy the hinges and limbs of predominantly anticlinal fold structures. Over 20 significant gold occurrences hosted by Belt (Dixcove)- and Basin (Cape Coast)-type granitoids are known in Ghana, with a number constituting significant deposits. These deposits represent a relatively new style of gold mineralization for orogenic gold deposits within the West African Birimian terrain. Belt-type intrusion-hosted gold deposits include Newmont Mining's Subika deposit at their Ahafo mine and Kinross Mining's Chirano deposit within the Sefwi gold belt, as well as the former Golden Star Resources' Hwini-Butre deposit at the southern extremity of the Ashanti gold belt.
Technical Report Recommendations
Based on the results of the 2021 Mineral Resource Estimate ("MRE") and exploration results on early-stage targets across the project area, Pivot and Tect recommend a two-phase exploration program to further advance the Kibi Gold Project.
Phase 1 is geared towards the further delineation of existing mineral resources and identification of additional resource bodies within the MRE footprint area, continued advancement of early-stage targets across the Kibi Gold Project, and property-scale target generation exploration work.
Phase 2, designed to support the continued advancement of the project, includes additional drilling to further define mineral resources, an updated mineral resource estimate, completion of a Preliminary Economic Assessment ("PEA"), metallurgical test work, and collection of additional data to support future scoping studies.
A cost estimate for the recommended two-phase work program serves as a guideline. The estimated drilling expenditures are based on all-inclusive drilling costs utilizing Xtra-Gold's in-house operated diamond core drill rigs. Total expenditures are estimated at USD 5,295,000, including: USD 3,570,000 for Phase 1; and USD 1,725,000 for Phase 2. With the implementation of Phase 2 being contingent upon the success of Phase 1.
Interpretation Report of VTEM Survey
In August 2011, Geotech Airborne Limited provided our company with a report setting forth its interpretation of approximately 4,027 line kilometers of electromagnetic, magnetic and radiometric data for gold exploration in our Kibi project area.
The airborne geophysical datasets display a complex signal largely dominated by NE-SW to NNE-SSW structures that are interpreted as shear zones and graphitic sediments. Metasediments, metavolcanics and granitoids units have been delineated from their geophysical (magnetic, electromagnetic and radiometric) characteristics. The electromagnetic anomaly picks show elongated patterns of conductors located in NE-SW to NNE-SSW trending areas interpreted as graphitic layers within the interpreted shear zone and graphitic sediments.
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The available geological and geophysical data was interpreted in terms of gold potential within the area of interest. The geophysical interpretation used the genetic model for stockworks/silicification gold emplacement and the genetic model of granitoid gold emplacement. A total of 38 targets were delineated and ranked according to a priority level for ground follow-up. Geotech Airborne Limited suggested that these targets should be further investigated in the field using geology and geochemistry before planning a drilling program.
Modified Gold Deportment Study
In October 2011, SGS South Africa (Pty) Ltd. provided our company with a mineralogical report relating to mineralogical test work consisting of a modified gold deportment study to characterize the gold, in two samples, to recommend a process route to maximize gold recoveries. Approximately 10 kilograms of sample G478923 sulphide material (drill core) and 10 kilograms of composite oxide (saprolite) material were utilized for the test work. The composite oxide sample was created by SGS South Africa (Pty) Ltd. from trench samples that were crushed and combined. The mineralogical test work included metallurgical and mineralogical tests and was done in conjunction with gravity test work conducted by the Metallurgical Section of SGS South Africa (Pty) Ltd. This report outlined the methodology as to how the different tests were conducted, the results of the test work, conclusions and recommendations.
The objective of the modified gold deportment study was to gain an understanding of the nature and mode of occurrence of the gold in each sample. The modified gold deportment study included the following:
• test work to determine the amenability of the ore to gravity recovery;
• gold distribution across size fractions (grading analysis);
• heavy liquid separation to determine the amount of free gold or gold in heavy particles such as sulphides;
• exposure and mineral association analysis of the particulate gold grains in the gravity concentrate;
• chemical composition of the ore and metallurgical test products;
• general mineralogical characterization of the ore;
• identification and quantification of gold minerals including native gold, gold-tellurides, etc. in the gravity concentrates;
• grain size distribution of the gold grains in the gravity concentrate;
• test work to determine the gold recovery by direct cyanidation; and
• diagnostic leach analysis of the gravity tailings to determine the gold deportment in the gravity tails.
SGS South Africa (Pty) Ltd. made the following preliminary gold recovery conclusions in their report:
• The gold in the G478923 gold ore samples (3.49 g/t Au) is highly amenable to cyanidation leaching with ~97% recoverable by means of direct cyanidation. This ore is also amenable to gravity upgrading, with ~67% of the gold recovered at a mass pull of ~3%. In the gravity concentrate (97.5 g/t Au), a total of 143 particulate gold grains were observed in the gravity concentrate of this sample.
• The grading analysis on the G478923 gold ore sample indicated a very high upgrading of gold in the +106µm size fraction (~69%). This indicates that the gold is either large gold grains or locked in large gold-bearing particles. From the liberation and mineral association characteristics determined by QEMSCAN, on the gravity concentrate, the gold was found to be ~63% liberated and ~25% was associated with pyrite. This indicates that the gold is either large, liberated gold grains or locked in large gold-bearing pyrite particles.
• The direct cyanidation and diagnostic leach indicates that the sample is highly amenable to cyanide leaching, with ~97% of the gold recovered from the head sample at a grind of 80%-75µm by direct cyanidation and ~96% for the gravity tailings at a grind of~50%-75µm. This is corroborated by the exposure and the mineral association characteristics as determined by QEMSCAN analysis of the gravity concentrate. Approximately 90% of the particulate gold grains are ≥10% exposed and should be leachable.
• The gold in the composite gold ore sample (7.28 g/t Au) is also highly amenable to cyanidation, with ~97% of the gold recoverable by means of direct cyanidation. The ore is also amenable to gravity upgrading, to some degree, with only ~56% of the gold recovered at a mass pull of ~3%. In the gravity concentrate (134.83 g/t Au) a total of 125 particulate gold grains were observed by QEMSCAN.
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• The grading analysis on the composite gold ore sample indicated a very high upgrading of gold in the +106µm size fraction (~74%). This indicates that the gold is either large gold grains or locked in large gold-bearing particles. From the liberation and mineral association characteristics determined by QEMSCAN analysis of the gravity tailings, it was found that the gold grains were moderately liberated (~76%) and that ~10% was occurring in silicates and ~14% in oxides. This indicates that the gold is either large, liberated gold grains or locked in large gold-bearing silicate/oxide particles.
• The direct cyanidation and diagnostic leach tests indicated that the sample is highly amenable to cyanide leaching, with ~98% of the gold recovered from the head sample at a grind of 80%-75µm and ~99% of the gold in the gravity tailings at a grind of 50%-75µm. This is corroborated by the exposure and mineral association characteristics of particulate gold in the gravity concentrate, as determined by QEMSCAN analysis. Approximately ~96% of the gold grains are ≥10% exposed and should be leachable.
• The most simplistic processing option would be to mill the ore to ~80%-75µm followed by carbon-in-leach cyanidation. Another option, which may result in somewhat lower operational cost is to mill the ore relatively coarsely (say 80%-106µm) followed by gravity concentration and intensive cyanidation of the gravity concentrate. The gravity tailings could then be milled finer to ~80%-75 µm, followed by carbon-in- leach cyanidation. Taking out the coarse gold and some of the sulphides by gravity, will allow shorter retention times in the leach tanks and possibly even lower cyanide consumption.
Report on Structural Geological Investigations of Zone 2, Kibi Project
In November 2011, SRK Consulting (Canada) Inc. provided our company with a report of their structural geological investigations of Zone 2 (Big Bend zone, South zone and other zones including the Mushroom zone) on our Kibi project.
Objectives and Overview
● to review geological mapping to date and to provide on ground structural geological guidance; and
● to conduct structural geological investigations of key exposures and drill core at Zone 2 with a focus on understanding:
● the 3D geometry of diorite dykes;
● structural controls on the distribution of gold mineralization (including ore plunge); and
● kinematics of shear/fault zones and their influence on the distribution of gold mineralization.
SRK Consulting (Canada) Inc. Conclusions
● The distribution of gold mineralization in the Big Bend zone is controlled by two NNE-trending shear zones that bound the auriferous zone in a quartz diorite.
● Auriferous quartz veins in the Big Bend zone comprise:
● shear and extensional veins related to the development of NNE-trending shear zones; and
● stockwork veins in a particular portion of the quartz diorite.
● Vein geometry, rare kinematic indicators and steeply plunging mineral lineation imply that deformation associated with gold mineralization in the Big Bend zone resulted from a protracted episode of reverse SE over NW movement.
● The controls on gold mineralization at the South zone and other zones are not well understood and require further oriented core drilling followed by structural geology investigations.
SRK Consulting (Canada) Inc. Recommendations
Big Bend Zone
● complete infill drilling at the Big Bend zone to confirm gold grade continuity in preparation for resource estimation;
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● conduct detailed petrography studies to identify compositional variations in the quartz diorite and verify their potential control on the distribution of gold mineralization;
● include structural contours of auriferous diorite contacts on geological maps to investigate the relationship between the geometry of the auriferous portion of the diorite body and the distribution of gold mineralization; and
● define the continuation of (auriferous) shear zones to the north and south of the Big Bend diorite.
South Zone and Other Zones (including the Mushroom Zone)
● undertake further oriented core drilling to verify the extent and potential presence of shear zones at the South zone (drill orientations to SW and SE); and
● determine the shear zone kinematics and controls on gold distribution.
Regional Structural Geology Interpretation of the Aeromagnetic Data from the VTEM Survey
In December 2011, SRK Consulting (Canada) Inc. provided our company with a report of their structural geological interpretation of aeromagnetic data covering our Kibi Gold Belt mining concessions to assist in understanding the structural setting of gold mineralization in the area and to provide a practical structural framework for future exploration targeting. The defined area of interest is ~705 square kilometers in area and is located at the northern extremity of the Kibi Gold Belt. The area of interest was based on the extent of the VTEM Survey conducted by Geotech Airborne Limited. The SRK Consulting (Canada) Inc. report documents the methodology, results, conclusion and recommendations from the structural geological interpretation.
The scope of work included a desktop structural interpretation of the airborne geophysical data we acquired over the area of interest. Based on the available airborne geophysical data, SRK Consulting (Canada) Inc. constructed form lines outlining the internal geometry of stratigraphy within our area of interest. In general, form lines within our area of interest display a strong southwest-northeast trend, parallel to the tectonic grain in the known greenstone belts of Ghana. Variations from this trend occur in a north-west-southeast-trending belt along the lower portion of our area of interest.
SRK Consulting (Canada) Inc. Conclusions
● A fault network was interpreted and subdivided in terms of age. The fault network comprises dominant southwest- northeast-trending faults, subparallel to the dominant trend observed in the form lines that include early reactivated DE extensional faults. These faults are interpreted to have developed (or reactivated) during the Eburnean Orogeny (D2 -D5 ) and are believed to be closely linked to gold mineralization.
● Two types of intrusions (belt and basin type granitoids) were identified in our area of interest, both of which were emplaced before the culmination of the Eburnean Orogeny (D5 ) and therefore are overprinted by D5 deformation.
● A late (D6 ) fault set is represented by east-west-rending faults that are linked by minor northwest-southeast- trending faults. These are characterized by narrow, linear breaks in the magnetic data often with little to no visible offset in the magnetic stratigraphy. These late faults are interpreted to have resulted from northeast-southwest compression that may have occurred at the final stages of the Eburnean Orogeny or post-dated the Eburnean Orogeny.
● Several areas of structural complexity were identified within our area of interest, including left and right- hand steps along the major fault corridors, intersections between D2 -D5 faults and intersections between D2 -D5 and D5 faults, particularly in the vicinity of intrusions.
SRK Consulting (Canada) Inc. Recommendations
● Regional ground-truthing of the regional structural interpretation should be conducted. This should aim to not only identify whether a given fault is present, but also characterize each fault in terms of:
● fault products (including the brittle/brittle-ductile/ductile nature of the fault);
● orientation of associated foliations and lineations if present;
● kinematics; and
● alteration or gold mineralization present.
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● A confidence rating should be compiled for each interpreted fault identified as part of this interpretation. This may include using existing geological mapping, satellite imagery, other geophysical datasets, or ground-truthing to produce a confidence rating based on the number of datasets, a given fault is identified in, or based on the resolution of datasets a given interpreted fault is based on.
● Regional ground-truthing of the regional lithological interpretation should be conducted. This should focus on the location of the boundary between the basin and belt assemblages, as well as better defining the internal variation within both these assemblages, including their known relationships with gold mineralization.
● Conduct a regional geochemical survey to verify the validity of identified target areas and conduct close- spaced soil geochemical sampling to guide exploration drilling in areas of positive results.
Note:
● 1 gram per tonne (g/t) = 1 part per million (ppm) = 1,000 parts per billion (ppb)
● All gold results for our exploration programs are reported in g/t gold (Au) unless otherwise indicated
Our Prior Exploration Activities
Please refer to our annual reports on Form 20-F and Form 10-K previously filed with the SEC for any exploration activities conducted by us before the three years required by this annual report.
Kibi Project
Overview
Our Kibi project is also referred to in this annual report as the Apapam concession and is comprised of a 33.65 square kilometer land position.
Our Kibi project land position also encompasses the following two land staking applications:
● the Akim Apapam concession is a reconnaissance license contiguous to the southwest extremity of our Kibi project covering an area of 7.0 square kilometers (700 hectares); and
● the Apapam concession extension is a ground extension along the northwest boundary of our Kibi project covering an area of 1.42 square kilometers (142 hectares).
The Akim Apapam concession application was made to provide a buffer area. The Akim Apapam concession was covered by a first pass (200 meters x 25 meters) soil geochemistry survey in 2011; with 2012 exploration efforts including a single trench (157 meters) and 27 hand auger holes (147 meters) targeting a gold-in-soil anomaly. The Apapam concession extension application was made to cover certain trench and drill gold intercepts. The applications for the Akim Apapam concession and the Apapam concession extension were submitted by our company to the Minerals Commission of Ghana on January 15, 2008 and November 19, 2009, and as at the date of this annual report, approval of these applications is still pending and there is no assurance that either of them will be granted.
The Apapam concession contains two small scale mining licenses, comprising approximately 0.1012 square kilometers (10.12 hectares) located within the northwest portion of the concession which were granted to third parties before our company's application for the Apapam concession. None of the in situ, lode gold mineralization occurrences, described in the October 31, 2012 independent National Instrument 43-101 technical report prepared by SEMS Exploration Services Ltd. are located within and/or proximal to these third party small scale mining licenses, and there is no current knowledge of any lode gold occurrences being present on these parcels. No information is available on past and/or current alluvial gold mining activity on these small scale mining licenses.
Location and Access
Our Kibi project lies within the Kibi-Winneba greenstone belt in the Eastern Region of Ghana and is located on the eastern flank of the Atewa Range along the headwaters of the Birim River in the immediate vicinity of the district capital of Kibi, approximately 75 kilometers NNW of the nation's capital city of Accra. Access to our Kibi project is by driving northwest from Accra on the paved Accra-Kumasi Trunk Road, the main national highway, for approximately 90 kilometers until the town of Kibi, marked by a road sign, is reached. One would make a left hand turn at the Kibi sign and drive southwest for approximately 5 kilometers to arrive at our Apapam concession. A tarred road emanating from the Accra-Kumasi Trunk Road, approximately 15 kilometers northeast of Kibi, dissects the north-central and south-eastern portions of our concession, while the tarred road servicing the town of Apapam provides access to the concession's south-western extremity. Our Kibi project is located approximately 15 kilometers south-southeast from our field camp.
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The Kibi-Winneba greenstone belt is characterized by a narrow sequence of Birimian metavolcanics underlying most of the Atewa Range, which is covered by an extensive laterite/bauxite capping, and surrounded by a thick package of Birimian metasediments dominating the flanks and the lower lying areas. Our Kibi project covers the Birimian volcanic-sediment contact which we believe represents a highly favorable environment for the hosting of lode gold deposits throughout Ghana.
Historic Work
Before the exploration work conducted by our company, very little systematic exploration work for bedrock gold deposits has been conducted in the Kibi area since the 1930s.
Prior Exploration by Xtra-Gold
2019 Exploration Program
Exploration activities on this project from January 1 to December 31, 2019, focussed on the continued advancement of early stage gold shoots / showings within the Zone 2 - Zone 3 maiden mineral resource footprint area. A total of 32 diamond core boreholes totalling 3,553 metres were completed by the Company's in-house drilling crew during the 2019 year, including: 22 boreholes totalling 2,367 metres targeting resource expansion opportunities in the Zone 2 resource area; and 10 scout holes totalling 1,186 metres on the Akwadum South ("Zone 7") grassroots gold-in-soil anomaly target.
The resource expansion drill program initiated in February 2018 was completed during the March 2019 quarter with 11 diamond core boreholes totalling 1,163 metres drilled from January 28 to April 1 at the South Ridge gold deposit on Zone 2 of the Kibi Gold Project. A total of 37 boreholes encompassing 4,577 metres were completed during the 2018 - 2019 resource expansion drill program with the program designed to test an approximately 400 metre strike length of the South Ridge gold zone at a nominal 50 metre section spacing and to further define the litho-structural setting of the gold mineralization.
The assay results for the final 19 boreholes (2,305 metres) of the South Ridge mineral resource expansion drill program completed from October 24, 2018 to April 1, 2019 were reported by the Company on May 1, 2019, including the following highlights:
- 30.25 metres grading 1.5 grams per tonne ("g/t") gold, including 2.26 g/t gold over 8.5 metres and 2.56 g/t gold over 9.55 metres from a down-hole depth of 62.65 metres in #KBDD18278;
- 11.0 metres grading 3.3 g/t gold (uncut), including 5.96 g/t gold over 5.15 metres from a down-hole depth of 22.0 metres in #KBDD19287, 25 metres NW of previously reported high-grade #KBDD18264 intercept of 27.0 metres grading 2.85 g/t gold, including 4.84 metres grading 5.12 g/t gold (see the Company's news release of August 8, 2018);
- 15.0 metres grading 2.85 g/t gold, including 5.67 g/t gold over 6.0 metres and 8.5 metres grading 3.33 g/t gold, including 6.02 g/t gold over 4.5 metres from down-hole depths of 9.0 metres and 10.5 metres in #KBDD19293 and #KBDD19292 respectively, 25 metres and 50 metres up-dip from the high-grade #KBDD18264 intercept; and
- 7.5 metres grading 6.71 g/t gold (uncut), including 31.00 g/t gold over 1.5 metres from a down-hole depth of 1.5 metres on the zone's most northwesterly drill section.
The final phase of the resource expansion drill program (19 holes) included: a series of drill fences (12 holes) targeting the depth continuity of the southeastern 200 metre segment of the South Ridge gold zone at downdip depths extending from approximately 70 metres to 220 metres from surface; 4 infill holes to further test the high-grade gold mineralization intersected in holes #KBDD18263 / #KBDD18264 at 25 metre section spacing; and 3 holes targeting near surface mineralization at the northwestern extremity of the South Ridge gold zone, including 2 holes testing the shallow, up-dip extension of the previously reported #KBDD18264 high-grade gold mineralization (see the Company's news release of August 8, 2018).
The 2018 - 2019 South Ridge drilling data was outsourced to Goldspot Discoveries Inc. ("Goldspot") of Montreal, Canada for integration into an updated 3D geological model of the Zone 2 - Zone 3 mineral resource footprint area. The new 3D geological model was completed by Goldspot in late July 2019 with the detailed modelling geared towards the identification of prospective litho-structural gold settings to help guide upcoming resource expansion drilling efforts.
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The South Ridge deposit consists of a northwest striking / northeast dipping quartz diorite-hosted gold mineralization body traced to date along an approximately 400 metre strike length and 230 metre downdip depth from surface. Gold mineralization is associated with quartz-albite-carbonate-sulphide vein arrays developed within the quartz diorite body.
The South Ridge deposit has a current inferred mineral resource estimate of 0.9 million tonnes grading 1.48 grams per tonne ("g/t") gold for 43,000 ounces of contained gold. The South Ridge deposit, along with the Big Bend, East Dyke, and Mushroom deposits in Zone 2 and the Double 19 deposit in Zone 3, form part of a maiden mineral resource estimate (October 26, 2012) on the Company's Kibi Gold Project. In aggregate, these five gold deposits lying within approximately 1.6 kilometres of each other are estimated to encompass an indicated mineral resource of 3.38 million tonnes grading 2.56 g/t gold for 278,000 ounces of contained gold and an additional inferred mineral resource of 2.35 million tonnes grading 1.94 g/t gold for 147,000 ounces of contained gold (@ base case 0.5 g/t cut-off). The Zone 2 - Zone 3 maiden mineral resource represents the first ever mineral resource generated on a lode gold project within the Kibi Gold Belt. Gold mineralization is characterized by auriferous quartz vein sets hosted in Belt-type granitoids geologically analogous to other "Granitoid-hosted" gold deposits of Ghana, including Kinross Gold's Chirano and Newmont Mining's Subika deposits in the Sefwi gold belt. The above mineral resource estimate was filed in accordance with National Instrument 43-101 (NI 43-101) requirements with the Technical Report entitled "Independent Technical Report, Apapam Concession, Kibi Project, Eastern Region, Ghana", prepared by SEMS Explorations and dated October 31, 2012, is filed under the Company's profile on SEDAR at www.sedar.com.
A target generation drilling program geared towards the identification of new resource expansion opportunities within the Zone 2 - Zone 3 maiden mineral resource footprint area of the Kibi Gold Project was initiated in late September 2019; with a total of 11 diamond core boreholes totaling 1,204 metres completed by the Company's in-house drilling crew by the end of the 2019 year. The ongoing drilling program is designed to follow up on early stage gold shoots / showings discovered by previous drilling / trenching efforts (2008 - 2012) and to test prospective litho-structural gold settings identified by recently completed 3D geological modelling.
The assay results for the initial 16 boreholes (1,643 metres) of the ongoing resource expansion target generation program completed from September 24, 2019 to January 27, 2020 were reported by the Company on February 26, 2020, including the following highlights:
- 49 metres grading 1.1 grams per tonne ("g/t") gold, including 1.42 g/t gold over 31.6 metres and 45.1 metres grading 1.51 g/t gold, including 2.24 g/t gold over 26.4 metres from down-hole depths of 47 metres and 32 metres in #KBDD19304 and #KBDD20306 respectively, on adjacent 25 metre spaced drill-fan patterns (Road Cut Zone);
- gold mineralization now traced over an approximately 110 metre strike length and to 90 metre vertical depth on the Road Cut Zone; with newly developing gold body lying within 65 metres of the southern margin (footwall) of the flagship Big Bend gold deposit; and
- step-out drilling successfully traced gold mineralization over an approximately 200 metre strike length of the host diorite body to the southeast of the South Ridge gold deposit; including exploration significant drill intercepts of 1.5 metres grading 4.94 g/t gold and 6.2 metres grading 0.87 g/t gold in #KBDD19297 and #KBDD19303 respectively (South Ridge - SE Extension target).
The initial phase of the resource expansion target generation drill program focussed primarily on the Road Cut Zone and the South Ridge - SE Extension target with 8 holes (790.5 metres) and 4 holes (468 metres) on each target respectively. The Road Cut Zone was subjected to follow up drilling with North-South drill targeting based on recent detailed geological modelling work. The drilling (8 holes) tested the ENE-trending / steep northerly dipping Road Cut auriferous system over an approximately 100 metre strike length, including: three (3) south trending drill-fan patterns (-55o / -75o) at 25 metre spacing and two (2) northerly trending boreholes (scissor-pattern) designed to further define the geometry / attitude of the host diorite body and of the gold-bearing vein system.
To date gold mineralization has been traced over an approximately 110 metre strike length and to a 90 metre vertical depth on the Road Cut Zone; with the newly developing gold body lying within 65 metres of the southern margin (footwall) of the Kibi Gold Project's flagship Big Bend gold deposit. The Road Cut auriferous vein system is emplaced in a parallel diorite body exhibiting a similar NW to ENE flexure in strike-geometry has the flexure appearing to control the Big Bend deposit gold mineralization. The Big Bend deposit has a current indicated mineral resource of 213,000 ounces of gold (2.72 million tonnes at an average grade of 2.44 g/t gold) and an additional inferred mineral resource of 27,000 ounces of gold (0.52 million tonnes at an average grade of 1.6 g/t gold).
Step-out drilling (4 holes) successfully traced gold mineralization over an approximately 200 metre strike length of the host diorite body to the southeast of the South Ridge gold deposit (i.e., South Ridge - SE Extension target). Of exploration significance are typical Kibi-type granitoid hosted gold mineralization intercepts produced by a drill-fan pattern (-60o / -80o) collared approximately 200 metres southeast of the South Ridge resource body, including: 5.2 metres grading 0.41 g/t gold from a down-hole depth of 62.8 metres in the upper #KBDD19302 hole; and 6.2 metres grading 0.87 g/t gold from a down-hole depth of 73 metres in the lower #KBDD19303 hole, approximately 25 metres down dip from the #KBDD19302 intercept.
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Exploration efforts on the Kibi Gold Project during the 2019 year also included a scout drilling program on the high-priority Akwadum South ("Zone 7") gold-in-soil anomaly located at the southeastern extremity of the Apapam concession; with the first pass drilling program forming part of an ongoing exploration initiative geared towards the continued advancement of grassroots gold targets across the Apapam concession. A total of 10 boreholes (1,186 metres) ranging in depth from 73 metres to 190 metres were completed by the company's in-house drilling crew from late May to mid-September 2019. The scout drilling program was designed to test an approximately 1,000 metre strike-length of the Akwadum South gold target and to further define the litho-structural setting of the gold mineralization. Final compilation of the geological and assay result data is currently ongoing.
The Akwadum South target is characterized by an approximately 1,200 metres long by 100 metres to 400 metres wide, NE-trending gold-in-soil anomaly spatially associated with a volcaniclastic rock package exhibiting widespread silica alteration, quartz veining and sulphide mineralization. Of the 157 soil geochemistry samples collected from the Akwadum South gold-in-soil trend: 11 yielded less than 25 parts per billion ("ppb") gold; 89 returned gold values from 25 ppb to 100 ppb; 50 between 100 ppb to 300 ppb gold; and 7 samples yielded values over 300 ppb gold, including maximum gold values of 444 ppb and 725 ppb.
In early September 2019, also in relation to our Kibi Gold Project, Tect Geological Consulting of West Somerset, South Africa ("Tect") conducted a structural analysis / interpretation of the Cobra Creek gold zone located at the northeast extremity of the Apapam concession. The study encompassing structural mapping and drill core observations, in combination with compilation of existing surface sampling and geophysical data, was designed to further define the structural controls of the gold mineralization and provide high-priority exploration targets to help guide future drilling campaigns on the Cobra Creek gold zone. The Company received the final product of the Tect structural study in late September, including a generative exploration model for the Cobra Creek project, and study result compilation is currently ongoing.
Xtra-Gold completed 2,639 metres of drilling comprised of 43 diamond core holes on the Cobra Creek gold zone in 2016. Initial drilling efforts yielded some very exploration significant high-grade mineralized intercepts, including highlights of 4.5 metres grading 10.9 g/t gold and 5.2 metres grading 9.51 g/t gold (see the Company's news release of October 19, 2016).
In mid-May 2019, Xtra-Gold engaged Goldspot Discoveries Inc. ("Goldspot") of Montreal, Canada to undertake a multifaceted target generation study, including: 3D Geological Modeling of the Zone 2 - Zone 3 maiden mineral resource footprint area on the Kibi gold project; and Traditional Targeting encompassing geophysical / structural / geochemistry datasets and Machine Learning Targeting (i.e., Artificial Intelligence) covering all five (5) of the company's Kibi Gold Belt concessions. The Company received the final product of the Goldspot study in late July and study result compilation is currently ongoing.
2020 Exploration Program
Exploration activities on this project from January 1 to December 31, 2020, being the fiscal year for which this annual report is being filed, focussed primarily on the following Zone 2 - Zone 3 resource expansion targets: 23 holes (3,109 metres) on the Double 19 Zone; 13 holes (1,660 metres) on the Gatehouse Zone; 8 holes (857 metres) on the Boomerang Zone; and 15 holes (2,095 metres) on the Road Cut Zone.
The Kibi project hosts the maiden Zone 2 - Zone 3 mineral resource estimate (October 26, 2012), including the Big Bend, East Dyke, South Ridge and Mushroom deposits in Zone 2, and the Double 19 deposit in Zone 3. Collectively, these five gold deposits lying within approximately 1.6 kilometres of each other are estimated to encompass an indicated mineral resource of 3.38 million tonnes grading 2.56 grams per tonne ("g/t") gold for 278,000 ounces of contained gold and an additional inferred mineral resource of 2.35 million tonnes grading 1.94 g/t gold for 147,000 ounces of contained gold (@ base case 0.5 g/t cut-off). No mineral reserves have been established on the Kibi project.
The Zone 2 - Zone 3 maiden mineral resource represents the first ever mineral resource generated on a lode gold project within the Kibi Gold Belt. Gold mineralization is characterized by auriferous quartz vein sets hosted in Belt-type granitoids geologically analogous to other "Granitoid-hosted" gold deposits of Ghana, including Kinross Gold's Chirano and Newmont Mining's Subika deposits in the Sefwi gold belt. The above mineral resource estimate was filed in accordance with National Instrument 43-101 (NI 43-101) requirements with the Technical Report entitled "Independent Technical Report, Apapam Concession, Kibi Project, Eastern Region, Ghana", prepared by SEMS Explorations and dated October 31, 2012, is filed under the Company's profile on SEDAR at www.sedar.com. A copy of the Technical Report is attached as Exhibit 1.5 to this Form 20-F.
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The 2020 resource expansion drilling on the Double 19 deposit successfully extended the gold mineralization approximately 115 metres down plunge from the previous 2012 drilling and identified a new, apparent fold limb-controlled gold zone (i.e., NW Limb Zone) along the northwest limb of the Double 19 fold structure. Recent detailed 3D litho-structural modelling indicates that the Double 19 gold mineralization is emplaced within the inner arc of a tight, steep NE-plunging, isoclinally folded diorite body. The present drilling efforts have extended the gold mineralization along the Fold Hinge zone over an approximately 285 metre down-plunge distance from surface (~150 metres vertical) and demonstrated the continuity of the NW Limb zone over an approximately 110 metre trend-length of the fold structure (~150 metre down-plunge distance), and down to a vertical depth of approximately 100 metres. The Double 19 deposit has a current inferred mineral resource of 48,000 ounces of gold (0.61 million tonnes at an average grade of 2.43 g/t gold).
The assay results for the 23 boreholes (3,109 metres) of the ongoing Double 19 resource expansion drilling program, completed from August to December 2020, were reported by the Company on October 20 and December 16, 2020, and February 17, 2021, including the following highlights:
- 55.3 metres grading 2.1 grams per tonne ("g/t") gold, including 3.47 g/t gold over 16.6 metres, from down-hole depth of 96.2 metres in #KBDD20341; and 20.0 metres grading 1.02 g/t gold and 27.0 metres grading 2.5 g/t gold from down-hole depths of 142 metres and 187 metres respectively in #KBDD20351; confirming down plunge extension of Fold Hinge gold zone
- 61.57 metres grading 2.42 g/t gold, including 5.13 g/t gold over 21.5 metres, from down-hole depth of 18.2 metres in #KBDD20346; new fold limb gold zone on NW flank of Double 19 fold structure
- 30.0 metres grading 6.20 g/t gold, including 10.1 g/t gold over 12.0 metres, from down-hole depth of 56.0 metres in #KBDD20369 on NW Limb zone; with #KBDD20369 cross-cutting above #KBDD20346 intercept which was drilled down dip of the fold limb
- 44.0 metres grading 2.78 g/t gold, including 4.14 g/t gold over 17.5 metres and 9.10 g/t gold over 3.0 metres, from a down-hole depth of 50.5 metres in #KBDD20375 and 20.0 metres grading 1.61 g/t gold, including 2.68 g/t gold over 11.0 metres, from a down-hole depth of 92.0 metres in #KBDD20378; demonstrating continuity of NW Limb zone mineralization along approximately 110 metres trend-length of the fold structure
- 17.5 metres grading 3.89 g/t gold, including 6.03 g/t gold over 7.0 metres, from a down-hole depth of 4.5 metres in #KBDD20377; undercutting trench #TAD045 returning 6.32 g/t gold over 15.0 metres along southeastern margin of Double 19 Fold Hinge zone
The Gatehouse Zone, located approximately 500 metres southeast of the Zone 2 gold resource footprint area, was originally identified by 2011 - 2012 scout trenching / drilling targeting a gold-in-soil anomaly with a coincidental Induced Polarization (IP) / Resistivity geophysical signature. Follow up drilling of this prospect during the present 2020 resource expansion target generation program extended the mineralization approximately 235 metres further southwest along the host granitoid body than the gold zone originally outlined by the 2011 - 2012 trenching / drilling. Typical Kibi-type (Zone 2) Granitoid-hosted gold mineralization has been traced to date over an approximately 325 metre strike length and to a 165 metre vertical depth along the NE-trending Gatehouse zone.
The assay results for the 13 follow up boreholes (1,660 metres) on the Gatehouse Zone were reported by the Company on September 8, October 20, and December 16, 2020, including the following highlights:
- 14.4 metres grading 1.7 g/t gold, including 2.42 g/t gold over 4.2 metres, from a down-hole depth of 66.9 metres in #KBDD20350; 150 metre step-out from original 2012 scout drilling
- 17.0 metres grading 1.05 g/t gold, including 4.51 g/t gold over 1.0 metre, from a down-hole depth of 104.0 metres in #KBDD20352 and 12.5 metres grading 1.24 g/t gold, including 2.72 g/t gold over 4.0 metres, from a down-hole depth of 31.5 metres in #KBDD20370, approximately 50 metres down-dip and 35 metres up-dip of the #KBDD20350 intercept, respectively; establishing mineralization to a vertical depth of approximately 120 metres on the #KBDD20350 - #352 - #370 drill fence
The Boomerang Zone was originally identified during a 2012 scout drilling program designed to test geophysical targets located along the approximately 2.5 km long by 0.5 km to 1.2 km wide Zone 3 anomalous gold-in-soil trend. Follow up drilling of this prospect during the 2020 drilling campaign defined a typical Kibi-type (Zone 2) Granitoid-hosted gold zone located over 1,500 metres to the southwest of the current Zone 2 gold resource footprint. Gold mineralization at the Boomerang Zone has been traced to date over an approximately 80 metre down-plunge distance from surface along an apparent NE-plunging fold structure.
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The assay results for the 8 follow up boreholes (857 metres) on the Boomerang Zone were reported by the Company on September 8 and October 20, 2020, including the following highlights:
- 43.5 metres grading 1.21 g/t gold, including 2.16 g/t gold over 7.5 metres and 4.3 g/t gold over 6.0 metres, from a down-hole depth of 3.0 metres in #KBDD20335 and 24.0 metres grading 1.35 g/t gold, including 1.99 g/t gold over 9.0 metres, from a down-hole depth of 56.5 metres in undercut hole #KBDD20338; approximately 30 metres down plunge of the #KBDD20335 gold intercept
The Road Cut Zone, lying approximately 65 metres from the southern margin of the Kibi Gold Project's flagship Big Bend gold deposit, was subjected to follow up drilling from mid-November 2019 to late April 2020 as part of the ongoing resource expansion target generation program designed to follow up on early stage gold shoots / showings discovered by previous drilling / trenching efforts. Based on recent detailed 3D geological modelling, the follow up drilling tested the Road Cut zone with optimized North-South drill targeting, unlike the ESE-trending drill orientation utilized in the original 2011 drilling. Present drilling efforts traced the gold mineralization over an approximately 200 metre strike length and to an approximately 170 metre vertical depth within a parallel diorite body lying along the southern (footwall) flank of the Big Bend diorite. With the auriferous vein system centred on the same apparent NE-plunging, open fold hinge zone controlling the Big Bend deposit gold mineralization. The Big Bend deposit has a current indicated mineral resource of 213,000 ounces of gold (2.72 million tonnes at an average grade of 2.44 g/t gold) and an additional inferred mineral resource of 27,000 ounces of gold (0.52 million tonnes at an average grade of 1.6 g/t gold).
The assay results for the 18 follow up Road Cut zone boreholes (2,446 metres), including 3 holes (351 metres) drilled in late 2019, were reported by the Company on February 26 and September 8, 2020, including the following highlights:
- 49 metres grading 1.1 g/t gold, including 1.42 g/t gold over 31.6 metres and 45.1 metres grading 1.51 g/t gold, including 2.24 g/t gold over 26.4 metres from down-hole depths of 47 metres and 32 metres in #KBDD19304 and #KBDD20306 respectively, on adjacent 25 metre spaced drill-fan patterns
Exploration activities for the 2020 year continued to focus on the continuation of the resource expansion target generation drill program initiated in 2019. Seventy-four (74) diamond core boreholes totalling 9,615 metres were completed in 2020 with drilling efforts targeting resource expansion opportunities within the Zone 2 - Zone 3 maiden mineral resource footprint area. The target generation drilling program is designed to follow up on early stage gold shoots / showings discovered by previous drilling / trenching efforts (2008 - 2012), test down-plunge extensions and/or fold limbs of existing resource bodies, and to test prospective litho-structural gold settings identified by recently completed 3D geological modelling. A total of 85 boreholes totaling 10,819 metres have been completed to date by the Company's in-house drilling crews during the ongoing Zone 2 - Zone 3 resource expansion drilling program initiated in late September 2019.
2021 Exploration Program
Exploration activities for the first half of 2021 focussed on resource expansion drilling on the Double 19 resource body (3,292 m) and exploration drilling targeting resource expansion opportunities within Zone 3 of the Kibi Gold Project (2,150 m). The Zone 3 target generation drilling program was designed to follow up on early-stage gold shoots / showings discovered by previous drilling / trenching efforts (2008 - 2012) and to test prospective litho-structural gold settings identified by recently completed 3D geological modelling. The assay results for the 36 boreholes (5,982 m) completed from January to June 2021 (#KBDD21379 - #KBDD21414), were reported by the Company on April 14 and August 11, 2021, including the following highlights:
- 48.8 m at 0.76 grams per tonne gold ("g/t Au"), including 6.9 m at 1.91 g/t Au, from 134.0 m in hole #KBDD21387; and 15.1 m at 1.24 g/t Au from 200.0 m in undercut hole #KBDD21391 (Double 19 - Resource Expansion Drilling)
- 13.5 m at 1.92 g/t Au from 138.5 m in hole #KBDD21384; 11.6 m at 1.00 g/t Au and 17.1 m at 1.13 g/t Au from 92.0 m and 121.9 m respectively in #KBDD21386; and 7.6 m at 2.12 g/t Au and 8.75 m at 1.03 g/t Au from 101.0 m and 125.25 m in respectively in # KBDD21390 (Double 19 - Resource Expansion Drilling)
- 65.0 m at 1.03 g/t Au, including 13.5 m at 2.42 g/t Au, from 33.0 m in hole #KBDD21411; and 43.1 m at 0.75 g/t Au, including 3.0 m at 3.65 g/t Au and 9.0 m at 1.29 g/t Au, from 28.5 m in #KBDD21402 (Boomerang West Target - Exploration Drilling)
- 7.3 m at 1.93 g/t Au from 70.7 m in hole #KBDD21409; and 15.0 m at 1.02 g/t Au from 99.0 m in undercut hole #KBDD21410 (Twin Zone Target - Exploration Drilling)
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Exploration activities for the second half of 2021, corresponding to exploration drilling conducted after the late July 2021 database close-out date for the updated Mineral Resource Estimate, continued to target resource expansion opportunities along the southwestern (Zone 3) segment of the over three-kilometre-long Zone 2 - Zone 3 anticlinal fold structure. With the exploration program focussing on follow up drilling of the early-stage Boomerang East, Boomerang West, and Twin Zone (formerly JK East) targets positioned along similar second-order fold hinge structures as the neighbouring Double 19 resource body, and scout drilling of prospective litho-structural gold settings identified by recently completed detailed 3D geological modelling. The assay results for the 39 boreholes (5,982 m) completed from late July to December 2021 (#KBDD21415 - #KBDD21453), as well as five (5) boreholes completed in January 2022 (#KBDD22454 - #KBDD22458), were reported by the Company on February 18, 2022, including the following highlights:
Boomerang East Target
- 6.0 metres ("m") at 6.19 grams per tonne gold ("g/t Au"), including 2.6 m at 13.82 g/t Au, from 52.0 m in hole #KBDD21434
- 33.5 m at 1.22 g/t Au, including 7.5 m at 3.76 g/t Au, from 31.5 m in hole #KBDD21453
- 16.5 m at 6.23 g/t Au, including 6.5 m at 13.74 g/t Au, from 1.5 m in hole #KBDD22455
- 13.5 m at 1.64 g/t Au, including 6.0 m at 3.35 g/t Au, from 0.0 m in #KBDD22458; followed by second interval of 21.0 m at 1.46 g/t Au from 39.0 m, including 11.0 m at 2.49 g/t Au
- gold mineralization at Boomerang East target traced over an approximately 400 m section across the southeastern limb of the NE-trending Zone 2 - Zone 3 anticlinal fold structure; with the mineralization predominantly being spatially associated with a series of apparent second-order (parasitic) fold structures
Boomerang West Target
- 29.0 m at 1.04 g/t Au, including 4.5 m at 3.27 g/t Au, from 50.0 m in #KBDD21423
- 6.0 m at 3.12 g/t Au from 9.0 m in hole #KBDD21425
- Boomerang West target occupies a NE-plunging, tight to isoclinal, anticlinal fold hinge zone; with gold mineralization traced over an approximately 240 m trend-length and 80 m width of the anticlinal fold structure, and down to a vertical depth of approximately 165 m
Twin Zone Target
- 13.2 m at 1.07 g/t Au from 161.0 m in hole #KBDD21419
- 4.0 m at 3.53 g/t Au from 157.0 m in hole #KBDD21448
- gold mineralization at the early-stage Twin Zone target intermittently traced over an approximately 275 m down-plunge distance, and down to a vertical depth of approximately 150 m, along the limbs of two parallel, NE-trending, second-order (parasitic) fold structures
Future Exploration Plans
2022 Proposed Exploration Program
As at the date of this annual report, during 2022, we plan to conduct:
● follow-up trenching of Zone 1 - Zone 2 - Zone 3 early stage gold shoots / showings to guide future mineral resource expansion drilling efforts;
● prospecting, reconnaissance geology, hand augering and/or scout pitting, and trenching of high priority gold-in-soil anomalies and grassroots gold targets across the extent of the Apapam concession; and
● a diamond core drill program of approximately 15,000 metres, at an estimated cost of $750,000, to be implemented utilizing the Company's in-house operated drill rigs; consisting of a combination of follow up drilling of early stage gold targets and scout drilling of prospective litho-structural gold settings within the mineral resource footprint area; and scout drilling of new grassroots gold targets across the Apapam concession.
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Gold Intercept Reporting Criteria
Unless otherwise indicated, "Reported Intercepts" represent core-lengths; true width of mineralization is unknown at this time. Individual sample results were length weighted to yield average composite interval grades as reported. Unless otherwise indicated "Significant Intercepts" satisfy following criteria: 1 metre minimum length and minimum metal factor (grade x length) of 3; with minimum 0.3 grams per tonne ("g/t") gold average grade over interval or a minimum metal factor of 5 if interval less than 1 metre in length. Intercepts also constrained with a 0.25 g/t gold minimum cut-off grade at top and bottom of intercept, with no upper cut-off applied, and maximum of five (5) consecutive samples of internal dilution (<0.25 g/t gold). All internal intervals above 15 g/t gold indicated.
Quality-Control Program
We have implemented a quality-control program to ensure best practice in the sampling and analysis of the diamond drill core, reverse circulation (RC) chip samples, saprolite trench and saw-cut channel samples, and soil samples. Drill core is HQ diameter (63.5 millimeters) in upper oxidized material (regolith) and NQ diameter (47.6 millimeters) in the lower fresh rock portion of the hole. Drill core is saw cut and half the core is sampled in standard intervals. The remaining half of core is stored in a secure location. Reverse circulation (RC) chip samples are taken at one meter intervals under dry drilling conditions by experienced geologists, with all samples weighed on site. Saprolite trench samples consist of continuous, horizontal channels collected from a canal excavated along the bottom sidewall of the trench (~ 0.10 meters above floor). All samples are transported in security-sealed bags to Intertek Minerals Limited, an ISO 17025:2005 accredited laboratory located in Tarkwa, Ghana. As of the date of this annual report, a 1,000 gram split of the sample is pulverized to better than 85% passing 75 microns, and analyzed by industry standard 50 gram fire assay fusion with atomic absorption spectroscopy finish. Samples with observed visible gold and/or exhibiting typical Kibi-type granitoid hosted mineralization characterized by liberated, particulate gold grains are pulverized in their entirety to better than 85% passing 75 microns, and analyzed three times by industry standard 50 gram fire assay fusion with atomic absorption spectroscopy finish; with the arithmetic average of the three assays reported. Our company inserts a certified reference standard (low to high grade), analytical blank, and field duplicate sample in every batch of 20 drill core / reverse circulation (RC) chip / trench channel / saw cut channel samples. Validation parameters are established in the database to ensure quality control.
Recovery and Sale of Placer Gold
There were no placer gold recovery operations carried out at this project from 2012 to 2021.
Mineral Resources and Reserves
No mineral reserves have been identified on our Kibi project.
A maiden Mineral Resource Estimate was produced by Xtra-Gold for its Kibi Gold Project on October 26, 2012. The maiden Zone 2 - Zone 3 resource estimate, including the Big Bend, East Dyke, South Ridge and Mushroom deposits in Zone 2, and the Double 19 deposit in Zone 3, represented the first ever Mineral Resource generated on a lode gold project within the Kibi Gold Belt. Collectively, these five gold deposits lying within approximately 1.6 kilometres of each were estimated to encompass an Indicated Mineral Resource of 3.38 million tonnes grading 2.56 grams per tonne ("g/t") gold for 278,000 ounces of contained gold and an additional Inferred Mineral Resource of 2.35 million tonnes grading 1.94 g/t gold for 147,000 ounces of contained gold (@ base case 0.5 g/t cut-off). The above mineral resource estimate was filed in accordance with National Instrument 43-101 (NI 43-101) requirements with the Technical Report entitled "Independent Technical Report, Apapam Concession, Kibi Project, Eastern Region, Ghana", prepared by SEMS Explorations and dated October 31, 2012, filed under the Company's profile on SEDAR at www.sedar.com.
On November 1, 2021, the Company announced the results of an updated Mineral Resource Estimate for its Kibi Gold Project located on the Apapam Mining Lease. The updated resource estimate, with an effective date of September 30, 2021, was prepared in accordance with the Definition Standards for Mineral Resources and Mineral Reserves set out by the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM"). The Mineral Resource Estimate was filed in accordance with National Instrument 43-101 (NI 43-101) requirements with the Technical Report entitled "Xtra-Gold Resources Corporation Kibi Gold Project", jointly prepared by Pivot Mining Consultants (Pty) Ltd and Tect Geological Consulting of Johannesburg and Somerset West, South Africa, respectively, and dated November 16, 2021, filed under the Company's profile on SEDAR at www.sedar.com. A copy of the Technical Report is attached as Exhibit 1.5 to this Form 20-F.
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The updated Mineral Resource incorporates an additional 212 diamond core boreholes (25,198.55 m) completed since the October 2012 Maiden Resource Estimate. This includes 158 holes (21,321.45 m) completed from February 2018 - June 2021 by Xtra-Gold's in-house drilling crews on resource expansion targets within the Zone 1 - Zone 2 - Zone 3 resource estimate footprint area. The resource estimate encompasses drill hole and trench data available as of July 30, 2021.
The new Mineral Resource encompasses updated resource estimates for the following five (5) deposits: Big Bend, East Dyke, Mushroom, South Ridge and Double 19; and initial resource estimates for the following three (3) deposits, which were at an early exploration stage at the time of the 2012 resource estimate: Road Cut, Gatehouse and Gold Mountain. In aggregate, these eight (8) gold deposits lying within approximately 1.6 kilometres of each other are estimated to contain an Indicated Mineral Resource of 623,700 ounces of gold based on 13,893,000 tonnes at an average grade of 1.40 grams per tonne ("g/t") gold and an additional Inferred Mineral Resource of 180,700 ounces of gold based on 5,694,000 tonnes at an average grade of 0.96 g/t gold (at a base case 0.5 g/t cut-off).
In comparison to the 2012 Maiden Resource Estimate, the updated Mineral Resource represents increases of 124.4% in the Indicated category and 22.9% in the Inferred category. Approximately 73% of the Indicated Mineral Resources (456,200 oz.) is contained within the essentially contiguous Big Bend and East Dyke deposits.
Gold mineralization within the Mineral Resource footprint area consists predominantly of tensional arrays of auriferous quartz-carbonate veins hosted by folded diorite bodies with an interpreted Belt-type granitoid affinity. The gold-bearing zones occupy the hinges and limbs of predominantly anticlinal fold structures. Over 20 significant gold occurrences hosted by Belt (Dixcove)- and Basin (Cape Coast)-type granitoids are known in Ghana, with a number constituting significant deposits. These deposits represent a relatively new style of gold mineralization for orogenic gold deposits within the West African Birimian terrain. Belt-type intrusion-hosted gold deposits include Newmont Mining's Subika deposit at their Ahafo mine and Kinross Mining's Chirano deposit within the Sefwi gold belt, as well as the former Golden Star Resources' Hwini-Butre deposit at the southern extremity of the Ashanti gold belt.
Cautionary Note on Mineral Resources: Mineral Resources are not Mineral Reserves and by definition do not demonstrate economic viability. The Mineral Resource Estimate disclosed herein includes Inferred Mineral Resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as Mineral Reserves. There is also no certainty that these Inferred Mineral Resources will be converted to the Measured and Indicated resource categories through further drilling, or into Mineral Reserves, once economic considerations are applied. The stated figures for contained gold are in-situ Mineral Resources.
Apapam Mining Lease
XG Mining's interest in our Kibi project was previously held by a prospecting license granted by the Government of Ghana on March 29, 2004 covering a licensed area of 33.65 square kilometers. In May 2008, XG Mining applied to the Government of Ghana to convert the Kibi prospecting license to a mining lease. When our application received parliamentary approval, the Government of Ghana granted and registered the Apapam mining lease to XG Mining on the following terms and conditions.
The Apapam mining lease is dated December 18, 2008 and is owned and controlled by our company, as to a 90% interest; and is registered to our subsidiary, XG Mining, while the remaining 10% free carried interest in XG Mining is held by the Government of Ghana. The Apapam mining lease covers a lease area of 33.65 square kilometers and is located in the East Akim District of the Eastern Region of Ghana. The Apapam mining lease had a seven year term which expired on December 17, 2015.
All required documentation to extend the lease for our Kibi Project (formerly known as the Apapam Project) for 15 years from December 17, 2015 has been submitted to the Ghana Minerals Commission. As these extensions generally take years for the regulatory review to be completed, the Company is not yet in receipt of the extension approval. However, until the Company receives the extension documents, the old lease remains in force under the mineral laws. The extension is in accordance with the terms of application and payment of fees to the Minerals Commission of Ghana ("Mincom"). All gold production will be subject to a production royalty of the net smelter returns ("NSR") payable to the Government of Ghana.
We have been granted surface and mining rights by the Government of Ghana to work, develop and produce gold in the Apapam lease area (including the processing, storing and transportation of ore and materials).
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With respect to the Apapam mining lease, we are:
● required to pay applicable taxes and annual rental ("ground rents") fees to the Government of Ghana in the amount of approximately $21,172 (GH¢124,540.80), when the renewal extension is granted; and
● committed to pay a royalty in each quarter to the Government of Ghana, through the Commissioner of Internal Revenue, based on the production for that quarter within 30 days from the quarter end as well as a royalty on all timber felled in accordance with existing legislation;
● required to:
● commence commercial production of gold within two years from the date of the mining lease;
● conduct our operations with due diligence, efficiency, safety and economy, in accordance with good commercial mining practices and in a proper and workmanlike manner, observing sound technical and engineering principles using appropriate modern and effective equipment, machinery, materials and methods and paying particular regard to the conservation of resources, reclamation of land and environmental protection generally; and
● mine and extract ore in accordance with preceding paragraph, utilizing methods which include dredging, quarrying, pitting, trenching, stoping and shaft sinking in the Apapam lease area.
We are further required to furnish to the government authorities of Ghana, comprised of the Minister of Lands, Forestry and Mines, the Head of the Inspectorate Division of the Minerals Commission, the Chief Executive of the Minerals Commission and the Director of Ghana Geological Survey (the "government authorities"), with technical records which include:
● a report in each quarter not later than 30 days after the quarter end to the government authorities in connection with quantities of gold won in that quarter, quantities sold, revenue received and royalties payable;
● a report half-yearly not later than 40 days after the half year end to the government authorities summarizing the results of operations during the half year and technical records, which report shall also contain a description of any geological or geophysical work carried out by our company in that half year and a plan upon a scale approved by the Head of the Inspectorate Division of the Minerals Commission showing dredging areas and mine workings;
● a report in each financial year not later than 60 days after the end of the financial year summarizing the results of our operations in the lease area during that financial year and the technical records, which report shall further contain a description of the proposed operations for the following year with an estimate of the production and revenue to be obtained;
● a report not later than three months after the expiration or termination of the Apapam mining lease, to the government authorities giving an account of the geology of the lease area including the stratigraphic and structural conditions and a geological map on scale prescribed in the Mining Regulations;
● a report not less than 21 days in advance of the proposed alteration, issuance or borrowing to the government authorities (except for the Head of the Inspectorate Division of the Minerals Commission and the Director of Ghana Geological Survey) of any proposed alteration to our regulations,
● a report not less than 21 days in advance of the proposed alteration, issuance or borrowing to the government authorities (except for Head of the Inspectorate Division of the Minerals Commission and the Director of Ghana Geological Survey) on the particulars of any fresh share issuance or borrowings in excess of an amount equal to the stated capital of XG Mining;
● a copy of XG Mining's annual financial reports to the government authorities (except for the Head of the Inspectorate Division of the Minerals Commission and the Director of Ghana Geological Survey) including a balance sheet, profit and loss account and notes thereto certified by a qualified accountant, who is a member of the Ghana Institute of Chartered Accountants, not later than 180 days after the financial year end; and
● such other reports and information in connection with our operations to the government authorities as they may reasonably require.
We are entitled to:
● surrender all of our rights in respect of any part of the lease area not larger in aggregate than 20% of the lease area by providing not less than two months' notice to the Government of Ghana;
● surrender a larger part of the lease area by providing not less than 12 months' notice; and
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● terminate our interest in the Apapam mining lease if the mine can no longer be economically worked, by giving not less than nine months' notice to the government authorities, without prejudice to any obligation or liability incurred before such termination.
The Government of Ghana has the right to terminate our interest in the Apapam mining lease if we:
● fail to make payments when due;
● contravene or fail to comply with terms and conditions of the mining lease (however, we have 120 days to remedy from the notice of such event);
● become insolvent or commit an act of bankruptcy; or
● submit false statements to the government authorities.
The Apapam mining lease further provides that XG Mining shall report forthwith to the government authorities if it discovers any other mineral deposits apart from gold and silver in the lease area, who in turn will provide XG Mining with the first option to prospect further and to work the said minerals subject to satisfactory arrangements made between XG Mining and the government authorities.
Kwabeng Project
Our Kwabeng Project is also referred to in this annual report as the Kwabeng concession and is comprised of 44.76 square kilometers.
Location and Access
The Kwabeng concession is located in the Atiwa West District of the Eastern Region of Ghana, along the western, lower flank and base of the Atewa Range, approximately 10 kilometers north-northwest of our Kibi project which is located on the Apapam concession. The eastern boundary of the Kwabeng concession is demarcated by the Atewa Forest Reserve.
Access to our Kwabeng project can be gained by driving northwest from Accra on the Accra-Kumasi Trunk Road, for approximately 110 kilometers until arrival at Anyinam, making a left hand turn at the road sign that reads "Kwabeng" in the middle of the Town of Anyinam and driving in a southwesterly direction approximately 10 kilometers until arriving at a sign reading "Xtra-Gold Mining" before reaching the town of Kwabeng.
Historical Work
There has been very little exploration for lode source gold deposits at our Kwabeng and Pameng projects; however, there has been detailed exploration for placer gold deposits. Prior to the recovery of placer gold from our Kwabeng project during 2007 and 2008 and our Kibi and Pameng projects during 2010 and 2011, these projects contained approximately 12,583,000 bank cubic meters of auriferous gravels. As at the date of this annual report, the company does not feel an accurate calculation of the remaining cubic metres and grade figures on our Kibi, Kwabeng and Pameng projects can be made. In addition to the mineralized material, there is potential to define reserves with further exploration.
The placer gold deposit currently located at our Kwabeng concession was mined by the former owner in the early 1990's for 15 months and produced approximately 16,800 ounces of gold before operations were ceased due to mining difficulties as noted hereunder. The placer gold is contained in a gravel deposit distributed across the floor of the river valleys west of the Atewa Range which can easily be excavated.
Prior Exploration by Xtra-Gold
2019 Exploration Program
Exploration work on our Kwabeng project during the 2019 year was limited to the Goldspot target generation study.
2020 Exploration Program
Exploration work on our Kwabeng project during the 2020 year was limited to airborne geophysical survey compilation and satellite remote sensing imagery.
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2021 Exploration Program
Exploration work on our Kwabeng project during the 2021 year was limited to airborne geophysical survey compilation and satellite remote sensing imagery.
2022 Proposed Exploration Program.
As at the date of this annual report, during 2022, we plan to conduct:
● ongoing geological compilation, prospecting, soil geochemical sampling, hand augering and/or scout pitting, and trenching to identify and/or further advance grassroots targets; and
● the continuation of placer gold recovery operations at this project (commenced in March 2013).
Recovery and Sale of Placer Gold
As at December 31, 2021, we have sold an aggregate of 20,444 fine ounces of gold from placer gold recovered from the mineralized material at our Kwabeng project during 2007, 2008, and 2013 to 2021 fiscal years. We did not have an exclusive agreement with any company or entity to buy the placer gold that was recovered. No placer gold recovery operations were conducted at this project during 2009 through 2012.
The gold price (approximately $1,923 per ounce as at March 19, 2021) is significantly greater compared to the approximately $300 per ounce gold price during the previous mining effort by the former operator of this project. On the basis of an annual recovery of placer gold of approximately 700,000 bank cubic meters, we anticipate that recovery of placer gold operations at this project could be sustained for 2 years. However, this will depend upon numerous factors including the grade and commercial recoverability of the mineralized material and the selling gold price at the relevant time.
Resumption of Placer Gold Recovery Operations at our Kwabeng Project
Placer gold recovery operations at our Kwabeng project resumed in 2013. As stated elsewhere in this annual report, we plan to focus our efforts and our financial resources primarily on planned exploration activities on our Kwabeng project (see "Kwabeng Project - 2021 Exploration Program").
Former Ownership
In the early 1990's, the former mining lessee invested approximately $24,000,000 to open and operate a mine at the Kwabeng concession. The mining operation lasted for 15 months and 16,800 ounces of gold was produced before the mine was shut down due to a poor gold price, mining methodology and a lack of funds to continue mining operations.
Resources and Reserves
No mineral resources or mineral reserves have been identified on our Kwabeng project.
Kwabeng Mining Lease
The Kwabeng mining lease is dated July 26, 1989 and is owned and controlled by our company, as to a 90% interest; and is registered to our subsidiary, XG Mining, while the remaining 10% free carried interest in XG Mining is held by the Government of Ghana. The Kwabeng mining lease covers a lease area of 44.76 square kilometers and has a 30 year term expiring on July 26, 2019. We have applied for a 15 year renewal extension. We have been granted surface and mining rights by the Government of Ghana to work, develop and produce gold in the lease area (including processing, storing and transportation of ore and materials). See "Kibi Project - Apapam Mining Lease" for identical mining lease terms for the Kwabeng mining lease, except for the name of the mining lease, the lease registration particulars, the lease area and annual ground rents of approximately $27,868 (GH¢163,926.83), when the renewal extension is granted.
The Kwabeng mining lease further provides that XG Mining shall report forthwith to the government authorities if we discover any other minerals in the Kwabeng lease area and will provide XG Mining with the first option to prospect further and to work the said minerals subject to satisfactory arrangements made between XG Mining and the government authorities.
Ancillary Operations
Field Camp at Kwabeng Project
Our company possesses our fully operational and well maintained field camp comprised of an administrative office, living quarters and workshop facilities located on our Kwabeng concession which is accessible by paved road located approximately two hours drive from the capital city of Accra. Our field camp is the base of operations for the majority of our administrative activities and all of our exploration activities. All of our senior Ghanaian staff is accommodated in the field camp with our junior staff located in the surrounding towns and villages. XG Mining has rehabilitated the field camp which included installation of a communication system for Internet access, electronic mail, telephone and facsimile service and minor construction repairs. Our field camp is within cell phone coverage and is supplied with electricity from the national power grid, which lines run along the road accessing our field camp.
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Fuel and Spare Parts Supply
We deliver fuel from Accra by tanker and discharge the fuel into and store the fuel in the fuel tank facility located within our field camp. We purchase spare parts for all of our equipment either locally or from suppliers overseas and store such parts in the secure spare parts warehouse located at our field camp.
Workspace
There is adequate office space at our field camp to accommodate our administrative, geology, surveying, equipment maintenance and other departments, as well as their technical support and our laborers.
Equipment Maintenance
Any maintenance of our excavators or other equipment which we may own will be carried out in the workshops located within our field camp.
Capital Expenditures
We do not anticipate any significant capital expenditures in the next 12 months in connection with placer gold recovery operations.
Pameng Project
Our Pameng project is also referred to in this annual report as the Pameng concession and is comprised of 40.51 square kilometers.
The Pameng concession is located in the East Akim District of the Eastern Region of Ghana, along the western, lower flank and base of the Atewa Range, approximately 2 kilometers west-northwest of our Kibi project which is located on the Apapam concession. Access to our Pameng project can be gained by driving northwest from Accra on the Accra-Kumasi Trunk Road for approximately 125 kilometers until arrival at the village of Pameng where there is a road sign reading "Pameng". Make a left hand turn at the Pameng sign and drive southwest approximately 2 kilometers to reach our Pameng concession. Our Pameng concession is located approximately 12.5 kilometers south-southwest from our field camp.
Historical Work
To the best of our knowledge, the Pameng concession has never been subjected to modern, systematic exploration for lode gold mineralization.
Prior Exploration by Xtra-Gold
2019 Exploration Programs
Exploration activities on our Pameng project during the 2019 year was limited to the Goldspot target generation study.
2020 Exploration Programs
Exploration activities on our Pameng project during the 2020 year was limited to airborne geophysical survey compilation and satellite remote sensing imagery.
2021 Exploration Programs
Exploration activities on our Pameng project during the 2021 year was limited to airborne geophysical survey compilation and satellite remote sensing imagery.
Future Exploration Plans for 2022
As at the date of this annual report, during 2022, we have planned the following exploration activities at this project:
● ongoing geological compilation, prospecting, soil geochemical sampling, and scout trenching to identify and/or further advance grassroots targets.
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Recovery and Sale of Placer Gold
During 2010 and 2011, we negotiated with independent Ghanaian contract miners and operators in connection with their placer gold recovery operations at our Pameng project on fixed payment terms to our company. During 2010, 4,720 ounces of gold was recovered and produced by the contract miners from our Pameng project for which we received and sold 897 ounces of gold for gross proceeds of $1,128,451. During 2011, 5,621 ounces of gold was recovered and produced by the contract miners at this project for which we received and sold 1,068 ounces of gold for $1,489,058. During 2012, we sold 53 ounces of gold for gross proceeds of $87,997 which was the remaining payment we had received from the contract miners during their 2010 and 2011 placer gold recovery operations at this project. No placer gold recovery operations were conducted at this project from 2012 to 2019. Gold recovery operations resumed in 2020. Gold sales of 2,871 ounces of pure gold in 2021 (2020 - 1,366 ounces of pure gold) were sold for $5,026,504 (2020 -$2,323,843).
Mineral Reserves
No mineral resources or mineral reserves have been identified on our Pameng project.
Pameng Mining Lease
The Pameng mining lease is dated July 26, 1989 and is owned and controlled by our company, as to a 90% interest; and is registered to our subsidiary, XG Mining, while the remaining 10% free carried interest in XG Mining is held by the Government of Ghana. The Pameng mining lease covers a lease area of 40.51 square kilometers and has a 30-year term expiring on July 26, 2019. We have applied for a 15-year renewal extension. We have been granted surface and mining rights by the Government of Ghana to work, develop and produce gold in the lease area (including processing, storing and transportation of ore and materials). See "Kibi Project - Apapam Mining Lease" for identical mining lease terms for the Pameng mining lease, except for the name of the mining lease, the lease registration particulars, the lease area and annual ground rents payable in the amount of approximately $25,142 (GH¢147,892.20), when the renewal extension is granted.
The Pameng mining lease further provides that XG Mining shall report forthwith to the government authorities if we discover any other minerals in the Pameng lease area, and will provide XG Mining with the first option to prospect further and to work the said minerals subject to satisfactory arrangements made between XG Mining and the government authorities.
Banso Project
Our Banso project is also referred to in this annual report as the Banso concession and is comprised of 55.28 square kilometers.
Location and Access
The Banso concession is located in the East Akim District of the Eastern Region of Ghana, approximately 7 kilometers south-southwest from our field camp.
Both of the Banso concession and the Muoso concession lie in the Kibi-Winneba Gold Belt on the western flanks of the prominent Atewa Range, which is underlain by Birimian greenstone, phyllites, meta-tuffs, epi-diorite, meta-greywacke and chert. The valleys, over which this concession is located, are underlain by thick sequences of Birimian metasediments. The north-western end of the Atewa Range is the type-locality for the Birimian metasediments and metavolcanics. The area where both of our Banso and Muoso projects are located is one of the oldest placer gold mining areas of Ghana, dating back many centuries.
Access to the Banso concession is gained by driving northwest approximately 136 kilometers from Accra on the paved Accra-Kumasi Trunk Road.
Historic Work
Historical exploration and mining have mainly focused on placer gold. Before the acquisition of our interest in the Banso concession, to the best of our knowledge and based on mining records in Ghana, there had never been a detailed documented bedrock exploration program conducted on this concession.
2019 to 2021 Exploration Programs
No significant lode gold exploration work was conducted by our company on our Banso project from 2013 to 2021. Exploration activities on our Muoso project during the 2021 year was limited to airborne geophysical survey compilation and satellite remote sensing imagery.
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Future Exploration Plans for 2022
As at the date of this annual report, during 2022, we have planned the following exploration activities at this project:
● ongoing geological compilation, prospecting, soil geochemical sampling, hand augering and/or scout pitting, and trenching to identify and/or further advance grassroots targets; and
● the continuation of placer gold recovery operations at these projects (commenced in 2015 to present).
Mineral Reserves
No mineral resources or mineral reserves have been identified on our Banso project.
Banso Mining Lease
The Banso mining lease is dated January 6, 2011 and is owned and controlled by our company, as to a 90% interest; and is registered to XG Mining, while the remaining 10% free carried interest in XG Mining is held by the Government of Ghana. The Banso mining lease covers a lease area of 51.67 square kilometers and has a 14 year term expiring on January 5, 2025. We have been granted surface and mining rights by the Government of Ghana to work, develop and produce gold in the lease area (including processing, storing and transportation of ore and materials). See "Kibi Project - Apapam Mining Lease" for identical mining lease terms for the Banso mining lease, except for the name of the mining lease, the lease registration particulars, the lease area and annual ground rents in the amount of approximately $32,155 (GH¢189,146.34).
The Banso mining lease further provides that XG Mining shall report forthwith to the government authorities if we discover any other minerals in the Banso lease area, and will provide XG Mining with the first option to prospect further and to work the said minerals subject to satisfactory arrangements made between XG Mining and the government authorities.
Muoso Project
Our Muoso project is also referred to in this annual report as the Muoso concession and is comprised of 55.28 square kilometers.
Location and Access
The Muoso concession is located in the East Akim District of the Eastern Region of Ghana, approximately 1 kilometer north from our field camp.
Access to our Muoso project is gained by driving northwest approximately 80 kilometers from Accra on the paved Accra-Kumasi Trunk Road. This highway passes through the easternmost portion of the Muoso concession and shares a common boundary with the Kwabeng concession. From the town of Osino, one would drive northwest approximately 5 kilometers to the town of Anyinam, from which an all weather direct road heads south through the centre of the Muoso concession and onto the Banso concession, approximately 15 kilometers south of the Accra-Kumasi Trunk Road. The town of Muoso is approximately 10 kilometers from Anyinam. A number of dirt roads, trails and footpaths offer additional access to this concession.
Historic Work
Historical exploration and mining have mainly focused on placer gold. Before the acquisition of our interest in the Muoso concession, to the best of our knowledge and based on mining records in Ghana, there had never been a detailed documented bedrock exploration program conducted on this concession.
Prior Exploration by Xtra-Gold
No significant lode gold exploration work was conducted by our company on our Muoso project from 2014 through to the end of our fiscal year. Exploration activities on our Muoso project during the 2021 year was limited to airborne geophysical survey compilation and satellite remote sensing imagery.
Future Exploration Plans for 2022
As at the date of this annual report, during 2022, we have planned the following exploration activities at this project:
● ongoing geological compilation, prospecting, soil geochemical sampling, hand augering and/or scout pitting, and trenching to identify and/or further advance grassroots targets; and
● the continuation of placer gold recovery operations at these projects (commenced in 2015 to present).
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No mineral resources or mineral reserves have been identified on our Muoso project.
Muoso Mining Lease
The Muoso mining lease is dated January 6, 2011 and is owned and controlled by our company, as to a 90% interest; and is registered to XG Mining, while the remaining 10% free carried interest is held by the Government of Ghana. The Muoso mining lease covers an area of 55.28 square kilometers and has a 13 year term expiring on January 5, 2024. We have been granted surface and mining rights by the Government of Ghana to work, develop and produce gold in the Muoso lease area (including processing, storing and transportation of ore and materials). See "Kibi Project - Apapam Mining Lease" for identical terms for the Muoso mining lease, except for the name of the mining lease, the lease registration particulars, the lease area and annual ground rents payable in the amount of approximately $34,404 (GH¢202,378.80).
The Muoso mining lease further provides that XG Mining shall report forthwith to the government authorities if we discover any other minerals in the Muoso lease area, and will provide XG Mining with the first option to prospect further and to work the said minerals subject to satisfactory arrangements made between XG Mining and the government authorities.
Item 4A Unresolved Staff Comments
Not applicable.
Item 5 Operating and Financial Review and Prospects
A. Operating Results -
Our company reported a net gain after tax for the year ended December 31, 2021 of $835,976 (December 31, 2020 - gain of $1,860,249, December 31, 2019 - gain of $2,247,957). Our company's basic and diluted gain per share for the year ended December 31, 2021 was $0.02 (December 31, 2020 - $0.05, December 31, 2019 - $0.05). All years benefited from gold recovery results and from a large gain on investment portfolio holdings. The most significant change is the tax expense as the company has used its tax shelter position.
The weighted average number of shares outstanding was 46,779,574 (December 31, 2020 - 46,645,387, December 31, 2019 - 46,095,232). Average shares were increased in 2021 via the exercise of warrants and stock options in 2020, and reduced from share repurchases. Average shares were increased in 2020 via the exercise of warrants and stock options, and reduced from share repurchases. Average shares outstanding were reduced in 2019 through share repurchases. Average fully diluted shares in 2021 were 48,925,574 (2020 - 49,033,887, 2019 - 49,589,430), with the difference being in the money stock options and warrants. These items did not materially affect earnings per share.
We incurred expenses of $2,161,514 in the year ended December 31, 2021 (December 31, 2020 - $1,481,612, December 31, 2019 - $961,058). Exploration expense increased significantly in 2021 as more consultants were engaged to assist with the hard rock program, work on the NI 43-101 technical report, and more drilling was undertaken. Exploration expense in 2020 was increased from 2019 with the addition of a second drill and a more intense hard-rock exploration program. We expense all exploration costs. Amortization in 2021 increased with the addition of three pickup trucks, while 2020 increased with the late-2019 addition of a trommel and with the 2020 addition of a drill, pickup trucks and a dozer. General and administrative expense in 2021 of $377,345 decreased from $578,176 in 2020 but was in line with the 2019 expense of $344,710. Most of the difference in general and administrative expense was created by stock-based compensation. Non-cash stock-based compensation expense was $2,504 in 2021, $196,115 in 2020, and $10,642 in 2019. The company did not grant stock options in 2021. The company granted 534,000 stock options in 2020. Revaluation of consultants' options in 2020 did not materially affect the 2020 expense. No options were granted in 2019, with the expense related to valuation of consultant's options.
Exploration activities for the 2021 year continued to focus on the Kibi Gold Project (Apapam Mining Lease). With exploration efforts highlighted by the release of an updated Mineral Resource Estimate for the Company's flagship Kibi Gold Project in the December 2021 quarter (see the Company's news release of November 1, 2021). Seventy-five (75) diamond core boreholes totalling 11,343 metres were completed by the Company's in-house drilling crews in 2021 with drilling efforts primarily targeting resource expansion opportunities within Zone 3 of the Kibi Gold Project.
We did not conduct any exploration activities on our Kwabeng, Pameng, Banso and Muoso projects during the 2021 year.
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On November 1, 2021, the Company announced the results of an updated Mineral Resource Estimate for its Kibi Gold Project located on the Apapam Mining Lease. The updated resource estimate, with an effective date of September 30, 2021, was prepared in accordance with the Definition Standards for Mineral Resources and Mineral Reserves set out by the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM"). The Mineral Resource Estimate was filed in accordance with National Instrument 43-101 (NI 43-101) requirements with the Technical Report entitled "Xtra-Gold Resources Corporation Kibi Gold Project", jointly prepared by Pivot Mining Consultants (Pty) Ltd and Tect Geological Consulting of Johannesburg and Somerset West, South Africa, respectively, and dated November 16, 2021, filed under the Company's profile on SEDAR at www.sedar.com.
The updated Mineral Resource incorporates an additional 212 diamond core boreholes (25,198.55 m) completed since the October 2012 Maiden Resource Estimate. This includes 158 holes (21,321.45 m) completed from February 2018 - June 2021 by Xtra-Gold's in-house drilling crews on resource expansion targets within the Zone 1 - Zone 2 - Zone 3 resource estimate footprint area. The resource estimate encompasses drill hole and trench data available as of July 30, 2021.
The new Mineral Resource encompasses updated resource estimates for the following five (5) deposits: Big Bend, East Dyke, Mushroom, South Ridge and Double 19; and initial resource estimates for the following three (3) deposits, which were at an early exploration stage at the time of the 2012 resource estimate: Road Cut, Gatehouse and Gold Mountain. In aggregate, these eight (8) gold deposits lying within approximately 1.6 kilometres of each other are estimated to contain an Indicated Mineral Resource of 623,700 ounces of gold based on 13,893,000 tonnes at an average grade of 1.40 grams per tonne ("g/t") gold and an additional Inferred Mineral Resource of 180,700 ounces of gold based on 5,694,000 tonnes at an average grade of 0.96 g/t gold (at a base case 0.5 g/t cut-off).
In comparison to the 2012 Maiden Resource Estimate, the updated Mineral Resource represents increases of 124.4% in the Indicated category and 22.9% in the Inferred category. Approximately 73% of the Indicated Mineral Resources (456,200 oz.) is contained within the essentially contiguous Big Bend and East Dyke deposits.
Gold mineralization within the Mineral Resource footprint area consists predominantly of tensional arrays of auriferous quartz-carbonate veins hosted by folded diorite bodies with an interpreted Belt-type granitoid affinity. The gold-bearing zones occupy the hinges and limbs of predominantly anticlinal fold structures. Over 20 significant gold occurrences hosted by Belt (Dixcove)- and Basin (Cape Coast)-type granitoids are known in Ghana, with a number constituting significant deposits. These deposits represent a relatively new style of gold mineralization for orogenic gold deposits within the West African Birimian terrain. Belt-type intrusion-hosted gold deposits include Newmont Mining's Subika deposit at their Ahafo mine and Kinross Mining's Chirano deposit within the Sefwi gold belt, as well as the former Golden Star Resources' Hwini-Butre deposit at the southern extremity of the Ashanti gold belt.
Cautionary Note on Mineral Resources: Mineral Resources are not Mineral Reserves and by definition do not demonstrate economic viability. The Mineral Resource Estimate disclosed herein includes Inferred Mineral Resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as Mineral Reserves. There is also no certainty that these Inferred Mineral Resources will be converted to the Measured and Indicated resource categories through further drilling, or into Mineral Reserves, once economic considerations are applied. The stated figures for contained gold are in-situ Mineral Resources.
Exploration activities for the first half of 2021 focussed on resource expansion drilling on the Double 19 resource body (3,292 m) and exploration drilling targeting resource expansion opportunities within Zone 3 of the Kibi Gold Project (2,150 m). The Zone 3 target generation drilling program was designed to follow up on early-stage gold shoots / showings discovered by previous drilling / trenching efforts (2008 - 2012) and to test prospective litho-structural gold settings identified by recently completed 3D geological modelling. The assay results for the 36 boreholes (5,982 m) completed from January to June 2021 (#KBDD21379 - #KBDD21414), were reported by the Company on April 14 and August 11, 2021, including the following highlights:
- 48.8 m at 0.76 grams per tonne gold ("g/t Au"), including 6.9 m at 1.91 g/t Au, from 134.0 m in hole #KBDD21387; and 15.1 m at 1.24 g/t Au from 200.0 m in undercut hole #KBDD21391 (Double 19 - Resource Expansion Drilling)
- 13.5 m at 1.92 g/t Au from 138.5 m in hole #KBDD21384; 11.6 m at 1.00 g/t Au and 17.1 m at 1.13 g/t Au from 92.0 m and 121.9 m respectively in #KBDD21386; and 7.6 m at 2.12 g/t Au and 8.75 m at 1.03 g/t Au from 101.0 m and 125.25 m in respectively in # KBDD21390 (Double 19 - Resource Expansion Drilling)
- 65.0 m at 1.03 g/t Au, including 13.5 m at 2.42 g/t Au, from 33.0 m in hole #KBDD21411; and 43.1 m at 0.75 g/t Au, including 3.0 m at 3.65 g/t Au and 9.0 m at 1.29 g/t Au, from 28.5 m in #KBDD21402 (Boomerang West Target - Exploration Drilling)
- 7.3 m at 1.93 g/t Au from 70.7 m in hole #KBDD21409; and 15.0 m at 1.02 g/t Au from 99.0 m in undercut hole #KBDD21410 (Twin Zone Target - Exploration Drilling)
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Exploration activities for the second half of 2021, corresponding to exploration drilling conducted after the late July 2021 database close-out date for the updated Mineral Resource Estimate, continued to target resource expansion opportunities along the southwestern (Zone 3) segment of the over three-kilometre-long Zone 2 - Zone 3 anticlinal fold structure. With the exploration program focussing on follow up drilling of the early-stage Boomerang East, Boomerang West, and Twin Zone (formerly JK East) targets positioned along similar second-order fold hinge structures as the neighbouring Double 19 resource body, and scout drilling of prospective litho-structural gold settings identified by recently completed detailed 3D geological modelling. The assay results for the 39 boreholes (5,982 m) completed from late July to December 2021 (#KBDD21415 - #KBDD21453), as well as five (5) boreholes completed in January 2022 (#KBDD22454 - #KBDD22458), were reported by the Company on February 18, 2022, including the following highlights:
Boomerang East Target
- 6.0 metres ("m") at 6.19 grams per tonne gold ("g/t Au"), including 2.6 m at 13.82 g/t Au, from 52.0 m in hole #KBDD21434
- 33.5 m at 1.22 g/t Au, including 7.5 m at 3.76 g/t Au, from 31.5 m in hole #KBDD21453
- 16.5 m at 6.23 g/t Au, including 6.5 m at 13.74 g/t Au, from 1.5 m in hole #KBDD22455
- 13.5 m at 1.64 g/t Au, including 6.0 m at 3.35 g/t Au, from 0.0 m in #KBDD22458; followed by second interval of 21.0 m at 1.46 g/t Au from 39.0 m, including 11.0 m at 2.49 g/t Au
- gold mineralization at Boomerang East target traced over an approximately 400 m section across the southeastern limb of the NE-trending Zone 2 - Zone 3 anticlinal fold structure; with the mineralization predominantly being spatially associated with a series of apparent second-order (parasitic) fold structures
Boomerang West Target
- 29.0 m at 1.04 g/t Au, including 4.5 m at 3.27 g/t Au, from 50.0 m in #KBDD21423
- 6.0 m at 3.12 g/t Au from 9.0 m in hole #KBDD21425
- Boomerang West target occupies a NE-plunging, tight to isoclinal, anticlinal fold hinge zone; with gold mineralization traced over an approximately 240 m trend-length and 80 m width of the anticlinal fold structure, and down to a vertical depth of approximately 165 m
Twin Zone Target
- 13.2 m at 1.07 g/t Au from 161.0 m in hole #KBDD21419
- 4.0 m at 3.53 g/t Au from 157.0 m in hole #KBDD21448
- gold mineralization at the early-stage Twin Zone target intermittently traced over an approximately 275 m down-plunge distance, and down to a vertical depth of approximately 150 m, along the limbs of two parallel, NE-trending, second-order (parasitic) fold structures
Exploration activities for the 2020 year continued to focus on the Company's flagship Kibi Gold Project (Apapam Mining Lease) with the continuation of the resource expansion target generation drill program initiated in 2019. Seventy-four (74) diamond core boreholes totalling 9,615 metres were completed in 2020 with drilling efforts targeting resource expansion opportunities within the Zone 2 - Zone 3 maiden mineral resource footprint area. The target generation drilling program is designed to follow up on early stage gold shoots / showings discovered by previous drilling / trenching efforts (2008 - 2012), test down-plunge extensions and/or fold limbs of existing resource bodies, and to test prospective litho-structural gold settings identified by recently completed 3D geological modelling. A total of 85 boreholes totaling 10,819 metres have been completed to date by the Company's in-house drilling crews during the ongoing Zone 2 - Zone 3 resource expansion drilling program initiated in late September 2019.
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The maiden Kibi Gold Project mineral resource estimate (October 26, 2012) encompasses the Big Bend, East Dyke, South Ridge and Mushroom deposits in Zone 2 and the Double 19 deposit in Zone 3. In aggregate, these five gold deposits lying within approximately 1.6 kilometres of each other are estimated to encompass an indicated mineral resource of 3.38 million tonnes grading 2.56 g/t gold for 278,000 ounces of contained gold and an additional inferred mineral resource of 2.35 million tonnes grading 1.94 g/t gold for 147,000 ounces of contained gold (@ base case 0.5 g/t cut-off). The Zone 2 - Zone 3 maiden mineral resource represents the first ever mineral resource generated on a lode gold project within the Kibi Gold Belt. Gold mineralization is characterized by auriferous quartz vein sets hosted in Belt-type granitoids geologically analogous to other "Granitoid-hosted" gold deposits of Ghana, including Kinross Gold's Chirano and Newmont Mining's Subika deposits in the Sefwi gold belt. The above mineral resource estimate was filed in accordance with National Instrument 43-101 (NI 43-101) requirements with the Technical Report entitled "Independent Technical Report, Apapam Concession, Kibi Project, Eastern Region, Ghana", prepared by SEMS Explorations and dated October 31, 2012, filed under the Company's profile on SEDAR at www.sedar.com.
Drilling activities for the 2020 year focussed primarily on the following Zone 2 - Zone 3 resource expansion targets: 23 holes (3,109 metres) on the Double 19 Zone; 13 holes (1,660 metres) on the Gatehouse Zone; 8 holes (857 metres) on the Boomerang Zone; and 15 holes (2,095 metres) on the Road Cut Zone.
The 2020 resource expansion drilling on the Double 19 deposit successfully extended the gold mineralization approximately 115 metres down plunge from the previous 2012 drilling and identified a new, apparent fold limb-controlled gold zone (i.e., NW Limb Zone) along the northwest limb of the Double 19 fold structure. Recent detailed 3D litho-structural modelling indicates that the Double 19 gold mineralization is emplaced within the inner arc of a tight, steep NE-plunging, isoclinally folded diorite body. The present drilling efforts have extended the gold mineralization along the Fold Hinge zone over an approximately 285 metre down-plunge distance from surface (~150 metres vertical) and demonstrated the continuity of the NW Limb zone over an approximately 110 metre trend-length of the fold structure (~150 metre down-plunge distance), and down to a vertical depth of approximately 100 metres. The Double 19 deposit has a current inferred mineral resource of 48,000 ounces of gold (0.61 million tonnes at an average grade of 2.43 g/t gold).
The assay results for the 23 boreholes (3,109 metres) of the ongoing Double 19 resource expansion drilling program, completed from August to December 2020, were reported by the Company on October 20 and December 16, 2020, and February 17, 2021, including the following highlights:
- 55.3 metres grading 2.1 grams per tonne ("g/t") gold, including 3.47 g/t gold over 16.6 metres, from down-hole depth of 96.2 metres in #KBDD20341; and 20.0 metres grading 1.02 g/t gold and 27.0 metres grading 2.5 g/t gold from down-hole depths of 142 metres and 187 metres respectively in #KBDD20351; confirming down plunge extension of Fold Hinge gold zone
- 61.57 metres grading 2.42 g/t gold, including 5.13 g/t gold over 21.5 metres, from down-hole depth of 18.2 metres in #KBDD20346; new fold limb gold zone on NW flank of Double 19 fold structure
- 30.0 metres grading 6.20 g/t gold, including 10.1 g/t gold over 12.0 metres, from down-hole depth of 56.0 metres in #KBDD20369 on NW Limb zone; with #KBDD20369 cross-cutting above #KBDD20346 intercept which was drilled down dip of the fold limb
- 44.0 metres grading 2.78 g/t gold, including 4.14 g/t gold over 17.5 metres and 9.10 g/t gold over 3.0 metres, from a down-hole depth of 50.5 metres in #KBDD20375 and 20.0 metres grading 1.61 g/t gold, including 2.68 g/t gold over 11.0 metres, from a down-hole depth of 92.0 metres in #KBDD20378; demonstrating continuity of NW Limb zone mineralization along approximately 110 metres trend-length of the fold structure
- 17.5 metres grading 3.89 g/t gold, including 6.03 g/t gold over 7.0 metres, from a down-hole depth of 4.5 metres in #KBDD20377; undercutting trench #TAD045 returning 6.32 g/t gold over 15.0 metres along southeastern margin of Double 19 Fold Hinge zone
The Gatehouse Zone, located approximately 500 metres southeast of the Zone 2 gold resource footprint area, was originally identified by 2011 - 2012 scout trenching / drilling targeting a gold-in-soil anomaly with a coincidental Induced Polarization (IP) / Resistivity geophysical signature. Follow up drilling of this prospect during the present 2020 resource expansion target generation program extended the mineralization approximately 235 metres further southwest along the host granitoid body than the gold zone originally outlined by the 2011 - 2012 trenching / drilling. Typical Kibi-type (Zone 2) Granitoid-hosted gold mineralization has been traced to date over an approximately 325 metre strike length and to a 165 metre vertical depth along the NE-trending Gatehouse zone.
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The assay results for the 13 follow up boreholes (1,660 metres) on the Gatehouse Zone were reported by the Company on September 8, October 20, and December 16, 2020, including the following highlights:
- 14.4 metres grading 1.7 g/t gold, including 2.42 g/t gold over 4.2 metres, from a down-hole depth of 66.9 metres in #KBDD20350; 150 metre step-out from original 2012 scout drilling
- 17.0 metres grading 1.05 g/t gold, including 4.51 g/t gold over 1.0 metre, from a down-hole depth of 104.0 metres in #KBDD20352 and 12.5 metres grading 1.24 g/t gold, including 2.72 g/t gold over 4.0 metres, from a down-hole depth of 31.5 metres in #KBDD20370, approximately 50 metres down-dip and 35 metres up-dip of the #KBDD20350 intercept, respectively; establishing mineralization to a vertical depth of approximately 120 metres on the #KBDD20350 - #352 - #370 drill fence
The Boomerang Zone was originally identified during a 2012 scout drilling program designed to test geophysical targets located along the approximately 2.5 km long by 0.5 km to 1.2 km wide Zone 3 anomalous gold-in-soil trend. Follow up drilling of this prospect during the 2020 drilling campaign defined a typical Kibi-type (Zone 2) Granitoid-hosted gold zone located over 1,500 metres to the southwest of the current Zone 2 gold resource footprint. Gold mineralization at the Boomerang Zone has been traced to date over an approximately 80 metre down-plunge distance from surface along an apparent NE-plunging fold structure.
The assay results for the 8 follow up boreholes (857 metres) on the Boomerang Zone were reported by the Company on September 8 and October 20, 2020, including the following highlights:
- 43.5 metres grading 1.21 g/t gold, including 2.16 g/t gold over 7.5 metres and 4.3 g/t gold over 6.0 metres, from a down-hole depth of 3.0 metres in #KBDD20335 and 24.0 metres grading 1.35 g/t gold, including 1.99 g/t gold over 9.0 metres, from a down-hole depth of 56.5 metres in undercut hole #KBDD20338; approximately 30 metres down plunge of the #KBDD20335 gold intercept
The Road Cut Zone, lying approximately 65 metres from the southern margin of the Kibi Gold Project's flagship Big Bend gold deposit, was subjected to follow up drilling from mid-November 2019 to late April 2020 as part of the ongoing resource expansion target generation program designed to follow up on early stage gold shoots / showings discovered by previous drilling / trenching efforts. Based on recent detailed 3D geological modelling, the follow up drilling tested the Road Cut zone with optimized North-South drill targeting, unlike the ESE-trending drill orientation utilized in the original 2011 drilling. Present drilling efforts traced the gold mineralization over an approximately 200 metre strike length and to an approximately 170 metre vertical depth within a parallel diorite body lying along the southern (footwall) flank of the Big Bend diorite. With the auriferous vein system centred on the same apparent NE-plunging, open fold hinge zone controlling the Big Bend deposit gold mineralization. The Big Bend deposit has a current indicated mineral resource of 213,000 ounces of gold (2.72 million tonnes at an average grade of 2.44 g/t gold) and an additional inferred mineral resource of 27,000 ounces of gold (0.52 million tonnes at an average grade of 1.6 g/t gold).
The assay results for the 18 follow up Road Cut zone boreholes (2,446 metres), including 3 holes (351 metres) drilled in late 2019, were reported by the Company on February 26 and September 8, 2020, including the following highlights:
- 49 metres grading 1.1 g/t gold, including 1.42 g/t gold over 31.6 metres and 45.1 metres grading 1.51 g/t gold, including 2.24 g/t gold over 26.4 metres from down-hole depths of 47 metres and 32 metres in #KBDD19304 and #KBDD20306 respectively, on adjacent 25 metre spaced drill-fan patterns
Exploration activities on our Kwabeng, Pameng, Banso and Muoso projects during the 2020 year were limited to airborne geophysical survey compilation and satellite remote sensing imagery.
Exploration activities for the 2019 year focused on the Kibi Gold Project located on the Apapam Mining Lease with exploration efforts primarily geared towards the continued advancement of early stage gold shoots / showings within the Zone 2 - Zone 3 maiden mineral resource footprint area. A total of 32 diamond core boreholes totalling 3,553 metres were completed by the Company's in-house drilling crew during the 2019 year, including: 22 boreholes totalling 2,367 metres targeting resource expansion opportunities in the Zone 2 resource area; and 10 scout holes totalling 1,186 metres on the Akwadum South ("Zone 7") grassroots gold-in-soil anomaly target.
The resource expansion drill program initiated in February 2018 was completed during the March 2019 quarter with 11 diamond core boreholes totalling 1,163 metres drilled from January 28 to April 1 at the South Ridge gold deposit on Zone 2 of the Kibi Gold Project. A total of 37 boreholes encompassing 4,577 metres were completed during the 2018 - 2019 resource expansion drill program with the program designed to test an approximately 400 metre strike length of the South Ridge gold zone at a nominal 50 metre section spacing and to further define the litho-structural setting of the gold mineralization.
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The assay results for the final 19 boreholes (2,305 metres) of the South Ridge mineral resource expansion drill program completed from October 24, 2018 to April 1, 2019 were reported by the Company on May 1, 2019, including the following highlights:
- 30.25 metres grading 1.5 grams per tonne ("g/t") gold, including 2.26 g/t gold over 8.5 metres and 2.56 g/t gold over 9.55 metres from a down-hole depth of 62.65 metres in #KBDD18278;
- 11.0 metres grading 3.3 g/t gold (uncut), including 5.96 g/t gold over 5.15 metres from a down-hole depth of 22.0 metres in #KBDD19287, 25 metres NW of previously reported high-grade #KBDD18264 intercept of 27.0 metres grading 2.85 g/t gold, including 4.84 metres grading 5.12 g/t gold (see the Company's news release of August 8, 2018);
- 15.0 metres grading 2.85 g/t gold, including 5.67 g/t gold over 6.0 metres and 8.5 metres grading 3.33 g/t gold, including 6.02 g/t gold over 4.5 metres from down-hole depths of 9.0 metres and 10.5 metres in #KBDD19293 and #KBDD19292 respectively, 25 metres and 50 metres up-dip from the high-grade #KBDD18264 intercept; and
- 7.5 metres grading 6.71 g/t gold (uncut), including 31.00 g/t gold over 1.5 metres from a down-hole depth of 1.5 metres on the zone's most northwesterly drill section.
The final phase of the resource expansion drill program (19 holes) included: a series of drill fences (12 holes) targeting the depth continuity of the southeastern 200 metre segment of the South Ridge gold zone at downdip depths extending from approximately 70 metres to 220 metres from surface; 4 infill holes to further test the high-grade gold mineralization intersected in holes #KBDD18263 / #KBDD18264 at 25 metre section spacing; and 3 holes targeting near surface mineralization at the northwestern extremity of the South Ridge gold zone, including 2 holes testing the shallow, up-dip extension of the previously reported #KBDD18264 high-grade gold mineralization (see the Company's news release of August 8, 2018).
The 2018 - 2019 South Ridge drilling data was outsourced to Goldspot Discoveries Inc. ("Goldspot") of Montreal, Canada for integration into an updated 3D geological model of the Zone 2 - Zone 3 mineral resource footprint area. The new 3D geological model was completed by Goldspot in late July 2019 with the detailed modelling geared towards the identification of prospective litho-structural gold settings to help guide upcoming resource expansion drilling efforts.
The South Ridge deposit consists of a northwest striking / northeast dipping quartz diorite-hosted gold mineralization body traced to date along an approximately 400 metre strike length and 230 metre downdip depth from surface. Gold mineralization is associated with quartz-albite-carbonate-sulphide vein arrays developed within the quartz diorite body.
The South Ridge deposit has a current inferred mineral resource estimate of 0.9 million tonnes grading 1.48 grams per tonne ("g/t") gold for 43,000 ounces of contained gold. The South Ridge deposit, along with the Big Bend, East Dyke, and Mushroom deposits in Zone 2 and the Double 19 deposit in Zone 3, form part of a maiden mineral resource estimate (October 26, 2012) on the Company's Kibi Gold Project. In aggregate, these five gold deposits lying within approximately 1.6 kilometres of each other are estimated to encompass an indicated mineral resource of 3.38 million tonnes grading 2.56 g/t gold for 278,000 ounces of contained gold and an additional inferred mineral resource of 2.35 million tonnes grading 1.94 g/t gold for 147,000 ounces of contained gold (@ base case 0.5 g/t cut-off). The Zone 2 - Zone 3 maiden mineral resource represents the first ever mineral resource generated on a lode gold project within the Kibi Gold Belt. Gold mineralization is characterized by auriferous quartz vein sets hosted in Belt-type granitoids geologically analogous to other "Granitoid-hosted" gold deposits of Ghana, including Kinross Gold's Chirano and Newmont Mining's Subika deposits in the Sefwi gold belt. The above mineral resource estimate was filed in accordance with National Instrument 43-101 (NI 43-101) requirements with the Technical Report entitled "Independent Technical Report, Apapam Concession, Kibi Project, Eastern Region, Ghana", prepared by SEMS Explorations and dated October 31, 2012, is filed under the Company's profile on SEDAR at www.sedar.com.
A target generation drilling program geared towards the identification of new resource expansion opportunities within the Zone 2 - Zone 3 maiden mineral resource footprint area of the Kibi Gold Project was initiated in late September 2019; with a total of 11 diamond core boreholes totaling 1,204 metres completed by the Company's in-house drilling crew by the end of the 2019 year. The ongoing drilling program is designed to follow up on early stage gold shoots / showings discovered by previous drilling / trenching efforts (2008 - 2012) and to test prospective litho-structural gold settings identified by recently completed 3D geological modelling.
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The assay results for the initial 16 boreholes (1,643 metres) of the ongoing resource expansion target generation program completed from September 24, 2019 to January 27, 2020 were reported by the Company on February 26, 2020, including the following highlights:
- 49 metres grading 1.1 grams per tonne ("g/t") gold, including 1.42 g/t gold over 31.6 metres and 45.1 metres grading 1.51 g/t gold, including 2.24 g/t gold over 26.4 metres from down-hole depths of 47 metres and 32 metres in #KBDD19304 and #KBDD20306 respectively, on adjacent 25 metre spaced drill-fan patterns (Road Cut Zone);
- gold mineralization now traced over an approximately 110 metre strike length and to 90 metre vertical depth on the Road Cut Zone; with newly developing gold body lying within 65 metres of the southern margin (footwall) of the flagship Big Bend gold deposit; and
- step-out drilling successfully traced gold mineralization over an approximately 200 metre strike length of the host diorite body to the southeast of the South Ridge gold deposit; including exploration significant drill intercepts of 1.5 metres grading 4.94 g/t gold and 6.2 metres grading 0.87 g/t gold in #KBDD19297 and #KBDD19303 respectively (South Ridge - SE Extension target).
The initial phase of the resource expansion target generation drill program focussed primarily on the Road Cut Zone and the South Ridge - SE Extension target with 8 holes (790.5 metres) and 4 holes (468 metres) on each target respectively. The Road Cut Zone was subjected to follow up drilling with North-South drill targeting based on recent detailed geological modelling work. The drilling (8 holes) tested the ENE-trending / steep northerly dipping Road Cut auriferous system over an approximately 100 metre strike length, including: three (3) south trending drill-fan patterns (-55o / -75o) at 25 metre spacing and two (2) northerly trending boreholes (scissor-pattern) designed to further define the geometry / attitude of the host diorite body and of the gold-bearing vein system.
To date gold mineralization has been traced over an approximately 110 metre strike length and to a 90 metre vertical depth on the Road Cut Zone; with the newly developing gold body lying within 65 metres of the southern margin (footwall) of the Kibi Gold Project's flagship Big Bend gold deposit. The Road Cut auriferous vein system is emplaced in a parallel diorite body exhibiting a similar NW to ENE flexure in strike-geometry has the flexure appearing to control the Big Bend deposit gold mineralization. The Big Bend deposit has a current indicated mineral resource of 213,000 ounces of gold (2.72 million tonnes at an average grade of 2.44 g/t gold) and an additional inferred mineral resource of 27,000 ounces of gold (0.52 million tonnes at an average grade of 1.6 g/t gold).
Step-out drilling (4 holes) successfully traced gold mineralization over an approximately 200 metre strike length of the host diorite body to the southeast of the South Ridge gold deposit (i.e., South Ridge - SE Extension target). Of exploration significance are typical Kibi-type granitoid hosted gold mineralization intercepts produced by a drill-fan pattern (-60o / -80o) collared approximately 200 metres southeast of the South Ridge resource body, including: 5.2 metres grading 0.41 g/t gold from a down-hole depth of 62.8 metres in the upper #KBDD19302 hole; and 6.2 metres grading 0.87 g/t gold from a down-hole depth of 73 metres in the lower #KBDD19303 hole, approximately 25 metres down dip from the #KBDD19302 intercept.
Exploration efforts on the Kibi Gold Project during the 2019 year also included a scout drilling program on the high-priority Akwadum South ("Zone 7") gold-in-soil anomaly located at the southeastern extremity of the Apapam concession; with the first pass drilling program forming part of an ongoing exploration initiative geared towards the continued advancement of grassroots gold targets across the Apapam concession. A total of 10 boreholes (1,186 metres) ranging in depth from 73 metres to 190 metres were completed by the company's in-house drilling crew from late May to mid-September 2019. The scout drilling program was designed to test an approximately 1,000 metre strike-length of the Akwadum South gold target and to further define the litho-structural setting of the gold mineralization.
The Akwadum South target is characterized by an approximately 1,200 metres long by 100 metres to 400 metres wide, NE-trending gold-in-soil anomaly spatially associated with a volcaniclastic rock package exhibiting widespread silica alteration, quartz veining and sulphide mineralization. Of the 157 soil geochemistry samples collected from the Akwadum South gold-in-soil trend: 11 yielded less than 25 parts per billion ("ppb") gold; 89 returned gold values from 25 ppb to 100 ppb; 50 between 100 ppb to 300 ppb gold; and 7 samples yielded values over 300 ppb gold, including maximum gold values of 444 ppb and 725 ppb.
In early September 2019, also in relation to our Kibi Gold Project, Tect Geological Consulting of West Somerset, South Africa ("Tect") conducted a structural analysis / interpretation of the Cobra Creek gold zone located at the northeast extremity of the Apapam concession. The study encompassing structural mapping and drill core observations, in combination with compilation of existing surface sampling and geophysical data, was designed to further define the structural controls of the gold mineralization and provide high-priority exploration targets to help guide future drilling campaigns on the Cobra Creek gold zone. The Company received the final product of the Tect structural study in late September, including a generative exploration model for the Cobra Creek project, and study result compilation is currently ongoing.
Xtra-Gold completed 2,639 metres of drilling comprised of 43 diamond core holes on the Cobra Creek gold zone in 2016. Initial drilling efforts yielded some very exploration significant high-grade mineralized intercepts, including highlights of 4.5 metres grading 10.9 g/t gold and 5.2 metres grading 9.51 g/t gold (see the Company's news release of October 19, 2016).
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Exploration activities on our Kwabeng, Pameng, Banso, and Muoso projects during the 2019 year were limited to the Goldspot target generation study.
We recognized gains related to other items of $4,207,227 in 2021 (2020 - $3,778,635, 2019 - $3,349,405). The gains can mostly be attributed to the recovery of gold and gain on sales of securities, offset by foreign exchange losses in all years. During the year ended December 31, 2021, we sold 4,318 fine ounces of gold at an average price of US$1,789 for net proceeds of $4,074,170 (2020 - 3,137 ounces of gold at an average price of $1,695 for net proceeds of $2,373,592, 2019 - 2,945 fine ounces of gold at an average price of $1,356 for net proceeds of $1,878,198). Gold sales relating to our share of gold is not recognized until the risks and rewards of ownership passed to the buyer. These placer gold recovery operations were contracted to local Ghanaian groups. We pay a 5% government royalty on our gold sales. Using local contractors promotes the local economy while avoiding illegal workings on our projects.
Embedded derivatives resulted from issuing Canadian denominated warrants in the May 2016 financing. Because the Company's functional currency is the US dollar, Canadian denominated warrants must be considered expense items and reported on a mark-to-market basis. During 2018 the term of these warrants was extended to February 2020.
The company had no warrants outstanding in 2021 and no mark-to-market adjustment was required. We recognized a mark-to-market recovery of expense of $137,313 on warrants in 2020 (2019 - expense of $21,250), related to extending the warrants to February 2020. Canadian dollar denominated warrants were issued with financings. These warrants were deemed to be embedded derivatives since our company's functional currency is the U.S. dollar. The warrants are marked to market in each period with the change in value recognized in other items of the Statement of Operations and Comprehensive Loss.
During the year ended December 31, 2021, our company had a foreign exchange loss of $426,420 (2020 - loss of $124,558, 2019 - loss of $40,849) mostly due to strength in the U.S. dollar against the Ghana cedi and the Canadian dollar.
Our company recognized a trading and holding gain on marketable securities in 2021 of $714,523 (2020 - gain of $1,346,699, 2019 - gain of $1,485,100), whle recognizing an impairment on marketable securities in 2021 of $211,018. Gains in 2021 and 2020 were recognized throughout the portfolio, with significant gains reported on several investments. Most of the 2019 gain resulted on the appreciation and sale of one security in Q3 2019. Unrealized gains and losses reflect mark-to-market changes in the investment portfolio during a period. A realized gain is recognized when securities are sold from the investment portfolio, being the difference between the selling price and the purchase price of the security sold. At the time of the sale, any mark-to-market gain or loss which is related to the security sold, previously recognized in unrealized gains and losses, is reversed.
Other income of $55,972 (2020 - $45,589, 2019 - $48,476,) mostly relates to interest and dividends on investment portfolio assets.
Recent Capital Raising Transactions
Our activities, principally the exploration and acquisition of properties for gold and other metals, may be financed through joint ventures or through the completion of equity transactions such as equity offerings and the exercise of stock options and warrants.
During the year ended December 31, 2021, the Company issued 255,000 shares at prices between CAD$0.23 and CAD$0.65 per share for proceeds of CAD$118,750 ($94,929) on exercise of stock options.
During 2020, the company issued 885,000 shares at CAD$0.50 per share for cash proceeds of $334,132 on the exercise of warrants and issued 346,500 shares at prices between CAD$0.15 and CAD$0.50 per share for cash proceeds of $71,912 on the exercise of stock options.
There were no capital raising transactions in 2021 or 2019.
B. Liquidity and Capital Resources
We are an exploration company focused on gold and associated commodities and do not have operating revenues; and therefore, we must utilize our current cash reserves, income from placer gold sales, income from investments, funds obtained from the exercise of stock options and warrants and other financing transactions to maintain our capacity to meet the planned exploration programs, or to fund any further development activities. There is no certainty that future financing will be available to us in the amounts or at the times desired on terms acceptable to us, if at all.
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Cash on hand was increased by $224,072 during 2021. Operations provided cash of $670,947. Cash of $2,357,144 was used to purchase investments in 2021 while proceeds from the sale of investments generated $2,053,292 of cash. Inventory was reduced by $133,292 due to the timing of smelt shipments. Payables were increased, mostly due to an accrual for income taxes payable in Ghana related to 2021 operations. Other operating expenses were mostly cash neutral. Cash of $203,419 was used to purchase three pickup trucks during 2021. Cash of $338,386 was used to repurchase shares in 2021. Cash proceeds of $94,929 were received on the exercise of stock options and warrants.
During the year ended December 31, 2021, our company repurchased 379,300 of our shares at a cost of $315,235 and cancelled these shares. Also, during the month ended December 31, 2020, the company repurchased 5,200 of our shares at a cost of $4,857. These shares were reported as shares in treasury at December 31, 2020 and were cancelled in January 2021. Further, during the month ended December 31, 2021, the company repurchased 17,600 of our shares at a cost of $13,294. These shares were reported as shares in treasury at December 31, 2021 and were cancelled in January 2022.
During the year ended December 31, 2020, our company repurchased 233,600 of our shares at a cost of $107,565 and cancelled these shares. Also, during the year ended December 31, 2019, the company repurchased 25,000 of our shares at a cost of $9,430. These shares were reported as shares in treasury at December 31, 2019 and were cancelled in January 2020. Further, during the year ended December 31, 2020, the company repurchased 5,200 of our shares at a cost of $4,857. These shares were reported as shares in treasury at December 31, 2020 and were cancelled in January 2021.
In the year ended December 31, 2019, our company repurchased and cancelled 401,800 of our shares at a cost of $124,145 (December 31, 2018 - repurchased and cancelled 1,536,500 of our shares at a cost of $290,985).
At December 31, 2021, accounts payable and accrued liabilities increased by $747,575 to $1,029,140, mostly due to a $600,000 income tax accrual increase (December 31, 2020 - $200,000) and a $91,000 increase in revenue-based gold production payments. With no gold shipments in the fourth quarter, royalty payments to the government for the third quarter were remitted, reducing our balances payable. Our cash and cash equivalents as at December 31, 2021 were sufficient to pay these liabilities. We believe that our company has sufficient working capital to achieve our 2022 operating plan. However, our historical losses raise substantial doubt about our ability to continue as a going concern. Our auditors have issued an explanatory paragraph in their audit opinion for the year end December 31, 2021.
At December 31, 2021, we had total cash and cash equivalents and restricted cash of $4,971,650 (December 31, 2020 - $4,747,578, December 31, 2019 - $4,277,561). Working capital as of December 31, 2021 was $8,004,677 (December 31, 2020 - $7,313,004, December 31, 2019 - $4,995,317,). In both 2021 and 2020, the increase in working capital mostly reflects the revenue from gold recovery and the gain on the investment portfolio, combined with gold inventory on hand. The 2019 increase in working capital mostly reflects the revenue from gold recovery and the gain on sale of investments.
We are an exploration company focused on gold and associated commodities and do not have operating revenues; and therefore, we must utilize our current cash reserves, income from placer gold sales, income from investments, funds obtained from the exercise of stock options and warrants and other financing transactions to maintain our capacity to meet the planned exploration programs, or to fund any further development activities. There is no certainty that future financing will be available to us in the amounts or at the times desired on terms acceptable to us, if at all.
Our shares of common stock, warrants and stock options outstanding as at March 26, 2022, December 31, 2021, December 31, 2020, and December 31, 2019 were as follows:
Subsequent to December 31, 2021, 17,600 shares which were purchased in December 2021 were cancelled. In January 2022 and February 2022, a total of 84,000 shares were purchased and cancelled.
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We remain debt free and our credit and interest rate risk is limited to interest-bearing assets of cash and bank or government guaranteed investment vehicles. Accounts payable and accrued liabilities are short-term and non-interest bearing.
Our liquidity risk with financial instruments is minimal as excess cash is invested with a Canadian financial institution in government-backed securities or bank-backed guaranteed investment certificates.
Our fiscal 2022 budget to carry out our plan of operations is approximately $2,250,000 as disclosed in our Plan of Operations section above and in our 20-F annual report under Item 4.B - Information on Xtra-Gold - Business Overview". These expenditures are subject to change if management decides to scale back or accelerate operations. We believe that we are adequately capitalized to achieve our operating plan for fiscal 2022. However, our losses raise substantial doubt about our ability to continue as a going concern. Our auditors have issued an explanatory paragraph in their audit opinion for the year end December 31, 2021.
Going Concern
The Company is in development as an exploration company. It may need financing for its exploration and acquisition activities. Although the Company has incurred a gain of $835,976 for the year ended December 31, 2021, it has an accumulated a deficit of $21,977,165. Results for the year ended December 31, 2021 are not necessarily indicative of future results. The uncertainty of gold recovery and he fact the Company does not have a demonstrably viable business to provide future funds, raises substantial doubt about its ability to continue as a going concern for one year from the issuance of the financial statements. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and implement its business plan, which is typical for junior exploration companies. The financial statements do not include any adjustments related to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Management of the Company ("Management") is of the opinion that sufficient financing will be obtained from external sources and further share issuances will be made to meet the Company's obligations. The Company's discretionary exploration activities do have considerable scope for flexibility in terms of the amount and timing of exploration expenditure, and expenditures may be adjusted accordingly if required.
C. Research and Development, Patents and Licenses
As Xtra-Gold is a mineral exploration company with no producing properties, the information required by this item is inapplicable.
D. Trends
Gold prices closed in 2021 at $1,806 per ounce, just above the 2021 average of $1,807 per ounce. The low for 2021 occurred in March, with prices gradually demonstrating strength from that time forward. We continue to see positive indicators for gold prices in the future.
The WHO-declared coronavirus pandemic continues to create a significant amount of economic uncertainty across the world. While gold prices originally surged with this announcement, prices have fallen back recently with a global asset sell off. Indicators are of significant spending programs by all governments to combat this issue while supporting national economies.
The coronavirus has negatively affected world GDP's and resulted in significant amounts of money printing by governments. This response has resulted in inflation in previous cycles.
Gold does well in times of uncertainty. National, corporate and individual debt levels increase this uncertainty and leave less room to safely manage any potential crisis.
Gold prices per ounce over the year ended December 31, 2021 and previous two years are as follows:
2021 | 2020 | 2019 | |||||||
High | $ | 1,943 | $ | 2,067 | $ | 1,546 | |||
Low | 1,684 | 1,474 | 1,270 | ||||||
Average | 1,800 | 1,770 | 1,392 |
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Overall, a lower U.S. dollar should lead to higher costs in U.S. dollar terms to identify and explore for gold but could be more than offset by higher gold prices, resulting in greater interest in gold exploration companies. Conversely, if the U.S. dollar strengthens further, interest in the gold exploration sector could be reduced.
Currently, Covid-19 has not affected any of the Company's operations in Ghana. The first cases of Covid-19 were detected much later in Ghana than other parts of the world, and Government action has limited the incidence of transmission. The Company continues to monitor the potential effects on its operations and is implementing protocol to hopefully help in minimize its impact. However, investors are cautioned this is an evolving issue, and that there is not guarantee the Company's protocols will be effective.
E. Off-Balance Sheet Arrangements
Our company has no off-balance sheet arrangements.
F. Tabular Disclosure of Contractual Obligations
Our company does not have any material contractual obligations as of December 31, 2021.
G. Safe Harbor
This annual report, including all exhibits hereto, contains forward-looking statements and forward-looking information. Forward-looking statements are with reference to our financial condition, results of operations, business prospects, plans, objectives, goals, strategies, future events, capital expenditure, and exploration and development efforts. Words such as "anticipates", "expects", "intends", "plans", "forecasts", "projects", "budgets", "believes", "seeks", "estimates", "could", "might", "should", and similar expressions identify forward-looking statements. Although we believe that our plans, intentions and expectations reflected in these forward-looking statements are reasonable, we cannot be certain that these plans, intentions or expectations will be achieved. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements. These statements include comments regarding the establishment and estimates of mineral reserves and mineral resources, production, production commencement dates, productions costs, cash operating costs per ounce, total cash costs per ounce, grade, processing capacity, potential mine life, feasibility studies, development costs, capital and operating expenditures, exploration, the closing of certain transactions including acquisitions and offerings. All statements, other than statements of historical facts, included in this annual report, our other filings with the SEC and Canadian securities commissions and in news releases and public statements made by our officers, directors or representatives of our company, that address activities, events or developments that we expect or anticipate will or may occur in the future are forward-looking statements and forward-looking information.
The following, in addition to the factors described elsewhere in this annual report under "Risk Factors", are among the factors that could cause actual results to differ materially from the forward-looking statements:
● unexpected changes in business and economic conditions;
● the effect of COVID-19 on world economies and the company's operations;
● significant increases or decreases in gold prices;
● changes in interest rates and currency exchange rates;
● unanticipated grade changes;
● changes in metallurgy;
● access and availability of materials, equipment, supplies, labor and supervision, power and water;
● determination of mineral resources and mineral reserves;
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● availability of drill rigs; changes in project parameters;
● costs and timing of development of new mineral reserves; results of current and future exploration activities;
● results of pending and future feasibility studies; joint venture relationships;
● political or economic instability, either globally or in the countries in which we operate;
● local and community impacts and issues;
● timing of receipt of government approvals; accidents and labor disputes; environmental costs and risks; and
● competitive factors, including competition for property acquisitions; and availability of capital at reasonable rates or at all.
With respect to any forward-looking statement that includes a statement of its underlying assumptions or bases, we believe such assumptions or bases to be reasonable and have formed them in good faith, assumed facts or bases almost always vary from actual results, and the differences between assumed facts or bases and actual results can be material depending on the circumstances. When, in any forward-looking statement, we express an expectation or belief as to future results, that expectation or belief is expressed in good faith and is believed to have a reasonable basis, but there can be no assurance that the stated expectation or belief will result or be achieved or accomplished. All subsequent written and oral forward-looking statements attributable to us, or anyone acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Except for our ongoing obligations to disclose material information under the Federal securities laws, we do not undertake any obligations to publicly release any revisions to any forward-looking statements to reflect events or circumstances after the date of this annual report or to reflect unanticipated events that may occur. These forward-looking statements speak only as of the date of this annual report and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.
Item 6 Directors, Senior Management and Employees
A. Directors and Senior Management
The following table sets forth, as of December 31, 2021, the names of the directors and senior management of Xtra-Gold. Each of our directors has served in his capacity since his election and/or appointment and will serve until the next annual general meeting of our shareholders.
Name, Municipality of Residence and Position Held with the Company | Age | Principal Occupation | Date of Appointment or Election | Other Principal Directorships |
James Longshore (5)(6) Rose Island, Bahamas Manager Director, Ghana Operations | 55 | President and CEO Xtra-Gold Resources Corp., and Manager Director of Ghana Operations | January 3, 2009 | none |
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Name, Municipality of Residence and Position Held with the Company | Age | Principal Occupation | Date of Appointment or Election | Other Principal Directorships |
Denis Laviolette(1)(2)(3) Toronto, Ontario Director | 36 | Vice President Palisade Global Investments | June 22, 2015 | none |
Peter Minuk (5)(6) Toronto, Ontario Secretary and Treasurer and Director | 57 | Self-employed business consultant | March 5, 2007 | none |
James Harold Schweitzer (1)(2)(3)(5)(6) Scarborough, Ontario Director | 83 | Retired businessman | June 11, 2011 | none |
Yves P. Clement (5)(6) Vancouver, British Columbia Vice-President, Exploration | 56 | Geologist and Vice-President, Exploration of Xtra-Gold Resources Corp. | May 1, 2006 | Director of Tartisan Nickel Corp. since January 2016 (CSE:TN) |
Victor Nkansa (5)(6) Accra, Ghana Vice-President, Ghana Operations | 63 | Chief Financial Officer and Vice-President, Ghana Operations of Xtra-Gold Resources Corp. | December 22, 2009 | none |
Hans Julian Morsches(1)(2)(3) Kansas City, Missouri Director | 63 | Managing Director, Unum | June 22, 2015 | none |
(1) Member of Audit Committee. All members of the Audit Committee are financially literate and all members are independent. "Financially literate" and "independent" have the meaning ascribed to those terms in National Instrument 52-110 - Audit Committees and in the Marketplace Rules of the NASDAQ (National Association of Securities Dealers Automated Quotations).
(2) Member of the Compensation Committee.
(3) Member of the Nominating and Corporate Governance Committee.
(4) There is no family relationship between any of the persons named above.
(5) There is no arrangement or understanding with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a director or member of senior management.
(6) A brief description of the business experience, functions and areas of experience in our company, as well as the principal business activities of the directors and senior management of Xtra-Gold are set forth below.
James Longshore
President and CEO, Manager Director of Ghana Operations
Mr. Longshore was elected as a director of our company in June 2014. He is a co-founder of Xtra-Gold and formerly served as our company's President, Chief Executive Officer and Chief Financial Officer from March 4, 2007 to June 1, 2010 and a director from September 1, 2006 to June 1, 2010. Effective September 23, 2015, Mr. Longshore became Chief Executive Officer and Chairman of the Board. Mr. Longshore has been overseeing our operations in Ghana as the Managing Director of our subsidiaries, XG Mining and XGEL since 2009. Mr. Longshore has more than 25 years of business investment experience in resource companies.
Currently, Mr. Longshore is a director of Good2go2 Corp. and High Mountain 2 Capital Corporation. Mr. Longshore is not an officer and/or director of any other public company, at the current time. During 2021, Mr. Longshore was a director of Buccaneer Gold Corp. During 2019, Mr. Longshore was a director of Hempco Food and Fibre Inc.
As of the date of this annual report, Mr. Longshore devotes a majority of his time in consulting services to our company on a month-to-month basis (see "Termination of Employment, Change in Responsibilities and Employment Contracts - Consulting Arrangements with Managing Director of Ghana Operations"). Mr. Longshore oversees the administrative and exploration activities relating to our projects. Mr. Longshore has not entered into a non-competition and non-disclosure agreement with our company.
Denis Laviolette, B.Sc, Earth Science (Geology)
Mr. Laviolette is an exploration professional with approximately 10 years of experience in mining and capital markets. Mr Laviolette is a co-founder, CEO & President and Director of GoldSpot Discoveries (TSX.V:SPOT) and is co-founder and President and Director of New Found Gold Corp. Mr Laviolette worked with mineral projects in (Timmins, Kirkland Lake and Red Lake),.. Mr. Laviolette received his B.Sc, Earth Science (Geology) from Brock University, in St. Catharines, Ontario. Mr. Laviolette was employed as a mining analyst with Pinetree Capital Ltd. ("Pinetree") in Toronto since February 2014 to September 2015. His responsibilities at Pinetree include market/portfolio analysis, reviewing and vetting assets from a technical perspective and providing valuation estimates, analyzing and summarizing technical reports on resources, feasibility and corporate financial statements.
Mr. Laviolette has been and is currently chief geologist/partner/operator of M.A. Resources Ltd., a privately held alluvial mining and exploration company in Ghana since February 2013 to the present time. From February 2012 to February 2013, he was the senior geologist for Buccaneer Gold Corp. in Ghana. From February 2011 to February 2012, he was the senior project geologist for Xtra-Gold in connection with its Kibi Gold Belt, located in the Apapam Concession in Ghana. From March 2010 to February 2011, Mr. Laviolette was a Production Geologist for Kirkland Lake Gold Inc. at its Macassa Gold Mine in Kirkland Lake, Ontario. From November 2009 to March 2010, he was a Production Geologist for Lakeshore Gold Corp. at its Timmins West Mine, in Timmins, Ontario.
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Peter Minuk
Secretary and Treasurer and Director
Mr. Minuk was appointed as Vice-President, Finance and a director of our company in March 2007. He resigned as Vice-President, Finance effective January 31, 2009 and was subsequently appointed Secretary and Treasurer on August 11, 2009 following the resignation of Kiomi Mori from this office. Mr. Minuk served as interim Chief Executive Officer of the company from June 22, 2015 to September 23, 2015. Mr. Minuk has more than 25 years of experience in finance and investment as well as experience in project management, training and developing staff and client relationships. From February 1, 2009 to May 31, 2009, he provided limited consulting services to our company. From April 2, 2011 to the date of this annual report, Mr. Minuk has been providing freelance management and consulting services to unrelated companies. From June 1, 2009 to April 1, 2011, Mr. Minuk was a business analyst consultant for Industry Canada where he was responsible for reviewing proposals relating to regional development of public infrastructure projects and providing oversight over 40 projects assigned to him by the Fed Dev Ontario which is responsible for administering a variety of government stimulus programs, resources and initiatives for the southern Ontario region. Before joining our company, from 1990 to 2006, Mr. Minuk was employed by BMO InvestorLine in connection with implementing project management protocols. Mr. Minuk received a Masters Certificate in Project Management from the Schulich School of Business, York University in 2005. He obtained his Fellow of the Canadian Securities Institute in 1989 and completed the Business Administration program from Southern Alberta Institute of Technology in 1985.
During the prior five years, Mr. Minuk has been an officer and/or director of the following public companies.
Name of Company | Position(s) Held | Term of Office |
Buccaneer Gold Corp. (1) | Corporate Secretary | April 2011 to August 2015 |
(1) | Buccaneer Gold Corp. is a mineral exploration CSE listed issuer. |
As at the date of this annual report, Mr. Minuk devotes approximately 25% of his time in consulting services to our company. He provides 75% of his time to unrelated companies. There is no management consulting agreement in force at this time nor has Mr. Minuk entered into a non-competition and non-disclosure agreement with our company.
James Harold Schweitzer
Director
Mr. Schweitzer was appointed as a director of our company in June 2011. Mr. Schweitzer was employed in the securities sector of the investment industry in Canada in various capacities for 55 years and retired in June 2011. He was employed as a registered representative with Haywood Securities Inc. from February 2003 to June 2011, when he resigned from Haywood. His former employment as a registered representative of Haywood Securities Inc. was approved by the Investment Dealers Association of Canada. As a registered representative, Mr. Schweitzer acted as an account executive and investment advisor for clients and was licensed to provide advice to clients as to which securities (primary resource stocks) a client can buy and sell. Prior to that, Mr. Schweitzer became a director and shareholder in the brokerage firm of Wills Bickle and Co. Ltd. in 1975. In 1979, he joined McDermid Miller and McDermid as a registered representative and was appointed as a trading officer for Ontario and was in charge of its Toronto branch office until its merger with St. Lawrence Securities in 1984. Mr. Schweitzer remained with McDermid Miller and McDermid through two mergers with other brokerage firms until 2000 when Raymond James Financial Inc. acquired the then named firm of Goepel McDermid Inc. He resigned as registered representative of Raymond James Financial Inc. in February 2003.
Yves Pierre Clement, P. Geo.
Vice-President, Exploration
Mr. Clement was appointed Vice-President, Exploration of our company in May 2006. Mr. Clement has over 30 years experience in the generation, evaluation and development of a wide variety of mineral resources hosted by a broad spectrum of geological environments in Canada, South America, and Africa. Before joining our company, Mr. Clement was senior project geologist for Lake Shore Gold Corp. in the Timmins lode gold camp from August 2005 to April 2006 and was formerly exploration manager for Aurora Platinum Corp.'s Sudbury operations from August 2000 to July 2005. Before joining Aurora, Mr. Clement was senior project geologist/exploration manager for Southwestern Resources Corp. where he was responsible for the generation of precious and base metal exploration opportunities in Peru and Chile. Mr. Clement's experience will allow us to further maximize the value of our existing portfolio of projects, as well as allowing us to expand our strategy of growth through strategic acquisitions.
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Victor Nkansa, CA, BA, Economics, MBA, Finance
Vice-President, Ghana Operations
Mr. Nkansa was appointed as Vice-President, Ghana Operations of our company in December 2009 and Chief Financial Officer on June 22, 2015. His responsibilities include overseeing our operations in Ghana under the supervision of our President and CEO, and General Manager of our Ghanaian subsidiaries, James Longshore. Mr. Nkansa is also the Secretary and a director of our Ghanaian subsidiaries. Mr. Nkansa is familiar and experienced with respect to obtaining mining leases, prospecting and reconnaissance licenses and the government regulations relating thereto and is knowledgeable in connection with environmental and forestry issues, immigration and customs affairs. His experience and background will assist us with respect to acquiring approvals, prospecting licenses, mining leases and related permits and renewals from the relevant government authorities to advance our operations in Ghana and acting as our primary government liaison in connection therewith. Mr. Nkansa has more than 29 years of business experience, the last 15 years of which have been in the mining industry. Since 2004, he has been the Controller of our Ghanaian subsidiaries where his responsibilities include the provision of accounting services and assisting with the facilitation of license renewals with respect to our property interests.
During the prior five years, Mr. Nkansa has not been an officer and/or director of any other public companies.
As at the date of this annual report, Mr. Nkansa devotes a variable amount of his time in consulting services to our company on a month to month "as needed" basis (see "Termination of Employment, Change in Responsibilities and Employment Contracts - Consulting Arrangements with Vice-President, Ghana Operations"). Mr. Nkansa has not entered into a non-competition and non-disclosure agreement with our company.
Hans Julian Morsches. B.A., M.A.
Mr. Morsches is the Managing Director of Unum at its Kansas City and St. Louis regional offices in Missouri and is a 30 year insurance industry veteran. He has been in his current role since May 1999 and has overall responsibility for the Unum brand in Missouri, Kansas, Iowa, Nebraska and southern Illinois. Prior to moving to Kansas City, he was National Vice President for Sales for Unum Canada located in Toronto from September 1989 to May 1999. Unum is a Fortune 270 insurance company and has been an employee benefits market leader for 35 years generating US$10.5 billion annual revenue.
Mr. Morsches received his B.A., Liberal Arts from Vanderbilt University, Nashville, Tennessee in 1980 and his Masters of International Management from the American Graduate School of International Management in 1983.
B. Compensation
The following tables and accompanying notes set forth all compensation paid by our company to our directors and senior management for the positions held during 2020.
No part of this compensation was paid pursuant to a profit sharing plan. There were no amounts set aside for a pension, retirement or similar benefits plans for any director or officer.
Directors and Senior Management Compensation Table
Name | Position | Year | Compensation (US$) | Option-based awards (US$) | Non-equity incentive plan compensation Annual incentive plans | Total compensation (US$) | ||
James Longshore | Director President and CEO Manager Director of Ghana Operations | 2021 2021 2021 | - - 506,247 | (2) (3) | - - - | - - - | - - 506,247 | |
Denis Laviolette | Director | 2021 | - | - | - | - | ||
Peter Minuk | Director Secretary and Treasurer | 2021 2021 | 2,398 4,796 | (1) (1) | - - | - - | 2,398 4,796 | |
James H. Schweitzer | Director | 2021 | - | - | - | - | ||
Yves P. Clement | Vice-President, Exploration | 2021 | 119,910 | (1)(2) | - | - | 119,910 | |
Victor Nkansa | Vice-President, Ghana Operations Chief Financial Officer | 2021 | 107,104 - | (2)(3) | - - | - - | 107,104 - | |
Hans Julian Morsches | Director | 2021 | - | - | - | - |
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(1) The compensation noted above under "Total Compensation" was paid in Canadian dollars and was translated at the average exchange rate of C$1.00 = US$0.7994.
(2) See "Termination of Employment, Change in Responsibilities and Employment Contracts" below for consulting arrangements and/or consulting contracts with our company.
(3) The compensation noted above under "Total Compensation" was paid in Ghanaian cedi and was translated at the average exchange rate of C$1.00 = US$0.1697.
Stock Options Granted in 2021
During our fiscal year ended December 31, 2021, we did not granted stock options to senior management or directors.
Termination of Employment, Change in Responsibilities and Employment Contracts
Determination of Compensation Paid in 2021
The terms of the following management consulting agreements were determined by our Compensation Committee and subsequently approved by our Board of Directors. As at the date of this annual report, our Compensation Committee has complete authority to determine the amount of compensation to be paid and the other terms of management compensation. At the time of entering into the agreements, our Compensation Committee did not consult with any consultants or other third parties in determining the amount of compensation to be paid under the management consulting agreements.
During the fiscal year, our Compensation Committee considered and determined the compensation be paid to James Longshore as noted under "Consulting Arrangements with President and Chief Executive Officer". In determining the compensation to be paid to Mr. Longshore, our Compensation Committee considered a number of factors including the scope of his duties and responsibilities to our company, the time he devotes to our business, his length of services to our company and industry standards for compensation paid for similar positions in other comparable reporting companies. Our Compensation Committee did not consult with any experts or other third parties in fixing the amount of Mr. Longshore's compensation.
During the fiscal year, Mr. Longshore received a compensation package, through Brokton International Ltd., for providing his consulting services as Managing Director to XG Mining and XGEL as noted under "Consulting Arrangements with Managing Director of Ghana Operations". Mr. Longshore was reimbursed for out-of-pocket expenses incurred on behalf of our company in connection with carrying out his duties and responsibilities. The terms of any future compensation to be paid to Mr. Longshore will be determined by our Compensation Committee. At such time, our Compensation Committee will consider a number of factors in determining Mr. Longshore's compensation including the scope of his duties and responsibilities to our company and our subsidiaries, the time he devotes to our business, his length of service to our company and industry standards for compensation paid for similar positions in other comparable reporting companies and whether to consult with any experts or third parties in fixing such compensation.
During the fiscal year, our Compensation Committee considered and determined compensation be paid to Mr. Clement as noted under "Management Consulting Agreement with Vice-President, Exploration". In determining the compensation to be paid to Mr. Clement, our Compensation Committee considered a number of factors including the scope of his duties and responsibilities to our company and our subsidiaries, the time he devotes to our business, his length of service to our company and industry standards for compensation paid for similar positions in other comparable reporting companies. Our Compensation Committee did not consult with any experts or other third parties in fixing the amount of Mr. Clement's compensation.
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Our Chief Executive Officer, James Longshore, provides the stewardship of our company, oversees day-to-day managerial functions of our business, reviews all business opportunities, reports to our Board of Directors and performs the duties and responsibilities generally associated with being the most senior executive of a reporting company. As of the date of this annual report, Mr. Longshore provides his services to our company on a month-to-month basis and is paid as a part of his Managing Director of Ghana Operations fees. He is reimbursed for certain expenses incurred in performing his duties to our company. There is no provision for a payment to be made to our Chief Executive Officer if his services are terminated without cause or for payment of additional compensation in the event of a change in responsibilities.
The consulting services of James Longshore, as our Managing Director of Ghana Operations is provided by Brokton International Ltd. through which he oversees administrative and exploration activities relating to our projects. As of the date of this annual report, Brokton International Ltd. provides Mr. Longshore's services to our company on a month-to-month basis and is paid $10,000.00 per month to provide the foregoing services. Brokton International Ltd. is reimbursed for certain expenses incurred by Mr. Longshore in performing his duties to our Ghanaian subsidiaries. There is no provision for a payment to be made to Brokton International Ltd. if Mr. Longshore's services are terminated without cause or for additional compensation in the event of a change in responsibilities.
Management Consulting Agreement with Chief Financial Officer and Vice-President, Ghana Operations
Our Chief Financial Officer and Vice-President, Ghana Operations, Victor Nkansa, oversees our operations in Ghana under the supervision of our President and CEO, James Longshore, who is the President and General Manager of our Ghanaian subsidiaries. Mr. Nkansa is also the Secretary and a director of our Ghanaian subsidiaries.
His primary responsibilities are the provision of accounting services and assisting with the facilitation of obtaining mining leases, operating permits and prospecting license or renewals with respect to our property interests and acting as our primary liaison with the Government of Ghana. He also provides certain accounting services to our company including financial and general management duties, accounting, financial and reporting control and regulatory reporting duties. As of the date of this annual report, our Vice-President, Ghana Operations is paid 19,451 Cedis (US$3,300) per month by XG Mining to provide his consulting services on a month to month "as needed" basis. The Vice President, Ghana Operations is also eligible for bonuses based on gold production. There is no provision for a payment to be made to our Vice-President, Ghana Operations if he is terminated without cause or for payment of additional compensation in the event of a change in responsibilities.
Management Consulting Agreement with Vice-President, Exploration
Our Vice-President, Exploration, Yves Clement, makes project or property site attendances as may be required from time to time, prepares progress reports with respect to our mineral exploration projects, conducts due diligence as may be required from time to time in connection with potential mineral properties; reviews geological data and liaises with principal owners of mineral properties in which our company may wish to acquire an interest, and retains technical experts, makes recommendations to our Board of Directors and its relevant committees with respect to the acquisition and/or abandonment of mineral exploration properties and prepares and implements, subject to our Board of Directors' approval, plans for the operation of our company including plans for exploration programs, costs of operations and other expenditures in connection with our mineral projects. As of the date of this annual report, Mr. Clement is paid CAD$12,500 (USD$9,993) per month to provide the foregoing services. He is reimbursed for certain expenses incurred in performing his duties to our company. There is no provision for a payment to be made to our Vice-President, Exploration if this agreement is terminated without cause or for payment of additional compensation in the event of a change in responsibilities.
C. Board Practices
Election of Directors
The directors of Xtra-Gold are elected annually and hold office until the earlier occurrence of the next annual general meeting of our shareholders is held, their successors in office are duly elected or appointed or a director resigns. We have not entered into service contracts with any directors of our company or any of our subsidiaries providing for benefits upon termination of employment.
Board Committees
Our Board of Directors has established three committees, an audit committee (the "Audit Committee"), a compensation committee (the "Compensation Committee") and a nominating and corporate governance committee (the "Nominating and Corporate Governance Committee"). The members of these committees do not have any fixed terms for holding their positions, are appointed and replaced from time to time by resolution of the Board of Directors and do not receive any cash remuneration for acting as members of the committees, however committee members may be awarded additional stock options for each committee served on. There are no director service contracts between Xtra-Gold and its directors providing for benefits upon termination of employment. The members of these committees are comprised entirely of independent non-related directors.
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Our Board of Directors has adopted a written charter for the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee as summarized below.
Audit Committee
While we are not currently subject to any law, rule or regulation in the United States requiring that we establish or maintain an audit committee, as a reporting issuer in Canada, we are required to comply with National Instrument 52-110 - Audit Committees ("NI 52-110"), adopted by the Canadian Securities Administrators, which states in part that every issuer must have an audit committee that complies with the requirements of the instrument. Prior to our company becoming a reporting issuer in Canada in November 2010, our Board of Directors determined it advisable and in the best interests of our shareholders to establish an audit committee (the "Audit Committee") in November 2009.
Our Audit Committee assists our Board of Directors in fulfilling its oversight responsibility relating to:
● the integrity of our financial statements;
● our compliance with legal and regulatory requirements; and
● the qualifications and independence of our independent registered public accountants.
Our Audit Committee has adopted a written charter pursuant to which the Audit Committee provides:
● an independent review and oversight of our company's financial reporting processes, internal controls and independent auditors;
● a forum separate from our management in which auditors and other interested parties can candidly discuss concerns. By effectively carrying out its functions and responsibilities, our Audit Committee helps to ensure that:
● our management properly develops and adheres to a sound system of internal controls;
● procedures are in place to objectively assess our management's practices and internal controls; and
● the outside auditors, through their own review, objectively assess our company's financial reporting practices.
Our Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the work of any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for our company.
Our Audit Committee is composed of three directors; namely James Schweitzer, who is also Chair of our Audit Committee, Denis Laviolette and, Hans Julian Morsches all of whom have been determined by our Board of Directors to be "independent," as defined in the Marketplace Rules of the NASDAQ and within the meaning of NI 52-110.
Board of Directors Independence
Our Board of Directors consists of five members; namely, James Longshore (Chair), Peter Minuk, James Schweitzer, Denis Laviolette and, Hans Julian Morsches. Our Board of Directors has determined that James Schweitzer, Denis Laviolette and, Hans Julian Morsches are independent within the within the meaning of National Instrument 58-101 - Disclosure of Corporate Governance Practices ("NI 58-101") and the Marketplace Rules of the NASDAQ and as is required by the applicable policies of the TSX. James Longshore and Peter Minuk are not independent within the meaning of NI 58-101 as they are officers of our company and thereby have a "material relationship" with our company.
Nominating and Corporate Governance Committee
We established our Nominating and Corporate Governance Committee in November 2009. The Nominating and Corporate Governance Committee has adopted a written charter pursuant to which the committee:
● recommends the slate of director nominees for election to our Board of Directors;
● identifies and recommends candidates to fill vacancies on our Board of Directors;
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● reviews the composition of our Board of Directors' committees; and
● monitors compliance with, reviews and recommends changes to our various corporate governance policies and guidelines.
This committee also prepares and supervises our Board of Directors' annual review of director independence and our Board of Directors' annual self-evaluation. The Nominating and Corporate Governance Committee is composed of three directors; namely James Schweitzer, Denis Laviolette and, Hans Julian Morsches, all of whom have been determined by our Board of Directors to be "independent," as defined in the Marketplace Rules of the NASDAQ and within the meaning of NI 52-110.
A majority of the persons serving on our Board of Directors must be "independent". The Nominating and Corporate Governance Committee has considered transactions and relationships between each director or any member of his immediate family and us or our affiliates, including those reported under "Related Party Transactions" below and also reviewed transactions and relationships between directors or their affiliates and members of our senior management or their affiliates. As a result of this review, the committee affirmatively determined that each of Messrs. Schweitzer, Laviolette and, Morsches are independent.
Nomination of Directors
The Nominating and Corporate Governance Committee considers all qualified candidates for our Board of Directors identified by members of the committee, by other members of our Board of Directors, by senior management and by our stockholders. The committee reviews each candidate including each candidate's independence, skills and expertise based on a variety of factors, including the person's experience or background in management, finance, regulatory matters and corporate governance. When identifying nominees to serve as director, the Nominating and Corporate Governance Committee seeks to create a Board of Directors that is strong in its collective knowledge and has a diversity of skills and experience with respect to accounting and finance, management and leadership, vision and strategy, business operations, business judgment, industry knowledge and corporate governance. In addition, before nominating an existing director for re-election to our Board of Directors, the Nominating and Corporate Governance Committee considers and reviews an existing director's Board of Directors' and committee meeting attendance and performance, length of Board of Directors' service, experience, skills and contributions that the existing director brings to our Board of Directors, equity ownership in our company and independence.
The committee follows the same process and uses the same criteria for evaluating candidates proposed by members of our Board of Directors, members of senior management and stockholders. Based on its assessment of each candidate, the committee recommends candidates to our Board of Directors. However, there is no assurance that there will be any vacancy on our Board of Directors at the time of any submission or that the committee will recommend any candidate for our Board of Directors.
In addition to the each of the individual skills and background described above, our Nominating and Corporate Governance Committee and our Board of Directors also concluded that each of these individuals will continue to provide knowledgeable advice to our other directors and to senior management on numerous issues facing our company and on the development and execution of our strategy.
Diversity Policy
Policies Regarding the Representation of Women on the Board
The members of our company's Board have diverse backgrounds and expertise and were selected on the belief that the company and its stakeholders would benefit from such a broad range of talent and experiences. The Board considers merit as the key requirement for board appointments. Our company has not adopted a written diversity policy and has sought to attract and maintain diversity at the Board level informally through the recruitment efforts of management in discussion with directors prior to proposing nominees to the Nominating and Corporate Governance Committee and to the Board as a whole for consideration.
Consideration of the Representation of Women on the Board and in Executive Officer Appointments
In identifying suitable Board nominees or in selecting and assessing candidates for executive positions, candidates will be considered on merit against objective criteria regarding business experience, skill sets, competencies, technical expertise, sector specific knowledge and with due regard for the benefit of diversity including the level of representation of women in these capacities. As the need for new directors or executive officers arises, the Corporate Governance Committee assesses candidates on the basis of industry experience and business acumen with specific knowledge of mineral exploration and development or other areas (such as finance, West African market experience) as desired at that particular time by the company, the Board and its committees. Board candidates are also evaluated against the area of expertise of existing members so new appointments may contribute to expanding the Board's breadth of experience.
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Presently, none of the company's directors and none of the executive officers of the company and of its major subsidiaries are women. Diversity including gender, age, nationality, cultural and educational background, business knowledge and other experience, are among the factors that the Corporate Governance Committee considers in identifying and selecting candidates for the Board and executive positions. For example, with the majority of the company's operations being located in West Africa, one of the executive officers is Ghanaian. Taken together, these diverse skills and backgrounds help to create a business environment that encourages a range of perspectives in which all employees and directors are treated with fairness and respect, and have equal access to opportunities for advancement based on skills and aptitude. As a result, the Corporation has not adopted targets based on any specific area of diversity and does not set targets for women on the Board or in executive officer positions.
Compensation Committee
We established a Compensation Committee in November 2009. The Compensation Committee has adopted a written charter pursuant to which the committee is responsible for overseeing our compensation programs and practices, including our executive compensation plans and incentive compensation plans. Our Chief Executive Officer provides input to the Compensation Committee with respect to the individual performance and compensation recommendations for the other executive officers. Although the committee's charter authorizes the committee to retain an independent consultant, no third-party compensation consultant was engaged for 2021. The Compensation Committee is composed of three directors; namely James Schweitzer, who is also Chair of our Compensation Committee, Denis Laviolette and, Hans Julian Morsches, all of whom have been determined by our Board of Directors to be "independent," as defined in the Marketplace Rules of the NASDAQ and within the meaning of NI 52-110.
Risk Management
We do not separate the role of our Chief Executive Officer and the Chairman of our Board of Directors. However, our management has approval limits which it must not exceed without approval from our Board of Directors. These approval limits span hiring, asset purchases and the issuance of shares. Our Board of Directors administers its oversight function through three sub-committees which report to our full Board of Directors, being our Audit Committee, our Nominating and Corporate Governance Committee and our Compensation Committee. We are a very small company at this time and consider five members for our Board of Directors to be adequate for the purpose of directing its activities. Our Board of Directors self-assesses on an ongoing basis and has the scope to increase its size if the need is determined.
D. Employees
As at the date of this annual report, our company has no salaried employees. Our President, Chief Executive Officer, and General Manager of our Ghanaian subsidiaries provides our company with his consulting services and devotes approximately 80% of his time to our company. Our Chief Financial Officer and Vice-President, Ghana Operations provides our company with his consulting services and devotes approximately 80% of his time to our company. Our Vice-President, Exploration provides our company with his consulting services and devotes approximately 70% of his time in consulting services to our company. We also engage the consulting services of our Secretary and Treasurer with respect to corporate and administrative services who devotes a variable percentage of his time to our company on an "as needed" basis.
E. Share Ownership
The following table sets forth, as of the date of this annual report, the number of common shares of our company beneficially owned by the directors and members of senior management of Xtra-Gold, individually, and as a group, and the percentage of ownership of the outstanding common shares represented by such shares.
The shareholders listed below possess sole voting and investment power with respect to the shares.
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Directors and Senior Management Share Ownership
NAME OF BENEFICIAL OWNER | TITLE OF CLASS OF SHARES | NUMBER OF SECURITIES OF CLASS | PERCENTAGE OF CLASS (1) | PERCENTAGE OF CLASS (2) |
James Longshore (3) | common | 4,420,855 | 10.2% | 10.2% |
Denis Laviolette (4) | common | - | 0.4% | 0.4% |
Peter Minuk (5) | common | 20,000 | 0.5% | 0.5% |
James H. Schweitzer (6) | common | 358,000 | 0.9% | 0.9% |
Yves P. Clement (7) | common | - | 1.1% | 1.1% |
Victor Nkansa (8) | common | - | 0.2% | 0.2% |
Hans Julian Morsches (9) | common | 200,000 | 0.9% | 0.9% |
Directors and Officers as a Group | 4,998,855 | 14.3% | 14.3% |
(1) Based on 48,541,917 common shares outstanding as at March 31, 2021 and as if all of the options held by directors and officers (1,956,000 as a group) were exercised converted to common shares.
(2) Based on 48,541,917 common shares outstanding as at March 31, 2021 and as if only the vested options (1,956,000 as a group) and were exercised converted to common shares.
(3) James Longshore owns 4,420,855 common shares of which 1,047,000 common shares are owned directly, 2,050,000 common shares are owned indirectly through Brokton International Ltd., a Turks & Caicos Islands corporation, whose sole beneficial owner is James Longshore and 1,323,855 common shares are owned indirectly through Sausilito Ltd., a Turks & Caicos Islands corporation, whose sole beneficial owner is James Longshore. Mr. Longshore exercises sole investment, voting and disposition powers over the common shares included in the above table. Mr. Longshore holds a total of 544,000 stock options with exercise prices and expiry dates as set out in the table below.
(4) Denis Laviolette holds a total of a total of 215,000 stock options with exercise prices and expiry dates as set out in the table below.
(5) Peter Minuk owns 20,000 common shares and holds a total of 242,000 stock options with exercise prices and expiry dates as set out in the table below.
(6) James H. Schweitzer owns 358,000 common shares and holds 100,000 stock options with an exercise price and expiry date as set out in the table below.
(7) Yves P. Clement holds a total of 550,000 stock options with exercise prices and expiry dates as set out in the table below.
(8) Victor Nkansa holds 90,000 stock options with exercise prices and expiry dates as set out in the table below.
(9) Hans Julian Morsches owns 200,000 common shares and holds a total of a total of 215,000 stock options with exercise prices and expiry dates as set out in the table below.
Options to Purchase Securities
10% Rolling Stock Option Plan
On May 12, 2011, our Board of Directors considered and believed that it was advisable and in the best interests of our company to terminate our fixed 2005 Equity Incentive Compensation Plan and authorized, approved and adopted our 10% rolling stock option plan (the "Option Plan"). Our Option Plan was approved by our shareholders at our annual and special shareholders' meeting held on June 10, 2011 and we received final acceptance of our Option Plan from the TSX on July 13, 2011. In accordance with TSX policy, all unallocated options or other entitlements to a compensation arrangement which does not have a fixed number of securities reserved for issuance must be approved every three years by our Board of Directors and our shareholders. On March 26, 2014, our Board of Directors approved our Option Plan for a further three-year period (the "2014 Plan"). The 2014 Plan was approved by our shareholders at our annual and special meeting of shareholders held on June 19, 2014 and we received final acceptance of our 2014 Plan from the TSX on June 26, 2014. On March 28, 2017, our Board of Directors approved our Option Plan for a further three year period (the "2017 Plan"). The 2017 Plan was approved by our shareholders at our annual and special meeting of shareholders held on May 16, 2017 and we received final acceptance of our 2017 Plan from the TSX on May 16, 2017. On March 26, 2020, our Board of Directors approved our Option Plan for a further three-year period (the "2020 Plan"). The 2020 Plan was approved by the shareholders at our annual and special meeting of shareholders held in June 2020.
Pursuant to our Option Plan, our company may issue no more than 10% of our issued and outstanding common shares in the aggregate from time to time, and a maximum of 5% of the common shares may be issued to any one director, officer, key employee or other eligible person, except consultants, in any 12-month period, unless disinterested stockholder approval is obtained. The maximum number of common shares that may be issued to a consultant under our Option Plan in a 12-month period shall not exceed 2% of the common shares outstanding. The number of securities issuable to our company's insiders (as defined in National Instrument 55-104 - Insider Reporting Requirements), at any time, under all security-based compensation arrangements, shall not exceed 10% of the issued and outstanding securities and the number of securities issued to insiders, within any one-year period, under all security-based compensation arrangements, shall not exceed 10% of the issued and outstanding securities. Common shares used for stock grants and our Option Plan options may be authorized and unissued common shares or common shares reacquired by our company. Common shares covered by our Option Plan options which terminate unexercised or common shares subject to stock awards which are forfeited or cancelled will again become available for grant as additional options or stock awards, without decreasing the maximum number of common shares issuable under our Option Plan.
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Upon adoption of our Option Plan, the 1,989,000 outstanding options granted under our former 2005 Equity Incentive Compensation Plan were converted into options under our Option Plan, and the former plan was terminated. As at the date of this annual report, 4,658,592 common shares have been reserved for issuance under our Option Plan. As at the date of this annual report, there are 2,381,000 options outstanding to purchase an aggregate of 2,381,000 common shares, representing 5.1% of the 46,585,917 common shares currently outstanding. Options to purchase 2,277,592 common shares are currently available for grant under our Option Plan, being 10% of the 46,585,917 common shares currently outstanding less the 2,381,000 shares reserved for the 2,381,000 options currently outstanding.
The period during which options may be exercised shall be determined by our Board of Directors in its discretion, to a maximum of
10 years from the date that the option is granted and the options shall vest on the date of the grant, except that options issued to persons employed in investor relations activities must vest in stages over not less than 12 months with no more than one-quarter of the options vesting in any three month period.
Stock Options Outstanding
The names and titles of the directors and executive officers of our company to whom outstanding stock options have been granted and the number of common shares subject to such stock options is set forth in the following table as of December 31, 2020, as well as the number of options granted to directors and all consultants as a group. The exercise prices of the stock options are stated in Canadian dollars as that is the currency unit in which the options were issued.
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Name | Title | Number of Stock Options Granted to Purchase Common Shares | Exercise Price | Expiration Date |
James Longshore | President, CEO and Director Manager Director of Ghana Operations | 382,000 162,000 | CAD$0.15 CAD$0.30 | December 31, 2022 July 1, 2023 |
Denis Laviolette | Director | 125,000 40,000 50,000 | CAD$0.20 CAD$0.30 CAD$1.23 | October 8, 2025 July 1, 2026 October 23, 2025 |
Peter Minuk | Secretary and Treasurer and Director | 150,000 42,000 50,000 | CAD$0.30 CAD$0.60 CAD$1.23 | July 1, 2023 June 1, 2025 October 23, 2025 |
James H. Schweitzer | Director | 40,000 60,000 | CAD$0.30 CAD$1.23 | July 1, 2023 October 23, 2025 |
Yves P. Clement | Vice-President, Exploration | 400,000 100,000 50,000 | CAD$0.40 CAD$0.30 CAD$1.23 | May 5, 2026 July 10, 2026 October 23, 2025 |
Victor Nkansa | Vice-President, Ghana Operations | 12,000 78,000 | CAD$0.60 CAD$0.30 | June 1, 2025 July 1, 2023 |
Hans Julian Morsches | Director | 125,000 40,000 50,000 | CAD$0.20 CAD$0.30 CAD$1.23 | October 8, 2025 July 1, 2023 October 23, 2025 |
As a group, seven officers and directors hold 1,956,000 stock options as at December 31, 2021.
Item 7 Major Shareholders and Related Party Transactions
A. Major Shareholders
Our company is a publicly owned BVI company and our common shares are owned by residents of the United States, Canada and other foreign residents. To the extent known to our company, our company is not directly owned or controlled by another corporation, by any foreign government or by any other natural or legal person severally or jointly. To the extent known to our company, there are no arrangements, the operation of which may at a subsequent date result in a change in control of our company.
Our company's registered shareholders' list for our common shares, dated March 18, 2022, showed 140 registered shareholders and
46,585,917 shares outstanding of which 13 of these registered shareholders were U.S. residents including one that is a U.S. depository holding 34,286,252 common shares representing 73% of the issued and outstanding shares of Xtra-Gold.
The following table lists the only persons or companies, known by our company, to beneficially own more than 5% of our voting securities. There has been no significant change in the percentage ownership held by any major shareholders during the past three years. Our company's major shareholders do not have different voting rights.
NAME OF BENEFICIAL OWNER | TITLE OF CLASS OF SHARES | NUMBEROF SECURITIES OF CLASS | PERCENTAGE OF CLASS | ||
James Longshore (1)(2) | common | 4,964,855 | 10.0% | (2) | |
Leon van der Merwe | common | 5,107,851 | 10.3% |
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(2) Based on 48,966,917 common shares outstanding as at March 31, 2022 and as if all 2,381,000 stock options were exercised.
B. Related Party Transactions
During the years ended December 31, 2020, 2019 and 2018, the Company entered into the following transactions with related parties:
December 31, 2020 | December 31, 2019 | December 31, 2018 | |||||||
Consulting fees paid or accrued to officers or their companies | $ | 1,124,304 | $ | 894,616 | $ | 701,957 | |||
Directors' fees | 2,398 | 2,238 | 2,257 | ||||||
Stock option grants to officers and directors | - | 112,868 | - | ||||||
Stock option grant price range | CAD$0.60 to CAD $1.23 | - |
Of the total consulting fees noted above, $772,494 (December 31, 2020 - $531,527, December 31, 2019 - $399,365) was incurred by the Company to a private company of which a related party is a 50% shareholder and director. The related party was entitled to receive $386,247 (December 31, 2020 - $274,292, December 31, 2019 - $199,683) of this amount. As at December 31, 2021, a balance of $90,538 (December 31, 2020 - a prepaid balance of $12,065, December 31, 2019, $83,592 balance payable,) exists to this related company and $Nil remains payable (December 31, 2020 - $Nil, December 31, 2019 - $3,800) to the related party for expenses earned for work on behalf of the Company. The CEO of the company made a $50,000 payment on behalf of the company in 2021. This balance was repaid in 2022.
During 2020 the Company granted 314,000 options to insiders at a prices between of $0.47 (CAD$0.60) and $0.96 (CAD$1.23). A total of $123,837 was included in consulting fees related to these options. During 2021 and 2019 the Company did not grant stock options to insiders.
C Interests of Experts and Counsel
This Form 20-F is being filed as an annual report under the Securities Act of 1934 and, as such, there is no requirement to provide any information under this sub-item.
Item 8 Financial Information
A. Consolidated Statements and Other Financial Information
Financial Statements
The financial statements required as part of this annual report are filed under Item 18 of this annual report.
Legal and Arbitration Proceedings
The Government of Ghana initially required an environmental bond of $385,000 for the Banso permit and $327,000 for the Muoso permit. The Company has submitted a request for a reduction of these fees to the government and is awaiting a response.
The Company is a party to three pending lawsuits. The first lawsuit claims mining activities of the Company are illegal and cause substantial environmental damage to the community. The second lawsuit claims that all leases issued to mining companies in Ghana violate the Ghana Constitution and are therefore illegal. The third lawsuit claims that an Xtra contracted worker caused bodily harm on another person. The Company will defend itself in each of these lawsuits if required, and believes both cases are completely without merit and frivolous.
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On July 23, 2019, Minerals Commission issued four invoices totaling $4,654,800 to our Ghanaian subsidiary. These invoices were titled "Outstanding Annual Mineral Right Fees" for four of our concessions (Muoso, Banso, Pameng and Apapam), which Minerals Commission indicated were related to the period from 2013 to 2018, for new annual mineral fees. However, all of our mining leases all have a one-time fixed consideration fee, which was paid when our leases were granted. We responded to Minerals Commission (the "Letters") on September 23, 2019, objecting to the four improper invoices. Our Letters outline the specific violated terms of our leases and various mineral laws. The Minerals Commission has not responded to our Letter. Should Minerals Commission challenge our Letters, our Company could enter dispute resolution arbitration clause under the Mineral Act. We believe the invoices are not legally enforceable under the Mineral Act, and have not included any amount related to these invoices in our accounts.
Dividends
Our company has not declared any dividends for the last five years and does not anticipate that we will do so in the foreseeable future. Our company does not presently have any intention of paying dividends. Our future dividend policy will be determined by our Board of Directors of the basis of earnings, financial requirements and other relevant factors.
B. Significant Changes
No significant changes have occurred since the date of our most recent audited financial statements for the year ended December 31, 2020, other than property update activities as reported in Note 6 to our financial statements for the year ended December 31, 2020 which are disclosed in this annual report.
Item 9. The Offering and Listing
A. Offering and Listing Details
Our common shares have traded on the TSX under the trading symbol "XTG" since November 23, 2010, following the completion of our initial public offering in Canada. Our common shares are quoted from broker dealers on the OTC Bulletin Board under the symbol "XTGRF". There is currently only a limited trading market for shares of our common shares. There is no assurance that the market for our common shares on the OTC Bulletin Board or TSX will develop into active trading markets.
The following table lists the annual high and low market prices on the TSX and the OTCQB for the five most recent financial years.
FOR THE FINANCIAL YEAR ENDED | TSX | OTC BULLETIN BOARD | ||
HIGH CAD$ | LOW CAD$ | HIGH US$ | LOW US$ | |
December 31, 2021 | $1.49 | $0.88 | $1.18 | $0.69 |
December 31, 2020 | $1.50 | $0.46 | $1.11 | $0.33 |
December 31, 2019 | $0.63 | $0.31 | $0.48 | $0.23 |
December 31, 2018 | $0.43 | $0.20 | $0.45 | $0.15 |
December 31, 2017 | $0.35 | $0.19 | $0.27 | $0.12 |
The following table lists the high and low market prices on the TSX and OTC Bulletin Board for Xtra-Gold's common shares for the full financial quarters for the three most recent full financial years.
FOR THE FINANCIAL QUARTER ENDED | TSX | OTC BULLETIN BOARD | |||
HIGH CAD$ | LOW CAD$ | HIGH US$ | LOW US$ | ||
December 31, 2021 | $1.49 | $1.11 | $1.18 | $0.88 | |
September 30, 2021 | $1.37 | $1.02 | $1.12 | $0.84 | |
June 30, 2021 | $1.10 | $0.88 | $0.94 | $0.69 | |
March 31, 2021 | $1.18 | $0.94 | $0.96 | $0.73 | |
December 31, 2020 | $1.41 | $1.04 | $0.98 | $0.97 | |
September 30, 2020 | $1.50 | $0.65 | $1.11 | $1.02 | |
June 30, 2020 | $0.71 | $0.46 | $0.52 | $0.47 | |
March 31, 2020 | $0.65 | $0.46 | $0.36 | $0.33 | |
December 31, 2019 | $0.60 | $0.42 | $0.48 | $0.33 | |
September 30, 2019 | $0.63 | $0.36 | $0.47 | $0.27 | |
June 30, 2019 | $0.40 | $0.31 | $0.31 | $0.23 | |
March 31, 2019 | $0.46 | $0.32 | $0.35 | $0.24 |
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Share Price Volatility and Price Fluctuations
Securities markets in Canada have experienced a high level of price and volume volatility, in recent years, and the market price of many resources companies that are considered to be speculative exploration companies, have experienced wide fluctuations in their share price which have not necessarily been related to operating performance or underlying asset values on the prospects of such companies. Our common shares fluctuated during 2021 from a low of CAD$0.88 to a high of CAD$1.49 and during the most recent six months our common shares fluctuated from a low of CAD$0.89 to a high of CAD$1.18. Mineral exploration is considered high risk and highly speculative and the trading market for mineral exploration companies is characteristically volatile, with wide fluctuation of price and volume which, only in part, relates to progress of exploration. There can be no assurance that continued fluctuation in our common share price and volume will not occur.
B. Plan of Distribution
This Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934 and, as such, there is no requirement to provide any information under this item.
C. Markets
Xtra-Gold shares trade on the following stock exchange and other regulated markets:
Stock Exchange of Other Regulated Market | Company Symbol |
Toronto Stock Exchange | XTG |
OTC Bulletin Board | XTGRF |
D. Dilution
This Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934 and, as such, there is no requirement to provide any information under this item.
E. Expenses of the Issue
This Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934 and, as such, there is no requirement to provide any information under this item.
Item 10 Additional Information
A. Share Capital
This Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934 and, as such, there is no requirement to provide any information under this item.
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Our company was incorporated in Nevada on September 1, 1998 (see "Corporate History" under Item 4. Information on our Company for further details).
On November 30, 2012, we changed the jurisdiction of incorporation of our company to the BVI.
Information regarding the Memorandum and Articles of Xtra-Gold and the various matters regarding the objects and purposes of our company, the powers of our directors, our authorized capital and the rights of our shareholders is incorporated by reference in a registration statement on Form S-4, SEC File No. 183376, as amended.
C. Material Contracts
Our company has not entered into any material contracts outside of the ordinary course of business for the two years immediately preceding publication of this annual report.
D. Exchange Controls
Our company is a corporation incorporated pursuant to the laws of the Territory of the BVI.
BVI has no system of exchange controls. There are no BVI restrictions on the repatriation of capital or earnings of a BVI public company to non-resident investors. There are no laws in BVI or exchange restrictions affecting the remittance of dividends, profits, interest, royalties and other payments to non-resident holders of the issuer's securities.
There are no limitations under the laws of BVI or in the organizing documents of our company on the right of foreigners to hold or vote securities of our company.
E Taxation
Scope of Discussion
This discussion addresses the material United States federal income tax considerations, under current U.S. law, generally applicable to U.S. Holders and Non-U.S. Holders (as defined below) of the ownership and disposition of our common shares. This discussion does not address all potentially relevant U.S. federal income tax matters including the U.S. federal income tax consequences of a U.S. Holder or Non-U.S. Holder of our common shares such as the consequences to persons subject to special provisions of U.S. federal income tax law, such as those described below as excluded from the definitions of a U.S. Holder and Non-U.S. Holder. United States alternative minimum tax considerations are not addressed in this discussion. In addition, this discussion does not cover any state, local or foreign tax consequences, nor any U.S. federal gift, estate or generation-skipping transfer tax consequences (except for such considerations addressed briefly herein for Non-U.S. Holders).
The following discussion is based upon the Code, Treasury Regulations, published IRS rulings, published administrative positions of the IRS, and court decisions that are currently applicable, any of which could be materially and adversely changed, possibly on a retroactive basis, at any time (including, without limitation, United States rates of taxation). This discussion does not consider the potential effects, both adverse and beneficial, of any recently proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time. There is no assurance that the IRS will not successfully challenge the conclusions reached herein.
U.S. Holders and Non-U.S. Holders
As used herein, a "U.S. Holder" means a holder of our common shares who is: a citizen, or an individual resident (as defined under United States tax laws), of the United States; a corporation created or organized in or under the laws of the United States or of any political subdivision thereof; an estate the income of which is taxable in the United States irrespective of source; or a trust if:
● a court within the United States is able to exercise primary supervision over the trust's administration and one or more United States persons have the authority to control all of its substantial decisions; or
● the trust was in existence on August 20, 1996 and has properly elected to continue to be treated as a United States person.
This discussion is limited to U.S. Holders who hold our common shares directly (e.g., not through an intermediary entity such as a corporation, partnership, limited liability company, or trust).
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As used herein, a "Non-U.S. Holder" means a holder of our common shares that is not a U.S. Holder and who holds our common shares directly (e.g., not through an intermediary entity such as a corporation, partnership, limited liability company, or trust).
This discussion does not address the U.S. federal income tax consequences applicable to U.S. Holders and Non-U.S. Holders that are subject to special provisions under the Code, including, but not limited to, the following:
● tax exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts;
● financial institutions, insurance companies, real estate investment trusts, or regulated investment companies;
● dealers in securities or currencies or traders in securities that elect to apply a mark-to-market accounting method;
● U.S. Holders that have a "functional currency" other than the U.S. dollar;
● U.S. Holders and Non-U.S. Holders that own our common shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position;
● U.S. Holders and Non-U.S. Holders that acquired our common shares in connection with the exercise of employee stock options or otherwise as compensation for services;
● U.S. Holders and Non-U.S. Holders that hold our common shares other than as a capital asset within the meaning of Section 1221 of the Code; or
● U.S. tax expatriates or former long-term residents of the U.S.
U.S. Holders and Non-U.S. Holders that are subject to special provisions under the Code, including U.S. Holders and Non-U.S. Holders described immediately above, should consult their own tax advisors regarding the U.S. federal income tax consequences arising from and relating to the Continuation and the ownership and disposition of our common shares following the Continuation.
Treatment of our Company as a U.S. Corporation for Tax Purposes Following the Continuation
The Continuation of our company from Nevada to the BVI resulted in the application of the U.S. "corporate inversion" rules. United States federal income tax law with respect to corporate inversions provides in certain cases that a non-U.S. corporation may be treated as a U.S. corporation for all purposes of the Code. An inversion can occur in certain transactions in which a non-U.S. corporation acquires substantially all of the assets of or equity interests in a U.S. corporation, if, after the transaction, former equity owners of the U.S. corporation own 80% or more of the stock, by vote or by value, in the non-U.S. corporation. Our company believes that these conditions have been met as a result of the Continuation.
Thus, even though following the Continuation our company is organized under the laws of the BVI and treated as a BVI company for corporate law and BVI tax purposes, we treat our company also as a U.S. domestic corporation under United States federal tax law, fully subject to United States federal income tax on our worldwide income under Section 7874(b) of the Code, and the remainder of this discussion assumes such treatment.
Material U.S. Federal Income Tax Consequences of the Continuation
The Continuation was treated as a tax-free reorganization pursuant to Section 368(a)(1)(F) of the Code, and was therefore not taxable to our company. Moreover, U.S. Holders and Non-U.S. Holders will not recognize gain or loss on our common shares as a result of the Continuation. Accordingly, such Holders' tax bases in and holding periods for our common shares after the Continuation will be the same as their tax bases in and holding periods for our common shares before the Continuation. Our company and our shareholders may be required to report certain information to the IRS in connection with the Continuation. Accordingly, U.S. Holders and Non-U.S. Holders should consult with their own tax advisors regarding any statements or information reporting to the IRS in connection with the Continuation.
Material U.S. Federal Income Tax Considerations of Owning Shares after the Continuation
U.S. Holders
Distributions on Shares
For United States federal income tax purposes, the gross amount of any distribution (including non-cash property) paid by our company (including BVI taxes withheld therefrom, if any) with respect to shares generally will be included in the gross income of a U.S. Holder as a dividend to the extent such distribution is paid out of our current or accumulated earnings and profits, as determined under United States federal income tax principles. To the extent that the amount of any distribution exceeds our company's current and accumulated earnings and profits for a taxable year, the distribution first will be treated as a tax-free return of capital to the extent of the U.S. Holder's adjusted tax basis in the shares and to the extent that such distribution exceeds the U.S. Holder's adjusted tax basis in the shares, will be taxed as a capital gain (see "Capital Gains and Losses" below). Dividends received by non-corporate U.S. Holders will be subject to United States federal income tax at lower rates (generally 15%) than other types of ordinary income in taxable years beginning on or before December 31, 2012 if certain conditions are met. These conditions include the U.S. Holder's satisfaction of a holding period requirement, and the U.S. Holder not treating the distribution as "investment income" for purposes of the investment interest deduction rules. Unless the reduced rate provision is extended by subsequent legislation, dividends received on or after January 1, 2013 will be taxed at ordinary income rates.
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Except as described immediately below, dividend distributions to U.S. Holders that are corporations will qualify for the 70% dividends received deduction, which is generally available to corporations that own less than 20% of the voting power or value of the outstanding stock of the distributing U.S. corporation. A corporate U.S. Holder may not be entitled to take the 70% dividends received deduction in all circumstances. In addition to other applicable rules, U.S. Holders that are corporations should consider the effect of:
Dispositions of Shares
Gain or loss, if any, realized by a U.S. Holder on the sale or other disposition of shares generally will be subject to United States federal income taxation as a capital gain or loss in an amount equal to the difference between the U.S. Holder's adjusted tax basis in the shares and the amount realized on the disposition (see "Capital Gains and Losses" below). Any such gain or loss that a U.S. Holder recognizes will generally be treated as U.S.-source income or loss.
Capital Gains and Losses
A capital gain or loss may be realized with respect to a disposition of shares, as described above. The amount of the capital gain or loss will be equal to the difference between the U.S. Holder's adjusted tax basis in the shares and the amount realized on the transaction. Net capital gains (i.e. capital gains in excess of capital losses) recognized by a non-corporate U.S. Holder (including an individual) on capital assets that have been held for more than one year will generally be subject to a maximum United States federal income tax rate of 15% (which is scheduled to increase to a maximum rate of 20% on January 1, 2013 unless the reduced rate is extended by subsequent legislation). Deductions for capital losses are subject to certain limitations.
Foreign Tax Credit
Generally, a U.S. Holder who pays (or has withheld from distributions) non-U.S. income tax with respect to stock he or she owns is entitled to either a deduction or a tax credit for such foreign tax paid or withheld. Generally, it is more advantageous to claim a credit because a credit reduces United States federal income tax on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer's income subject to tax. This election is made on a year-by-year basis and generally applies to all foreign taxes paid by (or withheld from) the U.S. Holder during that year.
In addition, this limitation is calculated separately with respect to specific "baskets" of income. Foreign taxes assigned to a particular class of income generally cannot offset United States tax on income assigned to another class. Unused foreign tax credits can generally be carried back one year and carried forward ten years.
In this situation, however, it is unclear whether BVI tax paid or withheld on distributions on our shares (if any) will be creditable for U.S. federal income tax purposes because following the Continuation, we will be treated as a U.S. domestic corporation for U.S. tax purposes. The IRS may take the position that distributions on our shares are U.S.-source income and thus BVI income tax withheld on distributions is not creditable against a U.S. Holder's United States federal income tax liability. U.S. Holders should consult their own tax advisors concerning their ability to utilize foreign tax credits in this context.
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Currency Fluctuations
For United States federal income tax purposes, the amount received by a U.S. Holder as payment with respect to a distribution on, or disposition of, shares, if paid in non-U.S. currency, will be the U.S. dollar value of the payment at the date of the payment, regardless of whether the payment is later converted into U.S. dollars. In such case, the U.S. Holder may recognize ordinary income or loss as a result of currency fluctuations between the date on which the payment is made and the date the payment is converted into U.S. dollars.
Information Reporting and Backup Withholding Tax
Payments made within the U.S. or by a U.S. payor or U.S. middleman, of dividends on, and proceeds arising from the sale or other taxable disposition of, shares will generally be subject to information reporting and backup withholding tax, at the rate of 28% (under current law), if a U.S. Holder:
● fails to furnish such U.S. Holder's correct U.S. taxpayer identification number (generally on Form W-9);
● is notified by the IRS that such U.S. Holder has previously failed to properly report interest and dividend income; or
● fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct U.S. taxpayer identification number that the IRS has not notified such U.S. Holder that it is subject to backup withholding tax, and that such U.S. Holder is a U.S. person.
However, certain exempt persons generally are excluded from these information reporting and backup withholding rules. Backup withholding is not an additional tax. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against a U.S. Holder's U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner. Each U.S. Holder should consult its own tax advisor regarding the information reporting and backup withholding rules.
New Tax on Net Investment Income
For tax years beginning after December 31, 2012, certain U.S. Holders that are individuals, estates or trusts whose income exceeds certain thresholds will be required to pay an additional 3.8% tax on "net investment income", which includes, among other things, dividends and net gain from the sale or other disposition of property (other than property held in a trade or business). U.S. Holders are urged to consult with their own tax advisors regarding the effect, if any, of this tax on net investment income on their ownership and disposition of our shares.
Non-U.S. Holders
Distributions on Shares
The gross amount of any distribution by our company to a Non-U.S. Holder with respect to shares is treated first as dividend income to the extent such distribution is paid out of our current or accumulated earnings and profits, as determined under United States federal income tax principles. To the extent that the amount of any distribution exceeds our company's current and accumulated earnings and profits for a taxable year, the distribution is treated as a tax-free return of capital to the extent of the Non-U.S. Holder's adjusted tax basis in shares. Then, to the extent that such distribution exceeds the Non-U.S. Holder's adjusted tax basis in shares, it is taxed as gain from the sale or exchange of the Non-U.S. Holder's shares (see "Dispositions of Shares", below).
Any such distribution that constitutes a dividend is treated as U.S.-source gross income for Non-U.S. Holders of shares, and is subject to withholding under Section 1441 of the Code (unless it is treated as "effectively connected" income as described below). The withholding rate under the Code on dividends is generally 30%, but may be reduced pursuant to a treaty. Any dividend income that is "effectively connected" with a Non-U.S. Holder's conduct of a U.S. trade or business (and, where a tax treaty applies, is attributable to a U.S. permanent establishment maintained by the Non-U.S. Holder) will not be subject to the withholding tax described in this paragraph but instead will be taxed as described in the second bullet point and the remaining discussion under the heading "Dispositions of Shares" below. Non-U.S. Holders will be required to provide specific documentation to claim a treaty exemption or reduced rate of withholding with respect to the distribution. Non-U.S. Holders should also review the discussion of the new FATCA rules, below.
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Dispositions of Shares
A Non-U.S. Holder generally will not be subject to U.S. federal income tax with respect to gain recognized upon the disposition of shares unless:
● such Non-U.S. Holder is an individual who is present in the United States for a period or periods aggregating 183 days or more during the taxable year of disposition and certain other conditions are met;
● such gain is effectively connected with such Non-U.S. Holder's conduct of a U.S. trade or business (and, where a tax treaty applies, is attributable to a U.S. permanent establishment maintained by the Non-U.S. Holder); or
● the common shares constitute a U.S. real property interest by reason of the company's status as a "United States real property holding corporation" for U.S. federal income tax purposes.
A Non-U.S. Holder described in the first bullet above is required to pay a flat 30% tax on the gain derived from the sale, which tax may be offset by U.S.-source capital losses. A Non-U.S. Holder described in the second bullet above or, if the third bullet applies, is required to pay tax on the net gain derived from the sale under regular graduated U.S. federal income tax rates, and corporate Non-U.S. Holders described in the second bullet above may also be subject to branch profits tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. Non-U.S. Holders should consult any applicable income tax treaties that may provide for different results. It is assumed that our company is not a United States real property holding corporation within the meaning of Section 897 of the Code for purposes of the third bullet point above. Non-U.S. Holders should also review the discussion of the new FATCA rules, below.
U.S. Estate and Gift Tax Consequences of Owning Shares
The U.S. gift, estate, and generation-skipping transfer tax rules generally apply to a Non-U.S. Holder of our shares. In general, our shares are considered a U.S.-situs asset for U.S. estate tax purposes and could be subject to U.S. estate tax at the death of a Non-U.S. Holder depending on the particular facts and circumstances of the Non-U.S. Holder. Non-U.S. Holders of our shares should consult an independent tax advisor with respect to U.S. gift, estate, and generation-skipping transfer tax consequences applicable to the ownership of our shares.
Backup Withholding and Information Reporting
Generally, our company must report annually to the IRS and to Non-U.S. Holders the amount of dividends paid and the amount of tax, if any, withheld with respect to those payments. These information reporting requirements apply even if withholding is not required. Pursuant to tax treaties or other agreements, the IRS may make such information available to tax authorities in the Non-U.S. Holder's country of residence. The payment of proceeds from the sale of our shares by a broker to a Non-U.S. Holder is generally not subject to information reporting if:
● the Non-U.S. Holder certifies his, her or its non-U.S. status under penalties of perjury by providing a properly executed IRS Form W-8BEN, or otherwise establish an exemption; or
● the sale of our common shares is effected outside the U.S. by a foreign office of a broker, unless the broker is:
● a U.S. person;
● a foreign person that derives 50% or more of its gross income for certain periods from activities that are effectively connected with the conduct of a trade or business in the U.S.;
● a "controlled foreign corporation" for U.S. federal income tax purposes; or
● a foreign partnership more than 50% of the capital or profits interest of which is owned by one or more U.S. persons or which engages in a U.S. trade or business.
A backup withholding tax may apply to amounts paid to a Non-U.S. Holder if the Non-U.S. Holder fails to properly establish its foreign status on the applicable IRS Form W-8 or if certain other conditions are met. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against the Non-U.S. Holder's U.S. federal income tax liability, assuming the required information is timely provided to the IRS.
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FATCA
New U.S. legislation signed into law on March 18, 2010 (the Foreign Account Tax Compliance Act ("FATCA")) substantially changes the withholding and reporting rules applicable to Non-U.S. Holders who are not individuals that receive certain U.S.-source income, generally effective for payments made after December 31, 2013 (with respect to dividends) and after December 31, 2014 (with respect to gross proceeds from a sale or other disposition). Certain changes made by FATCA may result in different U.S. federal income tax consequences for Non-U.S. Holders that are not individuals than those described above, including with respect to withholding and information reporting, and distributions on and dispositions of shares.
FATCA imposes a 30% U.S. withholding tax (which may be reduced pursuant to a treaty) on dividends on, or gross proceeds from the sale or other disposition of, shares paid to a Non-U.S. Holder that is a foreign financial institution or certain foreign non-financial entities, unless:
● the foreign financial institution undertakes certain diligence and reporting obligations; or
● the foreign non-financial entity either certifies it does not have any substantial United States owners or furnishes identifying information regarding each substantial United States owner.
If the Non-U.S. Holder is a foreign financial institution, it must enter into an agreement with the United States Treasury requiring, among other things, that it undertake to identify accounts held by certain United States persons or United States-owned foreign entities, annually report certain information about such accounts, and withhold 30% on payments to account holders whose actions prevent it from complying with these reporting and other requirements. Non-U.S. Holders should consult their own tax advisors with respect to the application of FATCA to their particular circumstances.
Material BVI Income Tax Consequences
BVI companies, provided that they do not operate or hold real property in the BVI or employ persons resident in the BVI, and all amounts paid by them to non-residents, are generally exempt from all local taxes and stamp duty.
Certain Canadian Income Tax Consequences
This summary is based on the provisions of the Income Tax Act (Canada) and the regulations thereunder in force as of the date hereof and the current administrative policies and practices of the Canada Revenue Agency published in writing by the Canada Revenue Agency before such date. This summary takes into account all specific proposals to amend the Income Tax Act (Canada) and the regulations thereunder which have been publicly announced by or on behalf of the Minister of Finance (Canada) before the date of this proxy statement/prospectus and assumes that all such proposed Canadian amendments will be enacted in their present form. No assurance can be given that the proposed Canadian amendments will be enacted in the form proposed, if at all. This summary does not otherwise take into account or anticipate any changes in law, whether by judicial, governmental or legislative decision or action, or changes in the administrative policies and practices of the Canada Revenue Agency.
This summary does not apply to a Holder:
● that is a "financial institution" for purposes of the "mark-to-market property" rules;
● to which the "functional currency" reporting rules in subsection 261(5) of the Income Tax Act (Canada) apply;
● an interest in which is a "tax shelter investment"; or
● with respect to whom our company is a "foreign affiliate", all within the meaning of the Income Tax Act (Canada).
Such Holders should consult their own tax advisors.
The following summary of the Canadian tax consequences has been provided for general information purposes only and is not intended to be, and should not under any circumstances be assumed or relied on by any shareholder to be, a complete analysis or discussion of all potential tax consequences relevant to shareholders in any jurisdiction. The following discussion is not intended to be, nor should it be construed to be, legal advice to any particular person who holds our common shares.
Shareholders are strongly urged to consult, and must rely on the advice of, their own independent tax and other advisors to determine the tax consequences of the Continuation to them because of their own particular circumstances and the jurisdiction in which they reside or in which they may be subject to tax consequences by the virtue of their ownership of our common shares.
This summary does not take into account, provincial, territorial or foreign income tax legislation or considerations, which may differ materially from those described herein. Holders should consult their own legal advisors with respect to the tax consequences to them based on their particular circumstances.
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No disposition of our common shares should be considered to have occurred for Canadian federal income tax purposes solely as result of the Continuation. Consequently, the Continuation should not result in the realization of any capital gain (or capital loss) by a Holder.
Qualified Investments
Provided our common shares remain listed on a "designated stock exchange" (within the meaning of the Income Tax Act (Canada) and which currently includes the TSX) at all relevant times, such common shares will be a "qualified investment" under the Income Tax Act (Canada) for trusts governed by registered retirement savings plans, registered retirement income funds, deferred profit sharing plans, registered education savings plans, registered disability savings plans and tax-free savings accounts.
Notwithstanding that our common shares may be a qualified investment for a trust governed by a tax-free savings account, a registered retirement savings plan or a registered retirement income fund, the holder of a tax-free savings account or the annuitant under a registered retirement savings plan or a registered retirement income fund will be subject to a penalty tax on our common shares held in the tax-free savings account, registered retirement savings plans or registered retirement income funds (as the case may be) if such shares are a "prohibited investment" for the purpose of section 207.01 of the Income Tax Act (Canada). Our common shares will generally be a "prohibited investment" if the holder of a tax-free savings account or the annuitant of a registered retirement savings plan or a registered retirement income fund does not deal at arm's length with our company for the purposes of the Income Tax Act (Canada) or the holder of a tax-free savings account or the annuitant of a registered retirement savings plan or a registered retirement income fund has a "significant interest" (as defined in the Income Tax Act (Canada)) in our company or a corporation, partnership or trust with which our company does not deal at arm's length for the purposes of the Income Tax Act (Canada). Such holders are urged to consult their own tax advisors.
The foregoing summaries of United States, BVI and Canadian tax consequences have been provided for general information purposes only and should not be assumed or relied on by any shareholder to be, a complete analysis or discussion of all potential tax consequences relevant to shareholders in any jurisdiction. The foregoing discussion is not a legal advice to any particular person who holds our common shares.
F. Dividends and Paying Agents
This Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934 and, as such, there is no requirement to provide any information under this item.
G. Statements by Experts
This Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934 and, as such, there is no requirement to provide any information under this item.
H. Documents on Display
Any of the documents referred to in this Form 20-F can be viewed at the office of Xtra-Gold, located at Shirley Street Plaza, Suite 2150, P.O Box AP 59217, Nassau Bahamas, during normal business hours. All of the above documents referred to above are in English.
Xtra-Gold is required to file financial statements and other information with the Ontario Securities Commission, the British Columbia Securities Commission and the Alberta Securities Commission electronically through SEDAR which can be viewed at www.sedar.com.
I. Subsidiary Information
This annual report includes consolidated information relating to our company and our subsidiaries.
Item 11 Quantitative and Qualitative Disclosures About Market Risk
Xtra-Gold is a smaller reporting company and, as such, does not need to provide the information required by this Item 11.
Item 12 Description of Securities Other Than Equity Securities
Not applicable.
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Item 13 Defaults, Dividend Arrearages and Delinquencies
Not applicable.
Item 14 Material Modifications to the Rights of Security Holders
Not applicable.
Item 15 Controls and Procedures
A. Disclosure Controls and Procedures
Our management, including our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this annual report.
Based on that evaluation, our management has concluded that as of the end of the period covered by this annual report our disclosure controls and procedures were effective such that the information required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (ii) is accumulated and communicated to our management to allow timely decisions regarding required disclosure.
Our management does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.
B. Management's Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:
• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Management's assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of these controls. Based on this assessment, our management has concluded that as of December 31, 2021, our internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
C. Attestation Report of the Registered Public Accounting Firm
This annual report does not include an attestation report of Harbourside CPA, an independent registered public accounting firm that audited our company's annual financial statements included in this annual report, in connection with internal control over financial report. Management's report is not subject to attestation by our company's registered public accounting firm pursuant to the rules of the SEC that permit our company to provide only management's report in this annual report.
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D. Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with our evaluation that occurred during our most recently completed fiscal year ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 16 [reserved]
Item 16A Audit Committee Financial Expert
Our Board of Directors has determined that each of James Schweitzer, Denis Laviolette and, Hans Julian Morsches is an "audit committee financial expert" as defined in Item 16.A of Form 20-F. In general, an "audit committee financial expert" is an individual member of the audit committee who:
• understands generally accepted accounting principles and financial statements;
• is able to assess the general application of such principles in connection with accounting for estimates and accruals;
• has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the company's financial statements;
• understands internal controls over financial reporting;
• understands audit committee functions; and
• is an independent director.
Item 16B Code of Ethics
In December 2009, we adopted a new and expanded code of ethics applicable to our principal executive officer, principal financial and accounting officers and persons performing similar functions. Our code of ethics is a written standard designed to deter wrongdoing and to promote:
● honest and ethical conduct;
● full, fair, accurate, timely and understandable disclosure in regulatory filings and public statements;
● compliance with applicable laws, rules and regulations;
● the prompt reporting of a violation of our code of ethics; and
● accountability for adherence to our code of ethics.
A copy of our code of ethics was previously filed as an exhibit to our annual report filed on Form 10-K for the year ended December 31, 2009. We will provide a copy of our code of ethics, without charge, to any person who makes a written request to us at our principal offices.
Item 16C Principal Accountant Fees and Services
During the financial year ended December 31, 2021, Harbourside CPA served as the company auditor. During the financial years ended December 31, 2020 and 2019, RBSM LLP served as the company auditor.
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Audit Fees
Audit fees are the aggregate fees billed by Harbourside CPA in 2021, and by RBSM LLP in 2020, and 2019 for the audit of Xtra-Gold's consolidated annual financial statements that are provided in connection with statutory and regulatory filings or engagements. The aggregate audit fees billed by our company's external auditors for the year ended December 31, 2021 was $25,000, December 31, 2020 was $25,000, for the year ended December 31, 2019 was $40,000.
Audit-related Fees
Audit-related fees consist of assurance and related services by our company's external auditors that are reasonably related to the performance of the audit or review of our company's quarterly financial statements and are not reported above under "Audit Fees." During 2021, RBSM LLP charged the company $6,000 to provide access to their files to Harbourside CPA, the incoming auditor, and $15,000 to review and sign the 2021 20-F document. Our company did not incur any non-audit fees in 2020 or in 2019.
Tax Fees
Tax fees consist of professional services rendered by our company's external auditors for tax compliance and tax advice. Our company did not incur tax fees for the year ended December 31, 2021, 2020 and 2019.
All Other Fees
All other fees consist of fees for other miscellaneous items. There were no other fees in connection services provided or billed by our company's external auditors in the years ended December 31, 2021, 2020 and 2019.
Audit Committee's Pre-approval Policies and Procedures
Our Audit Committee has adopted a procedure for pre-approval of all fees charged by our company's external auditors. Under the procedure, our Audit Committee approves the engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by our Audit Committee.
Item 16D Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16E Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Our company commenced a normal course issuer bid on February 9, 2012 (the "2012 Bid"), with the acceptance of the TSX.
Pursuant to the 2012 Bid, our company could purchase 4,045,353 common shares which, at that time, represented approximately 10% of our company's public float. The 2012 Bid expired on February 8, 2013. Our company purchased an aggregate of 68,300 common shares under the 2012 Bid which were cancelled.
The 2012 Bid and any subsequent normal course issuer bid, as detailed hereunder, are conducted in accordance with Part VI, Sections 628 and 629 of the TSX Company Manual. All common shares purchased by our company are cancelled.
Our company renewed the 2012 Bid for a further one year period commencing on February 15, 2013 (the "2013 Bid"), with the acceptance of the TSX. Pursuant to the 2013 Bid, our company could purchase 3,957,802 common shares which, at that time, represented approximately 10% of our company's public float. The 2013 Bid expired on February 14, 2014. Our company purchased an aggregate of 280,000 common shares under the 2013 Bid which were cancelled.
Our company renewed the 2013 Bid for a further one year period commencing on February 17, 2014 (the "2014 Bid"), with the acceptance of the TSX. Pursuant to the 2014 Bid, our company could purchase 4,119,002 common shares which, at that time, represented approximately 10% of our company's public float. The 2014 Bid expired on February 16, 2015. Our company purchased an aggregate of 533,500 common shares under the 2014 Bid which were cancelled.
Our company renewed the 2014 Bid for a further one year period commencing on October 30, 2015 (the "2015 Bid"), with the acceptance of the TSX. Pursuant to the 2015 Bid, our company could purchase 4,000,000 common shares which, at that time, represented approximately 9.4% of our company's public float. The 2015 Bid expired on November 5, 2016. Our company purchased an aggregate of 372,500 common shares under the 2015 Bid which were cancelled.
The Company announced in a news release disseminated on December 6, 2016, that, following expiration of the 2015 Bid, it would be renewing the 2016 bid for a further one year to purchase up to 4,000,000 Common Shares of the Company (the "2016 Bid"), representing approximately 8.3% of the public float of the Company. The maximum number of Common Shares that may be purchased on a daily basis is 5,327 Common Shares representing 25% of the average daily trading volume for the last six calendar months, except where purchases are made in accordance with "block purchases" exemptions under applicable TSX policies. Our company purchased an aggregate of 641,500 common shares under the 2016 Bid which were cancelled.
The Company announced in a news release disseminated on January 9, 2018, that, following expiration of the 2016 Bid, it would be renewing the 2018 bid for a further one year to purchase up to 4,000,000 Common Shares of the Company (the "2018 Bid"), representing approximately 10% of the public float of the Company. The maximum number of Common Shares that may be purchased on a daily basis is 5,141 Common Shares representing 25% of the average daily trading volume for the last six calendar months, except where purchases are made in accordance with "block purchases" exemptions under applicable TSX policies. Our company purchased an aggregate of 1,536,500 common shares under the 2018 Bid which were cancelled.
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The Company announced in a news release disseminated on February 8, 2019, that, following expiration of the 2018 Bid, it would be renewing the 2019 bid for a further one year to purchase up to 4,000,000 Common Shares of the Company (the "2019 Bid"), representing approximately 10% of the public float of the Company. The maximum number of Common Shares that may be purchased on a daily basis is 2,837 Common Shares representing 25% of the average daily trading volume for the last six calendar months, except where purchases are made in accordance with "block purchases" exemptions under applicable TSX policies. Our company purchased an aggregate of 426,800 common shares at an average price of C$0.41 under the 2019 Bid which were cancelled.
The Company announced in a news release disseminated on March 12, 2020, that, following expiration of the 2019 Bid, it would be renewing the 2020 bid for a further one year to purchase up to 4,000,000 Common Shares of the Company (the "2020 Bid"), representing approximately 10% of the public float of the Company. The maximum number of Common Shares that may be purchased on a daily basis was 5,298 Common Shares representing 25% of the average daily trading volume for the last six calendar months, except where purchases are made in accordance with "block purchases" exemptions under applicable TSX policies. Our company purchased an aggregate of 305,700 common shares at an average price of C$0.79 under the 2020 Bid which were cancelled.
The Company announced in a news release disseminated on March 12, 2021, that, following expiration of the 2020 Bid, it would be renewing the 2021 bid for a further one year to purchase up to 4,000,000 Common Shares of the Company (the "2021 Bid"), representing approximately 10% of the public float of the Company. The maximum number of Common Shares that may be purchased on a daily basis is 32,828 Common Shares representing 25% of the average daily trading volume for the last six calendar months, except where purchases are made in accordance with "block purchases" exemptions under applicable TSX policies. All shares purchased under the 2021 Bid will be cancelled. Our company purchased an aggregate of 414,000 common shares at an average price of C$1.00 under the 2021 Bid which were cancelled.
The Company announced in a news release disseminated on March 14, 2022, that, following expiration of the 2021 Bid, it would be renewing the 2022 bid for a further one year to purchase up to 4,000,000 Common Shares of the Company (the "2022 Bid"), representing approximately 10% of the public float of the Company. The maximum number of Common Shares that may be purchased on a daily basis is 3,502 Common Shares representing 25% of the average daily trading volume for the last six calendar months, except where purchases are made in accordance with "block purchases" exemptions under applicable TSX policies. All shares purchased under the 2022 Bid will be cancelled.
As of March 26, 2022, the Company had not repurchased any Common Shares under the 2022 Bid.
Footnotes
The details of the 2014 Bid, referred to above, were announced in a news release on February 13, 2014 (as reported by our company on Form 6-K filed on February 18, 2014).
The results of the 2014 Bid and the details of the 2015 Bid, referred to above, were announced in a news release on October 30, 2015.
The results of the 2015 Bid and the details of the 2016 Bid, referred to above, were announced in a news release on December 6, 2016.
The results of the 2016 Bid and the details of the 2018 Bid, referred to above, were announced in a news release on January 9, 2018.
The results of the 2018 Bid and the details of the 2019 Bid, referred to above, were announced in a news release on February 8, 2019.
The results of the 2019 Bid and the details of the 2019 Bid, referred to above, were announced in a news release on March 12, 2020.
The results of the 2020 Bid and the details of the 2021 Bid, referred to above, were announced in a news release on March 12, 2021.
The results of the 2021 Bid and the details of the 2022 Bid, referred to above, were announced in a news release on March 14, 2022.
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During the 2021 year, the company changed auditors from RBSM LLP to Harbourside CPA. No change during 2020, or 2019.
Item 16G Corporate Governance
Audit Committee
While we are not currently subject to any law, rule or regulation in the United States requiring that we establish or maintain an audit committee, as a reporting issuer in Canada, we are required to comply with National Instrument 52-110 - Audit Committees ("NI 52-110"), adopted by the Canadian Securities Administrators, which states in part that every issuer must have an audit committee that complies with the requirements of the Instrument. Prior to our company becoming a reporting issuer in Canada in November 2010, our Board of Directors determined it advisable and in the best interests of our stockholders to establish an audit committee (the "Audit Committee") in November 2009.
Our Audit Committee assists our Board of Directors in fulfilling its oversight responsibility relating to:
● the integrity of our financial statements;
● our compliance with legal and regulatory requirements; and
● the qualifications and independence of our independent registered public accountants.
Our Audit Committee has adopted a written charter pursuant to which the Audit Committee provides:
● an independent review and oversight of our company's financial reporting processes, internal controls and independent auditors;
● a forum separate from our management in which auditors and other interested parties can candidly discuss concerns. By effectively carrying out its functions and responsibilities, our Audit Committee helps to ensure that:
● our management properly develops and adheres to a sound system of internal controls;
● procedures are in place to objectively assess our management's practices and internal controls; and
● the outside auditors, through their own review, objectively assess our company's financial reporting practices.
Our Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the work of any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for our company.
Our Audit Committee is composed of three directors; namely James Schweitzer, who is also Chair of our Audit Committee, Denis Laviolette and, Hans Julian Morsches, all of whom have been determined by our Board of Directors to be "independent," as defined in the Marketplace Rules of the NASDAQ and within the meaning of NI 52-110.
Board of Directors Independence
Our Board of Directors consists of five members; namely James Longshore, Peter Minuk, James Schweitzer, Denis Laviolette and Hans Julian Morsches. Our Board of Directors has determined that James Schweitzer, Denis Laviolette and Hans Julian Morsches are independent within the meaning of National Instrument 58-101 - Disclosure of Corporate Governance Practices
("NI 58-101") and the Marketplace Rules of the NASDAQ and as is required by the applicable policies of the TSX. James Longshore and Peter Minuk are not independent within the meaning of NI 58-101 as they are officers of our company and thereby have a "material relationship" with our company.
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Nominating and Corporate Governance Committee
We established our Nominating and Corporate Governance committee in November 2009. The Nominating and Corporate Governance Committee has adopted a written charter pursuant to which the committee:
● recommends the slate of director nominees for election to our Board of Directors;
● identifies and recommends candidates to fill vacancies on our Board of Directors;
● reviews the composition of our Board of Directors' committees; and
● monitors compliance with, reviews and recommends changes to our various corporate governance policies and guidelines.
This committee also prepares and supervises our Board of Directors' annual review of director independence and our Board of Directors' annual self-evaluation. The Nominating and Corporate Governance Committee is composed of three directors; namely Schweitzer, Laviolette and Morsches, all of whom have been determined by our Board of Directors to be "independent," as defined in the Marketplace Rules of the NASDAQ and within the meaning of NI 52-110.
A majority of the persons serving on our Board of Directors must be "independent". The Nominating and Corporate Governance Committee has considered transactions and relationships between each director or any member of his immediate family and us or our affiliates, including those reported under "Certain Relationships and Related Transactions" below and also reviewed transactions and relationships between directors or their affiliates and members of our senior management or their affiliates. As a result of this review, the committee affirmatively determined that each of Messrs. Schweitzer, Laviolette and Morsches are independent.
Nomination of Directors
The Nominating and Corporate Governance Committee considers all qualified candidates for our Board of Directors identified by members of the committee, by other members of our Board of Directors, by senior management and by our stockholders. The committee reviews each candidate including each candidate's independence, skills and expertise based on a variety of factors, including the person's experience or background in management, finance, regulatory matters and corporate governance. When identifying nominees to serve as director, the Nominating and Corporate Governance Committee seeks to create a Board of Directors that is strong in its collective knowledge and has a diversity of skills and experience with respect to accounting and finance, management and leadership, vision and strategy, business operations, business judgment, industry knowledge and corporate governance. In addition, before nominating an existing director for re-election to our Board of Directors, the Nominating and Corporate Governance Committee considers and reviews an existing director's Board of Directors' and committee meeting attendance and performance, length of Board of Directors' service, experience, skills and contributions that the existing director brings to our Board of Directors, equity ownership in our company and independence.
The committee follows the same process and uses the same criteria for evaluating candidates proposed by members of our Board of Directors, members of senior management and stockholders. Based on its assessment of each candidate, the committee recommends candidates to our Board of Directors. However, there is no assurance that there will be any vacancy on our Board of Directors at the time of any submission or that the committee will recommend any candidate for our Board of Directors.
Compensation Committee
We established a Compensation Committee in November 2009. The Compensation Committee has adopted a written charter pursuant to which the committee is responsible for overseeing our compensation programs and practices, including our executive compensation plans and incentive compensation plans. Our Chief Executive Officer provides input to the Compensation Committee with respect to the individual performance and compensation recommendations for the other executive officers. Although the committee's charter authorizes the committee to retain an independent consultant, no third-party compensation consultant was engaged for 2010. The Compensation Committee is composed of three directors; namely James Schweitzer, Denis Laviolette and Hans Julian Morsches, all of whom have been determined by our Board of Directors to be "independent," as defined in the Marketplace Rules of the NASDAQ and within the meaning of NI 52-110.
Risk Management
We separate the role of our Chief Executive Officer and the Chairman of our Board of Directors. Our management has approval limits which it must not exceed without approval from our Board of Directors. These approval limits span hiring, asset purchases and the issuance of shares. Our Board of Directors administers its oversight function through three sub-committees which report to our full Board of Directors, being our Audit Committee, our Nominating and Corporate Governance Committee and our Compensation Committee. We are a very small company at this time and consider five members for our Board of Directors to be adequate for the purpose of directing its activities. Our Board of Directors self-assesses on an ongoing basis and has the scope to increase its size if the need is determined.
Not applicable.
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Not applicable.
PART III
Item 17 Financial Statements
Our company has provided our financial statements pursuant to Item 18.
Item 18 Financial Statements
Our company's consolidated financial statements and notes thereto are stated in United States Dollars (US$) and are prepared in accordance with U.S. GAAP.
This annual report on Form 20-F includes the following financial statements of Xtra-Gold:
● Audited Financial Statements for the Years Ended December 31, 2021, 2020, and 2019
● Report of Independent Registered Public Accounting Firm dated March 31, 2022
● Consolidated Balance Sheets as at December 31, 2021, 2020 and 2019
● Consolidated Statements of Operations for the Years Ended December 31, 2021, 2020 and 2019
● Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019
● Consolidated Statement of Stockholders' Equity for the Years Ended December 31, 2021, 2020 and 2019
● Notes to the Consolidated Financial Statements
Item 19 Exhibits
The following exhibits are included in this annual report on Form 20-F:
Exhibit Number | Description |
99.1 | Annual Financial Statements for the year ended December 31, 2021(2) |
99.2 | Management’s Discussion and Analysis for the year ended December 31, 2021(2) |
101.INS | Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document(2) |
101.SCH | Inline XBRL Taxonomy Extension Schema Document(2) |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document(2) |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document(2) |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document(2) |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document(2) |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)(2) |
(1) Previously filed with the Securities and Exchange Commission as an exhibit to the Form 20-F filed April 3, 2013.
(2) Filed as an exhibit to this annual report on Form 20-F.
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SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
XTRA-GOLD RESOURCES CORP. | ||
/s/ James Longshore | ||
By | ||
James Longshore | ||
President and Chief Executive Officer |
Date: March 31, 2022
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Pivot Mining Consultants (Pty) Ltd |
DOCUMENT INFORMATION
Author(s): | ||
Dr Corné Koegelenberg | Tect - Principal Geoscientist (Structural Geology, 3D Modelling) |
Pr.Sci.Nat., MGSSA, MSEG |
Dr Ian Basson | Tect - Principal Geoscientist (Structural Geology, 3D Modelling) |
Pr.Sci.Nat., FGSSA, MSEG, AMSAIEG |
Ken Lomberg | Director (Geology and Resources) | BSc (Hons) Geology, BCom, MEng (Mining), Pr.Sci.Nat. |
Effective Date: | 30 September 2021 | |
Project Number: | XTR001 |
Document Review and Sign Off
This is a scanned signature held on file by Pivot. The person and signatory consents to its use only for the purpose of this document. |
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This is a scanned signature held on file by Pivot. The person and signatory consents to its use only for the purpose of this document. |
Author |
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Author |
This is a scanned signature held on file by Pivot. The person and signatory consents to its use only for the purpose of this document. |
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This is a scanned signature held on file by Pivot. The person and signatory consents to its use only for the purpose of this document. |
Author |
|
Reviewer |
This document has been prepared for the exclusive use of Xtra-Gold Resources Corporation (Client) based on instructions, information and data supplied by them. No warranty or guarantee, whether express or implied, is made by Pivot with respect to the completeness or accuracy of any aspect of this document and no party, other than the Client, is authorised to or should place any reliance whatsoever on the whole or any part or parts of the document. Pivot does not undertake or accept any responsibility or liability in any way whatsoever to any person or entity in respect of the whole or any part or parts of this document, or any errors in or omissions from it, whether arising from negligence or any other basis in law whatsoever.
Pivot Mining Consultants (Pty) Ltd |
Table of Contents
1 SUMMARY | 1 |
1.1 Project Area and Location | 1 |
1.2 Accessibility, Climate, Local Resources, Infrastructure and Physiography | 1 |
1.3 History | 2 |
1.4 Geological Setting | 3 |
1.5 Deposit Types and Mineralization | 3 |
1.6 Exploration and Drilling | 4 |
1.6.1 2006 - 2007 Exploration Program | 4 |
1.6.2 2008 - 2010 Exploration Program | 5 |
1.6.3 2010 - 2012 Exploration Program | 6 |
1.6.4 2012 - 2021 Exploration Programme | 7 |
1.7 Sample Preparation, Analyses and Security | 8 |
1.7.1 Drill Core samples | 8 |
1.7.2 Reverse Circulation (RC) Drill Samples | 8 |
1.7.3 Auger Sampling | 8 |
1.7.4 Chain of Custody | 8 |
1.7.5 Analysis | 9 |
1.7.6 Quality Control and Quality Assurance | 9 |
1.8 Data Verification | 9 |
1.9 Mineral Processing and Metallurgical Testing | 10 |
1.10 Mineral Resource Estimate | 11 |
1.11 Adjacent Properties | 12 |
1.12 Other Relevant Data and Information | 12 |
1.13 Interpretation and Conclusions | 12 |
1.14 Recommendations | 13 |
2 INTRODUCTION | 14 |
2.1 Scope of the Report | 14 |
2.2 Xtra-Gold Resources Corp. | 14 |
2.3 Principal Sources of Information | 14 |
2.4 Participants, Qualifications, and Experience | 14 |
2.5 Independence | 15 |
2.6 Site and Technical Visits | 16 |
3 RELIANCE ON OTHER EXPERTS | 17 |
4 PROPERTY DESCRIPTION AND LOCATION | 18 |
4.1 Property Description and Location | 18 |
4.2 Country Profile: Ghana | 20 |
4.2.1 Economy | 21 |
4.2.2 Infrastructure | 22 |
4.2.3 Population | 22 |
4.2.4 Gold in Ghana | 22 |
4.2.5 Overview of the Mineral Laws of Ghana | 24 |
4.3 Mining Tenure | 25 |
4.4 Licence Status | 27 |
4.4.1 Apapam Mining Lease | 28 |
4.4.2 Apapam Mining Lease Boundary Agreement | 29 |
4.4.3 Akim Apapam Reconnaissance Licence Application | 29 |
4.4.4 Forest Reserve Prospecting Licence Application | 30 |
Pivot Mining Consultants (Pty) Ltd |
4.5 Holdings Structure | 30 |
4.6 Royalties and Agreements | 30 |
4.7 Environmental Liabilities | 32 |
5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY | 34 |
5.1 Access | 34 |
5.2 Climate | 34 |
5.3 Physiography | 35 |
5.4 Local Resources and Infrastructure | 36 |
5.5 Land Use | 37 |
6 HISTORY | 38 |
6.1 Project History | 38 |
6.1.1 Historic Alluvial Mining | 38 |
6.1.2 Artisanal Mining | 38 |
6.1.3 Exploration | 39 |
6.2 Ownership | 40 |
6.3 Exploration | 41 |
6.3.1 Alluvial Gold Deposits | 41 |
6.3.2 Bedrock Gold Deposits | 42 |
6.3.3 Historical Exploration of the Apapam Concession | 43 |
6.4 Mineral Resource | 43 |
6.5 Mineral Reserve | 44 |
6.6 Historical Production | 44 |
7 GEOLOGICAL SETTING AND MINERALIZATION | 45 |
7.1 Regional Geological Setting | 45 |
7.2 Geology of the Kibi Belt | 48 |
7.3 Geology of the Kibi Project | 50 |
7.4 Structure - Overview | 53 |
7.5 Structure - Kibi Project Area | 55 |
7.6 Mineralization and Deposits | 55 |
7.6.1 Big Bend | 57 |
7.6.2 Double 19 | 58 |
7.6.3 East Dyke | 58 |
7.6.4 Gold Mountain and Gate House | 59 |
7.6.5 Mushroom | 59 |
7.6.6 Road Cut | 59 |
7.6.7 South Ridge | 60 |
8 DEPOSIT TYPES | 61 |
8.1 Hydrothermal Gold Deposits of Ghana | 61 |
8.1.1 Shear-Hosted Gold Deposits of Ghana | 61 |
8.1.2 Granitoid-Hosted Gold Deposits of Ghana | 61 |
8.2 Gold Deposits of the Kibi District | 62 |
9 EXPLORATION | 63 |
9.1 2006 - 2007 Exploration Program | 63 |
9.1.1 Phase I Exploration Program (2006) | 63 |
9.1.2 Phase II Exploration Program (2007) | 65 |
9.2 2008 - 2010 Exploration Program | 66 |
9.2.1 Soil Geochemistry | 67 |
9.2.2 Ground Geophysics | 69 |
Pivot Mining Consultants (Pty) Ltd |
9.2.3 Prospecting | 72 |
9.2.4 Trenching | 72 |
9.2.5 Structural Study | 75 |
9.2.6 Petrographic Study | 76 |
9.3 2010 -2012 Exploration Program | 76 |
9.3.1 Geophysics | 76 |
9.3.2 Geochemistry | 79 |
9.3.3 Trenching | 81 |
9.3.4 Hand-Augering | 83 |
9.3.5 Structural Analysis of Zone 2 | 84 |
9.3.6 Regional Interpretation | 84 |
9.4 2012 - 2021 Exploration Programme | 85 |
9.4.1 Soil Sampling | 86 |
9.4.2 Grab Sampling | 88 |
9.4.3 Trenching | 89 |
9.4.4 Outcrop Stripping and Channel Sampling | 96 |
9.4.5 Hand-Augering | 99 |
9.4.6 Scout Pitting | 101 |
9.4.7 Ground Geophysics | 101 |
9.4.8 Structural Study | 103 |
9.5 Akim Apapam Reconnaissance License Application | 104 |
10 DRILLING | 109 |
10.1 Drilling Campaigns | 110 |
10.2 2008 - 2010 Exploration Program | 110 |
10.3 2010 - 2012 Exploration Program | 111 |
10.4 2012 - 2021 Exploration Program | 112 |
10.4.1 Cobra Creek (Zone 5) / Akwadum South (Zone 7) Scout Drilling Campaigns | 112 |
10.5 Drilling Quality | 115 |
10.5.1 Diamond Drill Core | 115 |
10.5.2 Reverse Circulation (RC) Drill Samples | 115 |
11 SAMPLE PREPARATION, ANALYSES AND SECURITY | 116 |
11.1 Sample Processing and Storage | 116 |
11.2 Sampling Methodology | 116 |
11.2.1 Diamond Drill Core Samples | 116 |
11.2.2 Reverse Circulation (RC) Drill Samples | 116 |
11.2.3 Auger Sampling | 117 |
11.3 Data Management | 117 |
11.4 Sample Preparation | 118 |
11.4.1 SGS Laboratory Services | 118 |
11.4.2 ALS Chemex (ALS Ghana Limited) | 118 |
11.4.3 Intertek Minerals Limited | 119 |
11.5 Chain of Custody | 120 |
11.6 Analytical Procedure | 120 |
11.6.1 Sample Preparation and Analyses (SGS Laboratory Services - Pre September 2008) | 120 |
11.6.2 Sample Preparation (ALS Chemex) (September 2008 - February 2017) | 121 |
11.6.3 Analytical Method (ALS Chemex) (September 2008 - February 2017) | 121 |
11.6.4 Sample Preparation and Analytical Method (Intertek Minerals Limited) (Post March 2017) | 122 |
12 DATA VERIFICATION | 123 |
12.1 Accurate Placement and Survey of Drill hole Collars | 123 |
Pivot Mining Consultants (Pty) Ltd |
12.2 Downhole Surveys | 123 |
12.3 Analytical Quality Assurance and Quality Control Data | 123 |
12.4 Quality Assurance and Quality Control (QA/QC) Procedures and Results | 123 |
12.4.1 2008 - 2010 Exploration Campaign | 123 |
12.4.2 Umpire analysis for period 2008 - 2012 | 124 |
12.4.3 2010-2012 Exploration Campaign | 125 |
12.5 Conclusions and Recommendations | 125 |
13 MINERAL PROCESSING AND METALLURGICAL TESTING | 127 |
14 MINERAL RESOURCE ESTIMATES | 129 |
14.1 Methodology | 129 |
14.2 Geological Models | 129 |
14.3 Compositing | 133 |
14.4 Descriptive Statistics: Composites | 133 |
14.5 Density | 138 |
14.6 Outlier Analysis | 139 |
14.7 Block Model Development | 142 |
14.8 Search Criteria | 143 |
14.9 Variography | 146 |
14.10 Estimation | 147 |
14.11 Validation | 147 |
14.12 Reasonable Prospects for Eventual Extraction | 149 |
14.13 Classification | 150 |
14.14 Mineral Resource Reporting | 150 |
15 ADJACENT PROPERTIES | 156 |
16 OTHER RELEVANT DATA AND INFORMATION | 157 |
17 INTERPRETATION AND CONCLUSIONS | 158 |
18 RECOMMENDATIONS | 160 |
18.1 Phase 1 Exploration | 160 |
18.1.1 Mineral Resource Estimate Footprint Area Work Program | 160 |
18.1.2 Property-Scale Work Program | 161 |
18.2 Cost Estimate | 161 |
19 REFERENCES | 163 |
Pivot Mining Consultants (Pty) Ltd |
List of Tables
Table 1.1: Kibi Project Mineral Resource 2012 | 3 |
Table 1.2: Mineral Resource Declaration - September 2021 | 11 |
Table 1.3: Mineral Resource Declaration - Kibi Gold Project - September 2021 | 13 |
Table 4.1: Characteristics of the Mineral Titles - Minerals and Mining Act, 2006 (Act 703). | 25 |
Table 4.2: Mineral Tenements of the Kibi Gold Project | 26 |
Table 4.3: Summary of Xtra-Golds Mining Leases | 27 |
Table 6.1: Mineral Resource 2012 | 44 |
Table 9.1: Summary of Trenching (2010 - 2012) | 81 |
Table 9.2: Summary of Trenches Excavated | 90 |
Table 9.3: Significant Trench Results (2012 - 2021) | 93 |
Table 9.4: Cobra Creek: Significant Channel Sampling Results | 98 |
Table 9.5: Summary of Scout Pitting (2016 - 2017) | 101 |
Table 10.1: Summary of Drilling | 109 |
Table 10.2: Summary of Diamond Drilling (2010 - 2012) | 111 |
Table 10.3: Summary of Drilling (2012 - 2021) | 112 |
Table 10.4: Significant Drill Results - Cobra Creek (Zone 5) / Akwadum South (Zone 7) | 114 |
Table 11.1: Summary of Quality Control Protocols | 119 |
Table 14.1: Statistics of ALS and Xtra-Gold Density Determinations | 139 |
Table 14.2: Outlier Analysis | 140 |
Table 14.3: Summary of the Block Model Details | 142 |
Table 14.4: Summary of Search Parameters | 143 |
Table 14.5: Assessment of the Reasonable Prospects for Eventual Economic Extraction | 149 |
Table 14.6: Summary of the Mineral Resource Declaration | 150 |
Table 14.7: Mineral Resource Declaration - September 2021 | 151 |
Table 17.1: Mineral Resource Declaration - September 2021 | 158 |
Table 18.1: Cost Estimates for the Recommended Work Program | 162 |
List of Figures
Figure 4.1: Location of Xtra-Gold Concessions | 18 |
Figure 4.2: Birimian Gold belts showing the location of the Kibi Project | 19 |
Figure 4.3: Location of Ghana | 20 |
Figure 4.4: Map showing the Three Properties of the Kibi Gold Project | 26 |
Figure 4.5: Xtra-Gold Mining Leases Located in the Kibi Gold Belt | 27 |
Figure 4.6: Apapam Mining Lease Boundary Pillar Points | 28 |
Figure 4.7: Xtra-Gold Holdings Structure | 30 |
Figure 5.1: Average Monthly Precipitation | 34 |
Figure 5.2: Average Monthly Temperatures | 35 |
Figure 5.3: Map showing the Location of Atewa Range Forest Reserve | 36 |
Figure 7.1: Simplified Geology and Major Lithotectonic Complexes of Ghana | 45 |
Figure 7.2: Geology of the Man-Leo Shield in the southern West African Craton | 46 |
Figure 7.3: Simplified Stratigraphy of Ghana | 47 |
Figure 7.4: Geology of the Kibi Belt | 49 |
Figure 7.5: Regional Geophysical Interpretations | 51 |
Figure 7.6: Detailed Geology of the Kibi Project | 52 |
Figure 7.7: Structure of the Kibi Project | 54 |
Figure 7.8: Kibi Project Targets | 56 |
Figure 9.1: Soil Geochemistry Survey | 68 |
Figure 9.2: Ground Geophysics Surveys | 70 |
Figure 9.3: Channel Sampling in Trench at Apapam Concession | 74 |
Pivot Mining Consultants (Pty) Ltd |
Figure 9.4: Pseudo-Geology Map Derived from the Interpretation by Geotech Airborne | 77 |
Figure 9.5: Proposed Targets based on the Interpretation the VTEM survey | 78 |
Figure 9.6: VTEM Image showing NE-SW Conductor interpreted as a Graphitic Shear Zone | 79 |
Figure 9.7: Locations of 2006 -2008 Soil Sampling (blue) and 2010 -2012 Sampling Sites (red) | 80 |
Figure 9.8: Trench Locations of pre-2010 Trenches (Blue) and 2010-2012 Trenches (Red). | 82 |
Figure 9.9: Location of the Hand Auger Sampling Sites (2010 -2012) | 83 |
Figure 9.10: Regional Geological Interpretation | 85 |
Figure 9.11: Results of Infill Soil Sampling (2016) | 87 |
Figure 9.12: Location of Grab Samples, Scout Pitting and Auger drilling (2012 -2021) | 88 |
Figure 9.13: Location of Excavated Trenches (2012 -2021) | 91 |
Figure 9.14: Cobra Creek (Zone 5) Trenching / Channel Sampling Results (2012 - 2016) | 94 |
Figure 9.15: Results of Trenching at Gate House Target (2020 - 2021) | 95 |
Figure 9.16: Location and Results of Hand Auger and Scout Pitting | 100 |
Figure 9.17: Results of the Induced Polarization and Magnetometer Ground Surveys | 102 |
Figure 9.18: Structural Mapping of the Cobra Creek Target | 104 |
Figure 9.19: Location and Results of Soil Sampling for Akim Apapam Reconnaissance Licence | 106 |
Figure 9.20: Location and Results of Hand Auger and Scout Pitting for Akim Apapam Reconnaissance Licence | 107 |
Figure 9.21: Trench #TAAP001-A Schematic Cross Section | 108 |
Figure 10.1: Location of Drill hole Collars (2008 - 2021) | 110 |
Figure 10.2: Drill / Compilation Plan - Cobra Creek (Zone 5) | 113 |
Figure 14.1: Map of the Targets | 130 |
Figure 14.2: Isometric Views of the Geological Models of the Various Targets | 132 |
Figure 14.3: Histograms of the Data for Each Target | 134 |
Figure 14.4: Comparison of ALS and Xtra-Gold Density determination | 138 |
Figure 14.5: Outlier Analysis: Graphs of Cumulative Averages | 141 |
Figure 14.6: Stereonets of Veins | 144 |
Figure 14.7: Isometric views of the Geological Models and the Vein Directions | 145 |
Figure 14.8: Variograms for each Target | 146 |
Figure 14.9: Swath Plots of the Individual Targets | 148 |
Figure 14.10: Grade-Tonnage Curves | 155 |
List of Appendices
Appendix A - Author's Certificate) |
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1 SUMMARY
Tect Geological Consulting (Tect) and Pivot Mining Consultants (Pty) Limited (Pivot) were requested by Xtra-Gold Resources Corp. (Xtra-Gold) to prepare an Independent Technical Report consistent with the Canadian Securities Administrators National Instrument 43-101 and Form 43-101F1 for the Apapam Concession (LVB 5191/09). The Apapam Concession forms part of Xtra-Gold's Kibi Gold Project in southern Ghana.
The purpose of this report is to publish an Independent Technical Report summarizing the geology, past exploration activities and Mineral Resource Estimate on the Kibi Gold Project. The updated mineral resource estimate encompasses an additional 158 diamond core boreholes (21,321.45 m) completed since the October 2012 maiden mineral resource estimate.
Through its subsidiary companies, Xtra-Gold holds three (3) concessions that are contiguous in the Kibi Gold Project, including the Apapam Mining Lease. The Apapam Concession is a granted mining lease, whereas the other two titles are currently applications that have been submitted to the Minerals Commission.
1.1 Project Area and Location
The Apapam Concession is located approximately 75 km north-northwest of the capital city of Accra, in the East Akim District of the Eastern Region of Ghana, on the eastern flank of the Atewa Range near the headwaters of the Birim River. The centre of the concession is situated at approximately 6o 09' 30" West Longitude and 0o 34' 15" North Latitude (WGS 84). The Kibi Project area covers 3,365 ha and is located at the northern extremity of the Kibi Winneba Greenstone Belt.
1.2 Accessibility, Climate, Local Resources, Infrastructure and Physiography
The concession is located approximately 75 km north-northwest of Accra and can be accessed by two asphalted secondary highways. Ghana has a fairly good network of paved highways and roads. Within the Apapam Concession, numerous tracks and paths are available for easy access to most points.
The climate within the area is equatorial with relatively high humidity throughout the year. Rainfall is mainly confined to two periods, being high and unpredictable especially during the peak period which falls in May/June with a second peak in September/October. The dry season is generally from January to February. Temperatures ranges between 22°C and 35°C. Operations can be undertaken throughout the year.
The topography of the Apapam Concession is characterized by steeply sloping ridges and undulating mountain sides and hills due to the prominent, NNE-trending Atewa Range, which is approximately 50 km long and 10-15 km wide, that dominates the area. The range consists of steep-sided hills with fairly flat summits which represent the last remnants of the Cenozoic peneplain that once covered southern Ghana. The peneplain locally contains ancient bauxitic soils. The steep flanks feature a wide variety of high canopy tropical hardwoods typical of south-western Ghana, whereas the summit has a diverse flora, including extensive hanging vines. The range is the site of the country's largest Forest Reserve.
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The infrastructure in the Kibi District is fairly well-developed. The town of Kibi is a major regional centre with a population of over 8,000. Kibi is connected to the national electricity supply network; hospital, postal and other community facilities are available. Extensive mining infrastructure is in place in all of the major gold-producing areas of Ghana.
1.3 History
Virtually all of the past gold mining activity that is locally evident has focused on alluvial gold occurrences found in the many river valleys throughout the area.
A London-based junior, Akim (1928) Ltd is known to have carried out some exploration and development work on the quartz vein at the Kibi Mine on the outskirts of the town of Kibi. It is likely that some of the other known vein occurrences in the area were explored but apparently with little economic success.
Exploration was undertaken by a number of companies in the latter part of the 20th century. Sun Gold Group were granted two concessions in the area, which were taken over by Shefford Resources of Toronto. Shefford did some initial work on the hard rock potential, including a Bankable Feasibility Study in 1989. After corporate restructuring, the mining leases were put into a new company, Goldenrae Mining Company, and Sikaman Gold Resources of Toronto amalgamated with Shefford. Sikaman then brought in a senior partner, the London-based ITM group who financed an alluvial operation which eventually closed down in 1993.
In the early 1990s, the EQ Resources group of Toronto also picked up a large concession (Apapam) on the eastern flank of the Atewa range, covering the drainage of the upper Birim River in the vicinity of the town of Kibi. EQ carried out a successful pitting program in cooperation with Goldenrae, with the intention of setting up a satellite production unit under Goldenrae management.
The remainder of the work was focused on the potential and profitability of other alluvial deposits.
Xtra-Gold Mining's interest in the Kibi Gold Project was previously via a prospecting licence granted by the Government of Ghana on March 29, 2004, covering a licensed area of 33.65 km2. In May 2008, Xtra-Gold Mining applied to the Government of Ghana to convert the Kibi prospecting license to a mining lease, which was granted. The mining lease expired in December 2015 but all required documentation to extend the lease for 15 years from December 17, 2015 has been submitted to the Ghana Minerals Commission. As these extensions generally take years for the regulatory review to be completed, Xtra-Gold is not yet in receipt of the extension approval. However, until Xtra-Gold receives the extension documents, the old lease remains in force under the mineral laws. The extension is in accordance with the terms of application and payment of fees to the Minerals Commission of Ghana.
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Xtra-Gold have been granted surface and mining rights by the Government of Ghana to work, develop and produce gold in and from the Apapam lease area (including the processing, storing and transportation of ore and materials).
In 2012 a maiden Mineral Resource was declared. This included the Big Bend, Double 19, East Dyke, Mushroom and South Ridge targets (Table 1.1).
Table 1.1: Kibi Project Mineral Resource 2012 Declared in terms of the guidelines of the CIM Standards |
||||
|
Category |
Tonnage (Mt) |
Gold Grade (g/t) |
Gold oz |
Total |
Indicated |
3.38 |
2.56 |
277,000 |
Inferred |
2.35 |
1.94 |
147,000 |
1.4 Geological Setting
Xtra-Gold's Kibi Project is hosted within the Kibi Belt, which forms the northern continuation of the Paleoproterozoic Kibi-Winneba Greenstone Belt (KWB), located in south-western Ghana. The KWB is correlated, to the west, with the well-documented Ashanti, Asankrangwa and SefwiBiriman Fold Belts, which host to world-class gold mines and deposits. These include, but are not limited to, the Akyem Newmont, Obuasi Anglo Gold Ashanti, Tarkwa Goldfields and Ahafo Newmont Mines.
The Kibi Project targets are hosted in intensely-sheared and tightly-folded volcano-metasedimentary strata with interlayered felsic- to intermediate- to mafic-dykes and sills, regionally correlated with the Birimian Super Group and Tarkwa Group.
Targets are predominantly hosted within, or in the vicinity of, felsic- to intermediate (e.g. granite to granodiorite) dykes or sills, in contact with metasediments (e.g. phyllites or greywackes), that occupy sheared fold limbs or fold hinge zones. These structural sites are classic type-locations for intensified brittle-ductile deformation and concomitant hydrothermal fluid ingress, with eventual auriferous mineralization. Ongoing exploration is geared to identifying and delineating such sites on a licence to target scale.
1.5 Deposit Types and Mineralization
The Kibi project hosts primary gold mineralization of economic significance. Auriferous bodies discovered to date on the Apapam Concession by Xtra-Gold include: Big Bend, East Dyke, Mushroom, Road Cut, and South Ridge in Zone 2, Double 19 in Zone 3, and Gate House and Gold Mountain in Zone 1. Collectively, these eight auriferous bodies, lying within approximately 1.6 km of each other, are estimated to encompass an indicated mineral resource of 13,893,000 Mt grading 1.40 g/t gold for a contained 623,700 oz and an additional Inferred Mineral Resource of 5,694,000 Mt grading 0.96 g/t gold for a contained 180,700 oz.
These deposits can be classified as classic, structurally-controlled mesothermal/orogenic gold mineralization. Mineralization is primarily associated with quartz albite-carbonate-sulphide tensional vein stockworks developed in - or especially near - the margins of sills, dykes and possibly small plutons (stocks) of granodiorite, quartz diorite and tonalite bodies.
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Generally, in comparison with other gold deposits in Ghana, the Kibi Project gold mineralization is characterized by auriferous quartz vein sets hosted in felsic to intermediate (Belt-type) granitoids that are geologically-analogous to other Granitoid-hosted gold deposits of Ghana, including Kinross Gold's Chirano and Newmont Mining's Subika deposits in the Sefwi belt.
From 2012 to present, exploration efforts were primarily focussed on the continued advancement of early-stage gold shoots and showings within the Zone 1 - Zone 3 maiden mineral resource footprint area.
1.6 Exploration and Drilling
1.6.1 2006 - 2007 Exploration Program
Two (2) separate work programs were conducted on the Apapam Concession during 2006-2007. The first work program was undertaken and managed by CME Consultants Inc. (CME), a Canada-based geological consultancy with over 15 years of project management experience in Ghana. The second program was undertaken and managed by Xtra-Gold personnel.
The Phase I exploration program was designed to test the Apapam Concession on a regional scale. The field work was implemented by CME from August 12 to September 23, 2006 and included:
◾ Concession-Wide Stream Sediment Sampling (88 Samples Collected From 44 Sites);
◾ Survey Grid Establishment (33.78 Line-Km);
◾ Soil Sampling (1,306 Samples);
◾ GPS Surveying (33.78 Line-Km);
◾ Rock Sampling (89 Samples); And
◾ Historical Adit and Bulldozer Cut Sampling (100 samples).
The Phase II exploration program consisted of a reconnaissance trenching program intermittently implemented by the Xtra-Gold exploration staff from February 2007 to December 2007. The trenching was carried out to test the depth extent of geochemical signatures from gold-in-soil anomalies, which were detected within the north-western portion of the concession during the Phase I work program. A total of 542 channel samples were collected from 21 trenches totalling 1,090 linear metres. In order to obtain an independent assessment of the 2007 Xtra-Gold trenching results, a NI 43-101-compliant data verification program was undertaken by CME in December 2007. This program involved the re-sampling of selected trenches which yielded exploration-significant gold mineralization intervals.
Gold mineralization on the Apapam Concession was found to occur in several different geological setting, including steeply-dipping and flat-lying quartz veins and alteration haloes proximal to the quartz veining.
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1.6.2 2008 - 2010 Exploration Program
Exploration work on the Apapam Concession during the 2008-2010 reporting period was aimed at advancing the Kibi Project, which encompassed a 5.5 km long mineralized trend delineated from gold-in-soil anomalies, trenching, drilling and geophysical interpretation along the northwest margin of the Apapam Concession. This trend and extent are characterized by widespread gold occurrences of the granitoid hosted-type.
An extensive soil geochemistry survey, covering approximately 47 line-kilometres (1,827 samples), was implemented in early 2008 to further define the extensive gold-in-soil trend. Regolith development in most of the Kibi Project area is favourable for soil sampling. The generally steep topography along the flank of the Atewa Range has resulted in relatively thin colluvial (lateritic gravel) cover in the project area. As a result, gold-in-soil anomalies on steeper slopes and ridges probably reflect a good, although not exactly quantitative, measure of gold distribution in the underlying saprolite.
The entire Kibi Project grid was also covered by Induced Polarization (IP)/Resistivity (~ 64 km) and ground magnetometer (~79 km) surveys to help define the lithological and structural pattern of the mineralized trend, and to prioritize trench/drill targets. Although the widespread granitoid-hosted gold mineralization in Zone 2 is typically characterized by 1-3%, locally up to 5%, disseminated sulphides (pyrrhotite, pyrite, arsenopyrite), the known mineralization occurrences failed to produce a chargeability response. In Zone 3, a moderate chargeability (IP) / very high resistivity anomaly is spatially associated with an approximately 135 m wide, NE-trending, granitoid-hosted, structural corridor that appears to encompass at least five (5) distinct, gold-bearing, sheeted to stockworked vein zones. The south-western portion of the gold-in-soil trend is characterized by an approximately 3.5 km long, NE-trending, generally moderate to high chargeability/moderate to high resistivity anomaly lying along or proximate to the contact between the southern resistive domain and the central conductive corridor. This exhibits a spatial relationship with a geophysically-inferred, NE-trending, regional structural trend.
Exploration activities in 2008 included a manual trenching program with the excavation of 18 trenches totalling approximately 1,217 linear-metres, including: 4 trenches (302 m) on Zone 2; and 14 trenches (915 m) on Zone 3 of the 5.5 km long gold-in-soil trend. In addition, 67 mechanical (i.e. excavator) trenches totalling approximately 2,223 m were also excavated in conjunction with the 2008 and 2009 drilling programs. The trenches and trench sampling identified extensive, granitoid-hosted, auriferous quartz vein systems.
A total of 109 grab samples were collected by Xtra-Gold during prospecting and reconnaissance geology traverses that were primarily designed to follow-up on gold-in-soil anomalies. Where anomalous values were returned, the locations were subsequently tested by trenching and/or drilling.
As part of the ongoing exploration efforts, Xtra-Gold commissioned SRK Consulting (Canada) Inc. (SRK) to conduct a structural study of the Apapam Concession. The goal of the study was to investigate key exposures and available drill core to document and understand the structural controls on gold mineralization at the Kibi Project. SRK reviewed 14 diamond drill cores (Zone 1 and 2), as well as available trench exposures (Zone 2 and 3) on the Apapam concession from March 16 to 27, 2010. Due to diamond drilling density and accessible trenches, SRK's structural study focused largely on Zone 2 of the Kibi Project. SRK also reviewed Xtra-Gold's geological and structural mapping, at the time, for zones 1, 2 and 3 of the Kibi Project.
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A petrographic study was also implemented in March 2010 to characterize the lithological units and ore mineralogy of the Kibi Project. Thirty-six (36) thin sections and nine (9) polished sections were studied by Professor K. Dzigbodi-Adjimah of the University of Mines and Technology, Tarkwa, Ghana. The findings of the structural and petrographic studies are incorporated in the structure and mineralization sections of the technical report, respectively.
A total of 68 boreholes totalling 7,716 m were drilled on the Apapam Concession, including 18 diamond core drill holes in 2008 (3,001 m), representing the first-ever drilling conducted in the Apapam concession area, and 50 reverse circulation (RC) drill holes in 2009 (4,715 m). This drilling focused on the Kibi Gold Project, and consisted of a > 5.5 km long mineralized trend delineated from gold-in-soil anomalies, trenching and geophysical interpretations along the northwest margin of the Apapam Concession, in turn characterized by widespread gold occurrences of the granitoid hosted-type.
1.6.3 2010 - 2012 Exploration Program
A VTEM survey was flown over the Kibi Gold Project by Geotech Airborne from December 2010 to February 2011. The survey measured ground elevation, radiometrics, magnetic field and electromagnetism (resistivity). Interpretation of the data resulted in an interpretive pseudo-geology map of the area. The different geophysical units may be correlated with various geological units. Two kinds of targets were defined: Resistive-type ((high-resistivity areas within interpreted conductive, graphitic shear zones and graphitic sedimentary units) and Granitoid-type (shear/fracture zones in basin-type granitoids). More detailed interpretation has highlighted the various faults around the project area.
From June 2011 to April 2012, 3,833 soil samples were collected every 25 m along lines 200 m apart in the south eastern part of the concession, as this had previously not been sampled.
One hundred and fifteen (115) rock grab samples were collected in conjunction with the 2011 - 2012 soil geochemical survey and follow-up prospecting of gold-in-soil anomalies.
Two hundred (200) trenches were excavated, at a number of prospects, in an effort to help define the extents and geological context of gold mineralisation. Due to the high relief in the area, some of the trenches were actually cleaned or cleared road cuttings on the sides of the hills. A total of 4,346 horizontal channel samples were taken and due to the prevalence of shallowly-dipping veins, 509 vertical channel samples were also taken where appropriate.
SRK Consulting (Canada) investigated the structural geology of the Kibi Gold Trend project - Zone 2 in November 2011. The work was focussed on Big Bend, wherein the structural controls on the mineralisation were proposed in their study.
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SRK Consulting (Canada) also analysed the regional structural geology, regional aeromagnetics and the VTEM data. Areas of structural complexity representing prospective targets for further exploration in the Kibi area, were highlighted.
A total of 188 diamond core drill holes totalling 41,372 m was drilled on the Kibi Gold Project during the 2010 - 2012 exploration program, with most of the drilling,132 holes totalling 29,889 m (72%), targeting the Zone 2 - Zone 3 Mineral Resource auriferous bodies.
1.6.4 2012 - 2021 Exploration Programme
Further soil sampling was undertaken on the Cobra Creek (Zone 5) and Akwadum South (Zone 7) targets. A total of 10.7 line-kilometres of sampling on a 100 m x 25 m grid was undertaken with a total of 458 samples being collected.
Sampling of outcrop and float material was performed at Cobra Creek (Zone 5) and other locations on the Apapam Concession with a total of 910 samples being collected.
Trenching was undertaken from October 2018 - June 2021 on Zone 1 - Zone 2 - Zone 3 to supplement the drilling of the targets already recognised. Fifty-six (56) trenches (1,577.7 sample metres) were excavated on the majority of the targets that form part of the Mineral Resource estimate. An additional 38 trenches (1,170.8 sample metres) were also completed on an intermittent basis from September 2012 - March 2016 to delineate the Cobra Creek (Zone 5) auriferous shear system.
A total of approximately 15,000 m2 of bedrock exposures were mechanically stripped and power-washed over the Cobra Creek target from 2012 - 2016 to permit systematic mapping and channel sampling of the auriferous shear system, with total of 1,312.26 m of saw-cut channel sampling and 71 m of chip-channel sampling completed on the stripped bedrock exposures.
A total of 118 auger holes with a cumulative meterage of 390.89 m were sunk at Akwadum South (Zone 7) during 2018 and 2019.
Sixty-two (62) scout pits were excavated manually to follow up on soil geochemistry and hand auger anomalies.
Ground geophysics was conducted at the Cobra Creek target, consisting of 32.2 line-kilometres of IP/Resistivity survey and 14.99 line-kilometres of magnetic survey.
A total of 212 diamond core drill holes, totalling 25,198.55 m, were drilled on the Kibi Gold Project during the 2012 - 2021 exploration program. With most of the drilling - 158 holes totalling 21,321.45 m (85%) - completed from February 2018 - June 2021 by Xtra-Gold's in-house drilling crews on targets within the Zone 1 - Zone 2 - Zone 3 Mineral Resource estimate footprint area.
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1.7 Sample Preparation, Analyses and Security
1.7.1 Drill Core samples
Drillcore obtained from diamond drilling is transferred directly from the core tube into wooden core boxes, marked with the drill hole number and depth information. In the case of saprolite material, the core is laid directly onto a strip of plastic wrap that is placed inside the box and then securely wrapped around the core to stabilize and prevent the dehydration of the saprolite.
At the Kwabeng exploration camp core shack, the core is laid out along an angle iron on a work bench and meticulously re-assembled piece-by-piece with the core aligned with the orientation marks at the bottom of each 3 m drill run. The core is then measured, core recovery and RQD information collected, and photographs of each individual box is taken. A company geologist subsequently conducts geological logging of the core and marks the sample intervals. The core is sampled over nominal 1 m intervals, with adjustments where necessary for mineralized structures or intervals.
The diamond drillcore is then saw-split lengthwise and half the core is immediately placed into a labelled plastic bag with a unique sample ticket stapled to the inside lip of the bag, and securely sealed by staples. The remaining half of core is returned to the core box and the box is stored in a secure facility.
1.7.2 Reverse Circulation (RC) Drill Samples
Reverse circulation drill samples are collected immediately at the drill hole site. The drill sample cuttings are collected in a cyclone over one (1) meter sample intervals, with the cyclone being purged after every 6 m drill run. The dry RC bulk chip sample (~ 25 to 30 kg) is then weighted and passed through a two-stage riffle splitter to produce a nominal 2 - 3 kg sample for assay, which is also weighed on site.
Drill cuttings from each sample interval are screened, washed and a quick log of the rock chips completed at the drill site by a company geologist, who notes, amongst other things, the sample quality/recovery, weathering profile, main lithologies, prominent alteration and the character of the mineralization (i.e. oxide versus sulphide).
1.7.3 Auger Sampling
Hand auger sampling is routinely utilized to test the geochemical signature of gold-in-soil anomalies at depth within the saprolite horizon, to better define trenching targets. Sampling is typically conducted at one (1) metre intervals with the material from the hole's first metre discarded to ensure the collection of in-situ material. Auger hole spacing is typically 25 m, with some 12.5 m in-filling. To avoid any contamination only dry samples are collected.
1.7.4 Chain of Custody
A typical chain of custody exists for all samples. Exploration samples, including soil, auger and trench samples, and Reverse Circulation (RC) drill samples are collected, numbered and bagged in the field and then transported from the field to the Kwabeng camp under Xtra-Gold's supervision. Upon arrival at camp, the samples and sample numbers are checked, and the samples are secured in rice sacks with a numbered security seal (i.e. nylon zap strap) for shipment to the laboratory. The diamond drill core is collected and transported to the camp's logging facility by Xtra-Gold's in-house drill personnel. All samples are kept in a locked facility at the camp. Samples are transported to the laboratory or collected by the laboratory on a weekly basis. A Tracking Record of all sample deliveries/pickups and pending analytical orders is kept by the Project Geologist, including: personnel in custody of samples; time of departure; laboratory drop-off site; status of security seals and assay turnaround time. Any discrepancies are noted by the laboratory who subsequently advise Xtra-Gold's management to this effect.
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1.7.5 Analysis
Pre-2008 samples were analysed by SGS Laboratory Services in Tarkwa. Aqua Regia and fire assay methods were used to determine the gold concentration.
From 2008 - 2017, analyses were undertaken by ALS Chemex at their Kumasi Laboratory. All samples, including drillcore and RC chips, trench channel, hand auger, rock and soil samples, were typically analysed for gold only utilizing ALS Chemex's Au-AA24 method: Fire Assay Fusion with Atomic Absorption Spectroscopy (AAS) Finish.
Since 2017, the analysis has been undertaken by Intertek at their laboratory in Tarkwa. Typically, the analysis for gold uses method FA51/AA which is a lead collection fire assay (50 g aliquot) fusion method with an Atomic Absorption Spectroscopy finish (AAS).
1.7.6 Quality Control and Quality Assurance
Quality-Control Programmes have been implemented to ensure best-practice in the sampling and analysis of the diamond drill core, reverse circulation (RC) chip samples, saprolite trench and saw-cut channel samples, and soil samples, such that the data can be used to inform subsequent work and the progression of the project.
1.8 Data Verification
The following conclusions and recommendations are made:
◾ The operator is diligent in the use of the QA/QC programme and the recording of data for analysis. An important aspect is that an effective and dynamic QC programme is utilised to review data as it comes in from the laboratory, a practice currently being applied on site.
◾ The assessment of the blanks confirms that there is minimal contamination at the laboratory.
◾ The assays were undertaken utilising a 50 g aliquot for fire assay, whereas the CRMs generally utilised a 30 g aliquot. The expectation is that the larger aliquot should produce results that are better-grouped (improved precision) and more accurate.
◾ An excessive number of different CRMs have been used previously. It is recommended that fewer are used in the future. It is considered more practical to identify 2 to 5 different CRMs to span the assay range of the expected grades i.e. 0.5 - 2 ppm. This will allow more control and conformation of the data, i.e. identification of sample swaps in particular.
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◾ In the earlier programmes, numerous failures of the Xtra-Gold CRMs had been noted. Most of these were attributed to the misidentification of the CRMs. The laboratory CRMs demonstrate that the data can be considered to be accurate.
◾ The precision is tested by an analysis of duplicate data. The results of the duplicate analysis presented suggest that precision is an issue. This is probably truer for the higher grades and may be related the presence of coarser grains of gold.
It was concluded that the geochemical data used in the resource estimation is satisfactory, with variations most probably due to the nature and deportment of the gold and/or probably related to the presence of coarse gold in the deposits.
1.9 Mineral Processing and Metallurgical Testing
A Gold Deportment Study which assessed the mineralogical and metallurgical aspects of the gold mineralization in the Kibi Gold Project was completed in October 2011 by SGS South Africa (Pty) Ltd. for both sulphide and oxide composites. The results of the study were:
◾ Gold in the sulphide samples is highly amenable to cyanidation leaching with ~97% recoverable by means of direct cyanidation.
◾ The grading analysis on the sulphide sample indicated a very high upgrading of gold in the +106µm size fraction (~69%).
◾ The direct cyanidation and diagnostic leach indicates that the sulphide sample is highly amenable to cyanide leaching, with ~97% of the gold recovered from the head sample at a grind of 80%-75µm by direct cyanidation and ~96% for the gravity tailings at a grind of~50%-75µm.
◾ The gold in the composite oxide sample is also highly amenable to cyanidation, with ~97% of the gold recoverable by means of direct cyanidation. The grading analysis on the composite oxide sample indicated a very high upgrading of gold in the +106µm size fraction (~74%).
◾ The direct cyanidation and diagnostic leach tests indicated that the oxide sample is highly amenable to cyanide leaching, with ~98% of the gold recovered from the head sample at a grind of 80%-75µm and ~99% of the gold in the gravity tailings at a grind of 50%-75µm.
It was concluded that the simplest processing option would be to mill the material to ~80%-75µm followed by carbon-in-leach cyanidation.
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1.10 Mineral Resource Estimate
The reported mineral resource is presented in Table 1.2.
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Mushroom |
||||
|
Tonnage (t) |
Density (t/m3) |
Grade - Au (g/t) |
Au (oz) |
Measured |
- |
- |
- |
- |
Indicated |
505,000 |
2.64 |
1.37 |
22,300 |
M+I |
505,000 |
2.64 |
1.37 |
22,300 |
Inferred |
- |
- |
- |
- |
|
||||
Road Cut |
||||
|
Tonnage (t) |
Density (t/m3) |
Grade - Au (g/t) |
Au (oz) |
Measured |
- |
- |
- |
- |
Indicated |
225,000 |
2.80 |
0.85 |
6,100 |
M+I |
225,000 |
2.80 |
0.85 |
6,100 |
Inferred |
- |
- |
- |
- |
|
||||
South Ridge |
||||
|
Tonnage (t) |
Density (t/m3) |
Grade - Au (g/t) |
Au (oz) |
Measured |
- |
- |
- |
- |
Indicated |
2,005,000 |
2.70 |
1.07 |
68,700 |
M+I |
2,005,000 |
2.70 |
1.07 |
68,700 |
Inferred |
943,000 |
2.82 |
1.02 |
30,800 |
|
||||
Total |
||||
|
Tonnage (t) |
Density (t/m3) |
Grade - Au (g/t) |
Au (oz) |
Measured |
- |
- |
- |
- |
Indicated |
13,893,000 |
2.73 |
1.40 |
623,700 |
M+I |
13,893,000 |
2.73 |
1.40 |
623,700 |
Inferred |
5,694,000 |
2.80 |
0.96 |
180,700 |
1.11 Adjacent Properties
Although the Kibi area is blanketed by mining concessions, very little systematic exploration work for bedrock gold targets has been conducted in the Kibi Greenstone Belt. This reflects the fact that the Kibi area has traditionally been recognized as an alluvial gold district, and that the surrounding concessions have been held since the mid-1980s to early 1990s for their alluvial gold potential.
1.12 Other Relevant Data and Information
None.
1.13 Interpretation and Conclusions
The work undertaken has confirmed the presence of a number of auriferous bodies (i.e. Big Bend, East Dyke, Mushroom, Road Cut, South Ridge, Double 19, Gate House and Gold Mountain) within the concession, as well as providing a structural model that explains the paragenesis of the mineralized bodies (Sections 7 and 14.2). The geological continuity has been demonstrated and the relevant structural information has been utilised in the mineral resource estimate, as described in Sections 14.2 and 14.8.
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The reported mineral resource is presented in Table 1.3.
Table 1.3: Mineral Resource Declaration - Kibi Gold Project - September 2021 Declared in terms of the CIM Standards Cut-off: Au 0.5 g/t |
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|
Tonnage (t) |
Density (t/m3) |
Grade - Au (g/t) |
Au (oz) |
Measured |
- |
- |
- |
- |
Indicated |
13,893,000 |
2.73 |
1.40 |
623,700 |
M+I |
13,893,000 |
2.73 |
1.40 |
623,700 |
Inferred |
5,694,000 |
2.80 |
0.96 |
180,700 |
A substantial amount of work has been completed on the Cobra Creek prospect wherein various targets have also been identified.
1.14 Recommendations
Based on the results of the 2021 Mineral Resource Estimate (MRE) and exploration results on early-stage targets across the project area, Pivot and Tect recommend a two-phase exploration program to further advance the Kibi Gold Project.
Phase 1 is geared towards the further delineation of existing mineral resources and identification of additional resource bodies within the MRE footprint area, continued advancement of early-stage targets across the Kibi Gold Project, and property-scale target generation exploration work.
Phase 2, designed to support the continued advancement of the project, includes additional drilling to further define mineral resources, an updated MRE, completion of a Preliminary Economic Assessment (PEA), metallurgical test work, and collection of additional data to support future scoping studies.
A cost estimate for the recommended two-phase work program serves as a guideline. The estimated drilling expenditures are based on all-inclusive drilling costs, utilizing Xtra-Gold's in-house operated diamond core drill rigs. Total expenditures are estimated at USD 5,295,000, including: USD 3,570,000 for Phase 1 and USD 1,725,000 for Phase 2, with the implementation of Phase 2 being contingent upon the success of Phase 1.
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2 INTRODUCTION
Xtra-Gold Resources Corp. (Xtra-Gold) commissioned Tect Geological Consulting (Tect) and Pivot Mining Consultants Ltd. (Pivot) to prepare an updated Mineral Resource Estimate for the Apapam Concession (LVB 5191/09). This Independent Technical Report (ITR) has been prepared in accordance with disclosure and reporting guidelines set forth in National Instrument 43-101 (NI 43-101) and companion Form 43-101F1 of the Canadian Securities Administrators' Standards of Disclosure for Mineral Projects. The Apapam Concession forms part of Xtra-Gold's Kibi Gold Project in southern Ghana.
2.1 Scope of the Report
The purpose of this report is to publish an Independent Technical Report summarizing the geology, past exploration activities and mineral resource estimate on the Kibi Gold Project. With the updated mineral resource estimate based on drilling completed since the October 2012 maiden mineral resource estimate.
2.2 Xtra-Gold Resources Corp.
Xtra-Gold's corporate offices are located at Village Road Shopping Plaza, Suite 2150, P.O. Box AP 59217, Nassau, Bahamas. Xtra-Gold is a public company listed on the Toronto Stock Exchange (TSX: XTG), with the company also trading on the over-the-counter equity market in the United States (OTCQB: XTGRF). Xtra-Gold is a junior exploration company focused on the advancement and development of its Kibi Gold Project in southern Ghana.
2.3 Principal Sources of Information
The data for the areas of gold mineralisation on the Kibi Gold Project and the geology of southern Ghana was obtained from Xtra-Gold. Tect and Pivot reviewed all of the available historical and current exploration work data and consider the data to be reliable.
The close-out date of the mineral resource database is July 30, 2021.
2.4 Participants, Qualifications, and Experience
The participants in the team consist of technical experts brought together by Tect and Pivot to estimate the Mineral Resources. These experts are Competent Persons as defined in the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) guidelines. The participants in the review and their individual areas of responsibility are listed as follows:
Dr Corné Koegelenberg - Structural-Economic Geologist
Ph.D. Structural Geology and Tectonics
M.Sc. Magmatic Sulphide Petrology and Ni-Cu-PGE mineralization
MGSSA, MSEG, Pr.Sci.Nat.
Dr Koegelenberg has 8 years exploration and consulting experience and has worked on more than 21 projects with experience in mapping, deciphering and 3D modelling of structurally complex, low- and high-grade, fold-and-thrust belt metamorphic terranes. He specializes in dynamic and kinematic structural analysis of Au-ferrous quartz-carbonate vein systems, high-grade metamorphic shear-hosted Cu-Co mineralization systems, whilst also having an academic background in magmatic sulphide and Ni-Cu-PGE mineralization processes in mafic to ultramafic complexes. He has extensive experience in advanced Micromine and Leapfrog Geo 3D modelling of structural networks, lithotypes, alteration and mineralization, combined with lithological and structural interpretation of geophysical and LandSat/ASTER data sets.
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Dr Ian Basson - Structural-Economic Geologist
Ph.D. Structural Geology
FGSSA, MSEG, AMSAIEG, Pr.Sci.Nat.
Dr Basson has 23 years of personal experience in 135 projects, 18 commodities and 38 deposit types throughout 23 African countries and the Middle East. He has performed consultant work on a total of 47 projects that address shear zone-hosted, vein-hosted, greenstone belt and Birimian gold mineralization in variably-metamorphosed terranes. This has included the interpretation and integration of geophysical surveys, field mapping, core logging, 3D geological modelling and reporting. He has published 32 peer-reviewed papers to date, excluding conference abstracts and presentations. In 2002, he founded Tect Geological Consulting, which specializes in the application of structural geology to exploration and mining projects and deposits at all stages of development. The focus of the company is to resolve complex structural environments and the way that they affect deposition, evaluation, mining and geohydrological modelling.
Ken Lomberg, Director (Geology and Resources), Pivot
B.Sc. (Hons) Geology, B.Com., M.Eng., FGSSA, Pr.Sci.Nat.
Project Management, Mineral Resources, Geological Interpretations, Site Visits, Report Preparation
Mr Lomberg has some 35 years' experience in the minerals industry (especially platinum and gold). He has been involved in exploration and mine geology and has experience in the technical development of mining projects from inception to full production. He is a respected professional with advanced capability, particularly in project management and Ore Reserve and Resource estimation as a result of his exposure to a wide range of mineral sector consulting assignments. Mr Lomberg has undertaken Mineral Resource and Reserve estimations and reviews for platinum, chromite, gold, copper, uranium and fluorite projects. He has assisted with the reviews or estimation of diamond and coal projects. He has assisted with or compiled Competent Persons Reports/NI 43-101 for various companies that have been listed on the TSX, JSE and AIM.
2.5 Independence
Neither Tect nor Pivot, or the key personnel contributing to the completed and reviewed work, has any interest (present or contingent) in Xtra-Gold Resource Corp. (Xtra-Gold) or its subsidiaries, its directors, senior management, advisers or the mineral properties reported on in this report. The proposed work, and any other work done by Tect and Pivot for Xtra-Gold, is strictly in return for professional fees. Payment for the work is not in any way dependent on the outcome of the work, nor on the success or otherwise of Xtra-Gold's own business dealings. There is no conflict of interest in Tect or Pivot in undertaking the assignment as contained in this document.
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2.6 Site and Technical Visits
Dr Koegelenberg has undertaken two visits to the Kibi Project Area. Firstly, over the period 1 - 12 September 2019, and secondly, 29 November - 10 December 2020. The first visit was solely to conduct structural field mapping, review of selected drill core and 3D structural modelling relevant to Zone 5 (Cobra Creek). The second visit focussed on structural drill core reviews, structural field mapping and 3D structural and mineralization modelling of targets and prospects situated in Zones 1 - 4, which contain the mineral resources described in this report.
Mr Lomberg accompanied Tect geoscientists on the second visit, when several trenches, road cuts and drill hole collars were visited and evaluated in the field for mineralization style and appropriate trench and drill hole sampling methods. At site, the storage sheds and sampling areas were examined, as well as the data room and recent drill core.
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3 RELIANCE ON OTHER EXPERTS
This report was prepared as a National Instrument 43-101 Technical Report, in accordance with Form 43-101F1, for Xtra-Gold, the issuer, by Tect Geological Consulting and Pivot Mining Consultants Pty Ltd. The quality of information and conclusions contained herein are consistent with the level of effort involved in Pivot's services and is based on:
This report is intended to be used by Xtra-Gold, subject to the terms and conditions of its contract with Tect and Pivot. This contract permits Xtra-Gold to file this report as a Technical Report with Canadian Securities Regulatory Authorities pursuant to National Instrument 43-101, Standards of Disclosure for Mineral Projects. Any other use of this report by any third party is at that party's sole risk.
A final draft of this report was provided to Xtra-Gold, along with a written request to identify any material errors or omissions, prior to lodgement.
Neither Tect nor Pivot, nor the authors of this report, are qualified to provide extensive comment on legal facets associated with ownership and other rights pertaining to Xtra-Gold's mineral properties described in Section 4. Pivot did not see or carry out any legal due diligence confirming the legal title of Xtra-Gold to the properties.
Similarly, neither Tect nor Pivot nor the authors of this report are qualified to provide extensive comment on environmental issues associated with Xtra-Gold's mineral properties, as discussed in Section 4.
Tect and Pivot relied on Xtra-Gold for the information in respect of the Prospecting Permits and Environmental Permits.
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4 PROPERTY DESCRIPTION AND LOCATION
4.1 Property Description and Location
The Apapam Concession is located approximately 75 km north-northwest of Accra, in the East Akim District of the Eastern Region of Ghana, on the eastern flank of the Atewa Range near the headwaters of the Birim River (Figure 4.1). The centre of the concession is situated at approximately 6o 09' 30" West Longitude and 0o 34' 15" North Latitude (WGS 84). The Kibi Project area spans 3,365 ha and is located at the northern extremity of the Kibi Winneba Greenstone Belt (Figure 4.2).
Figure 4.1: Location of Xtra-Gold Concessions |
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Figure 4.2: Birimian Gold belts showing the location of the Kibi Project |
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4.2 Country Profile: Ghana
The Republic of Ghana (Ghana), formerly known as the Gold Coast, is located in West Africa on the Gulf of Guinea (Figure 4.1) and shares borders with Côte d'Ivoire (Ivory Coast) to the west, Togo to the east and Burkina Faso (formerly Upper Volta) to the north. To the south are the Gulf of Guinea and the Atlantic Ocean. Ghana has a total land area of approximately 239,533 km2. Ghana's capital city is Accra, which is located along the south-eastern coast.
Figure 4.3: Location of Ghana |
The Republic of Ghana was formed from the merger of the British colony of the Gold Coast and the Togoland trust territory in 1957. Ghana endured a series of coups before Lt. Jerry Rawlings took power in 1981 and banned political parties. After approving a new constitution and restoring multiparty politics in 1992, Rawlings won presidential elections in 1992 and 1996 but was constitutionally prevented from running for a third term in 2000. John Kufuor of the opposition New Patriotic Party (NPP) succeeded him and was re-elected in 2004. John Atta Mills of the National Democratic Congress won the 2008 presidential election and took over as Head of State. Mills died in July 2012 and was constitutionally succeeded by his vice president, John Dramani Mahama, who subsequently won the December 2012 presidential election. In 2016, Nana Addo Dankwa Akufo-Addo of the NPP defeated Mahama, marking the third time that Ghana's presidency has changed parties since the return to democracy.
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After several peaceful transitions to power, the generally smooth elections and peaceful transfer of power in January 2017 has confirmed Ghana as one of Africa's most stable democratic states (The World Bank 2017).
4.2.1 Economy
Ghana has a market-based economy with relatively few policy barriers to trade and investment in comparison with other countries in the region. The country is endowed with economically viable mineral and petroleum natural resources. Ghana's economy was strengthened by a quarter century of relatively sound management, a competitive business environment, and sustained reductions in poverty levels, but in recent years has suffered the consequences of loose fiscal policy, high budget and current account deficits, and a depreciating currency.
Agriculture accounts for about 20% of GDP and employs more than half of the workforce, mainly small landholders. Gold, oil, and cocoa exports, and individual remittances, are major sources of foreign exchange. Expansion of Ghana's nascent oil industry has boosted economic growth, but the fall in oil prices since 2015 reduced by half Ghana's oil revenue. Production at Jubilee, Ghana's first commercial offshore oilfield, began in mid-December 2010. Production from two more fields, Ten and Sankofa, started in 2016 and 2017 respectively. The country's first gas processing plant at Atuabo is also producing natural gas from the Jubilee field, providing power to several of Ghana's thermal power plants.
As of 2018, key economic concerns facing the government include the lack of affordable electricity, lack of a solid domestic revenue base, and the high debt burden. The Akufo-Addo administration has made some progress by committing to fiscal consolidation, but much work is still to be done. Ghana signed a $920 million extended credit facility with the IMF in April 2015 to help it address its growing economic crisis. The IMF fiscal deposits require Ghana to reduce the deficit by cutting subsidies, decreasing the bloated public sector wage bill, strengthening revenue administration, boosting tax revenues, and improving the fiscal health of Ghana's banking sector. Priorities for the new administration include rescheduling some of Ghana's $31 billion debt, stimulating economic growth, reducing inflation, and stabilizing the currency. Prospects for new oil and gas production and follow through on tighter fiscal management are likely to help Ghana's economy in 2018.
According to the African Development Bank (https://www.afdb.org/en/countries/west-africa/ghana/ghana-economic-outlook), the COVID-19 pandemic has significantly curtailed Ghana's economic growth momentum. Real GDP growth was estimated to decelerate from 6.5% in 2019 to 1.7% in 2020 due to the slump in oil prices and weakened global economic activity. Nonetheless, growth is expected to be sustained by a recovery in construction and manufacturing sectors, combined with favourable gold and cocoa prices. Inflation is expected to reach 10% in 2020 from 8.7% in 2019 due to pandemic-related interruptions in supply chains and expansionary monetary policy aimed at mitigating the economic impacts of COVID-19. The fiscal deficit is expected to widen to 10.5% of GDP in 2020 from 4.8% in 2019 due to revenue shortfall from weak economic activity and unanticipated increased health expenditure. The current account deficit is expected to narrow to 2.5% of GDP in 2020 from 2.8% in 2019 because of reduced demand for imports. Foreign exchange reserves maintained the previous year's level of 4 months of import cover as of July 2021. The Ghanaian cedi (GHȼ) currently valued at 0.17 USD, depreciated by 3.1% in 2020, compared with a 10% depreciation in 2019. Ghana remains at high risk of debt distress in the International Monetary Fund's 2019 Debt Sustainability Analysis because of solvency and liquidity risks. The public debt-to-GDP ratio reached 71% in September 2020 from 63% a year earlier. A banking sector reform, including recapitalization of banks and liquidation of insolvent financial institutions, has enhanced the overall resilience of the sector. Firm and household surveys reveal that during the partial lockdown, about 770,000 individuals experienced reduced wages, and 42,000 lost their jobs.
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4.2.2 Infrastructure
Local infrastructure consists of 110,000 km of roads (14,000km tarred and 96,000 km untarred), 947km railways, seven paved airport runways.
4.2.3 Population
Ghana has a population of about 32.4 million (2021) consisting of a number of ethnic groups (Akan 47.5%, Mole-Dagbon 16.6%, Ewe 13.9%, Ga-Dangme 7.4%, Gurma 5.7%, Guan 3.7%, Grusi 2.5%, Mande 1.1%, other 1.4%) and speaking various local languages (Asante 16%, Ewe 14%, Fante 11.6%, Boron (Brong) 4.9%, Dagomba 4.4%, Dangme 4.2%, Dagarte (Dagaba) 3.9%, Kokomba 3.5%, Akyem 3.2%, Ga 3.1%, other 31.2%). English is the official language. Various religions are practiced:- Christian 71.2% (Pentecostal/Charismatic 28.3%, Protestant 18.4%, Catholic 13.1%, other 11.4%), Muslim 17.6%, traditional 5.2%, other 0.8%, none 5.2% (2010 est.). Some 76.6% of the population are considered literate (CIA World factbook).
4.2.4 Gold in Ghana
(Quoted from THE WORLD BANK June 2017 shifting Ghana's competitiveness into a higher gear Ghana economic update 40pp.)
For centuries, gold and Ghana have been synonymous. Hundreds of years before the Portuguese sailors first arrived (late 1400s) along the coast of West Africa in search of gold, large quantities of this treasured metal had been mined and transported across the Sahara to North Africa. This trade helped to establish and support major trading centres in the Sahel along the course of the Niger River and contributed much to the main trading ports along the southern coast of the Mediterranean Sea.
The arrival of the European traders led to increased gold production within the forest areas of southern Ghana and the area became known as the Gold Coast. It soon became one of the most important gold-producing areas in the world and eclipsed other major producing areas in present day western Mali (Bambuk) and northern Guinea (Boure), which had been the earliest sources in West Africa that had fostered the development of several successive inland states/empires in the Sahel over a period of many centuries.
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For a period of almost 400 years (1490s to late 1800s), European traders competed vigorously for gold brought to the many forts and trading posts strung out along the Gold Coast. Most unfortunately, the gold business was much diminished for almost 3 centuries by the diabolical slave trade and the coastal forts soon became way-stations for West Africans carted off to the New World where they were enslaved as plantation workers. This period was very disruptive to the gold trade, which recovered only in the early to mid-1800s, after slave trading was abolished in most countries and curtailed by the British navy who intercepted slave ships along the coast of West Africa.
In the late 1800s, when the emerging European powers were carving up their respective interests in Africa, Great Britain emerged the dominant European power along the Gold Coast and claimed it as a British colony in the mid-1870s. This marked the beginning of a new era in gold mining in the region as foreign companies were able to acquire gold concessions from local chiefs in very prospective areas in the interior of the country. By the beginning of the 20th century, modern gold operations began to emerge in many districts of southern Ghana.
During the colonial period, gold exploration and production waxed and waned according to economic conditions in the world economy. There was a huge but brief gold rush at the very beginning of the 20th century, which coincided with the Boer War in South Africa, and a much more sustained rush throughout the 1930s when gold production reached historical highs and world-class operations developed at the famous Ashanti mine in Obuasi and in the Tarkwa, Prestea, and Bibiani districts
After World War II and leading up to Ghana's independence in 1957, the gold production remained substantial and the mines were critical to the economy of the new nation. However, the rising costs of production at a time of a fixed gold price made many of the existing operations marginally profitable, except for the Ashanti mine whose traditionally very high grades kept it amongst the premier gold producers in the world. In the early 1960s, the Government of Ghana bought out several of the marginal producers and formed the State Gold Mining Corporation. This parastatal company achieved very good results in the 1960s and early 1970s but a sustained lack of capital investment in the existing operations led to a downward spiral in production throughout the 1970s and early 1980s. Furthermore, there had been little if any new exploration since the 1930s, so no new producers were on the horizon.
It was not until the mid-1980s that the downward trend was reversed as a result of the implementation of a broad Economic Recovery Programme, which included a significant focus on the mining sector. This resulted in updated laws and regulations as well as fiscal incentives to attract foreign capital to carry out exploration and the development of new producers or the upgrading of existing gold operations. These new policies were extremely successful and created the necessary 'enabling environment' that culminated in huge capital expenditures on exploration and development projects.
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Dramatic increases in production were achieved and have been sustained for the past 20 years during which Ghana has been the largest gold producer in Africa and over the past few years the country has broken into the top ten world producers. Ghana's success has become a case history for many developing nations, especially with respect to stimulating exploration and mining.
During the latest exploration boom, much of the early interest naturally focused on previous producers and the implications of new treatment schemes to more effectively mine lower grade deposits at mines that had closed down. In addition, many of the older mines now had more reason to re-evaluate known resources on their extensive concessions and to bring in new ideas and ways to increase production. This was especially true at Obuasi where a new and enlightened management team undertook huge development schemes that greatly increased gold production from about 250,000 oz in the mid-1980s to almost 1 million ounces in the mid-1990s.
In addition, the Government's efforts to disassemble and privatize the exploration and mining assets of the State Gold Mining Corporation were finally successful in the early 1990s and subsequent developments have seen very impressive production increases. For example, in Tarkwa, the old underground operations were producing a very modest 20,000-40,000 oz/yr in the late 1980s through the mid-1990s but Goldfields started a very large low-grade open-pit operation in the late 1990s and saw production shoot up to over 300,000 oz by the end of the decade and for the past several years it has been the #1 producer in the country at over 600,000 oz/yr.
In addition, the Newmont group, which had inherited several prospects in the Ahafo area on the north side of the Sefwi Belt. discovered a world-class district that has very quickly become the third biggest producer in the country and keeps expanding production. Newmont is also now developing the very large Akyem deposit on the NE margin of the Ashanti Belt.
Ghana plans to maintain an 'enabling environment' for investment in the mining sector. This starts with a full commitment to good governance and the strengthening of democratic institutions that has gained the nation much favourable attention in recent times. It also includes modifying laws and regulations to improve the overseeing and administering of exploration and mining activities as well as establishing a fair and equitable distribution of the profits from mining in the country.
4.2.5 Overview of the Mineral Laws of Ghana
The Minerals and Mining Act, 2006 (Act 703) (the Mining Act) was enacted in 2006.
According to the Mining Act, all minerals are the property of the Republic of Ghana and are vested in the President in trust for the people of Ghana. Granting of the various mineral titles is done by the Minister responsible for mines on behalf of the President and on the recommendation of the Minerals Commission. Ghana is now using a cadastral system for new tenement applications where the country is divided into blocks that are 15 seconds of longitude by 15 seconds of latitude (approximately 21 hectares or 0.21 km2 in area).
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Table 4.1 summarises the characteristics and conditions for the various types of mineral titles as described in the Mining Act.
With mining leases, holders can hold up to 90% interest. The remaining 10% interest is held by the Government of Ghana. Pursuant to the Mining Act, the Government of Ghana acquires a 10% free carried interest in all mining leases by way of 10% share ownership in all Ghanaian corporations who hold mining leases.
4.3 Mining Tenure
Through its subsidiary companies, Xtra-Gold has three titles in the Kibi Gold Project including the Apapam Mining Lease (Figure 4.1). The Apapam Concession is a granted mining lease, whereas the other two titles are currently applications that have been submitted to the Minerals Commission (Table 4.2).
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Table 4.2: Mineral Tenements of the Kibi Gold Project |
||||||
Title Number |
Name |
Type of |
Area (km2) |
Date of |
Date Granted |
Expiry Date |
LVB 5191/09 |
Apapam |
Mining Lease |
33.65 |
|
18/12/2008 |
17/12/2015 |
RL5/44 |
Akim Apapam |
Reconnaissance Licence Application |
3.80 |
15/1/2008 |
Pending |
N/A |
PL5/260 |
Forest Reserve Prospecting Licence Application |
Forest Reserve Prospecting Licence Application |
25.49 (2 Blocks) |
08/08/2018 |
Pending |
N/A |
Figure 4.4: Map showing the Three Properties of the Kibi Gold Project |
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4.4 Licence Status
Xtra-Gold holds five (5) concessions in the Kibi Gold Belt (Figure 4.5), including the Apapam mining lease located on the eastern flank of the Atewa Range, and four (4) contiguous mining leases situated on the western side of the Atewa Range, for a total land position of approximately 226 km2 (22,600 ha) (Table 4.3).
Figure 4.5: Xtra-Gold Mining Leases Located in the Kibi Gold Belt |
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4.4.1 Apapam Mining Lease
The Apapam Mining Lease is stamped as No. LVB 5191/09 by the Lands Commission, registered as No. 24/2009 at the Land Registry, and has the File No. PL.5/142 at the Minerals Commission of Ghana.
The concession boundaries have not been legally surveyed but are described by Latitude and Longitude coordinates via decree, with the mining lease boundaries defined by a series of pillar points in Latitude and Longitude coordinates utilizing the local Accra 1929 datum based on the British War Office (1926) ellipsoid. The concession pillar points as described by the Minerals Commission are depicted / listed on Figure 4.6.
Figure 4.6: Apapam Mining Lease Boundary Pillar Points |
Xtra-Gold Mining Limited, which is 90% owned and controlled by Xtra-Gold with the remaining 10% interest being held by the Government of Ghana, is the registered holder of the Apapam Mining Lease. Pursuant to the Mining Act, the Government of Ghana acquires a 10% free carried interest in all mining leases by way of 10% share ownership in all Ghanaian corporations who hold mining leases.
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While the mining lease expires in 2015 it can be renewed for a further 30-year term, in accordance with the Mining Act, by Xtra-Gold Mining making application not less than six months prior to the expiry date.
All the required documentation to extend the lease for the Kibi Project for 15 years from December 17, 2015 has been submitted to the Ghana Minerals Commission. As these extensions generally take years for the regulatory review to be completed, Xtra-Gold is not yet in receipt of the extension approval. However, until Xtra-Gold receives the extension documents, the old lease remains in force under the mineral laws. The extension is in accordance with the terms of application and payment of fees to the Minerals Commission of Ghana (Mincom).
Pursuant to the terms and conditions of the Apapam Mining Lease, Xtra-Gold was granted surface and mining rights by the Government of Ghana to work, develop and produce gold in the mining lease area (including the processing, storing and transportation of ore and materials).
4.4.2 Apapam Mining Lease Boundary Agreement
After the grant of the Apapam Mining Lease, the Minerals Commission implemented the cadastral system as required under the Minerals and Mining (Licensing) Regulations 2012 (L.I. 2176). As a result of the implementation of the cadastral system it became necessary for the common boundary shared by the Apapam mining lease and the Akoko mining lease to be readjusted / modified to conform with the cadastral blocks created by the new cadastral system.
Xtra-Gold Mining Limited and Akoko Goldfields Limited subsequently entered into a mutual consent agreement on September 26, 2016, giving the authority to the Mineral Titles Division of the Minerals Commission to readjust / modify the common boundary between the Apappam and Akoko mining leases to conform to the cadastral system with relation to the four (4) cadastral blocks depicted on the Kibi Gold Project Cadastral Plan (Figure 4.4). The boundary agreement was filed with the Minerals Commission on November 1, 2016.
4.4.3 Akim Apapam Reconnaissance Licence Application
Xtra-Gold's land position in the Kibi Gold Project area also includes the Akim Apapam reconnaissance licence application, contiguous to the southwest extremity of the Apapam mining lease (Figure 4.4). The reconnaissance license application for this 3.80 km2 ground parcel was submitted to the Minerals Commission on January 15, 2008, in the name of Xtra-Gold Exploration Limited. The application area was originally 7.0 km2 but was reduced to its current 3.80 km2 (18 cadastral blocks) by the Minerals Commission in 2015 to conform with the new cadastral system.
The application was approved by the Minerals Commission on January 18, 2019, but as at the date of this Report, the reconnaissance licence is still being processed by the Minerals Commission, and Xtra-Gold has yet to receive legal title to this ground. Xtra-Gold has conducted limited exploration work on the Akim Apapam application ground.
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4.4.4 Forest Reserve Prospecting Licence Application
The Kibi Gold Project land position includes a Prospecting Licence Application to conduct mineral exploration activities within the fringes of the Atewa Range Forest Reserve bordering the Apapam mining lease and the Akim Apapam reconnaissance licence application (Forest Reserve Application) (Figure 4.4). The Forest Reserve Application, covering a total area of approximately 25.49 km2, encompasses two blocks: a northern block of approximately 10.29 km2 (49 cadastral units); and a western block of approximately 14.91 km2 (71 cadastral units). With the approximately 450 m gap between the two blocks occupied by the Company's Pameng mining lease (Figure 4.5). The current Forest Reserve Application supersedes the November 13, 2009, Apapam mining lease extension application.
The application process for mineral rights within a Forest Reserve requires two separate permits: a Forest Entry Permit from the Forestry Commission; and a Prospecting Permit from the Minerals Commission. The application for the Forest Entry Permit was submitted on June 20, 2017, with the Forest Entry Permit granted by the Forestry Commission on October 17, 2018. The Prospecting Licence Application was submitted on August 8, 2018, and as at the date of this Report, the application is still being processed by the Minerals Commission.
4.5 Holdings Structure
The corporate holdings' structure is summarised in Figure 4.7.
Figure 4.7: Xtra-Gold Holdings Structure |
4.6 Royalties and Agreements
With respect to the Apapam mining lease, Xtra-Gold are:
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Required to obtain an annual operating exploration permit ("operating permit") from the Inspectorate Division of Minerals Commission, which is currently a fee of GH¢5,000 (approximately US$833), to conduct prospecting activities on the concession.
Upon the grant of the renewal/extension of the mining lease from the Minister of Lands and Natural Resources, Xtra-Gold will be required to pay the following:
◾ Committed to pay a royalty in each quarter to the Government of Ghana, through the Commissioner of Internal Revenue, based on the production for that quarter within 30 days from the quarter end as well as a royalty on all timber felled in accordance with existing legislation;
◾ Required to:
● Commence commercial production of gold within two years from the issue date of the mining lease.
● Conduct operations with due diligence, efficiency, safety and economy, in accordance with good commercial mining practices and in a proper and workmanlike manner, observing sound technical and engineering principles using appropriate modern and effective equipment, machinery, materials and methods and paying particular regard to the conservation of resources, reclamation of land and environmental protection generally and
● Mine and extract ore in accordance with the preceding paragraph, utilizing methods which include dredging, quarrying, pitting, trenching, stoping and shaft sinking in the Apapam lease area.
Xtra-Gold are required to furnish to the government authorities of Ghana, comprising the Minister of Lands, Forestry and Mines, the Head of the Inspectorate Division of the Minerals Commission, the Chief Executive of the Minerals Commission and the Director of Ghana Geological Survey (government authorities), with technical records which include:
◾ A report in each quarter not later than 30 days after the quarter end to the government authorities in connection with quantities of gold won in that quarter, quantities sold, revenue received and royalties payable.
◾ A report half-yearly not later than 40 days after the half year end to the government authorities summarizing the results of operations during the half year and technical records, which report shall also contain a description of any geological or geophysical work carried out by the company in that half year and a plan upon a scale approved by the head of the inspectorate division of the minerals commission showing dredging areas and mine workings.
◾ A report in each financial year not later than 60 days after the end of the financial year summarizing the results of the operations in the lease area during that financial year and the technical records, which report shall further contain a description of the proposed operations for the following year with an estimate of the production and revenue to be obtained.
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◾ A report not later than three months after the expiration or termination of the Apapam mining lease, to the government authorities giving an account of the geology of the lease area including the stratigraphic and structural conditions and a geological map on scale prescribed in the mining regulations.
◾ A report not less than 21 days in advance of the proposed alteration, issuance or borrowing to the government authorities (except for the head of the inspectorate division of the minerals Commission and the Director of Ghana Geological Survey) of any proposed alteration to the applicable regulations.
◾ A report not less than 21 days in advance of the proposed alteration, issuance or borrowing to the government authorities (except for Head of the Inspectorate Division of the Minerals Commission and the Director of Ghana Geological Survey) on the particulars of any fresh share issuance or borrowings in excess of an amount equal to the stated capital of Xtra-Gold Mining.
◾ A copy of Xtra-Gold Mining's annual financial reports to the government authorities (except for the Head of the Inspectorate Division of the Minerals Commission and the Director of Ghana Geological Survey) including a balance sheet, profit and loss account and notes thereto certified by a qualified accountant, who is a member of the Ghana Institute of Chartered Accountants, not later than 180 days after the financial year end; and
◾ Such other reports and information in connection with the operations to the government authorities as they may reasonably require.
All gold production will be subject to a production royalty of the net smelter returns (NSR) payable to the Government of Ghana.
The Kibi Gold Project is not subject to any back-in rights, payments or other agreements and encumbrances.
4.7 Environmental Liabilities
All exploration activities in Ghana are subject to regulation by governmental agencies under various environmental laws. These laws address emissions into the air, discharges into water, management of waste, management of hazardous substances, protection of natural resources, antiquities and endangered species, and reclamation of lands disturbed by mining operations. Compliance with environmental laws and regulations may require significant capital outlays and may cause material changes or delays in intended activities.
An Environmental Permit for Mineral Exploration is required from the Environmental Protection Agency (EPA) to carry out prospecting activities on any type of mining licence in Ghana. Xtra-Gold was granted a two-year mineral exploration permit to conduct its exploration work on the Apapam Mining Lease which expired on May 9, 2021. An application for the renewal of the environmental permit was submitted to the EPA on May 10, 2021, and as at the date of this Report, the EPA has yet to issue a new environmental permit to cover the ongoing exploration activities on the concession. It is accepted practice in Ghana for a mining company to carry on with its exploration activities while awaiting for the EPA to process an application for an environmental permit. The granting of environmental permits by the EPA can take several months.
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The project is not subject to any known environmental liabilities except as set forth below:
In accordance with the rules and regulations of the Environmental Protection Agency (EPA) of Ghana, the open trenches excavated by Xtra-Gold must be backfilled after mapping and sampling has been completed. Xtra-Gold has adopted a program of backfilling all excavations once mapped and sampled; however, some trenches have been preserved for ongoing exploration purposes and comparison with drilling. Drilling requires the construction of access roads and clearing of land for drill pads to accommodate the drill during operation. Xtra-Gold has adopted a policy of keeping the width of access roads and size of drill pads to a minimum to mitigate the impact on the vegetation. Also, drill cuttings are collected in sumps with the sumps backfilled after the completion of the drill hole.
In areas where there is a lawful surface holder or occupier, Xtra-Gold is required under the Mining Act to pay compensation when land is disturbed, in most cases this is related to the disturbance of crops during access road construction and trenching / drilling activities. Reasonable / fair crop compensation terms are always negotiated with the farm owners prior to the start of exploration work and Xtra-Gold has a good working relationship with the local communities.
Xtra-Gold is not responsible for small-scale artisanal and alluvial mining that has taken place across the project area.
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5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY
5.1 Access
The concession is located approximately 75 km north-northwest of Accra and can be accessed by two asphalted secondary highways. Access to the Kibi Gold Project can be achieved by driving approximately 75 km northwest from Accra on the paved Accra-Kumasi Trunk Road which is the main national highway. A tarred road emanating from the Accra-Kumasi Trunk Road approximately 15 km northeast of Kibi dissects the north-central and south-eastern portions of the Kibi Gold Project, while the tarred road servicing the town of Apapam provides access to the south-western extremity of the project.
A network of foot paths and tracks link most of the communities within the concession areas and provide access to the areas where exploration and drilling have been taking place. Xtra-Gold constructed a number of roads and 4WD tracks to provide access to the drill sites.
5.2 Climate
The climate within the area is equatorial with relatively high humidity throughout the year. Rainfall is generally characterised by two periods, with high and unpredictable rain especially during the peak period which falls in May/June with a second peak in September/October. The rainfall per annum is some 2700 mm (Figure 5.1). The dry season is generally from January to February. Temperatures ranges between 22°C and 35°C (Figure 5.2: Average Monthly TemperaturesFigure 5.2). Operations can be undertaken throughout the year.
Figure 5.1: Average Monthly Precipitation |
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Figure 5.2: Average Monthly Temperatures |
5.3 Physiography
The topography of the Apapam Concession is characterized by steep sloping ridges and undulating mountain side hills due to the prominent, NNE trending Atewa Range that is about 50 km long and 10-15 km wide and dominates the area. The range consists of steep-sided hills with fairly flat summits as the last remains of the Cenozoic peneplain that once covered southern Ghana, and contains ancient bauxitic soils. The steep flanks feature a wide variety of high canopy tropical hardwoods typical of south-western Ghana whereas the summit has a diverse flora, including extensive hanging vines. The range is the site of an important forest reserve, and the source of the Birim River and its tributaries drain the area. The Birim River makes a long detour north and southwest around the Atewa range before joining the Pra River.
Relief in most parts of the Apapam Concession is quite modest (10-30 m) but changes abruptly at the base of the steep-sided flanks of the Atewa Range. The maximum elevation on the Range is about 780 m above mean sea level and stands well above the surrounding lowlands, which are at approximately 180-200 m above mean sea level.
A large area of the Atiwa range has been declared a Forest Reserve, including about 17,400 hectares of upland evergreen forest, rare for Ghana (Figure 5.3). The reserve is managed by the Forestry Commission of Ghana in collaboration with other stakeholders, key among them is the Okyeman Environment Foundation, which has restricted people from farming in the area and instead is trying to encourage eco-tourism. However, the reserve is under pressure from logging and hunting for bushmeat. It is also vulnerable to mining exploration activities since the reserve contains gold deposits as well as low-grade bauxite. The Apapam concession lies at the base and the lower flanks of the Atewa Range immediately adjacent to the boundary of the Forest Reserve.
The main vegetation of the area is basically moist deciduous forest which is characterized by thick canopy tall trees with a layer of shorter trees and evergreen shrubs in the undergrowth. The area is dominated by tropical hard wood species such as Odum, Wawa, Ofram, Asamfra, Mahogany, Teak, Bamboo and Okyenkyen. Tree crops such as cocoa, oil palm, coffee, mango and citrus are also found to be thriving well in the area.
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Figure 5.3: Map showing the Location of Atewa Range Forest Reserve Atewa Range (dark red area) with Forest Reserve (lighter green area) |
5.4 Local Resources and Infrastructure
Ghana has a fairly good network of paved highways and roads. Within the Apapam Concession, numerous tracks and paths are available for easy access to most points.
Power is available in larger towns and cities. The electrical grid follows the main secondary roads and most of the major villages in the Kibi District have electrical power. When the national power grid is not available, generators are used for backup power.
The district has quite a large population that is well spread out in many towns (1,000-5,000 population) and villages; small farming hamlets occur throughout the area. The district capital is Kibi (also Kyebi), which is also the seat of the Paramount Chief, or Okyehene, of the Akim people. Kibi is a small city with considerable infrastructure (schools, hospital, police headquarters, etc.). The major towns (Asaaman, Apapam, Kibi and Anyinam) have limited centralized pipe-born water supplies with most of the towns depending on wells and drill holes as well as nearby streams.
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Telephone communications are fairly stable and mobile cellular phones are typically used outside of centralized areas of Ghana. Communication are fairly easy due to the availability of the mobile communication network companies such as One Touch, Areeba and Tigo.
The infrastructure in the Kibi District is fairly well developed. The town of Kibi is a major regional centre with a population of over 8,000. Kibi is connected to the national electricity supply network, and hospital, postal and other community facilities are available. Extensive mining infrastructure is in place in all of the major gold producing areas of Ghana.
5.5 Land Use
The main land uses include secondary forest, subsistence and cash crop farming, and artisanal gold mining. Agriculture is the dominant economic activity of the area with about 60% of the labour population engaged in it (Atiwa District Assembly, 2012). The Birimian series forest ochrosol soil coupled with the moist deciduous forest vegetation enables the cultivation of crops and the rearing of livestock. Crops such as, plantain, cassava, maize, yam, cocoyam, oil palm cocoa and vegetables are cultivated in the districts.
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6 HISTORY
6.1 Project History
The Kibi District is one of the oldest gold-producing districts in Ghana. Virtually all of the past gold mining activity has focused on alluvial gold deposits in the many river valleys throughout the Kibi area.
6.1.1 Historic Alluvial Mining
This section largely cites Rae et al. (2006).
Past gold mining activity was mainly focused on alluvial gold occurrences in many river valleys throughout the area. Long before Europeans arrived, the local villagers mined the area for generations using traditional pitting methods to penetrate through 2-3 m of barren overburden into the underlying gravels, which are often quite rich in coarse gold.
The area was mentioned in early historical accounts as being dangerous to wander from well-established trails because of the myriad of pits throughout the district. The Akim district was very much coveted by the Ashantis in their rise to become a regional power over 200 years ago, because of its known wealth in gold, and unsurprisingly it was one of their earliest conquests.
Direct European interest in the area started mainly in the frenzied but short-lived gold rush that started in 1898. The 1902 concession map of the Gold Coast shows many small to quite large concessions covering virtually the entire Atewa Range and adjacent areas with most of the area under the control of Goldfields of Eastern Akim. Many of the concessions were concentrated along major streams coming off the range where extensive artisanal mining was evident.
The most famous of these areas was known as Pusu, a small village at the base of the northeast flank of the range, approximately 5km due north of the village of Asiakwa. Junner (1935) reported that Europeans started alluvial mining operations in this area in 1903 and continued intermittently until 1930. The area was known for coarse nuggets of gold and recorded production from the companies during the 1920s was over 8600 oz from about 298,000 m3 with a recovered grade about 0.5 g/m3 in the nearby Birim River, dredging was attempted in 1904-1905, but this initiative was unsuccessful.
6.1.2 Artisanal Mining
In February 1990 Kibi Goldfields International Ltd, which shares a boundary on the eastern side of the Saaman concession, carried out a pitting program involving ten reconnaissance pits, under the instructions of Minproc Engineers, a consulting company. From October 2006, vigorous illegal small-scale gold mining 'galamsey' activity for hardrock mining was ongoing at Abompe, also near the area. Extensive workings, including very numerous pits and underground stopes, extend over their working area. These reveal the presence of mineralized sheared quartz veins hosted in phyllite.
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The artisanal miners have identified some mineralized quartz veins and lodes in the Kibi district. As a result there is abundant evidence of small-scale mining activity i.e. the presence of shafts and pits.
6.1.3 Exploration
A London-based junior, Akim (1928), Ltd carried out some exploration and development work on the quartz vein at the Kibi Mine on the outskirts of the town of Kibi. It is likely that some of the other known vein occurrences in the area were also explored but apparently yielded little success.
When the exploration interest in Ghana picked up in the mid-1980s, properties in the area were applied for and granted to small Ghanaian companies, in some cases in partnership with foreign backers. Their interest was almost exclusively on alluvial gold. Two groups, Sun Gold International and Kibi Goldfields, acquired prospecting concessions on the north western and north eastern margins of the Atewa range.
The Sun Gold group of Chicago, USA was in partnership with the Akyem-Abuakwa Development Corporation and was granted two mining concessions (totalling 85 km2) in 1987 at Kwabeng and Pameng on the NW margin of the Atewa hills. Sun Gold was unable to finance the project and Shefford Resources of Toronto entered the picture in late 1988.
Shefford performed an initial evaluation, which proved encouraging, and then went immediately ahead with a full test-pitting program to assess the resource potential. This was followed by Minproc Engineers of Perth, Australia who completed a Bankable Feasibility Study in 1989. The project was then completely restructured whereby the mining leases were put into a new company, Goldenrae Mining Company, and Sikaman Gold Resources of Toronto amalgamated with Shefford. Sikaman then brought in a senior partner, the London-based ITM Group, who had a great variety of business interest throughout Africa, including management of some alluvial diamond operations in Angola.
The ITM Group provided additional equity funding and assisted in arranging debt financing with Dutch and German banks. The project went into production on substantial alluvial resources at Kwabeng in late 1990 and, although the resource base was well-confirmed by subsequent mining, the project encountered a variety of technical and financial difficulties and it eventually had to be closed down in late-1993.
In the early 1990s, the EQ Resources group of Toronto also picked up a large concession (Apapam) on the eastern flank of the Atewa range, covering the drainage of the upper Birim River in the vicinity of the town of Kibi. EQ carried out a successful pitting program, in cooperation with Goldenrae, with the intention of setting up a satellite production unit under Goldenrae management; however the demise of Goldenrae left this project in limbo. The successors to Goldenrae were eventually able to secure this prospecting concession after it had lapsed.
In the late 1990s, a private Australian company (Sword Construction) briefly operated a small, skid-mounted alluvial plant close to Osino on the Kibi Goldfields concession. They carried out some bulk sampling, which apparently confirmed earlier grade estimates, but equitable financial arrangements could not be worked out with Kibi Goldfields and the work ceased.
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Meanwhile, also in the early 1990s, the Kibi Goldfields group had brought in private financing by Canadian investors and commissioned a Pre-Feasibility Study by Minproc Engineers, which confirmed substantial alluvial resources close to Osino along a major tributary of the Birim River on the NE flank of the Atewa Range. Eventually a decision was made to purchase a dredge from Malaysia, which was transported to site, but funds ran short and the equipment remains unassembled on site.
There was another small alluvial operation (Narawa), which started up in the late 1990s, along the Birim River valley close to Osino. This also involved a small, skid-mounted plant but there are no details as to production levels, grades, etc. In any event, this was at a time when the price of gold was very low (less than 300 USD/oz) and the operation was short-lived.
Yet another group tried their luck, this time on the small concession held by the Asikam cooperative just north of Kibi. This project was taken over by Ashanti Goldfields who had inherited an alluvial gold plant through their takeover of the Midras Mining group that originally had alluvial prospects on the Ofin River, west of Obuasi. However, the Asikam concession had higher-grade resources, so a plant was set up close to the Birim River and mining started in the late 1990s. Midras produced 7,510 oz in 1998 but production dropped to 1,066 oz in 1999 and the operations ceased in that year. Again, it would seem that the low gold price was a major factor in the closing of this operation. It is also likely that gold production was too low to support an operation with the invariably high overheads associated with foreign management.
A local group, Bugudon Company Ltd, acquired a prospecting license in the early 1990s at the southern tip of the Atewa Range, in the general vicinity of Asamankese. This company formed a partnership with a Russian group with considerable experience in alluvial gold mining; they imported equipment from Russia and had apparently started some gold production, but this was not sustained and the project did not proceed. There seems to have been an acrimonious parting of the ways between the local and foreign partner.
In 2006, there was a small alluvial operation owned by Med Mining immediately south of the Pameng lease. This was a dry mining operation that has been operating for about two years. The project is said to be financed by a Turkish group and managed by Ghanaian personnel.
6.2 Ownership
Xtra-Gold Mining's interest in Kibi Gold Project was previously by way of a prospecting license granted by the Government of Ghana on March 29, 2004, covering a licensed area of 33.65 km2. In May 2008, Xtra-Gold Mining applied to the Government of Ghana to convert the Kibi prospecting license to a mining lease.
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When Xtra-Gold received parliamentary approval, the Government of Ghana granted and registered the Apapam mining lease to Xtra-Gold Mining on the following terms and conditions.
◾ The Apapam mining lease is dated December 18, 2008 and is owned and controlled by Xtra-Gold, as to a 90% interest; and is registered to a subsidiary of Xtra-Gold Mining.
◾ The remaining 10% free carried interest in Xtra-Gold Mining is held by the Government of Ghana.
◾ The Apapam mining lease had a seven-year term that expired on 17 December 2015.
All the required documentation to extend the lease for the Kibi Project for 15 years from December 17, 2015 has been submitted to the Ghana Minerals Commission. As these extensions generally take years for the regulatory review to be completed, Xtra-Gold is not yet in receipt of the extension approval. However, until Xtra-Gold receives the extension documents, the old lease remains in force under the mineral laws. The extension is in accordance with the terms of application and payment of fees to the Minerals Commission of Ghana.
Xtra-Gold have been granted surface and mining rights by the Government of Ghana to work, develop and produce gold in the Apapam lease area (including the processing, storing and transportation of ore and materials).
6.3 Exploration
6.3.1 Bedrock Gold Deposits
Before the exploration work conducted by Xtra-Gold, very little systematic exploration work for bedrock gold deposits had been conducted in the Kibi area since the 1930s.
Although the Atewa Range is best known for extensive alluvial occurrences, the area also hosts several quartz vein prospects, which have attracted some attention. Numerous gold reefs (i.e. veins) were reportedly discovered during the course of this early alluvial mining, with the most noteworthy of these lode gold prospects being located on and/or in close proximity to Xtra-Gold's land positions, including the Clearing Reef (Kibi Mine) and Hill Reef (Gold Mountain), lying at the north-central extremity of the Apapam Concession. Although these lode gold prospects were reportedly worked or subjected to underground development by London-based mining syndicates in the early 1900s, it is unclear if they ever reached commercial production as there is no known gold production data available.
Cogill (1904) refers to minor prospecting work carried out on a narrow NW-trending vein at Kibi and a shallow shaft that was sunk close to the town of Kwabeng on another vein. Geological traverses in the early 1900s revealed minor gold in coarse clastics, which were identified as probably being equivalent to the Kawere Conglomerate of the Tarkwa district (Junner, 1935), while gold was also reported to be in some of the laterite capping the range.
Very little systematic work has been done on identifying bedrock sources of gold in the district. In the mid-1990s, Ashanti Goldfields had a reconnaissance license covering much of the area. They completed an airborne geophysical survey (magnetics and radiometrics) but apparently did very little follow-up ground work. In view of the widespread occurrences of alluvial gold, in valleys, along with a greenstone belt setting that is analogous with other belts in Ghana, the systematic evaluation of the lode gold potential was justified.
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On the northern outskirts of the town of Kibi is a small quartz vein occurrence (Kibi Mine), which was extensively explored in the 1920s (Annual Report of the Department of Mines, 1924, 1925). The work included a main shaft sunk to a depth of 48 m, with levels driven at depths of 20 m and 46 m (Junner, 1935). The targeted vein appears to contain fairly high but erratic values in gold. The gold is associated with pyrite, and the vein is generally quite narrow (usually from 10 to 100 cm wide) but has been traced for about 300m along strike.
Cogill (1904) reports work done on a large quartz vein in the immediate vicinity of the town of Kwabeng, on the northwestern flank of the Atewa Range, at the beginning of the 20th century. The exact location is not known but it is believed to be just north of town. At surface, the vein is quite massive and wide (up to about 7 or 8m) and several shafts were sunk to test its continuity and grade at depth. The vein strikes approximately ENE and dips 30-40° to the SE (Mining Yearbook, 1902-1903 for Kwaben Mines). The depth of the exploratory work was apparently at least 37 m, but specific details are lacking. The vein is apparently quite patchy in terms of gold values, with some sections assaying at >1oz/tonne, although overall grades were considerably lower. There were apparently plans to develop this into a small mine in 1903-04, but these plans were never realised and development work ceased a few years later. While carrying out alluvial prospecting in this area in the late 1980s, Goldenrae Mining stumbled across what is almost certainly the same vein, but all of the old shafts had collapsed. The nearby alluvial deposits show a slight increase in grade in this vicinity, no doubt because of their proximity to this vein.
6.3.2 Alluvial Gold Deposits
The early exploration work in this area by the Shefford/Sikaman team focused on carrying out extensive pitting to establish alluvial gold resources. These 1x1m pits on an initial 800 m x 100 m grid: where potential was found, a 200 m x 25 m grid was sampled. The pits were dug through 20-30 cm of the underlying weathered bedrock: some pits were up to 8 m depth but most were in the range 4-6 m with the overburden and gravel each being 2-3 m thick on average. Early testing indicated that the overburden was consistently barren so only the gravels were processed at the field site, using mainly small, portable units, which consisted mainly of a shaking screen with strong water spray and underlying sluice with an astro-turf bedding that captures most of the gold. Samples representing 50 cm intervals in the pits were processed and the volumes of each interval were carefully measured prior to processing.
The concentrates of heavy minerals from the astro-turf are taken to a central laboratory at the Kwabeng camp and subsequently panned carefully by an expert who can usually extract virtually all of the gold by hand. The gold is then weighed and placed in a glass vial for storage and future reference. In some cases, mercury has been introduced into concentrates with a substantial amount of fine-grained gold; the mercury is then burned off under a well-ventilated hood and the small 'sponge' of gold (± traces of Ag) left from the amalgam is then weighed and stored. In the vast majority of cases, the gold in the Kwabeng, Pameng, and Kibi areas is sufficiently coarse and the technicians are sufficiently adept at recovering the gold that mercury is rarely needed.
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6.3.3 Historical Exploration of the Apapam Concession
The general Apapam Concession area was first systematically explored in the late 1980s by the West Africa Resource Development and Investment Group Plc (WARDIG) who held a large tract of land extending from Pawtroasi in the south-west to Sajumasi in the north-east, encompassing the present Apapam ML and the Akim Apapam reconnaissance license application areas. In 1987 to 1988, RTZ Consultants Limited (RTZ Consultants) undertook preliminary exploration activities primarily designed to evaluate the alluvial gold potential. The work undertaken included sampling of quartz veining in alluvial test pits and along roads, and a compilation of the historical data on the Kibi Mine (Clearing Reef) lode gold prospect for WARDIG.
A zone of quartz veining, characterized by isolated quartz stringers, lenses and a 1m wide vein system was also located along the Kibi-Apapam road (Birim Valley) during the 1987-1988 reconnaissance exploration program. A 32 m-long trench was excavated to further expose the vein system and 11 samples were collected from the more prominent quartz veins/lenses. This sampling yielded gold values that were less than detection limit and/or just above detection limit in the <0.01 g/t to 0.025 g/t range. This veining occurrence was located and sampled by Xtra-Gold in 2006, with seven (7) samples yielding similar gold values at the detection limit. Sampling of four (4) greywacke-hosted quartz vein occurrences intersected by test pits along the Birim Valley yielded gold grades of between <0.01 g/t to 0.52 g/t.
In the late 1980s, most of the major valleys extending to the summit of the Atewa Range were subjected to geological mapping and stream geochemistry as part of a lateritic gold reconnaissance program conducted jointly by Sikaman Gold Resources and BHP Minerals Ghana Inc. This work was undertaken under a special permit issued by Mincom.
In the mid-1990s, Ashanti Goldfields Company Limited (now AngloGold Ashanti Ltd.) held a reconnaissance license covering much of the area. They completed an airborne geophysical survey (magnetics and radiometrics) but apparently did very little follow-up work. In the late 1990s, Ashanti Goldfields set up an alluvial processing plant on the banks of the Birim River on the Midras Mining concession, located immediately north of the Apapam Concession.
6.4 Mineral Resource
During July to October 2012 SEMS Exploration undertook a mineral resource estimate for Zones 2 and 3 of the Kibi Gold Project. The estimate, based on all exploration drilling completed as of June 2012, is presented in Table 6.1. The mineral resource estimate was prepared in compliance with the Definitions and Guidelines of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM Standards). All work was carried out using DatamineTM software. Data were verified in accordance with standard QA/QC procedures.
The database consisted of 256 drill holes covering sampling Zones 1 to 4 of the Apapam Concession. Ninety percent (90%) of these drill holes occur in Zones 2 and 3. Within Zones 2 and 3, five separate mineralised bodies (Big Bend, Double 19, East Dyke, Mushroom, South Ridge) have been defined by 190 drill holes, of which 88% are diamond drill holes.
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The five targets cover a combined strike length of 1.6 km, with separations between the mineral resource areas varying from almost contiguous to 200 m for four of the targets occurring in Zone 2 and the fifth target of Double 19 lying 500 m to the southwest in Zone 3.
The 2018 - 2019 South Ridge drilling data was outsourced to Goldspot Discoveries Inc. (Goldspot) of Montreal, Canada for integration into an updated 3D geological model of the Zone 2 - Zone 3 Mineral Resource footprint area. The new 3D geological model was completed by Goldspot in late July 2019, with detailed modelling geared towards the identification of prospective litho-structural gold settings to help guide upcoming resource expansion drilling efforts.
6.5 Mineral Reserve
No Mineral Reserves have been declared.
6.6 Historical Production
There has been no historical production.
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7 GEOLOGICAL SETTING AND MINERALIZATION
7.1 Regional Geological Setting
Xtra-Gold's Kibi Project is hosted within the Kibi Belt, which forms the northern continuation of the Paleoproterozoic Greenstone Kibi-Winneba Belt (KWB), located in south-western Ghana. Ghana's geology is generally described as part of the Guinea Shield of West Africa. It is broadly divided into four major lithotectonic terranes or settings, viz. Phanerozoic Costal Basins, Pan-African Mobile Belts (Neoproterozoic), Neoproterozoic to Cambrian platform sediments and Paleoproterozoic basement complexes, including the KWB (Figure 7.1).
Figure 7.1: Simplified Geology and Major Lithotectonic Complexes of Ghana
(adapted from Geological Survey Department of Ghana - www.ghana-mining.org). |
Paleoproterozoic Basement Complexes, on a regional-tectonic-scale, form part of the West African Craton (WAC) that is exposed as a series of inliers and shields located in the northern and southern sections of the craton, while the central portion is covered by largely Mesoproterozoic to Palaeozoic sedimentary cover sequences (Figure 7.2). The southern section of the West African Craton (sWAC) is assigned to the Man-Leo Shield, which comprises regional sequences of volcanic, volcanoclastic and silicilastic successions of the Birimian Supergroup, which were deposited in (sub-)basins immediately prior to and during the regional Eburnean Orogeny between ca. 2160 and 1960 Ma (Grenholm et al., 2019, and references therein) - also referred to as the Birimian Orogen of West Africa .
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Figure 7.2: Geology of the Man-Leo Shield in the southern West African Craton
Geological map of the Man-Leo Shield in the southern West African Craton (sWAC), including Birimian crust in the Paleoproterozoic Baoule Mossi domain Kedougou-Kenieba Inliers (KKI), Sao Luis Craton (SLC), and Archean crust in the Kenema-Man domain. Location of SLC after Klein and Moura (2008). Inset show location of the Man-Leo Shield in the West African Craton (WAC). Modified after Milesi et al. (2004). As - Ashanti series; Ta - Tarkwaian series; Ku - Kumasi series; Se - Sefwi series; CS - Comoe-Sunyani series; Ma - Maluwe series; Na - Nangodi series; BB - Bole-Bulenga domain; La - Lawra series; Bo - Boromo series; KT - Kedougou-Tumu domain; Go - Goren series; OG - Oudalan-Gouroul domain; OF - Ouango-Fitini Shear zone; HC - Haute Comoe series; HB - Hana Lobo-Bandama-Banfora series; It - Ity-Toulepleu inlier; BB - Boundiali-Bagoe; Bo - Bogouni; Si - Siguiri series; Ko - Kofi series; DD - Diale-Dalema series; Ma - Mako series. After Grenholm, et al. (2019) |
In Ghana, the KWB forms part of a series of north- to northeast-trending greenschist facies volcanoclastic to volcano-plutonic belts and sub-greenschist facies supracrustal basins, which are relics of the Birimian Orogen. These comprise, stratigraphically upwards, the Sefwi Group (ca. > 2174 Ma) and Kumasi Group (ca. 2154 - 2125 Ma), both assigned to the Birimian Supergroup and representing an early-tectonic pulse of volcanism and sedimentation. The Birimian Supergroup is, in turn, unconformably overlain by the Tarkwa Group (ca. 2107 - 2097 Ma) (also referred to as the Tarkwanian Supergroup), which represents a later tectonic pulse between 2115 and 2080 Ma. The entire sequence is host to contemporaneous voluminous early- (ca. 2270 - 2120 Ma) to late-tectonic granitoids (ca. 2120 - 2070 Ma) (Figure 7.3).
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Figure 7.3: Simplified Stratigraphy of Ghana |
The evolution of the regional Eburnean Orogeny (Perrouty et al., 2012, and references therein; Figure 7.3) is described as transitional between two phases: firstly, an accretionary or converging plate-subduction phase (ca. > 2.16 Ga) (D1) and secondly, an eventual plate-collision phase (D3 - D6) that peaked from 2.16 to 2.07 Ga. The accretionary phase is largely underpinned by the deposition and deformation of the Sefwi Group, which describes early supracrustal mafic to felsic volcanism and the deposition of coeval volcaniclastic and silicilastic sequences in an intra-volcanic arc setting, while lateral facies variations are attributed to the proximity of eruptive vents and distal marginal basins. In contrast, the overlying Kumasi Group comprises relatively deep water (low-energy deposition) phyllites and subordinate volcaniclastic sediments that reflect basinal extension or subsidence (D3), localized within an overall converging plate-subduction setting (deep frontal- or back-arc basin setting?). The unconformably-overlying Tarkwa Group, in turn, comprises predominantly shallow water sediments, which represent final basin inversion, towards eventual plate collision (viz. D3 - D6).
The margins of the KWB, along with the Ashanti, Asankrangwa and Sefwi Belts to the west, are bound by regional-scale major faults, which have throughout the Eburnean Orogeny been subject to repeated reactivation. These major faults are inferred to have acted as thrusts during plate margin convergence, accretion and collision (D1 - D3), but were in turn, re-activated to accommodate increasing lateral tectonic escape during eventual plate margin collision and peak burial metamorphism (D3 - D4). This gave rise to increased oblique-strike-slip kinematics (sinistral-reverse) along major faults (viz. D4). A subordinate, late-tectonic, sub-horizonal crenulation cleavage, cross-cutting earlier D1-4 structural features, is tentatively attributed to late- tectonic loading (D5), while reverse faults associated with late-stage mineralization from 2092 to 2063 Ma crosscut all earlier features (D1-5) and are assigned to D6.
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7.2 Geology of the Kibi Belt
The KWB is the easternmost of the Birimian Greenstone Belts in southern Ghana. It is located east of, and parallel to, the well-endowed and world-renowned Ashanti Gold Belt, which hosts many of Ghana's active producing gold mines. The north-east trending Kibi Belt (KB), viz. the northern continuation of the KWB, is approximately 60 km long and 20 km wide. Its southern limit is truncated by a large granitoid batholith, whereas its northern extent is overlain by younger, flat-lying sediments of the Pan-African Voltain Supergroup. Locally, the geology of the KB is poorly established, compared to the Ashanti Gold Belt, largely due to the poor exposures, limited government survey mapping and the lack of formal exploration activities. The general Kibi Project area geology is summarized from Griffis (1998) and Griffis et al (2002), and a Kibi Gold Belt Geological Map derived from regional geological survey traverses and airborne aeromagnetic and radiometric data interpretations (Figure 7.4).
The Kibi Project area is topographically dominated by the steep-sided Atewa Mountain Range, exhibiting a relief of approximately 500 m with the surrounding valleys. Its flat summits attain an elevation of approximately 780 m above sea level. The Atewa Mountain Range is underlain by northeast trending Birimian Supergroup sequences (viz. the Sefwi Group), including altered basalts and andesites (greenstones) interleaved with phyllites, meta-tuffs, epi-diorite, meta-greywacke and chert. The broad valleys are underlain by thicker sequences of metasediments (greywacke, argillite, and phyllite), which are more susceptible to weathering and erosion.
The northwestern extremity of the Atewa Mountain Range is the type-locality for Birimian metasediments and metavolcanics. Regional traverses and airborne geophysical data indicate the presence of extensive volcaniclastics with narrower bands of mafic flows and mafic sills. Numerous, small, radiometrically-inferred plutons appear to be emplaced within the belt, as well as several northeast-elongated bodies within the metasediments along the western margin of the belt. In general, granitoids associated with fold belts in southern Ghana are of dioritic to granodioritic (intermediate) composition, while granitoids in low-amplitude basins are more felsic and of granodioritic to granitic composition. Fold belt-associated granitoids are suggested to have been emplaced as early sub-volcanic plutonism between 2179 and 2136 Ma (Hirdes et al, 1992) (D1); while more felsic granitoids are associated with peak burial metamorphism and plate margin collision (D3 - D6). The belt exhibits several north-northeast to northeast trending major and secondary structures/faults that are conspicuous from airborne geophysical data and topographic patterns.
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Figure 7.4: Geology of the Kibi Belt Source: Xtra-Gold (2012)
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7.3 Geology of the Kibi Project
The knowledge and understanding of the geology of the Kibi Project area has been advanced significantly by Xtra-Gold's on-going exploration since 2006, which provides significant increases in mapping, trenching, drilling and soil geochemistry data in an otherwise poorly-explored region. Notable advances include, but are not limited to, interpretations of licence-scale (covering all of Xtra-Gold's concessions) airborne VTEM, aeromagnetic and radiometric surveys (Geotech Airborne, 2011; SRK Consulting, 2011 and Tect Geological Consulting, 2020) spanning across all of Xtra-Gold's concessions (Figure 7.5). Moreover, field-based structural and lithological excursions and high-resolution 3D implicit geological and structural modelling on a target-scale on the Apapam Concession, targeting specifically Kibi Project Zones 1 - 5 (SRK Consulting 2010 and 2011; Tect Geological Consulting, 2019, 2020a and 2020b), have been instrumental in ground-truthing geophysical interpretations and deciphering licence- to target-scale geological settings and structural geometries.
Detailed geological mapping, constrained to Zones 1 - 5 (Figure 7.6), located along the north-western (Zones 1 - 4) and north-eastern margin (Zones 5, viz. Cobra Creek) of the Apapam Concession, which includes all of Xtra-Gold's modelled targets (this report), comprises observations made from lateritic gravel cover, bedrock geology mapping, trench and road-cut exposures, in addition to drill hole observations. However, due to dense vegetation and the relative scarcity of surface exposures, coupled with relatively broad drill hole spacing, correlation of lithologies remains challenging and geophysical data must be relied upon.
In general, lithological mapping, trenching and drilling indicate that Zones 1 - 4 are characterized by predominantly metasedimentary rocks interlayered with (saprolitic) granitoid to granodiorite and (saprolitic) mafic metavolcanic horizons (Figure 7.6). This metasediment-dominated sequence is at variance with historical geological maps (Figure 7.4), which depict a largely mafic metavolcanic sequence. Apart from regional correlations, these rocks are largely undifferentiated with respect to the Birimian Supergroup and overlaying Tarkwa Group, as well as associated intrusives.
Dominant metasediments are characterized by thinly-bedded, medium- to coarse-grained greywackes with siltstone intercalations, and phyllites that are often graphitic. Interlayered mafic to intermediate metavolcanic units (basalt/andesite) and/or mafic sills (dolerite/diorite?) are characterized by massive, medium-grained textures and typically range from 5 m - 30 m in thickness. Granitoid (granodiorite, quartz-diorite and tonalite) interlayers, previously interpreted as sills and/or dykes (offshoots from larger plutons?), are relatively thick, often > 40 m, and typically medium to coarse-grained.
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Figure 7.5: Regional Geophysical Interpretations | ||||
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Geotech Airborne, 2011 (Proxy lithological map) | SRK Consulting 2011 (Proxy lithological map and structure) | Tect Geological Consulting, 2019 (Proxy EM and radiometric domains, structure from 1VD and RTP images and interpreted kinematics) |
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Figure 7.6: Detailed Geology of the Kibi Project
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7.4 Structure - Overview
Undifferentiated metasedimentary and interlayered metavolcanics and granitoids are generally intensely deformed. A distinct D1(S1) and D2(S2) deformation event has been distinguished from aeromagnetic and radiometric datasets (e.g. SRK Consulting, 2012, Tect Geological Consulting 2019, 2020a and 2020b) and structural field observations. D1- and D2-associated feature recognition and the resolution of the regional-scale geophysical interpretations, down to a target- or outcrop-scale, is often difficult, although general trends are evident. Indeed, the complexity of folds (tight to isoclinal) and shears that define the target-scale structural settings of the Kibi Project area, often result in regional-scale and geophysically-interpreted shears/contacts/lineaments being misconstrued. A thus far consistent and robust structural inventory, with interpreted kinematics, has been established (Figure 7.7):
D1 (S1) - Bedding(S0)-parallel foliation and associated F1 isoclinal folds. Regional to licence-scale S1 foliations may be assumed to be sub-parallel to lithological contacts, which otherwise provide sufficient contrast on geophysical surveys. Associated features, including F1 isoclinal folds (viz. shear-folds) that show fold widths varying from centimetre-scale up to 200 m, are only observed on a target-scale. D1 is consistently and readily correlated with the regionally-defined D1, as described by Perrouty et al. (2012) (Section 7.1, Figure 7.3).
D2 (S2) - Regional- to licence-scale NNE- to NE-trending S2 foliations are consistently observed and characterised as a pervasive and penetrative axial-planar cleavage to tight- to isoclinal F2 folds. S2 cleavages are particularly well-defined in metasediments, which are prone to preferential cleavage development, compared to more rheologically-competent, interlayered metavolcanics and intrusions. S2 and associated F2 folds locally transpose and refold S1 and F1 foliations and folds. Moreover, regional- to licence-scale shears, that otherwise constrain, internally-dissect, segment and locally-transpose relict D1 domains defining the Kibi Belt, are assigned to D2. In this context, D2, may be compared/associated with regionally-defined D3-4 reverse-sinistral kinematics, as described by Perrouty et al. (2012) (Section 7.1, Figure 7.3).
Regionally-defined D5-6 structural features have not been observed (Section 7.1, Figure 7.3).
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Figure 7.7: Structure of the Kibi Project
Source: Tect Geological Consulting 2019 and 2020b |
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7.5 Structure - Kibi Project Area
The structural location of the Kibi Project area, i.e. the Apapam Concession, within the Kibi Belt is depicted in Figure 7.7. The northwestern portion of the Kibi Project (Zones 2-4) occupies a local antithetic, dextrally-sheared domain (D2a), within an overall sinistrally-sheared and transposed Kibi Belt (D2b). The central to southeastern portion (Zones 1 and 5-9) occupy a predominantly sinistral domain, approximating the eastern margin of the Kibi Belt. The local D2a antithetic kinematic behaviour is attributed to belt-scale asymmetrical boudinage of a relatively more competent metavolcanic sequence rimmed by less competent metasediments. Inter-boudin zones facilitate clockwise rotation of boudins in an overall, belt-wide sinistral shear setting or zone. D2a local features are subject to gradual D2b transposition and the reactivation of shears to eventual sinistral kinematics.
On a licence scale, Au mineralization in Zones 1-4, and arguably Zones 6 and 9, are situated on the limbs and hinges of tight to isoclinal F2 folds, which have widths in the range of approximately 0.5 km and unknown - but probably extensive - amplitudes exceeding fold widths by 3-4 times (Figure 7.7). F2 fold plunges are deceptive, considering that their limbs are largely shear-bounded and that folds may have been kinematically-rotated against D2 shear planes/zones. Major D2 shear zones are largely delineated by the interpretation of geophysical data and limited drill hole intersections, as well as major lithological or structural trend discontinuities (for example, the southeastern margins of Zones 2-4). More locally, on a target scale, well-defined mineralization zones (which are the subject of this mineral resource declaration), constrained to Zones 2-4, further occupy F1 isoclinal fold hinges. Other major features include northeast-trending D2 features
Relevant targets (the subject of this Mineral Resource declaration) are predominantly hosted in diorite, or mafic to intermediate metavolcanic layers or sills/dykes, which are juxtaposed against a metasedimentary contact. From these characteristics, several scales of structural control for auriferous mineralization may be ascertained for the Kibi Project:
7.6 Mineralization and Deposits
The Kibi Project is located on the Apapam concession and is thus far Xtra-Gold's only material project, which hosts the maiden Zone 2 - Zone 3 Mineral Resource Estimate (October 26, 2012). This includes the Big Bend, East Dyke, South Ridge and Mushroom targets in Zone 2, and the Double 19 target in Zone 3 (Figure 7.8). Collectively, these five gold targets, lying within approximately 1.6 km of each, other have been estimated to encompass an indicated mineral resource of 3.38 million tonnes grading 2.56 g/t gold for 278,000 ounces of contained gold and an additional Inferred Mineral Resource of 2.35 million tonnes grading 1.94 g/t gold for 147,000 ounces of contained gold (@ base case 0.5 g/t cut-off). The Zone 2 - Zone 3 maiden Mineral Resource represented the first mineral resource generated on a lode gold project within the Kibi Gold Belt. It was filed in accordance with National Instrument 43-101 (NI 43-101) requirements. The Technical Report is entitled "Independent Technical Report, Apapam Concession, Kibi Project, Eastern Region, Ghana", prepared by SEMS Explorations and dated October 31, 2012, filed under the Company's profile on SEDAR at www.sedar.com.
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Figure 7.8: Kibi Project Targets
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Relevant gold mineralization is characterized by auriferous quartz-carbonate, tensional vein arrays or stockworks hosted in either granodiorite, diorite and mafic to intermediate metavolcanic layers or undifferentiated sills/dykes. This is geologically-analogous to other intrusive- or metavolcanic-hosted gold deposits of Ghana, including Golden Star's Wassa Mine in the Ashanti Belt, Kinross Gold's Chirano and Newmont Mining's Subika deposits in the Sefwi Belt. These tensional vein arrays are generated where the abovementioned competent host lithologies undergo preferential strain, leading to fracturing and auriferous mineralization. Such sites are typically localized along host-metasediment contacts that define sheared fold limbs, fold hinges or apparent flexures. Auriferous vein arrays are penetrative into metasediments, but with a very limited extent.
Hydrothermal alteration adjacent to quartz-carbonate veins is highly variable, but in heavily-veined (stockworks) granitoid the assemblage is characterized by moderate to strong quartz, carbonate, chlorite and sericite alteration. This is also associated with patchy to pervasive sulphidisation in the form of disseminated pyrrhotite, pyrite and arsenopyrite (+/- sphalerite). Variations in alteration intensity in granitoid hosts is reflected in gold grade, with higher intensity alteration leading to higher Au grades, particularly in pervasive stockworks.
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Since the 2012 maiden Mineral Resource estimate, ongoing exploration has further delineated the Big Bend, East Dyke, South Ridge, Mushroom and Double 19 targets, and has also identified new targets, including Road Cut (Zone 2), Gate House (Zone 1) and Gold Mountain (Zone 1), which were at that time only subject to early-stage exploration (Figure 7.8). Currently, alongside the abovementioned targets, early-stage prospects include Boomerang West and East (Zone 3), JK West and East (Zone 3), Cobra Creek (Zone 5), Hillcrest Shear (Zone 6) and Akwadum (Zone 7).
The respective structural inventory of each target is summarized as below and in Section 14.2. The 3D structural and geological modelling of each target was undertaken in Leapfrog GeoTM. The underlying reports are Tect Geological Consulting 2019 and 2020b and are shown in Figure 14.2.
7.6.1 Big Bend
Big Bend target occupies an open F2a anticlinal hinge zone, that plunges steeply (53⁰) towards 078⁰ (078⁰/53⁰) (estimated from 3D model and triangle mesh orientations, in turn informed by structural analyses and drill hole intersections)(Figure 14.6). Big Bend's F2a fold geometry was partially transposed by an apparent D2b shear zone towards the east, thus kinematically-rotating the plunge direction more towards the NW (anticlockwise). Notably, the South Ridge target is considered a direct analogue, with a plunge of 033⁰-48, albeit less transposed by D2b (see below).
Mineralization consists of tensional arrays of auriferous quartz-carbonate veins. Vein geometries may be divided into three principal sets. The dominant vein set ranges between 259⁰/34⁰, 306⁰/49 and 289⁰/28⁰ (contoured maxima from Reflex IQ-Logger, kenometer and field measurements, respectively), and largely occupies extensional or shear-extensional geometries with respect to a pervasive S2 axial planar cleavage (133⁰/68⁰), confirmed by field mapping.
Secondly, an equally intense vein set (040⁰/38⁰) is orientated sub-parallel to a S1/S0 bedding-parallel foliation (previously recorded on downhole logs as cleavage) of 046⁰/60⁰, confirmed chiefly by IQL measurements. Lastly, and perhaps with the most varied in orientation, is a vein set ranging between 236⁰/34⁰ and 162⁰/26⁰ striking sup-parallel to S1/S0 bedding-parallel foliations, albeit dipping at opposite and high angles. Both orientations are consistent with D1/S1 flexural slip during folding, either occupying extensional to extensional-shears, or S1 (shear-) foliation-parallel geometries.
It remains unclear which particular set of veins are predominantly mineralized, if not all of them. However, the context of the target-scale structural setting and the spatial distribution of mineralization along the F2a fold hinge reasonably suggest that veins with a tensional relationship with S2 axial planar cleavage are preferentially mineralized. This rationale is supported by the smaller Road Cut target, a direct analogue to the immediate south, wherein similar vein geometries are recorded.
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7.6.2 Double 19
The Double 19 target occupies a tight to isoclinal F1 anticlinal hinge zone. The fold plunge ranges between 067⁰-52⁰ (derived from a fit to poles to measured bedding) and 084⁰-50⁰ (modelled bedding)(Figure 14.6). This is broadly consistent with axial-planar cleavages of 118⁰/57⁰ (field mapping) and 221⁰/48⁰ (IQL).
Mineralization consists of tensional arrays of auriferous quartz-carbonate veins. Vein geometries from field mapping and Reflex IQ-Logger measurements are conspicuous and show a dominant set with contoured maxima varying between 279⁰/42⁰ and 309⁰/29⁰. This vein set largely occupies extensional or shear-extensional geometries with respect to a pervasive S2 axial planar cleavage and shearing.
Veining is restricted to the diorite-metavolcanoclastic/metasediment contact and internally within diorite. Due to its relatively high competency, diorite is more prone to fracture much more, compared to metavolcanoclastic units;
7.6.3 East Dyke
East Dyke target occupies a closed to isoclinal F1 anticlinal hinge zone, partly defined by an undifferentiated mafic sill or metavolcanic layer with variable lateral thickness (boudinage/pinch-and-swell). Mineralization is constrained to diorite-metavolcanoclastic and mafic sill-metavolcanoclastic contacts, which manifest in 3 sub-targets in the inner and outer arc of the F1 anticline. The F1 anticline plunges steeply towards 078⁰-63⁰ (estimated from 3D model and triangle mesh orientations, in turn guided by the structural/kinematic analysis and drill hole intersections)(Figure 14.6). . Similarly to Big Bend, the initial F1 fold geometry was partially transposed by a D2b shear zone to the east, thus kinematically rotating the plunge direction towards the NW (anticlockwise);
Mineralization consists of tensional arrays of auriferous quartz-carbonate veins. Vein geometries are difficult to gauge, due to limited data. The most reliable vein set, from mapping data, shows a contoured maxima of 281⁰/46⁰, and corresponds with extensional or shear-extensional vein geometries with respect to a pervasive S2 axial planar cleavage (133⁰/68⁰), as derived from Big Bend mapping data. Other apparent vein sets or contoured maxima from drillcore logging range between 345⁰/27⁰ and 230⁰/32⁰, which are determined to be partial representations/populations of the high-confidence mapping data.
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7.6.4 Gold Mountain and Gate House
Gold Mountain and Gate House are the least-studied targets. Gate House comprises two inferred parallel shears hoisting auriferous quartz-carbonate veins, while Gold Mountain along strike to the south, comprising a single, similarly mineralized shear. Although with limited data, these apparent shears are interpreted to represent a single continuous shear zone;
The shear zone strikes NE and records overall subvertical to steep SE dips (124⁰/84⁰)(Figure 14.6). . It is structurally located to the south-east of a major D2b shear zone and a juxtaposed F2 isoclinal fold with extremely attenuated and possibly sheared limbs. This suggests that the mineralized shear facilitates F2 limb-parallel shearing;
Auriferous mineralization is predominantly hosted by granitoids (granite) and subordinate diorite, undifferentiated mafic units and metasediments. It is inferred that shearing or shears straddle and dissect the more competent above-mentioned units that are otherwise more prone to fracturing, followed by fluid ingress and Au mineralization;
More detail structural analysis is required to confirm shear zone kinematics, mineralized vein orientations and the overall depositional setting.
7.6.5 Mushroom
The Mushroom target occupies a tight F1 anticlinal hinge zone that plunges steeply at 063⁰-58⁰ (estimated from 3D model and triangle mesh orientations)(Figure 14.6);
Mineralization consists of tensional arrays of auriferous quartz-carbonate veins. Vein measurements are limited, but contoured maxima are 162⁰/26⁰ and 302⁰/43 ⁰. These orientations are consistent with pure extensional to extensional-shear fracture/veins geometries that dissect S0/S1 contacts at sub-normal angles;
Veins are restricted to the diorite-metavolcanoclastic/metasediment contacts and internally within diorite. Due to its relatively high competency, diorite is prone to more fracturing, compared to metavolcanoclastic/metasediments units. Diorite is also a geochemically-favourable host due to its relatively high Fe-Mg content, which may cause precipitation of Au and pyrite/pyrrhotite (depending on metamorphic conditions).
7.6.6 Road Cut
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Mineralization consists of tensional arrays of auriferous quartz-carbonate veins. Vein geometries from field mapping are conspicuous and show a dominant set at 306⁰/47⁰. This vein set largely occupies extensional or shear-extensional geometries with respect to a pervasive S2 axial planar cleavage (111⁰/65⁰), confirmed by field mapping;
Veining is restricted to the diorite-metavolcanoclastic/metasediment contact and internally within diorite. Due to its relatively high competency, diorite is prone to fracture much more, compared to metavolcanoclastic units.
7.6.7 South Ridge
South Ridge occupies a more pristine open F2a anticlinal hinge zone, with no apparent transposition by the D2b shear zone that has affected Big Bend and East Dyke. The fold plunges at 033⁰-48⁰, which is broadly consistent with an S2 (axial planar cleavage) contoured maxima of between 119⁰/61⁰ (field mapping) and 095⁰/55⁰ (IQL)(Figure 14.6). High resolution Reflex IQ-Logger readings are limited to only one drill hole, whilst field mapping data is spatially much more representative;
Mineralization consists of tensional arrays of auriferous quartz-carbonate veins. Vein geometries from field mapping are conspicuous and show a dominant set at 282⁰/33⁰. This vein set largely occupies extensional or shear-extensional geometries with respect to a pervasive S2 axial planar cleavage (119⁰/61⁰), confirmed by field mapping;
Veining is restricted to the diorite-metavolcanoclastic/metasediment contact and internally within diorite. Due to its relatively high competency, diorite is prone to fracture much more, compared to metavolcanoclastic units.
Early-stage prospects with known auriferous mineralization intercepts, including Boomerang East and Boomerang West, and JK East and JK West, are structurally-analogous to the Double 19 target, albeit with some geometrical variability as would be expected, as F1 isoclinal fold may be non-cylindrical and doubly-plunging. Similarly, the strike and down-dip extents of these prospects are potentially very similar to Double 19, gauged from the apparent scale of hosting F1 fold structures.
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8 DEPOSIT TYPES
8.1 Hydrothermal Gold Deposits of Ghana
The deposit types being targeted at the Apapam Concession consist of mesothermal or orogenic gold mineralization of the granitoid-hosted type and classic Ashanti-style sediment-hosted shear zones, which are likely to be linked with a major northeast-trending D3-4 (after Perrouty et al., 2012, and references therein; Figure 7.3) major fault along the eastern flank of the Atewa Range. At present, the predominantly diorite-hosted type accounts for the majority of the identified gold occurrences of potentially economic significance on the concession and is consequently the current focus of Xtra-Gold's exploration efforts. However, soil geochemistry, prospecting and geophysical data interpretation and historical auriferous quartz vein showings indicate that the concession is also prospective for Ashanti-style shear zone gold mineralization.
8.1.1 Shear-Hosted Gold Deposits of Ghana
Characteristics of the Ashanti-style shear zone hosted gold deposits are described as follows by Naas (2008). Mineralization associated with major D3-4 faults (after Perrouty et al., 2012, and references therein) or major belt bounding faults was the target for both local prospectors and foreign exploration companies, moreover due to the presence of coarse-grained visible gold. Deposits of this type in Ghana include Obuasi, Prestea, Bogosu, Konongo and Bibiani. There are several commonly-observed associations with this mineralization environment:
8.1.2 Granitoid-Hosted Gold Deposits of Ghana
Over 20 significant gold occurrences hosted by Belt and Basin-type granitoids are known in Ghana, with a number of these constituting significant deposits. The structural setting and mineralization style for Belt and Basin granitoid-hosted gold deposits are very similar in nature to the Ashanti-style, and probably just represent varying structural and host rock settings. These deposits represent a subtype of the orogenic gold deposits of the Ghanaian Birimian terrane. Belt-type intrusion-hosted gold deposits include Newmont Mining's Subika deposit, the largest deposit of the Ahafo Mine project and Kinross's Chirano deposits, both in the Sefwi Belt; and Golden Star Resources' Hwini-Butre deposit at the southern extremity of the Ashanti Belt. Basin-type granitoid hosted gold deposits include Perseus Mining's cluster of deposits at the Central Ashanti Gold Project and AngloGold-Ashanti's Anyankyerim and Nhyiaso deposits to the west of Obuasi, along the western flank of the Ashanti Belt.
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As opposed to the typical lode gold deposits of the Ashanti, Prestea and Bibiani districts, which were (re-)discovered by Europeans during the gold rush of the late 1800s, all of the aforementioned granitoid-hosted gold deposits have been discovered since 1990. Tectonically, the host intrusive bodies lie within or proximate to reactivated regional structures and have deformed in a brittle >>> ductile fashion. In terms of lithology, the Belt-type granitoids are most commonly of diorite to granodiorite composition, and the Basin-type granitoids of granodiorite to granite composition. Enhanced brittle deformation of granitoids, internally and along contacts, of granitoids, appear to have served as preferential conduits for fluid flow (due to their relatively high competency compared to their metasedimentary hosts). The emplacement of granitoid-hosted mineralization is considered contemporaneous with the main mineralizing episode that resulted in the more prevalent Ashanti-type Birimian metasediment/metavolcanic shear hosted deposits of Ghana (Figure 7.2). The mineralization typically consists of quartz vein stockworks and pervasive alteration zones developed in brittle structures in the granitoids. The ore mineral assemblage is mainly composed of pyrite, pyrrhotite and arsenopyrite, with minor chalcopyrite, sphalerite and rutile. Hydrothermal alteration minerals are dominated by quartz, sericite (muscovite), sulphides (mainly pyrite, pyrrhotite, and arsenopyrite) and carbonates. Gold tends to be closely associated with the sulphides in both quartz veining and alteration zones.
8.2 Gold Deposits of the Kibi District
Primary gold mineralization of potentially economic significance discovered to date on the Apapam Concession by Xtra-Gold (Sections 7.5 and 7.6.) consists predominantly of mesothermal/orogenic gold mineralization of the granitoid-hosted type. The gold is associated with quartz-albite-carbonate-sulphide stockwork or tensional veining developed in - or especially near - the margins of sills, dykes and possibly small plutons (stocks) of granodiorite, quartz diorite and tonalite bodies. Possible primary shear zone-hosted gold mineralization (e.g. Zones 1, 6-8 and 9) does occur within the concession, but these are still subject to the relatively early stages of exploration.
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9 EXPLORATION
9.1 2006 - 2007 Exploration Program
Two (2) separate work programs were conducted on the Apapam Concession during 2006-2007. The first work program was undertaken and managed by CME Consultants Inc. (CME), a Canada-based geological consultancy with over 15 years of project management experience in Ghana. The second program was undertaken and managed by Xtra-Gold personnel.
The Phase I exploration program was designed to test the Apapam Concession on a regional scale. The field work was implemented by CME from August 12 to September 23, 2006 and included:
◾ Concession-wide stream sediment sampling (88 samples collected from 44 sites);
◾ Survey grid establishment (33.78 line-km);
◾ Soil sampling (1,306 samples);
◾ GPS surveying (33.78 line-km);
◾ Rock sampling (89 samples); and
◾ Historical adit and bulldozer cut sampling (100 samples).
The Phase II exploration program consisted of a reconnaissance trenching program intermittently implemented by the Xtra-Gold exploration staff from February 2007 to December 2007. The trenching was carried out to test the geochemical signature at depth of the gold-in-soil anomalies detected within the north-western portion of the concession during the Phase I work program. A total of 542 channel samples were collected from 21 trenches totalling 1,090 linear metres. In order to obtain an independent assessment of the 2007 Xtra-Gold trenching results, a NI43-101 compliant data verification program was undertaken by CME in December 2007. The program involved the re-sampling of selected trenches which yielded exploration-significant gold mineralization intervals.
9.1.1 Phase I Exploration Program (2006)
Stream Sediment Sampling
A total of 88 samples were collected at 44 samples sites from two (2) major streams and their respective tributaries. These included 44 silt samples for geochemical analysis (Bulk Leach Extractable Gold - BLEG) and 44 pan concentrate samples for visual gold grain counts.
Stream sampling returned gold-in-silt values of up to 710 ppb located at the western extremity of the concession. Values greater than the threshold value (mean + 2 standard deviations) of 144 ppb are considered to be anomalous. Five (5) samples yielded values greater than the threshold value. Gold grain counts of the pan concentrates showed visible gold grains in 36 of the 44 samples ranging from two (2) small grains per sample up to 16 flakes. Grain sizes varied from flour to over 3 mm.
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The stream sediment anomalies are divided into two (2) zones as follows:
◾ Zone A (Adansu Anomaly) consists of a 1.5 km stretch from Line 158+00N westwards at an average width of 1.0 km along the north western boundary of the concession; and
◾ Zone B (Kokorabo Anomaly) is 3.0 km long by 2.0 km in width sector covering the area between the south-western boundary of the concession and the floodplains of the Birim and Krensen rivers.
Soil Geochemical Sampling
A total of 1,306 soil samples were collected from 30.58 line-kilometres of cross-lines established within the Kibi North and Kibi South survey grids. Grid location was based on testing historical mineral occurrences located on and around Kibi Mountain (Kibi North Grid) and promising silt samples results from creeks southeast of Kibi (Kibi South Grid). Line spacing was at 100 m intervals within the Kibi Mountain area of the North Grid and 400 m elsewhere within the gridded areas. Soil samples were collected at a depth of 60 cm at 25 m intervals along the SE-NW trending grid lines. Soil samples were analysed by Fire Assay and reported in parts per billion (ppb).
The geochemical soil survey conducted on the Apapam Concession produced several interesting gold-in-soil anomalies. A geochemical trend of 050° to 060° (NE-SW) conforms to the regional geological trend. The highest gold value from the 1,306 samples was 1,413 ppb, located at L166+00N/60+25E. A total of 105 samples produced gold-in-soil values greater than a threshold value (mean plus two (2) standard deviations), of 98 ppb gold.
Rock and Historical Adit Sampling
A total of 89 rock samples were collected during stream sediment and soil sampling traversing. In addition, three (3) historical adits ranging from 7 m to 85 m in length and a bedrock face exposed along a bulldozer cut, located on and in the vicinity of Kibi Mountain, were also sampled during the Apapam Phase I exploration program. A total of 77 samples were collected from the three adits and 23 samples from the bulldozer cut face.
Seven (7) out of the 89 rock samples returned values greater than the threshold value of 82 ppb gold. The highest gold value recorded is 1.01 g/t, with the remaining anomalous values falling in the 140 ppb to 970 ppb gold range. No significant gold values were returned from the Adit 1 and Adit 3 sampling, but the six (6) samples collected from Adit 2 yielded economically-significant values between 710 ppb and 6.36 g/t gold from chip and channel samples.
Rock (float) and adit sampling has also confirmed that a potential for lode gold mineralization exists on the Apapam Concession, especially in the vicinity of Kibi Mountain. Three (3) of the anomalous rock samples are located at the base of Kibi Mountain (1.01 g/t Au, 255 ppb Au and 385 ppb Au) and a float sample (510 ppb Au) is located within the Area 4 gold-in-soil anomaly, thus confirming mineralization within the vicinity. Results returned from rock samples indicated that float of fractured and limonitic rock can be a useful tool for future prospecting programs.
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9.1.2 Phase II Exploration Program (2007)
A total of 21 reconnaissance trenches ranging from 2 m to 224 m in length were excavated by Xtra-Gold personnel during the 2007 Phase II exploration program. A total of 542 channel samples (2 m) were collected from the 21 trenches, totalling 1,090 linear metres. Trenches were manually excavated by pick-axes and shovels to a typical width of 1 m and an average depth of 3 m, with some sections of the trenches reaching 4 m in depth. Trenching typically extended down to the saprolite horizon, but locally the saprolite could not be reached due to safety concerns. Sampling consisted of a continuous channel sample collected from a channel excavated along the trench floor. Prior to sampling, the floor of the trench was cleaned of any loose material and an approximately 10 cm wide by 2-3 cm deep channel excavated along the centreline of the base of the trench.
The bulk of the trenching efforts, including eight (8) trenches totalling 834 linear metres (approx. 75%), focused on testing the Area 1, 2 and 3 gold-in-soil anomalies detected during the 2006 Phase I work program. Eight (8) trenches totalling 144 m were excavated to test the subsurface in an area of extensive Ashanti-style pits, discovered by prospecting, in what is now the north-central portion of the Zone 3 gold-in-soil anomaly. An additional five (5) trenches totalling 112 m were excavated to test the subsurface in areas of mineralized rock floats. Four (4) out of the 21 trenches yielded length-weighted average grade intervals greater than the arbitrarily set exploration-significant threshold of 1.0 g/t gold.
In order to obtain an independent assessment of the 2007 Xtra-Gold trenching results, a NI43-101-compliant data verification program was undertaken by CME in December 2007. The program involved the re-sampling of selected trenches which yielded exploration-significant gold mineralization intervals. The trenching program results noted hereunder correspond to the results returned by the independent CME data verification program. The CME re-sampling included 116 channel samples totalling 115.41 linear metres. Sampling consisted of a horizontal channel cut along the sidewall of the trench, approximately 0.2 m above the trench floor. Sampling was typically established at one (1) metre intervals, with sample lengths locally adjusted to accommodate geological features. Forty-six (46) out of the 116 channel samples collected by CME returned values greater than 1.0 g/t gold. The reported mineralized intercepts represent trench lengths and are not necessarily indicative of the true width of the mineralization.
Gold mineralization on the Apapam Concession was found to occur in several different geological settings, including steeply-dipping and flat-lying quartz veins and alteration haloes proximal to the quartz veining. The presence of shallow-dipping (viz. flat-lying) veins may produce an exaggeration in both the width and grade of the mineralization. This is estimated to represent a true width of 3 to 4 m due to the flat-lying nature of the quartz veins. Determination of true widths within trenches can be difficult, as not all of the geological features are properly exposed.
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Trenching was found to be an effective way to test gold-in-soil anomalies on the Apapam Concession. The following best practices sampling techniques were recommended for future trenching programs:
(1) Channel samples should be taken from the side wall of the trench and not from the floor of the trench in order to mitigate contamination issues and eliminate sampling bias when sampling exposed, shallow-dipping quartz veins;
(2) Sampling must be constrained by alteration, structure and lithology;
(3) If two (2) metre sampling widths are to be used for budget reasons, detailed sampling of anomalous areas must be undertaken as follow-up.
9.2 2008 - 2010 Exploration Program
Exploration work on the Apapam Concession during the 2008-2010 reporting period was aimed at advancing the Kibi Project which consists of a >5.5 km long mineralized trend delineated from gold-in-soil anomalies, trenching, drilling and geophysical interpretations along the northwest margin of the Apapam Concession, characterized by widespread gold occurrences of the granitoid hosted-type.
An extensive soil geochemistry survey, covering approximately 47 line-kilometres (1,827 samples), was implemented in early 2008 to further define the extensive gold-in-soil trend. The entire K grid was also covered by IP/Resistivity (~ 64 km) and ground magnetometer (~79 km) surveys to help define the lithological and structural pattern of the mineralized trend and to prioritize trench/drill targets.
Exploration activities in 2008 also included a manual trenching program encompassing 18 trenches totalling approximately 1,217 linear-metres, including: 4 trenches (302 m) on Zone 2; and 14 trenches (915 m) on Zone 3 of the 5.5 km long gold-in-soil trend. In addition, 67 excavator-dug trenches totalling approximately 2,223 m were also excavated in conjunction with the 2008 and 2009 drilling programs.
As part of the ongoing exploration efforts, Xtra-Gold commissioned SRK Consulting (Canada) Inc. (SRK) to conduct a structural study of the Apapam Concession. The goal of the study was to investigate key exposures and available drillcore to document and understand the structural controls on gold mineralization at the Kibi Project. SRK reviewed 14 diamond core holes (Zone 1 and 2) as well as available trench exposures (Zone 2 and 3) on the Apapam concession from March 16 to 27, 2010. Due to diamond drilling density and accessible trenches, SRK's structural study focused largely on Zone 2 of the Kibi Project. SRK, at the time, also reviewed Xtra-Gold's geological and structural mapping for zones 1, 2 and 3 of the Kibi Project.
A petrographic study was also implemented in March 2010 to characterize the lithological units and ore mineralogy of the Kibi Project. A total of 36 thin sections and nine (9) polished sections were studied by Professor K. Dzigbodi-Adjimah of the University of Mines and Technology, Tarkwa, Ghana. The findings of the structural and petrographic studies are incorporated in the structure (Section 7.4) and mineralization (Section 7.6) of the technical report, respectively.
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9.2.1 Soil Geochemistry
In early 2008, the Kibi Project grid was expanded to provide control for follow-up soil sampling and geophysical surveys. A total of 54.45 line-kilometres of crosslines (sample lines) and 2.1 km of baselines were established. The expanded grid now covers the entire north-western portion of the concession with a total of 78.8 line-kilometres of SE-trending crosslines extending along a 6.1 km baseline.
An extensive soil geochemistry survey was undertaken to provide detailed (100 m) soil sampling coverage of the gold-in-soil anomalies yielded by the Phase I (2006) work program and the bedrock gold occurrences identified in the 2007 trenching, and for reconnaissance (200 m) soil sampling to follow up on anomalous gold-in-silt samples identified in streams at the south-western extremity of property during the 2006 regional exploration program. A total of 1,827 soil samples were collected at 25 m station spacing along 46.975 line-kilometres of cross lines. Including the Phase I (2006) work program, a total of 2,859 soil samples have been collected on the Kibi Project.
Regolith development in most of the Kibi Project area is favourable for soil sampling. The generally steep topography along the flank of the Atewa Range has resulted in relatively thin colluvial (lateritic gravel) cover in the project area. As a result, gold-in-soil anomalies on steeper slopes and ridges probably reflect a good, although not exactly quantitative, measure of gold distribution in the underlying saprolite. Similarly, soil sampling has been primarily completed across areas of stronger, positive, topographic relief where alluvial gold deposits are unlikely to have developed. On very steep slopes, the anomalies show some asymmetry due to down-slope dispersion; however the core of these anomalies are not significantly displaced downhill from the source. This close reflection, saprolitic bedrock gold distribution associated with gold-in-soil anomalies developed on steep slopes is demonstrated by trench TAD019, located at the south-eastern extremity of the Zone 3 gold-in-soil anomaly. This returned a channel sample intercept of 4.93 g/t gold over a 45 m trench-length, including 10.12 g/t gold over 12 m, from a 75 m long, 620 ppb to 2,280 ppb deposit gold-in-soil anomaly. In areas exhibiting less relief and more extensive development of laterite, the resulting geochemical patterns tend to be characterized by much broader dispersion haloes that produced gold-in-soil anomalies reaching 200 m or more in width.
The anomalous threshold for the soil sample results was arbitrarily set at 75 ppb gold, based on past exploration experience by Xtra-Gold in the Kibi Greenstone Belt. A total of 666 (23%) out of the 2,859 soil samples returned gold values greater than the 75 ppb anomalous threshold, including: 253 (9%) samples from 76 ppb to 100 ppb gold; 297 (10%) samples from 101 ppb to 250 ppb gold; and 116 (4%) samples above 251 ppb gold (11,410 ppb Au maximum). The expanded soil survey outlined an approximately 5.5 km long, NE-trending, anomalous gold-in-soil trend (Figure 9.1). The typically NE-trending clusters are defined by discontinuous/patchy, > 75 ppb gold, anomalous gold-in-soil envelopes ranging from 50 m to 250 m by 900 m to 250 m - 1,200 m by 2,500 m in area.
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The gold-in-soil anomalies are considered to be significant, based on the fact that, in Ghana, soil geochemistry values greater than 50 ppb gold is normally considered to be anomalous (Griffis, 2002). For instance, in the Obuasi gold camp, AngloGold-Ashanti reportedly follows up all soil anomalies greater than 50 ppb gold with trenching or drilling. At the Ahafo mine project, gold-in-soil anomalies in the 100 ppb to 200 ppb range led to multimillion ounce gold discoveries (Griffis, 2002).
Figure 9.1: Soil Geochemistry Survey |
The best indication that the anomalous gold-in-soil trend may be considered to be significant is that the trenching and/or drilling of soil anomalies has yielded notable saprolitic bedrock gold intercepts in three (3) of the main four (4) anomalous gold-in-soil clusters/envelopes (i.e. Zone 2, Zone 3, Zone 1); with five (5) zones of granitoid-hosted gold mineralization having been discovered to date within the approximately 1,200 m by 500 m to 800 m, Zone 2 gold-in-soil anomaly. The Zone 4 gold-in-soil anomaly has yet to be tested by trenching/drilling but its spatial association with a prominent, linear, high chargeability/low resistivity IP anomaly, and the eluvial/colluvial gravel-characterized northern portion of the historical alluvial gold resource Block B, renders the area prospective for shear-hosted gold mineralization.
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9.2.2 Ground Geophysics
The entire 5.5 km length of the Kibi Project anomalous gold-in-soil trend was covered by pole-dipole IP/Resistivity and Magnetometer surveys to help define the lithological and structural pattern of the mineralized trend and prioritized trench/drill targets. The geophysical surveys were implemented in August to September 2008 by Sagax Afrique of Ouagadougou, Burkina Faso.
The approximately 64 line-kilometre IP/Resistivity (Time Domain) survey, covering the entire extent of the Kibi gold-in-soil trend at 200 m spacing, with some 100 m detailed sections centred on known gold showings (38 survey lines), conducted using a Pole- Dipole Array with a dipole length of 50 m and dipole separations of n = 1 to 6. This survey design was selected to yield an approximate depth of investigation of about 175 to 200 m at n = 6. The ground magnetometer survey covered the entire Kibi Project soil geochemical grid, totalling approximately 79 line-kilometres at 12.5 m station readings.
The IP/Resistivity survey identified 2 main resistive domains (Figure 9.2a) exhibiting a close spatial relationship with the main four (4) gold-in-soil anomalies of the Kibi Project (Zone 1 to 4); the resistive terrain is interpreted to reflect the widespread granitoids and/or carbonate-silica alteration associated with the known gold mineralization. A total of 36 chargeable anomaly axes have been identified (A1 to A36 on Figure 9.2b), including 24 interpreted as priority anomalies; with the majority of these anomalies yet to be field-tested. The survey outlined a prominent NE-trending, high chargeability, typically high conductivity (i.e. low resistivity) central corridor that possibly reflects a regional graphite-bearing shear zone. The continuity of the central anomalous chargeability corridor is intermittently dissected by inferred, NW-trending structures; with some exhibiting anomalous geophysical and soil geochemical signatures. The northeast extremity of the anomalous chargeability corridor is associated with a nonmagnetic domain (Mag Low), possibly reflecting alteration-related magnetite destruction of the host-rock.
Although the widespread granitoid-hosted gold mineralization in Zone 2 is typically characterized by 1-3% (locally up to 5%), disseminated sulphides (pyrrhotite, pyrite, arsenopyrite), the known mineralization occurrences failed to produce a chargeability response. The entire extent of Zone 2 is characterized by a resistive to strongly resistive signature, but individual granitoid bodies are not discernible on the resistivity map. A narrow shear zone exhibiting low grade gold values associated with quartz-carbonate veining and developed within graphitic phyllites in the eastern portion of Zone 2, is spatially associated with a NE-trending, moderate chargeability/moderate resistivity anomaly (i.e. A48). Trenching and drilling observations indicate that the broad, highly chargeable/highly conductive, NE-trending anomaly lying at the southeast extremity of Zone 2 reflects a graphitic metasedimentary rock sequence (i.e. A1).
The Trench TAD001 to TAD004 granitoid-hosted gold zone located within the northcentral portion of the Zone 3 gold-in-soil anomaly is spatially associated with an approximately 800 m long IP chargeability anomaly exhibiting a spatial relationship with a geophysically-inferred, NE-trending, regional structural trend. Limited scout RC drilling along the north-eastern, moderate chargeability/very high resistivity portion (200 m) of the IP anomaly outlined an approximately 135 m wide, NE-trending, granitoid hosted, structural corridor appearing to encompass at least five (5) distinct, gold-bearing, sheeted to stock-worked vein zones.
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Figure 9.2: Ground Geophysics Surveys |
a) Apparent Resistivity (z = 50 m)/Soil Geochemistry |
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b) IP/Resistivity Interpretation - Compilation |
Trench TKB003 excavated on the Zone 1 gold-in-soil anomaly exposed a system of foliation-parallel quartz-carbonate-pyrite (+/- arsenopyrite) veins hosted by shear zones developed within a tightly-folded metasedimentary rock sequence that is spatially associated with a high chargeability/low resistivity IP anomaly lying along a geophysically-inferred, NE-trending, regional structural trend. Scout drilling of this zone yielded intermittent, exploration-significant, anomalous gold values over a 60 m core length, including individual intercepts of 1.43 g/t gold over 13.5 m, 1.04 g/t gold over 6 m and 1.02 g/t gold over 8 m. An excavation on a gold-in-soil anomaly that is spatially associated with the southern margin of the same chargeability anomaly, returned a channel sample intercept of 2.51 g/t gold over a 4 m trench length.
The south-western portion of the gold-in-soil trend is characterized by an approximately 3.5 km long, NE-trending, generally moderate to high chargeability/moderate to high resistivity anomaly lying along or proximate to the contact between the southern resistive domain and the central conductive corridor. This exhibits a spatial relationship with a geophysically-inferred, NE-trending, regional structural trend.
The south-western segment of the chargeable/resistive anomaly exhibits a spatial association with the Zone 4 gold-in-soil anomaly and with the northern portion of alluvial gold resource Block B, which according to historical alluvial exploration work, consists of eluvial/colluvial gravels rather than alluvial gravels (sensu stricto). Eluvial/colluvial gravels consist of residual material derived by in-situ rock weathering or weathering plus gravitational/slump movements, and loose rock/soil material deposited by gravity at the base of a steep slope. The north-eastern extremity of the chargeable/resistive response exhibits a spatial association with the southwestern portion of the Zone 3 gold-in-soil anomaly. The central portion of the anomaly is not, for the most part, characterized by an anomalous gold-in-soil signature, which could reflect extensive alluvium/colluvium cover at the base of the Atewa Range, although prospecting efforts have identified an extensive gold anomalous float train that is spatially associated with this section of the IP/Resistivity anomaly.
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9.2.3 Prospecting
A total of 109 grab samples have been collected by Xtra-Gold during prospecting and reconnaissance geology traverses primarily designed to follow-up on gold-in-soil anomalies. Sampling included 44 rock floats and 65 in-situ samples consisting of saprolitic or saprock (weakly oxidized) bedrock material; with bedrock samples typically collected along road cuts and from historic workings. Eighteen (18) out of the 109 samples returned below-detection limit gold values (<0.01 g/t); 63 samples yielded between 0.01 - 0.10 g/t gold; 20 samples yielded between 0.1-1.0 g/t gold; and eight (8) samples returned between 1.0 - 7.5 g/t gold. A fair portion of the 28 anomalous grab samples (> 0.1 g/t Au) were collected from areas that were subsequently tested by trenching and/or drilling.
Prospecting identified an extensive gold-anomalous float train, exhibiting minimum dimensions of 550 m x 325 m, along the south-western margin of the Kibi Project grid area. The float train is spatially associated with the northern flank, of the central portion, of an approximately 3.5 km long, NE-trending, moderate to high chargeability/moderate to high resistivity anomaly associated with a geophysically-inferred, NE-trending, regional structural trend. A total of 14 rock samples were collected from the float train, with seven (7) samples yielding anomalous values ranging from 0.16 g/t to 3.49 g/t gold; but including a 7.5 g/t gold value. Mineralized floats are sub-angular to sub-rounded, average 0.15 to 0.75 m in diameter (2.5 m max.), generally consisting of strongly-silicified metasedimentary rock (possibly siltstone) crosscut by sheeted to stock-worked quartz stringers with disseminated limonitic boxworks appearing to be after pyrite.
9.2.4 Trenching
Reconnaissance trenching designed to test the geochemical signature at depth of the approximately 5.5 km long gold-in-soil trend continued in 2008 with the implementation of a manual (i.e. hand-dug) trenching program encompassing 18 trenches totalling approximately 1,217 linear-metres, including 4 trenches (302 m) on Zone 2 (TKB006-009) and 14 trenches (915 m) on Zone 3 (TAD008-021). In addition, 67 mechanical (i.e. excavator) trenches totalling approximately 2,223 linear metres were also excavated in conjunction with the 2008 and 2009 drilling programs, including 58 trenches (1,931 m) on Zone 2; 7 trenches (193 m) on Zone 3 and 2 trenches (99 m) on Zone 1 of the Kibi Project; with this trenching primarily designed to help map/trace the granitoid bodies hosting the gold mineralization.
The reconnaissance trenches designed to test the subsurface signature of the gold-in-soil anomalies were sampled in their entirety, with a total of 629 channel samples collected. Only a small percentage (12%) of the mechanical trenches were sampled as this trenching was predominantly designed to guide the drilling, by mapping the contacts of the host granitoid bodies and, to a lesser degree, tracing known mineralized vein zones. Only eight (8) out of the 67 granitoid mapping trenches were subjected to sampling, either in their entirety or partially, for a total of 132 channel samples (205 m). Xtra-Gold then adopted the practice of completely sampling all trenches regardless of trenching purpose or target.
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Manual (pick-axe and shovel) and mechanical (excavator) trenches are typically excavated to widths of 1 m and 1.5 m, respectively, and an average depth of 3 m, with some sections of trenches reaching 4 to 5 m in depth. Trenching typically extends down to the saprolite horizon, or locally to saprock, but often the saprolite cannot be reached due to safety concerns. The entire length of the trench is subjected to systematic geological mapping and channel sampling, with wooden pegs stuck to the side of the trench at 2 m intervals. Prior to sampling the wall of the trench is cleaned of any loose material to avoid contamination.
Samples consist of continuous, horizontal channels excavated along the bottom sidewall of the trench (~ 0.10 m above floor) with an emphasis on constant sample volume over the length of the sample interval. Saprolite/rock chips are collected on a clean plastic sheet laid on the trench floor and immediately placed into a labelled plastic sample bag containing a unique sample ticket stapled to the inside lip of the bag, and then securely sealed by staples.
Figure 9.3 depicts channel sampling of a trench on the Apapam Concession. Samples are typically 2 m in length; with 1 m, to locally 0.5 m, samples being utilized in areas of geological interest and/or to delineate specific lithological/structural features. Any economically-significant mineralized intersection that is yielded by 2 m sampling is re-sampled at 1 m intervals (this procedure was implemented in 2010 sampling programs). The sample intervals (i.e. sample numbers) are marked on aluminium tags stapled to wooden pegs stuck to the sidewall of the trench. Samples are collected by a trained field assistant under the supervision of a company geologist. Road cut and drill pad face samples are collected using the same general methodology as the trench channel samples.
First-pass exploration trenches are located by tying-in the trench start and end points to the DGPS surveyed grid stations, or by handheld GPS readings if no grid is present, and azimuth and slope information is collected by compass/inclinometer. Typically, any trenching in hilly terrain (> 10° slope) is excavated by utilizing step-like benches in order to maintain horizontal sampling intervals. Since January 2010, trenches yielding significant mineralization and/or forming part of a detailed trenching program have been surveyed by utilizing combined DGPS and Total Station-defined control points. The survey crew also systematically record azimuth and slope measurements.
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Figure 9.3: Channel Sampling in Trench at Apapam Concession |
Zone 2 Trenching
A total of 62 trenches (7 m to 136 m) totalling 2,233 linear-metres were excavated on the approximately 1,200 m by 500 m to 800 m, SE-trending, Zone 2 gold-in-soil anomaly during 2008-2009, including four (4) hand-dug, reconnaissance trenches (302 m) and 58 mechanized, granitoid mapping/tracing trenches (1,931 m). For these reasons, only five (5) out of the 58 mechanized trenches were sampled.
Out of the four (4) reconnaissance trenches, only trench TKB006, located in the north-central portion of the Zone 2 gold-in-soil anomaly, yielded a significant mineralized intercept. Trench TKB006, targeting a 120 ppb to 385 ppb gold-in-soil anomaly, returned a mineralized intercept of 1.46 g/t gold over 36 m, including 2.20 g/t gold over 17 m, from an extensive, granitoid-hosted, quartz vein system. Four (4) out of the five (5) mechanized trenches subjected to sampling returned significant mineralized intercepts. Trench TKB010, designed to trace the mineralization intersected in scout drill hole KBD08008, at the north-western extremity of the Zone 2 gold-in-soil anomaly, returned a mineralized intercept of 1.29 g/t gold over 42 m, including 2.26 g/t gold over 13m, from an extensive system of NE- to NW-trending quartz-carbonate veining developed along the margin of a (meta)tonalitic intrusive body. For comparison purposes, RC drill hole KBRC09068, designed to undercut trench TKB010, yielded a mineralized intercept of 76 m grading 1.62 g/t gold, including 20 m grading 3.36 g/t gold.
Trenches TKB014E and TKB014F, targeting a gold-in-soil anomaly spatially associated with a quartz float train, lying approximately 225 m west-northwest of the trench TKB006 gold occurrence, exposed an auriferous, granitoid-hosted, quartz-carbonate vein network. Two trenches, positioned end-to-end on the same soil geochemical anomaly line, both returned significant channel sample intercepts separated by an approximately 20.5 m distance, including 8.49 g/t gold over a 5 m trench-length, including 2 m grading 14.85 g/t gold, in trench TKB014E and 6.86 g/t gold over an 8 m trench-length, including 1 m grading 22.4 g/t gold, in trench TKB014F.
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Zone 3 Trenching
A total of 14 manually-excavated reconnaissance trenches (15 m to 154 m) totalling 915 linear-metres (TAD008 to TAD021) were completed on the approximately 2,500 m by 250 m to 1,200 m, NE-trending, Zone 3 gold-in-soil anomaly in 2008. Mineralized intercepts reported below are trench-lengths and the true width of mineralization is unknown at this time (see Table 2 for significant Zone 3 trench results).
Five (5) out of the 14 trenches, designed to test the geochemical signature at depth of gold-in-soil anomalies, exposed altered granitoid bodies exhibiting variable amounts of quartz-carbonate veining. The Zone 3 reconnaissance trenching yielded two (2) significant granitoid-hosted mineralization intercepts (TAD019, TAD016), with the remaining three (3) altered/veined granitoid occurrences yielding lower grade but exploration-significant, anomalous gold values.
Extensive, strongly-indurated, lateritic clays and gravels prevented the proper testing of some gold-in-soil anomalies due to the saprolite horizon not being reachable at many localities in the hand-dug trenches. Mechanized trenching and/or RAB drilling is recommended to further test the geochemical signature of the Zone 3 gold-in-soil anomalies at depth within the saprolite horizon.
9.2.5 Structural Study
SRK Consulting (Canada) Inc (SRK) conducted a structural study in an attempt to understand the structural controls on gold mineralization at the Kibi Gold Project. SRK reviewed 14 diamond drill holes (Zone 1 and 2) as well as available trench exposures (Zone 2 and 3). The following observations were made:
◾ Overall, N- to NE-trending shear zones occur throughout the Apapam concession. preferentially developed along the margins of quartz-diorite intrusions;
◾ Gold mainly occurs in gently to moderately NW-dipping, quartz-albite-carbonate vein stockworks bounded by NE-trending, steeply-dipping faults within quartz-diorite intrusions;
◾ Low-grade gold mineralization is associated with quartz-carbonate veins in narrow (graphitic) shear zones that occur in tightly-folded metasedimentary sequences;
◾ Hydrothermal alteration typically consists of quartz, carbonate, chlorite and sericite where auriferous quartz veins occur within quartz-diorite intrusions;
◾ Vein geometries and rare kinematic indicators suggest a reverse sense of shear associated with vein and shear zone development;
◾ The 3D geometry of quartz-diorite intrusions and the auriferous portions were poorly constrained at the time of this structural study.
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9.2.6 Petrographic Study
A petrographic study was also implemented to characterize the lithological units and ore mineralogy and alteration of the Kibi Gold Project. A total of 36 thin sections and nine (9) polished sections were studied by Professor K. Dzigbodi-Adjimah of the University of Mines and Technology, Tarkwa, Ghana. The observations made include:
◾ Identification of the altered granitoid as quartz-dioritic to granodioritic in composition;
◾ Identifying three generations of pyrite with the gold being associated with the last sulphide forming event;
◾ Observing that the gold often occurs as inclusions within pyrite, pyrrhotite and arsenopyrite which suggests that the sulphides are not refractory.
9.3 2010 -2012 Exploration Program
9.3.1 Geophysics
VTEM Survey
A VTEM survey was flown over the Kibi Gold Project by Geotech Airborne from December 2010 to February 2011. The survey measured ground elevation, radiometrics, magnetic field and electromagnetism (resistivity). Interpretation of the data resulted in an interpretive pseudo-geology map of the area (Figure 9.4). The different geophysical units can be correlated with various geological units.
Target areas were defined in the report for further ground exploration (Figure 9.5). Two kinds of targets were defined:
◾ Resistive type: following the silicification model for gold mineralisation, areas of low conductance/susceptibility occur within the interpreted conductive graphitic shear zones and the interpreted conductive graphitic sediment units.
◾ Granitoids-type: shear/fracture zones in basin-type granitoids are known to exhibit sub-economic to economic gold mineralisation in the survey area. As such, targets have been defined where interpreted fractures intersect the interpreted basin-type granitoids.
In the Apapam Concession 1, resistive-type (100) and 4 granitoid-type (20, 21, 22, and 24) targets were proposed (Figure 9.5). According to Geotech Airborne, targets 100 and 21 are priority 1 targets, target 20 is a priority 2 target, and targets 22 and 24 are priority 3 targets.
Following on from the work by Geotech Airborne, Xtra-Gold geologists have performed more detailed processing to highlight the various faults around the project area in the VTEM data (Figure 9.6).
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Figure 9.4: Pseudo-Geology Map Derived from the Interpretation by Geotech Airborne |
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Figure 9.5: Proposed Targets based on the Interpretation the VTEM survey |
Targets with numbers <30 are granitoid type targets, and those with numbers >99 are resistive type targets |
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Figure 9.6: VTEM Image showing NE-SW Conductor interpreted as a Graphitic Shear Zone |
9.3.2 Geochemistry
Soil Sampling
From June 2011 to April 2012, 3,833 soil samples were collected by Xtra-Gold to complete the soil sampling program over the Apapam Concession (Figure 9.7). Previously, only the north-western part of the concession had been covered by soil sampling. The samples were collected every 25 m along lines 200 m apart. Of the 3,833 samples collected, 2,747 were submitted to the laboratory for analysis.
As per program design, every second sample (50m stations) was initially submitted for gold analysis (1,859 samples), with the held-back samples subsequently analysed, where required, to delineate/bracket anomalous gold-in-soil anomalies. Based on gold results, an additional 888 infill (25 m station) samples were selected for analysis to further define the anomalous gold-in-soil trends.
Soil samples are collected from 20 cm to 30 cm diameter, hand-dug pits at a nominal depth of 75 cm using the local digging tool called "soso". Approximately 2.5 kg of material is collected into labelled plastic bags with unique sample tickets stapled to the inside lip of the bag, and securely sealed by staples. To avoid any contamination, only dry samples are collected. Field logging includes sample depth, landscape, slope direction, land use, soil type/characteristics, residual/erosional/depositional environment and regolith type.
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Float and outcrop grab samples (115 samples) were collected to assist with delineation of potential mineralisation.
Figure 9.7: Locations of 2006 -2008 Soil Sampling (blue) and 2010 -2012 Sampling Sites (red) |
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Rock Chip Sampling
One hundred and fifteen (115) rock grab samples have also been collected from outcrops and from floats and then analysed for gold. Tock sampling was conducted in conjunction with the 2011-2012 soil geochemical survey and follow-up prospecting of gold-in-soil anomalies. Out of the 115 grab samples collected, six (6) returned gold grades between 0.19 g/t and 12.35 g/t; and the remaining 109 yielded below or slightly above detection-limit gold values. Sampling of felsic intrusive outcrops returned highs of 1.5 g/t and 12.35 g/t gold, and a quartz float yielded 11.0 g/t gold.
9.3.3 Trenching
Trenching was undertaken from July 2010-August 2012 to supplement the drilling of the targets already recognised. Trenches were excavated on the majority of the targets that form part of the mineral resource estimate (Table 9.1).
Table 9.1: Summary of Trenching (2010 - 2012) |
||||||||
No. of |
Metres |
No. of |
Sample |
Vertical |
Metres |
No. of |
Sample |
|
Big Bend |
24 |
863 |
673 |
783 |
28 |
68 |
68 |
68 |
East Dyke |
12 |
436 |
336 |
398 |
38 |
85 |
84 |
85 |
Mushroom |
5 |
94 |
41 |
41 |
0 |
0 |
0 |
0 |
South Ridge |
26 |
1,106 |
847 |
977 |
33 |
81 |
81 |
81 |
Double 19 |
26 |
1,173 |
786 |
1,036 |
78 |
162 |
154 |
162 |
Other Targets |
107 |
6,021 |
4,346 |
4,971 |
202 |
514 |
509 |
514 |
Total |
200 |
9,693 |
7,029 |
8,206 |
379 |
910 |
896 |
910 |
Trenching was undertaken to help define the extents and geological context of gold mineralisation (Figure 9.8). Due to the high relief in the area, some of the trenches are actually cleaned road cuttings on the sides of hills. Of the 200 trenches that were dug, 198 of them were dug using an excavator, while the remaining two were dug by hand. Depths of the trenches varied widely from a metre to 5 m depending on relief and steepness of slopes on hill sides. Widths of the trenches average 1.5 m. A total of 4,346 horizontal channel samples were taken and, because of the prevalence of shallowly dipping veins, 509 vertical channel samples were also taken where appropriate. Where the 2 m samples yield anomalous results, 1 m samples were re-taken from the interval. The vertical sample sections were usually spaced 2.5 m apart. The total number of samples sent to the laboratory for analysis was 7,925. Typical QA/QC protocols were observed.
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Figure 9.8: Trench Locations of pre-2010 Trenches (Blue) and 2010-2012 Trenches (Red). |
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9.3.4 Hand-Augering
At Akwadum South 44 auger holes were sunk for a total of 237 m with 147 samples being collect and assayed (Figure 9.9). These holes were drilled to test a gold-in-soil anomaly.
Figure 9.9: Location of the Hand Auger Sampling Sites (2010 -2012) |
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9.3.5 Structural Analysis of Zone 2
SRK Consulting (Canada) investigated the structural geology of the Kibi Gold Trend project - Zone 2 in November 2011. They examined a number of trenches and drill holes from the Big Bend zone and South zone. SRK concluded that:
◾ The distribution of gold mineralization in the Big Bend Zone is controlled by two NNE-trending shear zones that bound the auriferous zone in a quartz diorite;
◾ Auriferous quartz veins in the Big Bend Zone comprise:
o Shear and extensional veins related to the development of NNE-trending shear zones; and
o Stockwork veins in a particular portion of the quartz diorite;
◾ Auriferous quartz veins in and around the shear zone have two dominant orientations (measured from drillcore):
o Steeply-dipping to the ESE (average 024°/78°); and
o Gently-dipping to the SE (average 035°/12°).
◾ Auriferous quartz veins in non-to weakly-foliated diorite in the Big Bend Zone form vein stockworks. Auriferous quartz veins within the quartz diorite (outside of shear zones) have two dominant orientations:
o Gently-dipping to the NNW (average 240°/15°); and
o Moderately-dipping to the NW (average 215°/45°);
◾ According to SRK, vein geometry, rare kinematic indicators and steeply plunging mineral lineations imply that deformation associated with gold mineralization in the Big Bend Zone resulted from a protracted episode of dominantly reverse SE-over-NW with minor sinistral movement; and
◾ In the South Zone, steeply-dipping auriferous laminated and breccia veins occur, in addition to the dominant gently dipping (<15°) extensional veins;
◾ The controls on gold mineralization at the South Zone and other zones are not well understood and require further oriented core drilling followed by structural geology investigations.
9.3.6 Regional Interpretation
SRK Consulting (Canada) analysed the regional structural geology and interpreted the aeromagnetic data for the Kibi Gold Project in December 2011. They interpreted regional aeromagnetics and the VTEM data were geologically interpreted over the area (Figure 9.10). Selected areas of structural complexity, which are of interest for exploration in the Kibi area, were highlighted, with three of the targets overlapping the Apapam Concession on the following criteria:
◾ Bends along fault corridors that acted as dilational jogs during sinistral strike-slip deformation;
◾ Areas of intersection between anastomosing NE-SW trending faults, or where these faults cross-cut intrusions;
◾ Areas of intersection between major NE-SW trending fault corridors and E-W trending faults; and
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◾ The presence of intrusions at or near any of the above faults.
Figure 9.10: Regional Geological Interpretation SRK targets, based on their regional interpretation, shown by red ellipses. |
9.4 2012 - 2021 Exploration Programme
The exploration programme during the 2012 - 2021 period consisted of ongoing compilation of geological data, soil geochemical sampling and scout trenching to identify and/or further advance grassroots targets. This was accompanied by drilling to extend mineralization and to prepare an updated mineral resource estimate.
Exploration activities were primarily geared towards the continued advancement of early-stage gold shoots/showings within the Zone 2 - Zone 3 maiden Mineral Resource footprint area.
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Activities from 2013 - 2016 focussed on preliminary work on the Cobra Creek Target (Zone 5), including trenching and outcrop stripping/channel sampling and a scout drilling program.
Exploration activities from 2018-2021 targeted resource expansion opportunities within the Zone 2 - Zone 3 maiden Mineral Resource footprint area. The drilling / trenching program was designed to follow up on early-stage gold shoots/showings discovered by previous drilling/trenching efforts (2008-2012), to test down-plunge extensions and/or fold limbs of existing resource bodies and to test prospective litho-structural gold settings identified by recently-completed 3D geological modelling.
9.4.1 Soil Sampling
Further infill soil sampling was undertaken on the Cobra Creek (Zone 5) and on Akwadum South (Zone 7) targets. The sampling was undertaken to provide more detailed 100 m line-spacing coverage of previously identified gold-in-soil anomalies (i.e., infilling of 2012 sampling at 200 m line-spacing). Soil sampling methodology consisted of the collection of approximately 2.5 kg of regolith material from hand-dug pits at depths of 50 to 60 cm with normal diameters not exceeding 30 cm using the soso digging tool.
A total of 10.71 line-kilometres of soil sampling was completed, including 7.03 line-kilometres at Cobra Creek and 3.68 line-kilometres at Akwadum South. A total of 458 samples were collected at 25 m stations along the NW-SE grid lines (Cobra Creek - 310 and Akwadum - 148). The infill soil sampling permitted the delineation of an approximately 1,700 m long by 100 m - 200 m wide anomalous gold-in-soil trend at Akwadum South (Zone 7) (Figure 9.11). The southwest extremity (500 m) of the anomaly extends on Third-Party ground (i.e., 1,200 m on Apapam mining lease) and the anomaly remains open at the northeast extremity with the soil coverage being interrupted by the hamlet of Akwadum.
The Akwadum South gold-in-soil trend is defined by an envelope of discontinuous/patchy, typically greater-than 50 ppb, gold-in-soil values, with the anomalous threshold arbitrarily set at 50 ppb gold based on past exploration experience by Xtra-Gold in the Kibi Greenstone Belt. Out of the 152 samples within the anomalous trend, including both 2012 and 2016 sampling, 114 samples yielded gold values (75%) greater than the 50 ppb anomalous threshold, including: 58 samples from 51 ppb to 100 ppb gold; 49 samples from 101 ppb to 300 ppb gold; and seven (7) samples above 300 ppb gold (725 ppb maximum).
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Figure 9.11: Results of Infill Soil Sampling (2016) |
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9.4.2 Grab Sampling
Sampling of outcrop and float material was performed at Cobra Creek (Zone 5) and other locations on the Apapam concession. A total of 910 grab samples were collected (Cobra Creek - 794 and 116 - other locations) as part of prospecting efforts geared towards the testing of quartz-bearing structures and the ground proofing of geophysical anomalies (Figure 9.12). Note that grab samples are selective in nature and may not be necessarily representative of the mineralization present on the concession.
Figure 9.12: Location of Grab Samples, Scout Pitting and Auger drilling (2012 -2021) |
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At the Cobra Creek (Zone 5) prospect, systematic outcrop / rock float grab sampling helped delineate an approximately 550 m wide, NE-trending, multi-structure braided shear zone system traced over an approximately 850 m strike length (Figure 9.14). With the quartz feldspar porphyry (QFP) hosted mineralized corridor encompassing at least 9 auriferous shear zones ranging from approximately 1 m to 25 m in apparent width. Of the 794 grab samples collected on Zone 5: 167 samples yielded less than 0.01 g/t gold; 330 samples yielded gold values from 0.01 g/t to 0.1 g/t; 158 samples between 0.1 g/t and 1.0 g/t gold; 76 samples between 1.0 g/t and 5.0 g/t gold, 55 samples from 5.0 g/t to 20 g/t gold, and 8 samples returned values above 20 g/t gold, including a maximum value of 61.7 g/t gold.
Further Zone 5 prospecting yielded an approximately 650 m long, auriferous banded iron formation (BIF), rock float train spatially associated with a series of coincident high chargeability (IP) / weak - moderate resistivity anomalies and patchy to intermittent anomalous gold-in-soil values in the 50 ppb to 225 ppb range (Figure 9.17). The mineralized hematite BIF material is characterized by quartz stockworks, strong patchy to pervasive silica alteration, and pyritization. Of the 57 BIF samples collected: 6 samples yielded less than 0.01 g/t gold; 22 samples returned gold values from 0.01 g/t to 0.1 g/t; 28 samples between 0.1 g/t and 1.0 g/t gold; and 1 sample returned a maximum value of 2.18 g/t gold. In situ source of auriferous BIF material yet to be established by trenching / drilling.
Prospecting efforts in Zone 4 further defined an auriferous silicified / pyritized siltstone rock float field originally discovered in 2006. The mineralized siltstone floats are spatially associated with a NE-trending VTEM high resistivity anomaly situated along the same F1 isoclinal fold hinge as the JK West and JK East prospects (Figure 9.12, Figure 7.7, Figure 7.8). Of the 45 silicified siltstone samples collected to date: 3 samples yielded less than 0.01 g/t gold; 20 samples returned gold values from 0.01 g/t to 0.1 g/t; 13 samples between 0.1 g/t and 1.0 g/t gold; and 9 samples returned values above 1 g/t gold, including a maximum value of 11.3 g/t gold. In situ source of auriferous siltstone material yet to be established by trenching / drilling.
9.4.3 Trenching
Trenching was undertaken from October 2018 - June 2021 on Zone 1 - Zone 2 - Zone 3 to supplement the drilling of the targets already recognised. Trenches were excavated on most of the targets that form part of the present mineral resource estimate (Figure 9.13). Trenching was also conducted intermittently from September 2012 - March 2016 to delineate the Cobra Creek (Zone 5) auriferous shear system.
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Table 9.2: Summary of Trenches Excavated |
|||
Oct 2018 - Jun 2021 |
No of Trenches |
Trench Metres |
Sampled Metres |
South Ridge |
8 |
276 |
|
Double 19 |
5 |
126 |
|
Road Cut |
8 |
201.1 |
|
Mushroom |
2 |
57.4 |
|
Gate House |
5 |
300.6 |
|
Boomerang West |
13 |
305.2 |
|
JK East |
10 |
260.8 |
|
Other Targets |
5 |
142.8 |
|
Total Trenching |
56 |
1669.9 m |
1577.7 m |
|
|||
Cobra Creek (Zone 5) |
38 |
1194.3 |
1170.8 m |
Sept 2012 - Mar 2016 |
No of Trenches |
Trench Metres |
Sampled Metres |
|
|||
Akwadum South (Zone 7) 2017 |
1 |
154.5 |
154.5 m |
Apapam Total Trenching |
95 |
3018.7 m |
2903.0 m |
Due to the high relief in the area, road cuts exposing saprolitic bedrock on hillsides are also categorize as trenches, and subject to the same surveying / sampling procedures described below for trenching. For differentiation purposes, the road cuts have the letters RS as part of the labelling prefix (i.e. Road Sampling).
The trenches were mechanically excavated with a width of 1.5 m and an average depth of 3 m, with some sections of trenches reaching 4 to 5 m in depth. Trenching typically extends down to the saprolite horizon, or locally to saprock, but often the saprolite cannot be reached due to safety concerns. The entire length of the trench is subjected to systematic geological mapping and channel sampling, with wooden pegs stuck to the side of the trench at 2 m intervals. Prior to sampling, the wall of the trench is cleaned of any loose material to avoid contamination.
Samples consist of continuous channels excavated along the bottom sidewall of the trench (~ 0.20 m above the floor) with emphasis on constant sample volume over the length of the sample interval. Samples are typically 2 m in length; with 1 m, to locally 0.5 m, samples being utilized in areas of geological interest and/or to delineate specific lithological/structural features. In addition to horizontal channel sampling, trenches where shallow-dipping quartz veining and/or shearing was observed were also subjected to vertical channel sampling at typically 2.5 m section spacing.
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Figure 9.13: Location of Excavated Trenches (2012 -2021) |
Saprolite/rock chips are collected on a clean plastic sheet laid on the trench floor and immediately placed into a labelled plastic sample bag containing a unique sample ticket stapled to the inside lip of the bag, and securely sealed by staples. The sample intervals (i.e. sample numbers) are marked on aluminium tags stapled to wooden pegs stuck to the sidewall of the trench. Samples are collected by a trained field assistant under the supervision of a company geologist.
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Trenches are surveyed as three-dimensional features to permit 3D-plotting, with the trench data collected in standard drill database tables (i.e. collar, survey, geology, assays, structure). Along the Zone 1 - Zone 4 corridor and at Cobra Creek (Zone 5), trench collar coordinates (i.e. zero mark of channel sample string) are established by Total Station survey using DGPS-established control pillars, by the company's in-house surveyor. For trenching on early-stage projects with no established control pillars, the trench collars are surveyed-in utilizing handheld GPS established reference points (i.e., backsight & foresight).
The trace of the channel sample string is surveyed by Total Station from the collar to the end point, with azimuth and slope measurements collected at inflection points. The sample intervals are established to match the inflection points along the trace of the sample line. With the sample intervals (i.e., from and to measurements) representing slope measurements along the channel sampling line and not horizontally corrected distances.
Ninety-five (95) trenches totalling 3,018.7 m were completed on the Kibi Gold Project during the 2012 - 2021 exploration program. Significant trench results are summarized in Table 9.3 and depicts the location of the trenches on the Apapam concession.
The reported trench results meet the following criteria: 4 m minimum length and minimum 0.3 g/t average grade over the interval or a minimum metal factor (grade x length) of 10 m-g/t if interval falls below the minimum 4 m criteria. In addition, mineralized intercepts are constrained with a 0.25 g/t gold minimum cut-off grade at top and bottom of intercept, with no upper cut-off applied, and maximum of five (5) consecutive samples of internal dilution (less than 0.25 g/t gold). Reported trench results correspond to trench-lengths in metres. The orientation / geometry of the mineralization is not fully understood in the saprolitic trench exposures resulting in unknown true thickness.
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Table 9.3: Significant Trench Results (2012 - 2021) |
||||
Trench ID |
From (m) |
To (m) |
Trench-Length (m) |
Au (g/t) |
South Ridge |
||||
KBRS045 |
25.5 |
33.0 |
7.5 |
1.47 |
KBRS047 |
7.3 |
12.0 |
4.7 |
4.32 |
including |
9 |
10 |
1 |
15.02 |
Double 19 |
||||
TAD044 |
0 |
7.2 |
7.2 |
1.85 |
including |
2 |
3.2 |
1.2 |
4.18 |
TAD045 |
2.5 |
22.5 |
20.0 |
4.83 |
including |
14.0 |
19.5 |
5.5 |
9.60 |
TAD046 |
1.0 |
5.5 |
4.5 |
0.87 |
Road Cut |
||||
TKB131 |
48.0 |
49.5 |
1.5 |
15.85 |
TKB141 |
20.0 |
26.3 |
6.3 |
2.15 |
Mushroom |
||||
TKB143 |
9.0 |
30.4 |
21.4 |
0.90 |
including |
17.4 |
24.4 |
7.0 |
1.86 |
Gate House |
||||
TKB144 |
22 |
35 |
13.0 |
0.33 |
TKB147 |
31.5 |
43.5 |
12.0 |
0.74 |
including |
37.5 |
39.5 |
2.0 |
2.30 |
TKB148 |
19.0 |
24.4 |
5.4 |
1.18 |
Boomerang West |
||||
TAH015 |
1.5 |
18.0 |
16.5 |
1.64 |
including |
4.5 |
13.5 |
9.0 |
2.35 |
TAH016 |
25.5 |
36.0 |
10.5 |
1.93 |
TAH023 |
18.0 |
31.0 |
13.0 |
0.5 |
JK East |
|
|
|
|
TAD050 |
16.0 |
34.0 |
18.0 |
0.52 |
ADRS018 |
9.0 |
25.0 |
16.0 |
0.67 |
including |
17.0 |
18.0 |
1.0 |
2.33 |
Cobra Creek (Zone 5) |
||||
TCK001 |
9.5 |
30.0 |
20.5 |
7.26 |
including |
22.5 |
29.0 |
6.5 |
12.26 |
TCK002 |
20.3 |
27.0 |
6.7 |
32.32 |
including |
23 |
25 |
2.0 |
82.22 |
TCK003 |
4.0 |
12.0 |
8.0 |
1.45 |
including |
4.0 |
5.0 |
1.0 |
4.65 |
TCK005 |
2.0 |
18.0 |
16.0 |
1.17 |
including |
17.0 |
18.0 |
1.0 |
6.15 |
TCK006 |
44.9 |
53.0 |
8.1 |
0.38 |
TCK008 |
61.0 |
73.0 |
12.0 |
0.31 |
TCK013 |
3.0 |
5.0 |
2.0 |
14.98 |
TCK017 |
0.0 |
9.1 |
9.1 |
0.42 |
CCRS001 |
8.0 |
20.5 |
12.5 |
1.28 |
including |
14.7 |
15.2 |
0.5 |
6.98 |
CCRS002 |
4.0 |
8.0 |
4.0 |
2.29 |
CCRS003 |
3.5 |
9.5 |
6.0 |
5.96 |
including |
7.0 |
9.5 |
2.5 |
13.00 |
CCRS005-A |
0.0 |
2.4 |
2.4 |
6.25 |
including |
1.5 |
2.4 |
0.9 |
10.10 |
CCRS009 |
0.0 |
4.0 |
4.0 |
1.67 |
Akwadum South (Zone 7) |
||||
TAKS001A |
18.0 |
43.25 |
25.25 |
0.35 |
including |
26.7 |
33.15 |
6.45 |
0.77 |
TAKS001A |
92.3 |
93.75 |
1.45 |
16.37 |
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At the Cobra Creek (Zone 5) prospect, systematic trenching helped delineate an approximately 550 m wide, NE-trending, multi-structure braided shear zone system traced over an approximately 850 m strike length. With the QFP hosted mineralized corridor encompassing at least nine auriferous shear zones ranging from approximately 1 m to 25 m in apparent width (Figure 9.14). Trenching was also utilized to test IP/Resistivity anomalies and to identify prospective areas for outcrop stripping and channel sampling.
At the Gate House target, trenching extended the gold mineralization approximately 150 m to the southwest, as well as confirmed the two, parallel zone geometry of the mineralized system, and helped further delineate the host granitoid body (Figure 9.15).
Figure 9.14: Cobra Creek (Zone 5) Trenching / Channel Sampling Results (2012 - 2016) |
A) Cobra Creek Shear System |
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B) High Grade Shoot - Inset Map |
Figure 9.15: Results of Trenching at Gate House Target (2020 - 2021) |
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9.4.4 Outcrop Stripping and Channel Sampling
The QFP body hosting the gold mineralization at the Cobra Creek (Zone 5) prospect is characterized by an abnormally strong resistance to weathering, with the QFP forming un-oxidized (fresh) rock outcrops in otherwise deeply laterized terrane.
A total of approximately 15,000 m2 of bedrock exposures were mechanically stripped and power washed at the Cobra Creek project from 2012 - 2016 to permit systematic mapping and channel sampling of the auriferous shear system (Figure 9.13). A total of 24 stripped bedrock exposures, ranging from approximately 20 m2 to 2,800 m2, were excavated across an approximately 850 m x 375 m extent of the host QFP body.
A total of 1,312.26 m of saw-cut channel sampling and 71 m of chip-channel sampling was completed on the stripped bedrock exposures (Figure 9.13). Individual rock channel samples range from 0.3 m to 2 m in length (0.7 m average length), with sample arrays ranging from single channel samples to continuous channel sample strings from 1.4 m to 37.6 m in length.
The saw-cut channel sampling involved the cutting of two continuous, parallel cuts approximately 3 cm - 5 cm apart to a typical depth of 5 cm - 7 cm utilizing a mechanical diamond blade saw. With the sample split between the two saw cuts with a chisel. The chip-channel samples involved the collection of contiguous rock chips along an approximate straight line forming an approximately 5 cm wide x 0.5 cm - 2 cm deep channel; with sample depth depending on oxidation degree of rock.
The extremities of individual samples are marked with short cross-cuts, and the sample measurements (i.e. from and to) and channel sample string identification numbers, hand-painted on the rock surface with durable exterior paint. For differentiation purposes, the saw-cut channel string identification numbers have the KBSC prefix (i.e. Kibi Project - Saw-Cut Channel) and the chip-channel string identification numbers have the KBLC prefix (i.e. Kibi Project - Linear Chip-Channel).
Channel sample strings are surveyed as three-dimensional features to permit 3D-plotting, with the sampling data collected in standard drill database tables (i.e. collar, survey, geology, assays, structure). Channel sample string collar coordinates (i.e. zero mark of channel string) are established by Total Station survey using DGPS-established control pillars, by the company's in-house surveyor.
The trace of the channel sample string is surveyed by Total Station from the collar to the end point, with azimuth and slope measurements collected at inflection points. The sample intervals are established to match the inflection points along the trace of the sample string. With the sample intervals (i.e. from and to measurements) representing slope measurements along the channel sampling string and not horizontally corrected distances.
Of the total 2,046 channel samples collected: 105 samples yielded less than 0.01 g/t gold; 777 samples returned gold values from 0.01 g/t to 0.1 g/t; 614 samples between 0.1 g/t and 1.0 g/t gold; 357 samples between 1.0 g/t and 5.0 g/t gold; 98 samples between 5.0 g/t and 10.0 g/t gold; 68 samples between 10.0 g/t and 25.0 g/t gold; 22 samples between 25.0 g/t and 50.0 g/t gold; and 5 samples above 5.0 g/t gold (121.0 g/t maximum).
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Significant channel sampling results are summarized in Table 9.4. The reported channel samples results meet the following criteria: 1 m minimum length and minimum metal factor (grade x length) of 15 m-g/t. Reported channel sample results correspond to channel-lengths in metres. Due to irregular bedrock surface, the channel sample results represent sample intersection lengths irrespective of mineralization topography and may not represent true width of mineralization.
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Table 9.4: Cobra Creek: Significant Channel Sampling Results |
||||
Trench ID |
From (m) |
To (m) |
Channel-Length (m) |
Au (g/t) |
High Grade Shoot |
||||
KBCS023 |
0.0 |
2.4 |
2.4 |
33.21 |
KBCS024 |
0.2 |
4.5 |
4.3 |
15.13 |
KBCS025 |
0.0 |
4.9 |
4.9 |
8.68 |
KBCS026 |
0.0 |
7.0 |
7.0 |
6.31 |
KBCS027 |
0.0 |
9.0 |
9.0 |
6.74 |
KBCS023-2 |
1.72 |
9.65 |
7.93 |
4.10 |
KBCS023-11 |
0.0 |
3.95 |
3.95 |
3.91 |
KBCS023-12 |
0.0 |
4.3 |
4.3 |
12.00 |
KBCS023-45 |
2.9 |
6.8 |
3.9 |
12.61 |
KBCS023-46 |
2.0 |
7.0 |
5.0 |
23.62 |
including |
6.1 |
7.0 |
0.9 |
67.90 |
KBCS023-47 |
4.12 |
8.7 |
4.58 |
20.48 |
including |
5.9 |
7.8 |
1.9 |
35.47 |
KBCS023-48 |
3.0 |
7.55 |
4.55 |
15.11 |
KBLC010 |
0.0 |
4.0 |
4.0 |
8.9 |
KBLC012 |
0.0 |
4.0 |
4.0 |
7.69 |
KBLC014 |
0.0 |
3.0 |
3.0 |
16.14 |
KBLC016 |
0.7 |
3.0 |
2.3 |
40.6 |
KBLC018 |
0.0 |
2.2 |
2.2 |
8.72 |
KBLC020 |
0.0 |
1.0 |
1.0 |
18.05 |
High Grade Shoot - West |
||||
KBCS092-3 |
0.35 |
3.72 |
3.37 |
10.26 |
KBCS092-4 |
0.0 |
3.15 |
3.15 |
13.17 |
including |
0.0 |
0.95 |
0.95 |
31.50 |
KBCS092-5 |
0.0 |
1.1 |
1.1 |
19.35 |
Tourmaline Zone |
||||
KBCS019 |
0.0 |
7.4 |
7.4 |
2.25 |
KBCS028B |
0.0 |
7.6 |
7.6 |
3.13 |
L17600N Shoot |
||||
KBCS080-2 |
0.0 |
1.5 |
1.5 |
10.47 |
KBCS080-5 |
0.0 |
1.6 |
1.6 |
11.14 |
KBCS080-9 |
0.6 |
4.5 |
3.9 |
5.90 |
KBCS080-18 |
0.0 |
1.1 |
1.1 |
14.77 |
KBCS080-28 |
1.4 |
6.5 |
5.1 |
5.88 |
KBCS080-33 |
5.2 |
12.0 |
6.8 |
3.12 |
KBCS080-35 |
0.5 |
3.5 |
3.0 |
6.39 |
Old Pit |
||||
KBCS077-11 |
0.0 |
3.8 |
3.8 |
6.84 |
KBCS077-26 |
0.9 |
5.2 |
4.3 |
13.89 |
L17600W Shear |
||||
KBCS078-5 |
2.2 |
5.8 |
3.6 |
15.40 |
Lightning Shoot |
||||
KBCS085-57 |
0.0 |
5.6 |
5.6 |
3.30 |
KBCS085-61 |
0.0 |
2.0 |
2.0 |
27.89 |
KBCS085-67 |
0.0 |
1.1 |
1.1 |
44.00 |
KBCS085-68 |
0.0 |
1.2 |
1.2 |
12.6 |
KBCS085-74 |
2.0 |
4.28 |
2.28 |
8.10 |
KBCS085-99 |
2.27 |
6.35 |
4.08 |
5.06 |
Main Shear - SW |
||||
KBCS090-10 |
0.0 |
3.85 |
3.85 |
4.62 |
KBCS090-V4 |
0.0 |
1.07 |
1.07 |
23.60 |
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9.4.5 Hand-Augering
A hand auger sampling program encompassing a total of 118 holes with a cumulative meterage of 390.89 m was implemented at Akwadum South (Zone 7) during 2018 and 2019 (Figure 9.16). The auger sampling was designed to test the subsurface signature of the gold-in-soil anomaly to identify follow up scout pitting and/or trenching targets. The sampling was carried out with a locally fabricated cutting tool made from a used drill rod with a bevelled cutting edge. The cylindrical sample barrel was driven into the ground to recover the sample at 1m intervals. Auger holes were sunk at 12.5 m spacing and typically to a depth of 3 m - 5 m (down to saprolite).
Of the 288 samples collected from the auger holes: 65 samples yielded less than 0.01 g/t gold; 150 samples returned gold values from 0.01 g/t to 0.1 g/t; 70 samples between 0.1 g/t and 1.0 g/t gold; and 3 samples above 1.0 g/t gold (4.68 g/t maximum). The auger sampling helped delineate the in situ, saprolitic bedrock, signature of the northeast extremity (250 m) of the Akwadum South gold-in-soil trend. With five consecutive auger holes covering a 50 m distance along Line 11900 N (i.e. 12.5 m spacing) yielding metal factors (grade x length) ranging from 0.26 - 1.81 m-g/t.
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Figure 9.16: Location and Results of Hand Auger and Scout Pitting |
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9.4.6 Scout Pitting
Exploration efforts included 62 scout pits designed to follow up on soil geochemistry and hand auger anomalies, and to help define the litho-structural setting of grassroots targets (Table 9.5 and Figure 9.16). The manually excavated pits were normally 2m long x 1m wide x 1.5m - 5m deep (down to saprolite). In addition to horizontal channel sampling, pits where shallow-dipping quartz veining and/or shearing was observed were also subjected to vertical channel sampling.
Of the total 233 samples collected from the pits: 52 samples yielded less than 0.01 g/t gold; 110 samples returned gold values from 0.01 g/t to 0.1 g/t; 64 samples between 0.1 g/t and 1.0 g/t gold; and 7 samples above 1.0 g/t gold (4.41 g/t and 27.37 g/t maximum values).
At Akwadum South (Zone 7), the scout pitting successfully confirmed the anomalous hand hander sampling results. With five consecutive pits covering a 50 m distance along Line 11300 N (i.e. 12.5 m spacing) yielding metal factors (grade x length) ranging from 0.69 - 4.85 m-g/t; and six of seven pits over a 75 m distance on Line 11700 N returning metals factors ranging from 0.51 - 1.96 m-g/t. The pitting also permitted the delineation of the volcaniclastic rock unit hosting the gold mineralization.
9.4.7 Ground Geophysics
Ground geophysics was conducted at Cobra Creek in 2013 (Figure 9.17). The work consisted of 32.2 line-kilometres of IP/Resistivity survey and 14.99 line-kilometres of magnetic survey. The IP/Resistivity survey utilised a Pole-Dipole Array with a dipole length of 50 m and dipole separations of n = 1 to 10, and was undertaken by Sagax Afrique S.A. The magnetic survey was conducted by Xtra-Gold utilising a single Model G-856AX portable proton magnetometer. Magnetic readings were collected at 5 m stations along 100 m spaced grid lines with diurnal drift in the Earth's magnetic field corrected via repeated sampling at a specific location during the survey.
Auriferous shear zones at Cobra Creek exhibit a strong spatial association with two prominent ENE-NE high resistivity trends that appear to reflect broad zones of strong iron-carbonate (± silica) alteration, with gold mineralization traced over an approximately 850 m distance along the approximately 1,100 m long R2 resistivity trend (i.e. Main Shear structure). Resistivity trends spatially-associated with the auriferous shear system appear to be abutting against and/or bending into an inferred NNE‐trending second order fault defined by a high chargeability / weak-moderate resistivity domain occupying the western margin of the survey grid.
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Consistent with the shear system orientation, the host QFP body exhibits a strong ENE-NE magnetic fabric exemplified by a series of low magnetic susceptibility trends separated by discontinuous, lozenge-shaped, higher susceptibility domains. The auriferous shear structures, as well as the associated resistivity trends, tend to be spatially associated with areas of low magnetic intensity and/or along the margins of the higher susceptibility domains. With the low magnetic susceptibility trends apparently attributable to magnetite-destructive shearing and alteration processes.
A deep-rooted (>225 m), moderate IP chargeability anomaly (M2) is spatially associated with the high-grade gold shoot and tourmaline zone at the NE extremity of the prominent main shear structure resistivity trend (R2). The approximately 350 m long, NE-trending, coincident chargeability/resistivity anomaly appears to exhibit a steep northwesterly dip and moderate SW plunge; with the upper margin of the chargeable body lying at a vertical depth of approximately 125 m. The deeper M2 chargeability target remains untested but drill testing of the adjacent M3 chargeability anomaly, appearing to represent the up-dip, near surface expression of the M2 anomaly, intersected a proto-mylonite zone exhibiting barren pyrite mineralization.
Figure 9.17: Results of the Induced Polarization and Magnetometer Ground Surveys |
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9.4.8 Structural Study
Tect Geological Consulting has undertaken a structural re-interpretation of regional VTEM and radiometric geophysical data across all of Xtra-Gold's concessions (Tect Geological Consulting, 2020a; Figure 7.5), a preliminary structural mapping and 3D modelling study of Zone 5 (Cobra Creek Prospect, Figure 7.6, Tect Geological Consulting 2019) and a comprehensive structural mapping and 3D modelling exercise for Zones 1-4 (Tect Geological Consulting 2020b). A summary of the relevant findings is presented in Chapter 7, with the omission of Zone 5 (Cobra Creek), which does not form part of the present resource update/declaration.
Recent work has been consolidated to provide guidance to the exploration activities for the Cobra Creek Deposit, as this prospect hosts significant Au anomalies (Tect Geological Consulting 2019) (Figure 9.18). Preliminary findings by Tect Geological Consulting have suggested the following:
Structural Data Analysis and Interpretation
• Locally, S1 (gneiss) and S2m (mylonite) trends within the hosting quartz feldspar porphyry (QFP) body are consistent with fabric trends interpreted from IP-Res and ground-based magnetics survey datasets, and overall the D2 structural evolution described for the Kibi Project (see Chapter 7.5);
• On an outcrop scale, individual S2m shears exhibit an anastomosing geometry that, in part, envelope lenses of relict QFP, thereby creating low-strain shadows associated with lozenges. S2m records distinct reverse (i.e. SW-up), left-lateral kinematic (i.e. oblique) movement, that is consistent with regionally-interpreted NNE-trending D2 structure (see Chapter 7.5).
• Auriferous veins consist of fault-fill/shear, extension and hybrid extensional-shear veins of varying proportions of quartz-carbonate±tourmaline, which were cotemporaneous with the development of S2m. Mineralization occurs in close association with late-stage Ser-Cb-Po-Py (±Chl) alteration and as native/visible gold;
• Syn-deformational (S2m) hydrothermal fluid flow, veining and auriferous mineralization occurred within a sub horizontal to shallow-dipping stress field, with a principle shortening axis trending NW to NNW;
Preliminary Model of Controls on Mineralization and Guide to Exploration
• Syn-deformational (S2m) fault-fill/Shear, extension and hybrid extensional-shear veins exhibit directional brittle fracturing, interconnectivity and directional permeability, leading to the development of stockwork geometries representative of echelon arrays (planes). Along these planes, stockworks have a preferred directional (linear) permeability or shoot geometry along very shallow (<20°) to sub-horizontal plunges towards the SW (236°-228°).
• Work was undertaken to characterize the extent and geometry of the host QFP intrusion within the volcano-sedimentary Kibi Belt, in turn to establish QFP (sheared) contacts and possible strain shadows or dilational zones (jogs/bends), which would be highly favourable sites for more continuous and enhanced Au mineralization;
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Figure 9.18: Structural Mapping of the Cobra Creek Target |
9.5 Akim Apapam Reconnaissance License Application
Exploration efforts on the Akim Apapam Reconnaissance License Application, including infill soil sampling, trench rehabilitation / deepening, scout pitting and hand auger sampling, were geared towards the further definition of the Hillcrest (Zone 6) target. An approximately 1,200 m long by 100 m - 200 m wide anomalous gold-in-soil trend spatially associated with a prospective litho-structural setting consisting of an inferred NE-trending regional fault bounding an apparent Belt-type granitoid (i.e. high magnetic susceptibility body) at the intersection with a series of SE-trending linking faults.
A total of 2.25 line-kilometres of infill soil sampling was completed in 2016 to provide tighter coverage of the gold-in-soil anomaly at 100 m line spacing (i.e. infilling of 2012 sampling at 200 m line spacing). A total of 97 soil samples were collected at 25 m stations along the NW-SE grid lines (Figure 9.19). The Hillcrest gold-in-soil trend is defined by an envelope of discontinuous/patchy, typically greater than 50 ppb, gold-in-soil values; with the anomalous threshold arbitrarily set at 50 ppb gold based on past exploration experience by Xtra-Gold in the Kibi Greenstone Belt. Out of the 80 samples within the anomalous trend, including both 2012 and 2016 sampling, 58 samples (72%) yielded gold values greater than the 50 ppb anomalous threshold, including: 29 samples from 51 ppb to 100 ppb gold; 23 samples from 101 ppb to 300 ppb gold; and 6 samples above 300 ppb gold (493 ppb maximum).
A 108.6 m section of an existing 2012 trench was manually rehabilitated / deepened in 2017 to provide continuous saprolitic bedrock exposure for detailed mapping / sampling of the Hillcrest shear structure (Figure 9.20). Of the 98 samples were collected from the deepened #TAAP001-A trench: 54 samples yielded gold values from 0.01 g/t - 0.1 g/t, 30 samples between 0.1 g/t to 1.0 g/t gold; 9 samples from 1.0 g/t to 5.0 g/t gold; and 5 samples above 5.0 g/t gold (10.7 g/t maximum). Trench #TAAP001-A delineated an approximately 45 m wide structural zone encompassing a series (7) of parallel, SE-dipping (30° - 40°), auriferous shears ranging from approximately 0.5 m to 4 m in trench-length (Figure 9.21). Channel sampling of the iron carbonate-amphibole-quartz schist seams returned mineralized intercepts ranging from 0.5 m grading 0.35 g/t gold to a high of 5.0 m grading 3.27 g/t gold. Note that the above auriferous intercepts represent trench-lengths with true widths estimated to be 50% - 60% of the reported intervals.
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Additional 2017 work on the Hillcrest target included the excavation of 21 scout pits totalling 66.3 vertical metres and 40.7 horizontal metres (Figure 9.20). The pitting was designed to follow up on soil geochemistry and/or hand auger anomalies, and to help define the mineralization zone's litho-structural setting. Of the 42 samples collected from the pits: 15 samples yielded less than 0.01 g/t gold; 17 samples returned gold values from 0.01 g/t to 0.1 g/t; 7 samples between 0.1 g/t and 1.0 g/t gold; and 3 samples returned maximum values of 1.81 g/t, 3.88 g/t, and 5.0 g/t gold respectively. Scout pitting efforts successfully traced the Hillcrest shear structure approximately 200 m northeast of trench #TAAP001-A. With iron carbonate-amphibole-quartz schist seams in pits #PKB062 and #PKB063, located 25 m apart, returning 5.0 g/t gold and 1.81 g/t gold over 1.0 m and 1.1 m trench-lengths respectively.
A hand auger sampling programme encompassing 17 holes totalling 66.1 m was implemented on the Hillcrest zone in 2019 (Figure 9.20). The auger sampling was designed to test the subsurface signature of gold-in-soil anomalies to identify follow up scout pitting and/or trenching targets. Of the 51 samples collected from the auger holes: 13 samples yielded less than 0.01 g/t gold; 18 samples returned gold values from 0.01 g/t to 0.1 g/t; 18 samples between 0.1 g/t and 0.35 g/t gold; and 2 samples returned maximum values of 0.9 g/t gold and 1.02 g/t gold. The auger sampling appears to have delineated the apparent southwest strike extension of the Hillcrest shear structure, approximately 100 m southwest of trench #TAAP001-A. With five consecutive auger holes covering a 50 m distance (i.e. 12.5 m spacing) yielding metal factors (grade x length) ranging from 0.45 - 2.1 m-g/t.
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Figure 9.19: Location and Results of Soil Sampling for Akim Apapam Reconnaissance Licence |
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Figure 9.20: Location and Results of Hand Auger and Scout Pitting for Akim Apapam Reconnaissance Licence |
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Figure 9.21: Trench #TAAP001-A Schematic Cross Section |
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10 DRILLING
Significant drilling has been completed on the Kibi Gold Project. The drilling activity is summarised in Table 10.1 and the location of the drill hole collars are depicted on Figure 10.1.
Table 10.1: Summary of Drilling |
||||||
Year |
Reverse Circulation |
Diamond Drill |
Total |
|||
No. of Drill |
Meterage |
No. of Drill |
Meterage |
No. of Drill |
Meterage |
|
2008 |
|
- |
18 |
3,001.00 |
18 |
3,001.00 |
2009 |
50 |
4,715.00 |
|
- |
50 |
4,715.00 |
2010 |
|
- |
36 |
6,458.12 |
36 |
6,458.12 |
2011 |
|
- |
81 |
21,878.32 |
81 |
21,878.32 |
2012 |
|
- |
71 |
13,035.40 |
71 |
13,035.40 |
2016 |
|
|
43 |
2,639.3 |
43 |
2,639.3 |
2018 |
|
- |
26 |
3,413.60 |
26 |
3,413.60 |
2019 |
|
- |
33 |
3,604.8 |
33 |
3,604.8 |
2020 |
|
- |
74 |
9,615.45 |
74 |
9,615.45 |
2021 |
|
|
36 |
5,925.4 |
36 |
5,925.4 |
Total |
50 |
4,715.00 |
418 |
69,571.39 |
468 |
74,286.39 |
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Figure 10.1: Location of Drill hole Collars (2008 - 2021) |
10.1 Drilling Campaigns
10.2 2008 - 2010 Exploration Program
The first drilling campaign on the Apapam Concession area was conducted by Xtra-Gold in 2008. The Xtra-Gold drilling focused on the Kibi Gold Project consisting of a > 5.5 km long mineralized trend delineated from gold-in-soil anomalies, trenching, and geophysical interpretations along the northwest margin of the Apapam Concession; and characterized by widespread gold occurrences of the granitoid hosted-type.
A total of 68 drill holes totalling 7,716 linear metres were drilled on the Apapam Concession, including 18 diamond core drill holes in 2008 (3,001 m) and 50 reverse circulation (RC) drill holes in 2009 (4,715 m). The diamond drilling and RC drilling was conducted by Burwash Drilling and Boart Longyear, respectively. The drill holes targeted the Zones 1, 2, and 3 gold-in-soil anomalies.
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Diamond drill core was HQ size (63.5 mm diameter) in upper oxidized material (regolith) and NQ2 size (50.6 mm diameter) in the lower fresh rock portion of the hole. RC drilling was typically conducted with a 5 ¾ inch diameter bit; but reduction to 5 ½ inch or 5 ¼ inch diameter bits was on occasion required due to rock hardness and/or increasing hole depth. Core from five (5) of the 18 diamond drill holes was oriented utilizing the Ezy-Mark core orientation device.
All drill collar locations were surveyed-in by a professional surveyor utilizing a combination of DGPS-established benchmarks and theodolite surveying; and all drill casing (PVC) secured by a cement base.
All drill holes (except for 3 drill holes) were downhole surveyed (azimuth/inclination) at nominal 30 m interval utilizing an electronic single shot survey instrument. Diamond drill and RC holes were surveyed with the Flexit and Reflex EZ-Shot tools, respectively. Out of the 68 drill holes, two (2) diamond drill holes were only subjected to dip surveys using the acid etch method due to electronic survey tool technical difficulties, and one (1) short RC hole (62 m) was not subjected to any type of downhole survey due to ground collapse.
10.3 2010 - 2012 Exploration Program
A total of 188 holes were drilled for 41,372 m of drilling (Table 10.2). From this, 33,961 samples were taken from 39,088 m of core. Core size used was HQ diameter (63.5 mm) in upper oxidized material (regolith) and NQ2 diameter (50.6 mm) in the lower fresh rock portion of the hole.
Table 10.2: Summary of Diamond Drilling (2010 - 2012) |
||||
July 25, 2010 to May 28, 2012 |
Drill holes |
Metres |
No. Samples |
Sample Metres |
Big Bend |
44 |
12,569 |
10,344 |
11,628 |
East Dyke |
18 |
4,489 |
3,124 |
3,804 |
Mushroom |
18 |
3,254 |
2,759 |
3,200 |
South Ridge |
24 |
4,652 |
4,445 |
4,586 |
Double 19 |
28 |
4,925 |
4,092 |
4,690 |
Other Targets |
56 |
11,483 |
9,197 |
11,180 |
Total |
188 |
41,372 |
33,961 |
39,088 |
Core recoveries recorded were generally very good with an average core recovery in the upper regolith (saprolite/transition zone) of 88.7%, and in the fresh rock of 99.6%. Drill core is stored in wooden trays that are stacked in storage sheds. The core was logged, and various structural measurements were taken where possible. Half-core sampling of drill core was undertaken. One half of the core was sent to the laboratory and the other half was retained in the core tray for reference. Samples are usually 1 m in length.
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10.4 2012 - 2021 Exploration Program
A total of 212 diamond core drill holes totalling 25,198.55 m was drilled on the Kibi Gold Project during the 2012 - 2021 reporting period. With most of the drilling,158 holes totalling 21,321.45 m (85%), completed from February 2018 - June 2021 on targets within the Zone 1 - Zone 2 - Zone 3 Mineral Resource estimate footprint area (Table 10.3). Samples were taken from 21,742 m of core. Core size used was HQ diameter (63.5 mm) in upper oxidized material (regolith) and NQ2 diameter (50.6 mm) in the lower fresh rock portion of the hole. Drilling was undertaken by Xtra-Gold's in-house drilling team utilizing Atlas Copco Christensen CS1000 and Odyssey ODR100 drill rigs.
A detailed review and investigation of structural readings from drill core, trench and outcrops was also undertaken by Tect Geological Consulting (Tect Geological Consulting, 2020b). The body of work was aided by the use of digital mapping devices for field mapping and a Reflex IQ-Logger to obtain more precise and dense structural datasets. These datasets where integrated with 3D Geological/Target Modelling (Chapter 14.2), exploration drill hole targeting and downstream resource estimation (Chapter 14.8 - 14.10).
10.4.1 Cobra Creek (Zone 5) / Akwadum South (Zone 7) Scout Drilling Campaigns
Drilling activities during the 2012 - 2021 exploration program also included scout drilling campaigns on the Cobra Creek (Zone 5) and Akwadum South (Zone 7) targets located at the northeastern and southwestern extremities of the Apapam concession respectively (Figure 10.1). These early-stage targets, exhibiting distinct litho-structural settings, fall outside the footprint area of the present Zone 1 - Zone 2 - Zone 3 mineral resource estimate.
A 43 drill hole (2,639.3 m) Phase I diamond core drill program was implemented from early June to late August 2016 on the Cobra Creek (Zone 5) target; an approximately 550 m wide, NE-trending, quartz-feldspar porphyry ("QFP") hosted, multi-structure braided shear zone system traced by trenching / outcrop stripping over an approximately 850 m strike length. With the drilling testing an approximately 700 m x 200 m - 300 m segment of the Cobra Creek auriferous structural corridor, down to a maximum vertical depth of approximately 175 m (Figure 10.2).
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The Cobra Creek drill program included: 12 scout drill holes ranging from 56 m to 220 m in length (1,576 m) designed to test auriferous shear targets identified by extensive outcrop stripping / channel sampling efforts and priority Induced Polarization ("IP") / Resistivity anomalies spatially associated with auriferous shears; and 31 short, predominantly vertical (-90o) drill holes ranging from 16 m to 63 m in length (1,063 m) designed to better target / dissect flat-lying to shallow dipping gold-bearing extensional veining arrays and/or shallow plunging auriferous shoots.
A scout drilling program was undertaken on the Akwadum South (Zone 7) target located at the southwestern extremity of the Apapam concession from late May to mid-September 2019 (Figure 9.16). A total of 11 diamond core drill holes (1,237.8 metres) ranging from 51.6 m -190 m in length were completed by the company's in-house drilling crew. The scout drilling traced anomalous gold mineralization over an approximately 1,000 m strike-length, and to a vertical depth exceeding 100 m, along a NE-trending volcaniclastic rock package exhibiting widespread silica-sericite-pyrite alteration with associated quartz veining.
Figure 10.2: Drill / Compilation Plan - Cobra Creek (Zone 5) |
Significant drill results for the Cobra Creek (Zone 5) and Akwadum South (Zone 7) targets are summarized in Table 10.4. The reported drill results meet the following criteria: 1 m minimum length and minimum metal factor (grade x length) of 3 m-g/t with minimum 0.3 g/t average grade over the interval or a minimum metal factor of 5 m-g/t if interval falls below the minimum 1 m criteria. In addition, mineralized intercepts are constrained with a 0.25 g/t gold minimum cut-off grade at top and bottom of intercept, with no upper cut-off applied, and maximum of five (5) consecutive samples of internal dilution (less than 0.25 g/t gold). Reported drill results correspond to core-lengths in metres. The orientation / geometry of the mineralization is not fully understood at this time resulting in unknown true thickness.
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Table 10.4: Significant Drill Results - Cobra Creek (Zone 5) / Akwadum South (Zone 7) |
||||
Hole ID |
From (m) |
To (m) |
Core-Length (m) |
Au (g/t) |
Cobra Creek (Zone 5) |
||||
CCDD16002 |
3.0 |
4.5 |
1.5 |
19.50 |
CCDD16004 |
31.7 |
32.3 |
0.6 |
8.05 |
CCDD16004 |
45.6 |
52.2 |
6.6 |
1.00 |
CCDD16005 |
128.6 |
129.5 |
0.9 |
6.31 |
CCDD16009 |
28.4 |
30.7 |
2.3 |
2.68 |
CCDD16010 |
115.0 |
115.6 |
0.6 |
9.95 |
CCDD16012 |
110.0 |
141.0 |
31.0 |
0.36 |
including |
122.4 |
123.3 |
0.9 |
2.40 |
CCDD16013 |
0.0 |
5.5 |
5.5 |
6.57 |
including |
2.5 |
4.5 |
2.0 |
11.70 |
CCDD16015 |
1.0 |
6.2 |
5.2 |
9.51 |
including |
4.6 |
5.7 |
1.1 |
37.95 |
CCDD16016 |
4.5 |
7.2 |
2.7 |
3.00 |
including |
4.5 |
5.0 |
0.5 |
8.08 |
CCDD16016 |
19.6 |
34.4 |
14.8 |
1.43 |
including |
28.2 |
30.2 |
2.0 |
4.39 |
CCDD16018 |
30.0 |
31.5 |
1.5 |
3.54 |
CCDD16020 |
7.1 |
11.6 |
4.5 |
10.90 |
including |
10.0 |
10.6 |
0.6 |
57.08 |
CCDD16021 |
24.5 |
26.8 |
2.3 |
2.41 |
CCDD16022 |
1.5 |
3.0 |
1.5 |
48.10 |
CCDD16022 |
12.0 |
13.2 |
1.2 |
7.27 |
CCDD16023 |
4.0 |
9.3 |
5.3 |
4.46 |
CCDD16024 |
10.4 |
18.0 |
7.6 |
2.09 |
including |
14.2 |
14.8 |
0.6 |
7.67 |
CCDD16024 |
27.6 |
28.3 |
0.7 |
58.73 |
CCDD16025 |
0.5 |
8.5 |
8.0 |
2.93 |
including |
1.1 |
2.0 |
0.9 |
9.61 |
CCDD16037 |
18.0 |
22.0 |
4.0 |
1.15 |
CCDD16039 |
0.0 |
4.0 |
4.0 |
1.57 |
CCDD16042 |
3.0 |
4.5 |
1.5 |
3.10 |
Akwadum South (Zone 7) |
||||
AKDD19002 |
35.5 |
52.7 |
17.2 |
0.37 |
AKDD19002 |
71.8 |
72.8 |
1.0 |
4.19 |
AKDD19002 |
79.0 |
80.0 |
1.0 |
3.25 |
AKDD19004 |
71.0 |
74.0 |
3.0 |
1.3 |
AKDD19006 |
28.0 |
53.0 |
25.0 |
0.47 |
including |
51.2 |
52.0 |
0.8 |
2.98 |
AKDD19007 |
62.0 |
73.5 |
11.5 |
0.62 |
including |
63.7 |
64.5 |
1.8 |
1.45 |
AKDD19008 |
50.5 |
52.0 |
1.5 |
4.05 |
AKDD19011 |
42.0 |
54.5 |
12.5 |
0.37 |
Pivot Mining Consultants (Pty) Ltd |
10.5 Drilling Quality
10.5.1 Diamond Drill Core
Diamond drill core is HQ diameter (63.5 mm) in upper oxidized material (regolith) and NQ2 diameter (50.6 mm) in the lower fresh rock portion of the hole.
All drill collar locations are surveyed-in by the company's in-house surveyor utilizing a combination of DGPS-established benchmarks and Total Station surveying; and completed holes are identified by a drill casing (PVC) secured by a cement base with an inscribed collar number.
Topographical control for the drill collars, including the digital terrain model (DTM) employed in the present MRE, is based on a satellite topography survey (i.e. photogrammetry) conducted in 2012 by PhotoSat of Vancouver, Canada (1 m bare earth survey grid).
Directional surveys (azimuth/inclination) are conducted at 30 m downhole intervals as the drill hole is being drilled and at 6 m intervals during the pulling of the NQ rods upon completion of the hole (i.e. until reaching the HQ casing). The directional surveys are conducted utilizing a Reflex EZYTRAC multi-shot electronic survey tool with the instrument periodically serviced and calibrated by Imdex Global BV, the official Reflex Instrument distributor in Ghana. The NQ2 core (i.e. in fresh rock) is oriented utilizing the Reflex Act III core orientation tool.
10.5.2 Reverse Circulation (RC) Drill Samples
All Reverse Circulation (RC) drill collar locations were surveyed-in by a professional surveyor utilizing a combination of DGPS-established benchmarks and theodolite surveying; and all drill casing (PVC) secured by a cement base. Directional surveys (azimuth/inclination) were conducted at 30 m downhole intervals utilizing an electronic single-shot drill hole survey tool.
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11 SAMPLE PREPARATION, ANALYSES AND SECURITY
11.1 Sample Processing and Storage
Core is transported to and stored at the Kwabeng exploration camp. The core shack has the trained personnel and facilities to receive and layout core and RC samples in preparation for logging and sampling by the site geologist.
11.2 Sampling Methodology
11.2.1 Diamond Drill Core Samples
Drill core obtained from diamond drilling is targeted directly from the core tube into wooden core boxes, marked with the drill hole number and depth information. In the case of saprolite material the core is laid directly onto a strip of plastic wrap placed inside the box and then securely wrapped around the core to stabilize and prevent the dehydration of the saprolite. Core recovery and any drilling problems are noted by company staff at the drill site.
The NQ2 core (i.e. in fresh rock) is laid out along an angle iron on a work bench and meticulously re-assembled piece by piece with the core aligned with the orientation marks at the bottom of each 3 m drill run. The core orientation line (i.e. bottom of core) is marked along the length of the core with down-hole pointing arrows. The core is then measured, core recovery and rock quality designation (RQD) information collected, and a dashed sampling line perpendicular to the core orientation line marked along the length of the core. Each individual core box is photographed with the photographs taken from both dry and wet core.
A company geologist subsequently conducts geological logging of the core and marks the sample intervals. Structural logging is conducted with the Reflex IQ-Logger structural logging laser-device with the structural measurements digitally collected. The core is sampled over nominal 1 m intervals; with adjustments where necessary for mineralized structures. More comprehensive geological logging (on half core) is routinely conducted after the reception of assays on significant gold intercepts and petrographic studies periodically undertaken.
The diamond drill core is then saw-split lengthwise by trained company personnel, and half the core is immediately placed into a labelled plastic bag with a unique sample ticket stapled to the inside lip of the bag, and securely sealed by staples. The remaining half of core is returned to the core box and the box stored in a secure facility. The samples are then laid-out in sequence in the designated sample room to avoid duplications and omissions of samples in the laboratory submission orders, and the sample bags placed in labelled rice sacks in sequence. The shipping sacks are immediately secured with a numbered security seal (i.e. nylon zap strap) and stored in a locked room pending shipment to the laboratory.
11.2.2 Reverse Circulation (RC) Drill Samples
Reverse circulation drill samples are collected immediately at the drill hole site under the supervision of a company geologist. The drill sample cuttings are collected in a cyclone over one (1) meter sample intervals; with the cyclone being purged after every 6 m drill run (i.e. hit with sledge hammer and air blown). Reverse circulation drilling is conducted under dry ground conditions to ensure sample integrity. If water is encountered in the RC hole, the drill target is subsequently drilled by the diamond core method.
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The dry RC bulk chip sample (~ 25 to 30 kg) is then weighed and passed through a two - stage riffle splitter to produce a nominal 2 - 3 kg sample for assay which is also weighed on site. The splitter is thoroughly cleaned by hitting it with a wooden club and a wire brush is used after every sample. The split sample is immediately placed into a labelled plastic bag with a unique sample ticket stapled to the inside lip of the bag, and securely sealed by staples. The remaining portion of the bulk drill chip samples is then stored in large, labelled plastic bags at the drill site for future reference.
Drill cuttings from each sample interval are screened - washed and a quick log of the rock chips is completed at the drill site by a company geologist; noting amongst other things the sample quality/recovery, weathering profile, main lithologies, prominent alteration, and the character of the mineralization (i.e. oxide versus sulphide). Representative rock chips are also collected into a plastic sample tray for subsequent detailed geological logging of the drill hole by a senior geologist with the aid of a binocular microscope.
Upon transport to the Kwabeng exploration camp by company personnel at the end of the drill shift the samples are laid-out in sequence in a designated sample room to avoid duplications and omissions of samples in the laboratory submission orders, and the sample bags placed in labelled rice sacks in sequence. The shipping sacks are immediately secured with a numbered security seal (i.e. nylon zap strap) and stored in a locked room pending shipment to the laboratory. The bulk reference samples for economically significant gold intercepts are subsequently transported to the Kwabeng exploration camp for safe keeping.
11.2.3 Auger Sampling
Hand auger sampling is routinely utilized to test the geochemical signature of gold-in-soil anomalies at depth within the saprolite horizon to better define trenching targets. The augering is carried out with a locally fabricated cutting tool made from a used drill rod; the cylindrical cutting edge being driven into the ground to recover the sample. At auger sites where strong quartz scree is present, a collar pit (~ 0.5 m -1 m deep) is dug to facilitate penetration through the surficial quartz scree. Auger holes are typically sunk to a depth of 3 m - 5 m depending on the depth of the saprolite horizon. Sampling is typically conducted at 1 m intervals starting from the hole's 1 m mark. Auger hole spacing is typically at 25 m, with local 12.5 m in-filling. To avoid any contamination only dry samples are collected.
11.3 Data Management
Xtra-Gold Resources utilizes the Datamine Fusion geological data management system for the collection, reporting and management of its geological data. The integrated software system allows the company to manage all drill hole/trench/channel, surface sampling, and Quality Control data from one location including managing reporting, analysis, and exporting data to GIS or modelling packages.
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Fusion Server: Fusion Server provides for one central location for the administration and storage of all data (drill hole, samples, QA-QC, etc) in one central database.
DHLogger: Complete drill hole/trench data capture and management with embedded QC (Quality Control) Management. Fully customizable interface for all types of geological data collection and management including geological, geochemical, and geotechnical. parameters
Sample Station: Complete surface sample data capture and management with integrated QC. Stores all data for rock, soil, and stream samples. All data is validated on input and all sample data is stored and can be reported on and used in Mine Modelling and GIS systems.
QueryBuilder: A querying tool to extract data from the Fusion Database. Includes querying, graphing and reporting capabilities. The QC Charting Wizards plots for Standards, Duplicates, Lab Checks, Thompson Howarth, etc may be quickly generated.
Lab import: permits direct import of sample results from a commercial laboratory. Lab import checks the contents of the file for errors, validates sample numbers and directly imports samples, field QC and lab QC into the database. Lab import automatically performs QC checks and presents a control chart showing the QC for that analytical batch.
11.4 Sample Preparation
11.4.1 SGS Laboratory Services
From August 2006 to August 2008 all samples were submitted to SGS Laboratory Services Ghana Ltd for analysis at their analytical facility located in Tarkwa, Ghana. The laboratory operates a Quality System, that accords to ISO 17025 standards. As part of the international group of SGS laboratories, the SGS Tarkwa laboratory takes part in a regular Round Robin sample analysis to check for bias or systematic error. Every sample batch is assayed alongside certified reference standards, a blank and a repeat. Aqua regia samples are done in batches of 20 and Fire assay samples in batches of 50. The Quality Control systems in place are such that analysis of blanks, standard reference materials, repeats and re-splits account for up to 25% of all determinations conducted. All such data is available to the company on final certificates if requested.
11.4.2 ALS Chemex (ALS Ghana Limited)
From September 2008 to February 2017 sample preparation and analysis for all Xtra-Gold's samples, including diamond core and RC samples, trench channel, soil, and surface chip/grab samples were conducted by ALS Chemex (ALS Ghana Limited) at their analytical facility located in Kumasi, Ghana. ALS Chemex laboratory operations are covered by ISO 9001:2000 certification for the provision of assay and geochemical analytical services by QMI Quality Registrars and are accredited to ISO 17025 standards in various jurisdictions. The quality system and work procedures used in the Kumasi laboratory are identical to those used in the ALS Chemex laboratory in Vancouver, Canada and are subject to regular internal audits by their global quality assurance team. The Kumasi laboratory also participates in a number of proficiency tests and round robins.
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ALS Chemex's automated Laboratory Information Management System (LIMS) inserts quality control samples (reference materials, blanks and duplicates) on each analytical run, based on the rack sizes associated with the method. Quality control samples are inserted based on the following rack sizes specific to the method (Table 11.1).
Table 11.1: Summary of Quality Control Protocols |
||
Rack Size |
Methods |
Quality Control Sample Allocation |
20 |
Specialty methods including specific gravity, bulk density, and acid insolubility |
2 standards, 1 duplicate, 1 blank |
28 |
Specialty fire assay, assay- grade, umpire and concentrate methods |
1 standard, 1 duplicate, 1 blank |
39 |
XRF methods |
2 standards, 1 duplicate, 1 blank |
40 |
Regular AAS, ICP-AES and ICP-MS methods |
2 standards, 1 duplicate, 1 blank |
84 |
Regular fire assay methods |
2 standards, 3 duplicates, 1 blank |
ALS Chemex has developed the Open Lab™ system which allows clients on-line access to not just data reports generated by the laboratory, but to all the underlying QC data and audit trails. In addition, all lab QC data is automatically provided in the data files and analytical certificates posted/stored on their Webtrieve system or sent directly to the client.
11.4.3 Intertek Minerals Limited
From March 2017, sample preparation and analysis for all Xtra-Gold's samples, including diamond drill programs, trench channel, soil, and surface chip/grab samples were and are conducted by Intertek Minerals Limited (Intertek) at their analytical facility located in Tarkwa, Ghana. The Tarkwa laboratory is accredited by the South African National Accreditation System (SANAS) (Accreditation No: T0796) in accordance with ISO17025 for Fire Assay, Aqua Regia and Carbon digestion.
As part of the Intertek's QC process, a full range of blanks, in house reference materials, certified reference materials, re-splits and checks are analysed with each job. Each job will contain approximately 4% reference materials, 4% re-splits, 4% checks and 2% blanks which can be control blanks (which monitor the digestion, analytical processes and instrument) or Prep blanks (which monitor contamination and analytical processes).
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11.5 Chain of Custody
Reverse circulation drill samples are collected immediately at the drilling site under the supervision of a company geologist who escorts the samples back to the Xtra-Gold exploration camp in Kwabeng at the end of the shift. Drill core samples are saw-split and bagged under the supervision of a company geologist in a sample cutting room located adjacent to the core shack at the exploration camp. Trench, auger, soil, and surface rock chip/grab samples are transported from the field to the Kwabeng camp under Xtra-Gold's field team supervision.
All samples are laid-out in sequence in the designated sample room to avoid duplications and omissions of samples in the laboratory submission orders, and the sample bags placed in labelled rice sacks in sequence. The shipping sacks are immediately secured with a numbered security seal (i.e. nylon zap strap) and stored in a locked room pending shipment to the laboratory. Only the Project Geologist and the Chief Geotechnician have access to the key. The Kwabeng exploration camp is a fenced in compound with 24 hr security. A record of all samples shipped, as well as the actual samples within the individual sacks and their security seal numbers, is kept by the Project Geologist.
Depending on sample shipment size, samples are either transported by Xtra-Gold personnel directly to the analytical facility or scheduled for pickup by the laboratory from the Kwabeng exploration camp. A Tracking Record of all sample deliveries/pickups and pending analytical orders is kept by the Project Geologist, including personnel in custody of samples and time of departure; laboratory drop-off site; status of security seals; and assay turnaround time.
Upon delivery or pickup of samples a signed copy of the Sample Submittal Form is provided to Xtra-Gold personnel by the laboratory's sample reception staff. The laboratory has been instructed to notify Xtra-Gold's VP, Exploration and/or Senior Project Geologist immediately of any signs of tampering with the security seals or damage to the shipping sacks.
11.6 Analytical Procedure
11.6.1 Sample Preparation and Analyses (SGS Laboratory Services - Pre September 2008)
Trench Channel, Hand Auger, and Rock Sample Samples
PRP86 Prep Method: Samples are dried in trays, crushed to a nominal 6 mm using a Jaw Crusher, then <1.5 kg is split using a Jones type riffle. Reject samples are retained in the original bag and stored. The split is pulverised in a chrome steel bowl to a nominal 75 µm. An approximately 200 g sub-sample is taken for assay, with the pulverised residue retained in a plastic bag. All the preparation equipment is flushed with barren material prior to the commencement of the job.
FAA505 Analytical Method: Fuse a 50 g sample with a litharge-based flux, cupel, dissolve prill in aqua regia, extract into DIBK and determine Gold by flame AAS - Detection Limit 0.01 ppm.
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Soil Samples
SCR30 Prep Method: Samples are dried (105o C) and disaggregated to break up lumps prior to sieving to -80 mesh; oversize material discarded.
FAE505 Analytical Method: Fuse a 50 g sample with a litharge-based flux, cupel, dissolve prill in aqua regia, extract into DIBK and determine Gold by flame AAS - Detection Limit 2 ppb.
11.6.2 Sample Preparation (ALS Chemex) (September 2008 - February 2017)
Prior to July 2009, drill core, trench channel, hand auger, and rock samples were prepared utilizing ALS Chemex's PREP-31 method as follows: The samples are logged in the tracking system, weighed, dried and finely crushed to better than 70% passing a 2 mm (Tyler 9 mesh, US Std. No.10) screen. A split of up to 250 g is taken utilizing a riffle splitter and pulverized to better than 85 % passing a 75 micron (Tyler 200 mesh, US Std. No. 200) screen.
From July 2009 onward, RC chip and drill core samples were prepared utilizing the PREP31-B method; in which a 1 kg split of the sample is pulverized to better than 85% passing 75 microns.
From October 2010 onward, including all the 2010 - 2012 drilling campaign sampling, drill core samples with observed visible gold and/or exhibiting typical Kibi-type granitoid hosted mineralization characterized by liberated, particulate gold grains were typically prepared utilizing ALS Chemex's PREP-22 method as follows; pulverize entire sample in multiple stages to 85% passing 75 microns or better. Recombine and homogenize by riffling and /or re-pulverize.
The soil samples were prepared using ALS Chemex's PREP-41 method as follows: samples are logged in the tracking system, weighed, low temperature dried and sieved to 180µmm (-80 mesh); both fractions are retained.
11.6.3 Analytical Method (ALS Chemex) (September 2008 - February 2017)
Prior to December 2011, all samples, including drill core and RC chips, trench channel, hand auger, rock, and soil samples, were typically analysed for gold only utilizing ALS Chemex's Au-AA24 method: Fire Assay Fusion with Atomic Absorption Spectroscopy (AAS) Finish. A prepared sample (50 g nominal sample weight) is fused with a mixture of lead oxide, sodium carbonate, borax, silica and other reagents as required, inquarted with 6 mg of gold-free silver and then cupelled to yield a precious metal bead. The bead is digested in 0.5 mL dilute nitric acid in the microwave oven. An amount of 0.5 mL concentrated hydrochloric acid is then added and the bead is further digested in the microwave at a lower power setting. The digested solution is cooled, diluted to a total volume of 4 mL with de-mineralized water, and analysed by atomic absorption spectroscopy against matrix-matched standards. Reporting range is 0.005 ppm - 10 ppm. Samples yielding over limit gold values (> 10 ppm) are re-assayed by Fire Assay (50 g nominal sample weight) with Gravimetric Finish (Au-GRA22).
Selective pulp duplicates submitted for re-assay, in addition to the standard Au-AA24 gold assay, were also submitted to a conventional exploration geochemistry ICP-AES analysis utilizing the ALS Chemex ME-ICP41 method (35 elements). Over limit values for base metal and pathfinder elements of interest are subsequently re-analysed utilizing an Ore Grade ICP-AES method (OG46 method code).
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From December 2011 onward, all samples except for soil samples, were analysed utilizing ALS Chemex's Au-AA26 method: Fire Assay Fusion (50 g aliquot) with Atomic Absorption Spectroscopy (AAS) Finish. Reporting range is 0.01ppm - 100 ppm.
From August 2011 onward, drill core samples with observed visible gold and/or exhibiting typical Kibi-type granitoid hosted mineralization characterized by liberated, particulate gold grains were typically analysed four (4) times either by the Au-AA24 (Au-GRA22 if >10 ppm) method or the Au-AA26 method; with the arithmetic average of the four assays reported. With the four fire assays conducted on four separate 250 g pulp subsamples (splits).
11.6.4 Sample Preparation and Analytical Method (Intertek Minerals Limited) (Post March 2017)
Currently all assays are undertaken by Intertek Minerals Limited at their Tarkwa facility in Ghana. Batches of samples are typically collected by the laboratory from the Kwabeng field camp on a two-week schedule.
Drill core, trench channel, saw-cut channel, hand auger, and rock grab samples are typically prepared utilizing Intertek's SP12 prep-method as follows: samples are logged in the tracking system, weighed, dried, and crushed to nominal 10 mm screen size. A split of up to 1.2 kg is taken utilizing a riffle splitter and pulverized to better than 85 % passing a 75 micron. The milling specifications (grind size) are checked regularly.
All samples are analysed for gold utilizing method FA51/AA which is a lead collection fire assay (50 g aliquot) fusion method with an Atomic Absorption Spectroscopy finish (AAS) finish. Reporting range is 0.01 ppm - 800 ppm.
Drill core samples with observed visible gold and/or exhibiting typical Kibi-type granitoid hosted mineralization characterized by liberated, particulate gold grains are typically pulverized in their entirety to better than 85% passing 75 microns (SP13 prep-code) and analysed three (3) times by the FA51/AA method; with the arithmetic average of the three assays reported. With the three fire assays conducted on three separate 300 g pulp subsamples (splits).
Soil samples are dry-sieved to 180 microns (SV12 prep-code) and the undersize fraction analysed by 50-gram Trace Level fire assay fusion with atomic absorption spectroscopy finish (FA50/AA). Reporting range is 0.005 ppm - 10 ppm.
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12 DATA VERIFICATION
12.1 Accurate Placement and Survey of Drill hole Collars
Pre 2010: Drill collar locations were surveyed-in by a professional surveyor utilizing a combination of DGPS-established benchmarks and Total Station surveying.
Post 2010: Drill collar locations were surveyed-in by the company's in-house surveyor utilizing a combination of DGPS-established benchmarks and Total Station surveying.
Topographical control for the drill collars, including the digital terrain model (DTM) employed in the present MRE, is based on a satellite topography survey (i.e. photogrammetry) conducted in 2012 by PhotoSat of Vancouver, Canada (1 m bare earth survey grid).
12.2 Downhole Surveys
Pre 2010: Downhole surveys (azimuth/inclination) were conducted at 30 m downhole intervals utilizing an electronic single-shot drill hole survey tool.
Post 2010: Downhole surveys (azimuth/inclination) were conducted at 30 m downhole intervals as the hole is being drilled and at 6 m - 9 m intervals during the pulling of the NQ rods upon completion of the hole (i.e. until reaching the HQ casing), utilizing an electronic multi-shot drill hole survey tool.
12.3 Analytical Quality Assurance and Quality Control Data
Quality-Control Programmes have been implemented to ensure best practice in the sampling and analysis of the diamond drill core, reverse circulation (RC) chip samples, saprolite trench and saw-cut channel samples, and soil samples and that the data can be used to inform subsequent work and the progression of the project.
12.4 Quality Assurance and Quality Control (QA/QC) Procedures and Results
12.4.1 2008 - 2010 Exploration Campaign
Analytical protocols utilized by Xtra-Gold involved the insertion of quality control samples into the sample stream of assay samples submitted to the laboratory. As of September 2008 certified reference standards, coarse analytical blanks, and field duplicate samples were inserted within sample sequences at the following rate: one (1) of each for every 20 samples within batches of Drill Core, RC Chip, and Trench Channel samples; and one (1) of each for every 40 samples within batches of Geological/Characteristic (i.e. grab, composite chip), Hand Auger, and Soil samples.
In February 2010, Xtra-Gold commissioned SEMS to conduct a detailed technical audit of Xtra-Gold's drill sample QA/QC program. Datasets assessed for quality control include:
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Laboratory standards, blanks, duplicates and check repeats (Fire Assay and Gravimetric determinations). The audit reviewed the following:
◾ Client introduced standards, blanks and RC field duplicates (Fire Assay and Gravimetric determinations)
◾ Client resubmitted pulps
◾ Client quartered core
◾ SEMS quarter core control
◾ SEMS RC duplicates resubmitted to ALS Chemex and also Intertek, Tarkwa
◾ Check sieve test analysis
◾ Laboratory and field splitting error
◾ Results for Screen Fire assay versus 50 g Fire Assay
The following results were found from the investigation:
◾ Comparison of laboratory standards indicates that precision and accuracy are well within industry tolerance.
◾ Standards obtained from Canada indicate that some batches sent to ALS were poorly analysed. Those batches were re-analysed by ALS.
◾ Blanks obtained from Rocklabs indicate that there is no evidence from the results of laboratory or client blanks to suggest low-level contamination or repeated cross-contamination during crushing or pulverisation
◾ Laboratory duplicates and check repeats generally indicate that precision is well within industry tolerance.
◾ Xtra-Gold duplicates indicate that there is insignificant bias in the correlation between duplicates and original samples.
◾ Xtra-Gold quarter core submission to compare with original half core results highlighted the presence and effect of coarse gold grains on assays (nugget effect).
◾ RC chip resubmission indicated that there is possibly a problem with splitting of the sample in the field while resubmission of core indicates that there is also a problem with splitting in the laboratory.
12.4.2 Umpire analysis for period 2008 - 2012
In 2021, 200 samples from the period 2008 - 2012 were reanalysed by Intertek.
The following results of the internal QA samples were found from the investigation:
◾ Although a relatively small population, no analyses of the blanks were greater than 3x the detection limit indicating that no significant contamination has occurred.
◾ The two internal CRMs didn't perform well. The one CRM performed within specification but the other failed.
◾ Typical of the deposit, a relatively large proportion of the duplicates have differences between the original and repeats.
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The analysis of the umpire analysis indicates that there is a little bias between the datasets. However, there are a number of differences between the original analysis and the repeat analysis that are beyond generally acceptable limits. Having noted this and when looking at various other duplicate analyses utilising a number of other laboratories, it is clear that the nature of the gold deportment within the deposit is the reason for the significant differences between the original and repeat analyses.
12.4.3 2010-2012 Exploration Campaign
Sampling carried out by Xtra-Gold was conscientiously and diligently pursued. The quality control programme involved inserting and analysing blanks standards, and duplicates, checking laboratory repeats to check precision and resampling core (quarter core). Overall the results of the QA/QC checks were reported as being very encouraging
The results were as follows:
◾ Contamination: All the QC blanks are below detection indicating that contamination is not significant.
◾ Accuracy: Some 30 CRMs were used by the laboratories. In all cases the analysis indicates that the laboratory's accuracy is within specification.
Xtra-Gold used 11 CRMs in the QC programme. Generally the analysis of the CRMs indicates that the assay data can be considered accurate and suitable for mineral resource estimation.
◾ Precision: Various tests of the precision were undertaken. In general the analysis of the duplicates indicates that there is very little bias between the original and repeat analyses. However there are a number of individual differences between the original analysis and the repeat analysis that are beyond generally acceptable limits. Having noted this and when looking at various other duplicate analyses utilising a number of other laboratories, it is clear that the nature of the gold deportment within the deposit is the reason for the significant differences between the original and repeat analyses.
◾ Independent quarter core re-assay in mineralised zones: The independent assessment of mineralised intersections from the Big Bend, East Dyke, Mushroom, Double 19 and South Ridge prospects, yielded a precision of the original and resampling programmes that is within specification. The results suggest the presence of particulate/coarse grained gold.
12.5 Conclusions and Recommendations
The following conclusions and recommendations are made:-
◾ The operator is diligent in the use of the QA/QC programme with the recording of data for analysis. An important aspect is that an effective and dynamic QC programme is utilised to review data as it comes in from the laboratory; a practice currently being applied on site.
◾ The assessment of the blanks confirms that there is minimal contamination at the laboratory.
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◾ The assays were undertaken utilising a 50 g aliquot for the fire assay whereas the CRMs generally utilised a 30 g aliquot. The expectation is that the larger aliquot should produce results that are better grouped (precision) and more accurate.
◾ An excessive number of different CRMs have been previously used. It is recommended that fewer are used in the future. It is considered more practical to identify 2 to 5 different CRMs to span the assay range of the expected grades i.e. 0.5 - 2 ppm. This will allow more control and conformation of the data, i.e. identification of sample swaps in particular.
◾ In the earlier programmes numerous failures of the Xtra-Gold CRMs have been noted. Most of these have been attributed to the misidentification of the CRMs. The laboratory CRMs demonstrate that the data can be considered to be accurate.
◾ The precision is tested by analysis of the duplicate data. The results of the duplicate analysis presented suggests that the precision is an issue. This is probably truer for the higher grades and may be related the presence of coarser grains of gold.
It was concluded that the geochemical data used in the resource estimation was satisfactory, with variations most probably due to the nature and deportment of the gold and probably related to the presence of coarse gold in the deposits.
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13 MINERAL PROCESSING AND METALLURGICAL TESTING
A Gold Deportment Study which assessed the mineralogical and metallurgical aspects of the gold mineralization in the Kibi Gold Project was completed in October 2011 by SGS South Africa (Pty) Ltd. Two 10 kg samples of oxide material (average grade of 7.28 g/t Au) and sulphide material (average grade of 3.47 g/t Au) were analysed. The composite oxide sample was created from trench samples that were crushed and combined. The mineralogical test work included metallurgical and mineralogical tests that were undertaken in conjunction with the gravity test work. The tests performed included:
◾ Test work to determine the amenability of the material to gravity recovery;
◾ Gold distribution across size fractions (grading analysis);
◾ Heavy liquid separation to determine the amount of free gold or gold in heavy particles such as sulphides;
◾ Exposure and mineral association analysis of the particulate gold grains in the gravity concentrate;
◾ Chemical composition of the material and metallurgical test products;
◾ general mineralogical characterization of the material;
◾ Identification and quantification of gold minerals including native gold, gold-tellurides, etc. In the gravity concentrates;
◾ Grain size distribution of the gold grains in the gravity concentrate;
◾ Test work to determine the gold recovery by direct cyanidation; and
◾ Diagnostic leach analysis of the gravity tailings to determine the gold deportment in the gravity tails.
The preliminary conclusions made indicated that:
◾ The gold in the sulphide samples (3.49 g/t Au) was highly amenable to cyanidation leaching with ~97% recoverable by means of direct cyanidation. This material is also amenable to gravity upgrading, with ~67% of the gold recovered at a mass pull of ~3%. In the gravity concentrate (97.5 g/t Au), a total of 143 particulate gold grains were observed in the gravity concentrate of this sample.
◾ The grading analysis on the sulphide sample indicated a very high upgrading of gold in the +106µm size fraction (~69%). This indicates that the gold is either large gold grains or locked in large gold-bearing particles. From the liberation and mineral association characteristics determined by QEMSCAN, on the gravity concentrate, the gold was found to be ~63% liberated and ~25% was associated with pyrite. This indicates that the gold is either large, liberated gold grains or locked in large gold-bearing pyrite particles.
◾ The direct cyanidation and diagnostic leach indicates that the sample is highly amenable to cyanide leaching, with ~97% of the gold recovered from the head sample at a grind of 80%-75µm by direct cyanidation and ~96% for the gravity tailings at a grind of~50%-75µm. This is corroborated by the exposure and the mineral association characteristics as determined by QEMSCAN analysis of the gravity concentrate. Approximately 90% of the particulate gold grains are ≥10% exposed and should be leachable.
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◾ The gold in the composite oxide sample (7.28 g/t Au) is also highly amenable to cyanidation, with ~97% of the gold recoverable by means of direct cyanidation. The material is also amenable to gravity upgrading, to some degree, with only ~56% of the gold recovered at a mass pull of ~3%. In the gravity concentrate (134.83 g/t Au) a total of 125 particulate gold grains were observed by QEMSCAN.
◾ The grading analysis on the composite oxide sample indicated a very high upgrading of gold in the +106µm size fraction (~74%). This indicates that the gold is either large gold grains or locked in large gold-bearing particles. From the liberation and mineral association characteristics determined by QEMSCAN analysis of the gravity tailings, it was found that the gold grains were moderately liberated (~76%) and that ~10% was occurring in silicates and ~14% in oxides. This indicates that the gold is either large, liberated gold grains or locked in large gold-bearing silicate/oxide particles.
◾ The direct cyanidation and diagnostic leach tests indicated that the sample is highly amenable to cyanide leaching, with ~98% of the gold recovered from the head sample at a grind of 80%-75µm and ~99% of the gold in the gravity tailings at a grind of 50%-75µm. This is corroborated by the exposure and mineral association characteristics of particulate gold in the gravity - 28 - concentrate, as determined by QEMSCAN analysis. Approximately ~96% of the gold grains are ≥10% exposed and should be leachable.
◾ The most simplistic processing option would be to mill the material to ~80%-75µm followed by carbon-in-leach cyanidation. Another option, which may result in somewhat lower operational cost is to mill the material relatively coarsely (say 80%-106µm) followed by gravity concentration and intensive cyanidation of the gravity concentrate. The gravity tailings could then be milled finer to ~80%-75 µm, followed by carbon-in- leach cyanidation. Taking out the coarse gold and some of the sulphides by gravity, will allow shorter retention times in the leach tanks and possibly even lower cyanide consumption.
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14 MINERAL RESOURCE ESTIMATES
14.1 Methodology
Geological models for each target were generated by Tect based on the geology of the target and the identified structural trends. Block models were generated for Big Bend, Double 19, Road Cut, East Dyke (North Limb, Core, South Limb), South Ridge, Mushroom, GH and GM. Each target was estimated separately from the data within the assigned geological model using variograms and search parameters that are aligned to the identified structural direction. The approach was based on the premise that gold-bearing fluids would have preferentially flowed through the delineated structural setting, as depicted by the geological model and evidenced as mineralized veins.
The database is comprised of collar coordinates, downhole surveys, lithological core logs, bulk density data and assay data for the 414 drill holes and 270 trenches completed on the project.
Detailed descriptive statistical analyses of the data for each target were competed prior to starting the estimate in order to understand the data thoroughly. An assessment of the various data populations was made and capping values for each target were determined.
The estimations for each target were undertaken using ordinary kriging as lognormal kriging had produced results that could not be validated. Directional variograms were developed for each target utilising the direction of the veins within the target. This direction was also used as the search parameter for each estimate. The block size was considered after testing various parameters and with consideration to the geometry of the targets.
14.2 Geological Models
Three dimensional models of each target were created based on the known geology and structural interpretation by Tect. 3D Geological Modelling in Leapfrog GeoTM was performed and utilised the relevant interpretations described in Sections 7.4 - 7.6. The most recent structural and lithological data was integrated and incorporated into the 3D target models (including Big Bend, Double 19, East Dyke, Gate House, Gold Mountain, Mushroom, Road Cut and South Ridge,). These target models serve a dual purpose, as they are used as well-constrained mineralization envelopes for mineral resource estimation, and as approximations of structurally-controlled mineralization zones that may be subject to further exploration targeting (Figure 14.1 and Figure 14.2).
Gold assays with a 0.4 g/t cut-off were used to constrain the outer limit of mineralization envelopes, otherwise referred to as target models. No compositing of the assay data was applied prior to creating the envelopes. Each target model was informed by the structural setting of the unconstrained mineralized zone, as indicated by the geometry of combined lithological contacts and intersected gold mineralization.
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The structural setting of targets Big Bend, Double 19, East Dyke, Mushroom and Road Cut, in particular, are further enhanced by additionally-modelled lithological contacts of undifferentiated mafic units (M1 and M2), diorite and metasediments.
Triangulation of target models in Leapfrog GeoTM was undertaken using the Vein System tool in conjunction with manual interval selection of 0.4 g/t cut-off intervals. This methodology was preferred, largely because of the level of confidence in the structural setting for each target vs. the pure implicit modelling (Intrusion tool) guided by LVA (locally variable anisotropy) or structural trends.
Using the deposit tool, a base surface (or contact) was modelled for a fresh rock-saprolite/laterite (TR-SAP-LAT) transitional zone and complete saprolite/laterite (SAP-LAT) zone, as recorded by drill hole and trench logs. Both TR-SAP-LAT and SAP-LAT surfaces approximate the level of oxidation and weathering from topography.
Figure 14.1: Map of the Targets |
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Figure 14.2: Isometric Views of the Geological Models of the Various Targets |
|||
Big Bend |
Double 19 |
East Dyke |
Gate House |
Gold Mountain |
Mushroom |
Road Cut |
South Ridge |
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14.3 Compositing
The data was composted to 1m intervals utilising the weighting by the drill hole length and density.
14.4 Descriptive Statistics: Composites
An intensive statistical analysis was undertaken on the data for each of the targets. The summary of analysis are presented in Table 14.14. and Figure 14.3. with comparisons of trench and drill hole data. It was determined that the drill hole and trench data represent the same geological environment and are compatible. It is noted that the trench data represents the oxide horizon.
The analysis of the data confirms that the gold grade populations of each of the targets is lognormal.
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Figure 14.3: Histograms of the Data for Each Target |
|||
Drill holes |
|||
Big Bend |
Double 19 |
East Dyke |
Gate House |
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Figure 14.1: Histograms of the Data for Each Target |
|||
Drill holes |
|||
Gold Mountain |
Mushroom |
Road Cut |
South Ridge |
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Figure 14.1: Histograms of the Data for Each Target |
|||
Trenches |
|||
Big Bend |
Double 19 |
East Dyke |
Gate House |
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Figure 14.1: Histograms of the Data for Each Target |
|||
Drill holes |
|||
Gold Mountain |
Mushroom |
Road Cut |
South Ridge |
|
|||
|
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14.5 Density
Density determinations were undertaken by ALS and by Xtra-Gold.
The density was measured by pycnometer (Method: OA-GRA08). In addition, density determinations were undertaken on site using the Archimedes method. From the available information, cognisance of the porosity was noted with samples being immersed in wax prior to weighting in water.
A full analysis of both datasets was undertaken to confirm that the data was equivalent and that all the data could be used to determine the densities of all the blocks in the block model. Figure 14.4 shows a strong correlation coefficient and a very low bias between data sets. As a result, the two datasets were considered compatible and were used to determine the density of the mineralised material. A summary of the determinations is presented in Table 14.1.
Figure 14.4: Comparison of ALS and Xtra-Gold Density determination |
Using all the data, densities were estimated independently of the gold and merged into the block model.
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Table 14.1: Statistics of ALS and Xtra-Gold Density Determinations |
|||||
|
Count |
Average |
Minimum |
Maximum |
Standard Deviation |
Big Bend |
|||||
Saprolite |
22 |
1.56 |
1.37 |
2.34 |
0.25 |
Transition |
12 |
2.34 |
2.17 |
2.53 |
0.11 |
Fresh |
927 |
2.84 |
2.60 |
3.43 |
0.06 |
Double 19 |
|||||
Saprolite |
13 |
1.82 |
1.44 |
2.15 |
0.22 |
Transition |
8 |
2.34 |
2.03 |
2.64 |
0.09 |
Fresh |
15 |
2.90 |
2.76 |
3.08 |
0.09 |
East Dyke |
|||||
Saprolite |
12 |
1.58 |
1.41 |
2.06 |
0.19 |
Transition |
2 |
2.55 |
2.49 |
2.61 |
0.08 |
Fresh |
87 |
2.86 |
2.66 |
3.11 |
0.08 |
Mushroom |
|||||
Saprolite |
13 |
1.68 |
1.26 |
2.40 |
0.30 |
Transition |
5 |
2.46 |
2.14 |
2.59 |
0.22 |
Fresh |
159 |
2.84 |
2.57 |
3.11 |
0.09 |
South Ridge |
|||||
Saprolite |
15 |
1.53 |
1.29 |
1.77 |
0.16 |
Transition |
13 |
2.39 |
2.25 |
2.57 |
0.07 |
Fresh |
1451 |
2.83 |
2.55 |
3.83 |
0.08 |
14.6 Outlier Analysis
The data was examined to determine if any of the data would be considered as an outlier that may have a negative effect on the estimation. An assessment of the high-grade samples was completed for each target to determine the requirement for possible high-grade cutting or capping. The approach is summarised as:
◾ Detailed review of histograms and probability plots with significant breaks in populations interpreted as possible outliers.
◾ Investigation of clustering of the higher-grade data.
◾ High-grade data which clustered was considered to be real while high grade samples not clustered with other high-grade data was considered to be a possible outlier that required further consideration either through cutting and/or search restriction.
Based on the analysis of the data set, capping was considered appropriate. The capping value was established for each target independently. The results of the outlier analysis are summarised in and the cumulative averages graphically represented in Figure 14.5.
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Table 14.2: Outlier Analysis |
|||
Target |
Capping value - Au (g/t) |
Target |
Capping value - Au (g/t) |
Big Bend |
20 |
Gold Mountain |
None |
Double 19 |
25 |
Mushroom |
20 |
East Dyke |
15 |
Road Cut |
None |
Gate House |
None |
South Ridge |
15 |
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Figure 14.5: Outlier Analysis: Graphs of Cumulative Averages |
|||
Big Bend |
Double 19 |
East Dyke |
Gate House |
NA |
|||
Gold Mountain |
Mushroom |
Road Cut |
South Ridge |
NA |
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14.7 Block Model Development
A three dimensional (3D) model was developed. The block model cell size of 5 m x 5 m x 5m was established after considering the Kriging Neighbourhood Analysis (KNA) (Table 14.3).
Table 14.3: Summary of the Block Model Details |
|||||||
Big Bend |
East Dyke |
Double 19 |
South |
Road Cut |
Mushroom |
GM/GH |
|
X |
769,300 |
769,700 |
768,500 |
768,800 |
769,400 |
769,200 |
769,500 |
Y |
684,200 |
684,000 |
683,500 |
684,000 |
684,100 |
684,400 |
683,000 |
Z |
-200 |
-100 |
200 |
200 |
200 |
300 |
100 |
Block Model Origin (Centroid) |
|||||||
X |
770,000 |
770,100 |
768,900 |
769,300 |
769,900 |
769,600 |
770,400 |
Y |
684,500 |
684,500 |
683,800 |
684,400 |
684,300 |
684,600 |
683,800 |
Z |
600 |
600 |
500 |
600 |
500 |
600 |
500 |
Block Model Max (Centroid) |
|||||||
X |
140 |
80 |
80 |
100 |
100 |
80 |
180 |
Y |
60 |
100 |
60 |
80 |
40 |
40 |
160 |
Z |
160 |
140 |
60 |
80 |
60 |
60 |
80 |
Block Model Parent Cell Size |
|||||||
X |
5 |
5 |
5 |
5 |
5 |
5 |
5 |
Y |
5 |
5 |
5 |
5 |
5 |
5 |
5 |
Z |
5 |
5 |
5 |
5 |
5 |
5 |
5 |
Sub cell splitting |
|||||||
|
No |
No |
No |
No |
No |
No |
No |
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14.8 Search Criteria
The search strategy used three search criteria and is summarised in Table 14.4. The shape and orientation of the search ellipse was informed by the results of the structural analysis (Figure 14.6 and Figure 14.7).
A three-pass estimation strategy was applied to each domain, applying progressively expanded and less restrictive sample searches to successive estimation passes, and only considering blocks not previously assigned an estimate. The search criteria are designed to be informed from adjacent drill holes rather than be informed from data in the same drill hole.
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Figure 14.6: Stereonets of Veins |
|||
Big Bend |
Double 19 |
East Dyke |
Gate House |
No structural data |
|||
Gold Mountain |
Mushroom |
Road Cut |
South Ridge |
No structural data |
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Figure 14.7: Isometric views of the Geological Models and the Vein Directions |
|||
Big Bend |
Double 19 |
East Dyke-Core |
East Dyke- South Limb |
Gate House & Gold Mountain |
Mushroom |
Road Cut |
South Ridge |
No structural data |
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14.9 Variography
Variographic modelling was undertaken separately for each target. Anisotropic Variogram models were developed for the vein orientation. In general this direction presented a good or best orientation for variogram modelling (Figure 14.8).
Figure 14.8: Variograms for each Target |
|
Big Bend |
Double 19 |
East Ridge - Core |
East Ridge - South Limb |
East Ridge - North Limb |
Gate House and Gold Mountain |
Mushroom |
Road Cut |
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South Ridge |
|
|
14.10 Estimation
As the populations for all the targets are lognormal, lognormal kriging was initially tested. However, the result was evidently incorrect, as in general very high grades were estimated. On further investigation it was established to be as a result of the high variance in the data which had a negative influence on the back transformation from the log values to the real values. As a result Ordinary kriging was utilised as being a more appropriate approach.
The estimation of each target was undertaken independently utilizing the structural information available. The premise used is that the main vein direction was the pathway for the mineralising fluid with their orientation being oblique to the lithological model.
14.11 Validation
Swath plots were undertaken for each target to demonstrate the veracity of the estimates (Figure 14.9). This analysis confirms the veracity of the estimates.
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Figure 14.9: Swath Plots of the Individual Targets |
|||
Big Bend |
Double 19 |
East Dyke - Core |
Gate House and Gold Mountain |
Mushroom |
Road Cut |
South Ridge |
|
|
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14.12 Reasonable Prospects for Eventual Extraction
Consideration of the Reasonable Prospects for Eventual Economic Extraction (RPEEE) was undertaken using a simple financial assessment, assuming initially open pit extraction transitioning in some targets to an underground mining operation. An appropriate gold processing facility was assumed.
This simple financial model is presented, with the included assumptions, in Table 14.5. Based on these assumptions, there is potential for an open pit operation initially and subsequently an underground mine. Therefore a Mineral Resource can be declared.
Based on this assessment, a cut-off grade of 0.5 g/t Au was considered appropriate.
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14.13 Classification
The classification of each target was undertaken on an individual basis and broadly based on the efficiency of the search criteria i.e. where a block could be informed by the first search strategy, it was considered as Indicated and the other blocks were considered as Inferred. The Mineral Resource estimate was constrained by the expected depth at which the mine would potentially become uneconomic.
14.14 Mineral Resource Reporting
The Mineral Resource is declared in terms of the guidelines of the Canadian Institute of Mine (CIM) Standards (Table 14.7 and Table 14.6). A cut-off grade of 0.5 g/t was applied after consideration of the reasonable expectation of eventual economic extraction (Section 14.12).
The respective target grade/tonnage curves are shown in Figure 14.10.
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Table 14.7: Mineral Resource Declaration - September 2021 Declared in terms of the CIM Standards Cut-off: Au 0.5 g/t |
|||||||||||
Big Bend |
Mushroom |
||||||||||
|
|
Tonnage (t) |
Density |
Grade Au |
Au (oz) |
|
|
Tonnage (t) |
Density |
Grade Au |
Au (oz) |
Oxide |
Measured |
|
|
|
|
Oxide |
Measured |
|
|
|
|
Indicated |
284,000 |
2.00 |
2.06 |
18,800 |
Indicated |
103,000 |
2.04 |
1.50 |
4,900 |
||
M+I |
284,000 |
2.00 |
2.06 |
18,800 |
M+I |
103,000 |
2.04 |
1.50 |
4,900 |
||
Inferred |
|
|
|
|
Inferred |
|
|
|
|
||
Transitional |
Measured |
|
|
|
|
Transitional |
Measured |
|
|
|
|
Indicated |
115,000 |
2.41 |
2.13 |
7,900 |
Indicated |
17,000 |
2.59 |
1.29 |
700 |
||
M+I |
115,000 |
2.41 |
2.13 |
7,900 |
M+I |
17,000 |
2.59 |
1.29 |
700 |
||
Inferred |
- |
|
|
|
Inferred |
- |
- |
- |
- |
||
Fresh |
Measured |
|
|
|
|
Fresh |
Measured |
|
|
|
|
Indicated |
6,072,000 |
2.82 |
1.44 |
280,700 |
Indicated |
385,000 |
2.81 |
1.35 |
16,600 |
||
M+I |
6,072,000 |
2.82 |
1.44 |
280,700 |
M+I |
385,000 |
2.81 |
1.35 |
16,600 |
||
Inferred |
1,257,000 |
2.82 |
1.03 |
41,400 |
Inferred |
- |
- |
- |
- |
||
Total |
Measured |
|
|
|
|
Total |
Measured |
|
|
|
|
Indicated |
6,472,000 |
2.78 |
1.48 |
307,400 |
Indicated |
505,000 |
2.64 |
1.37 |
22,300 |
||
M+I |
6,472,000 |
2.78 |
1.48 |
307,400 |
M+I |
505,000 |
2.64 |
1.37 |
22,300 |
||
Inferred |
1,257,000 |
2.82 |
1.03 |
41,400 |
Inferred |
- |
- |
- |
- |
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Double 19 |
|
Road Cut |
|||||||||
|
|
Tonnage (t) |
Density |
Grade Au |
Au (oz) |
|
|
Tonnage (t) |
Density |
Grade Au |
Au (oz) |
Oxide |
Measured |
|
|
|
|
Oxide |
Measured |
|
|
|
|
Indicated |
152,000 |
2.11 |
1.68 |
8,200 |
Indicated |
- |
- |
- |
- |
||
M+I |
152,000 |
2.11 |
1.68 |
8,200 |
M+I |
- |
- |
-
|
- |
||
Inferred |
|
|
|
|
Inferred |
|
|
|
|
||
Transitional |
Measured |
|
|
|
|
Transitional |
Measured |
|
|
|
|
Indicated |
89,000 |
2.11 |
1.67 |
4,800 |
Indicated |
12,000 |
2.50 |
0.74 |
300 |
||
M+I |
89,000 |
2.11 |
1.67 |
4,800 |
M+I |
12,000 |
2.50 |
0.74 |
300 |
||
Inferred |
- |
- |
- |
- |
Inferred |
- |
- |
- |
- |
||
Fresh |
Measured |
|
|
|
|
Fresh |
Measured |
|
|
|
|
Indicated |
1,343,000 |
2.71 |
1.33 |
57,400 |
Indicated |
213,000 |
2.82 |
0.85 |
5,800 |
||
M+I |
1,343,000 |
2.71 |
1.33 |
57,400 |
M+I |
213,000 |
2.82 |
0.85 |
5,800 |
||
Inferred |
- |
- |
- |
- |
Inferred |
- |
- |
- |
- |
||
Total |
Measured |
|
|
|
|
Total |
Measured |
|
|
|
|
Indicated |
1,584,000 |
2.62 |
1.38 |
70,400 |
Indicated |
225,000 |
2.80 |
0.85 |
6,100 |
||
M+I |
1,584,000 |
2.62 |
1.38 |
70,400 |
M+I |
225,000 |
2.80 |
0.85 |
6,100 |
||
Inferred |
- |
- |
- |
- |
Inferred |
- |
- |
- |
- |
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East Dyke |
South Ridge |
||||||||||
|
|
Tonnage (t) |
Density |
Grade Au |
Au (oz) |
|
|
Tonnage (t) |
Density |
Grade Au |
Au (oz) |
Oxide |
Measured |
|
|
|
|
Oxide |
Measured |
|
|
|
|
Indicated |
269,000 |
2.17 |
1.58 |
13,700 |
Indicated |
423,000 |
2.35 |
1.15 |
15,600 |
||
M+I |
269,000 |
2.17 |
1.58 |
13,700 |
M+I |
423,000 |
2.35 |
1.15 |
15,600 |
||
Inferred |
|
|
|
|
Inferred |
|
|
|
|
||
Transitional |
Measured |
|
|
|
|
Transitional |
Measured |
|
|
|
|
Indicated |
92,000 |
2.45 |
1.46 |
4,300 |
Indicated |
181,000 |
2.68 |
1.16 |
6,700 |
||
M+I |
92,000 |
2.45 |
1.46 |
4,300 |
M+I |
181,000 |
2.68 |
1.16 |
6,700 |
||
Inferred |
- |
- |
- |
- |
Inferred |
- |
- |
- |
- |
||
Fresh |
Measured |
|
|
|
|
Fresh |
Measured |
|
|
|
|
Indicated |
2,742,000 |
2.79 |
1.48 |
130,900 |
Indicated |
1,402,000 |
2.81 |
1.03 |
46,400 |
||
M+I |
2,742,000 |
2.79 |
1.48 |
130,900 |
M+I |
1,402,000 |
2.81 |
1.03 |
46,400 |
||
Inferred |
1,128,000 |
2.84 |
1.19 |
43,300 |
Inferred |
943,000 |
2.82 |
1.02 |
30,800 |
||
Total |
Measured |
|
|
|
|
Total |
Measured |
|
|
|
|
Indicated |
3,102,000 |
2.72 |
1.49 |
148,800 |
Indicated |
2,005,000 |
2.70 |
1.07 |
68,700 |
||
M+I |
3,102,000 |
2.72 |
1.49 |
148,800 |
M+I |
2,005,000 |
2.70 |
1.07 |
68,700 |
||
Inferred |
1,128,000 |
2.84 |
1.19 |
43,300 |
Inferred |
943,000 |
2.82 |
1.02 |
30,800 |
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Gate House and Gold Mountain |
Total |
||||||||||
|
|
Tonnage (t) |
Density |
Grade Au |
Au (oz) |
|
|
Tonnage (t) |
Density |
Grade Au |
Au (oz) |
Oxide |
Measured |
|
|
|
|
Oxide |
Measured |
- |
|
|
|
Indicated |
- |
- |
- |
- |
Indicated |
1,231,000 |
2.17 |
1.55 |
61,200 |
||
M+I |
- |
- |
- |
- |
M+I |
1,231,000 |
2.17 |
1.55 |
61,200 |
||
Inferred |
9,000 |
1.50 |
0.70 |
200 |
Inferred |
9,000 |
1.50 |
0.70 |
200 |
||
Transitional |
Measured |
|
|
|
|
Transitional |
Measured |
|
|
|
|
Indicated |
- |
- |
- |
- |
Indicated |
506,000 |
2.47 |
1.52 |
24,700 |
||
M+I |
- |
- |
- |
- |
M+I |
506,000 |
2.47 |
1.52 |
24,700 |
||
Inferred |
192,000 |
2.40 |
0.73 |
4,500 |
Inferred |
192,000 |
2.40 |
0.73 |
4,500 |
||
Fresh |
Measured |
|
|
|
|
Fresh |
Measured |
|
|
|
|
Indicated |
- |
- |
- |
- |
Indicated |
12,157,000 |
2.80 |
1.38 |
537,800 |
||
M+I |
- |
- |
- |
- |
M+I |
12,157,000 |
2.80 |
1.38 |
537,800 |
||
Inferred |
2,166,000 |
2.80 |
0.80 |
60,500 |
Inferred |
5,494,000 |
2.82 |
0.97 |
176,000 |
||
Total |
Measured |
|
|
|
|
Total |
Measured |
|
|
|
|
Indicated |
- |
- |
- |
- |
Indicated |
13,893,000 |
2.73 |
1.40 |
623,700 |
||
M+I |
- |
- |
- |
- |
M+I |
13,893,000 |
2.73 |
1.40 |
623,700 |
||
Inferred |
2,366,000 |
2.76 |
0.79 |
65,200 |
Inferred |
5,694,000 |
2.80 |
0.96 |
180,700 |
Pivot Mining Consultants (Pty) Ltd |
Figure 14.10: Grade-Tonnage Curves |
|||
Big Bend |
Double 19 |
East Dyke |
Gate House and Gold Mountain |
Mushroom |
Road Cut |
South Ridge |
|
|
Pivot Mining Consultants (Pty) Ltd |
15 ADJACENT PROPERTIES
Although the Kibi area is blanketed by mining concessions, very little systematic exploration work for bedrock gold deposits has been conducted over the years in the Kibi Greenstone Belt. This reflects the fact that the Kibi area has traditionally been recognized as an alluvial gold district, and the surrounding concessions have been held since the mid-1980s to early 1990s specifically for their alluvial gold potential.
Pivot Mining Consultants (Pty) Ltd |
16 OTHER RELEVANT DATA AND INFORMATION
None.
Pivot Mining Consultants (Pty) Ltd |
17 INTERPRETATION AND CONCLUSIONS
The work undertaken has confirmed the presence of a number of targets (i.e. Big Bend, Double 19, East Dyke, Gate House, Gold Mountain, Mushroom, Road Cut and South Ridge) within the concession as well as providing a structural model that explains the paragenesis of the targets. The geological continuity has been demonstrated.
The structural information has been utilised in the mineral resource estimate completed. The reported mineral resource is presented in Table 17.1.
Pivot Mining Consultants (Pty) Ltd |
Road Cut |
||||
|
Tonnage (t) |
Density (t/m3) |
Grade - Au (g/t) |
Au (oz) |
Measured |
- |
- |
- |
- |
Indicated |
225,000 |
2.80 |
0.85 |
6,100 |
M+I |
225,000 |
2.80 |
0.85 |
6,100 |
Inferred |
- |
- |
- |
- |
|
||||
South Ridge |
||||
|
Tonnage (t) |
Density (t/m3) |
Grade - Au (g/t) |
Au (oz) |
Measured |
- |
- |
- |
- |
Indicated |
2,005,000 |
2.70 |
1.07 |
68,700 |
M+I |
2,005,000 |
2.70 |
1.07 |
68,700 |
Inferred |
943,000 |
2.82 |
1.02 |
30,800 |
|
||||
Total |
||||
|
Tonnage (t) |
Density (t/m3) |
Grade - Au (g/t) |
Au (oz) |
Measured |
- |
- |
- |
- |
Indicated |
13,893,000 |
2.73 |
1.40 |
623,700 |
M+I |
13,893,000 |
2.73 |
1.40 |
623,700 |
Inferred |
5,694,000 |
2.80 |
0.96 |
180,700 |
A substantial amount of work has been completed on the Cobra Creek prospect where various targets have also been identified.
Pivot Mining Consultants (Pty) Ltd |
18 RECOMMENDATIONS
Based on the results of the 2021 Mineral Resource Estimate (MRE) and exploration results on early-stage targets across the project area, Pivot and Tect recommend a two-phase exploration program to further advance the Kibi Gold Project.
Phase 1 is geared towards the further delineation of existing mineral resources and identification of additional resource bodies within the MRE footprint area, continued advancement of early-stage targets across the Kibi Gold Project, and property-scale target generation exploration work.
Phase 2, designed to support the continued advancement of the project, includes additional drilling to further define mineral resources, an updated mineral resource estimate, completion of a Preliminary Economic Assessment (PEA), metallurgical test work and collection of additional data to support future scoping studies. With the implementation of Phase 2 being contingent upon the success of Phase 1.
18.1 Phase 1 Exploration
The recommended Phase 1 work program is detailed below:
18.1.1 Mineral Resource Estimate Footprint Area Work Program
Additional resource body exploration drilling targeting the down-plunge extensions of the respective 3D litho-structural deposit models and/or the lateral extensions of the resource bodies, is essential, with drill hole design aimed at intersecting the dominant vein set geometries.
Continued exploration drilling of the early-stage JK East, Boomerang West and Boomerang East targets, with the positioning of these prospects along the same F1 fold hinge as the Double 19 deposit offering potential for resource growth.
Infill drilling to upgrade inferred resources to the indicated category criteria.
Systematic scout drilling along the F1 fold hinges that are spatially-associated with the Zone 3 - Zone 4 gold-in-soil anomalies, to discover additional gold-prospective litho-structural settings that offer potential for resource growth. Scout drilling should initially focus on the fold hinge segment extending between the Double 19 resource body and the Boomerang East target.
Collection of more comprehensive/representative structural measurements utilizing the IQL-Logger structural logging laser-device from historical drill core, across relevant mineralization zones, to further determine geometries of dominant vein sets.
A comparative study on the locality and geometry of measured veins and gold grades, from which spatial and statistical relationships may be derived and related to the extent of gold mineralization.
Continued mechanical trenching to permit detailed geological structural mapping, establish litho-structural controls of early-stage mineralization zones to help guide drilling efforts, test priority gold-in-soil anomalies and ground-proof 3D geophysical and geological/structural modelling targets.
Pivot Mining Consultants (Pty) Ltd |
18.1.2 Property-Scale Work Program
Exploration drilling should initially focus on the Cobra Creek (Zone 5) auriferous shear system, with drill hole design aimed at intersecting the sub-horizontal, en-echelon, high-grade auriferous vein arrays and shallow-plunging stockwork "shoots". Drilling efforts should also include scout drilling that targets possible dilational zone-hosted gold mineralization along the sheared QFP body contacts.
Integrated 3D modelling of the Kibi Gold Project section of the 2011 regional airborne VTEM and aeromagnetic surveys (~ 500 line-km), including: joint resistivity and chargeability inversion of the VTEM data and inversion of the total magnetic intensity (TMI) data.
High-resolution 3D implicit geological and structural modelling to guide ground-proofing of geophysical interpretations and help define licence- to target-scale geological settings and structural geometries.
Continued scout trenching to test priority gold-in-soil anomalies and to ground-proof 3D geophysical and geological/structural modelling targets.
18.2 Cost Estimate
A cost estimate for the recommended two-phase work program is provided in Table 18.1 to serve as a guideline. The estimated drilling expenditures are based on all-inclusive drilling costs utilizing Xtra-Gold's in-house operated diamond core drill rigs. Total expenditures are estimated at USD 5,295,000, including: USD 3,570,000 for Phase 1; and USD 1,725,000 for Phase 2. With the implementation of Phase 2 being contingent upon the success of Phase 1.
Pivot Mining Consultants (Pty) Ltd |
Pivot Mining Consultants (Pty) Ltd |
19 REFERENCES
Annual Report for Xtra-Gold Resources Corp., filed on Form 20-F For the fiscal year ended December 31, 2020.
Cogill, F. (1904). Ghana Geological Survey Department [and] Minerals Commission [and] Mines Department, no. 100
Glossop LN and Coetzee LL (10 October 2011). Gold Deportment Study on Sample G478923 (Sulphide Material) and Composite Sample (Oxide Material). Mineralogical Report No: Min 0611/106 prepared by SGS South Africa.
Grenholm, M., Jessell, M. and Thébaud, N. (2019). A geodynamic model for the Paleoproterozoic (ca. 2.27-1.96 Ga) Birimian Orogen of the southern West African Craton-Insights into an evolving accretionary-collisional orogenic system. Earth-science reviews, 192, pp.138-193.
Hirdes, W., Davis, D. W. and Eisenlohr, B. N. (1992). Reassessment of Proterozoic granitoid ages in Ghana on the basis of U/Pb zircon and monazite dating. Precambrian Research v.56, p. 89-96.
John Rae, J., Griffis, R., Agyeman, K. (March 7, 2006). Goldenrae Evaluation Report prepared by Rae International for Xtra-Gold Resources Corp.
Junner, N.R. (1935). Gold in the Gold Coast. Gold Coast Geological Survey, Memoir, Vol. 4, p. 67.
Koegelenberg, C., Gloyn-Jones, J. and Basson, I.J. (2019). Xtra-Gold: Cobra Creek Prospect, Structural Analysis and Drill hole Targeting, TECT043/2019P, pp. 1-34.
Koegelenberg, C. and Basson, I.J. (2020a). Geophysical and Regional Interpretation, TECT019/2020P, pp. 1-8.
Koegelenberg, C., Stoch, B. and Basson, I.J. (2020b). Xtra-Gold: Kibi Project - Zones 2&3, Structural Analysis, 3D Modelling for Exploration and Mineral Resource Estimation, TECT002/2020P, pp. 1-48.
Meadows-Smith, S., Amanor, J. and Byrne, D. (31 October 2012). Kibi Gold Project Eastern Region, Ghana NI 43-101 Technical Report prepared by SEMS Exploration Services for Xtra-Gold Resources Corp.
Meadows-Smith, S. and Amanor, J. (12 July 2010). Independent Technical Report. Apapam Concession Kibi Project Eastern Region, Ghana NI 43-101 Technical Report prepared by SEMS Exploration Services for Xtra-Gold Resources Corp.
Naas, C.O. (2008). Technical Report on the Banso and Apapam Concessions, Eastern Region, Ghana, West Africa, for Xtra-Gold Resources Corp., unpublished report by CME Consultants Inc, April 9, 2008, 2 volumes.
Pivot Mining Consultants (Pty) Ltd |
Perrouty, S., Aillères, L., Jessell, M.W., Baratoux, L., Bourassa, Y. and Crawford, B. (2012). Revised Eburnean geodynamic evolution of the gold-rich southern Ashanti Belt, Ghana, with new field and geophysical evidence of pre-Tarkwaian deformations. Precambrian Research, 204, pp.12-39.
Griffis, RJ. (1998) Explanatory Notes-Geological Interpretation of Geophysical Data from South-Western Ghana. Minerals Commission, Accra, 51 p.
Griffis J, Barning K, Agezo F L, & Akosa F. (2002). Gold deposits of Ghana prepared on behalf of Ghana mineral commission. Ghana: Accra, 432.
Vos, I. (April 2010). Structural Geology Investigations of the Kibi Gold Trend Project Kibi-Winneba Greenstone Belt Southeast Ghana prepared by SRK Consulting (Canada).
Vos, I. Nash, I. (November 2011). Structural Geology Investigations of the Kibi Gold Trend Project - Zone 2 Southeast Ghana prepared by SRK Consulting (Canada).
Vos, I.. and Siddorn, S.P. (December 20, 2011). Regional Structural Geology Interpretation of Aeromagnetic Data, Kibi Project , Ghana prepared by SRK Consulting (Canada).
Vos, I. and Siddorn, S.P. (February 2, 2012). Notes on Interpreted Structural Framework at the Apapam Concession prepared by SRK Consulting (Canada).
Pivot Mining Consultants (Pty) Ltd |
Appendix A Authors Certificate |
|
|
Pivot Mining Consultants (Pty) Ltd |
Authors Certificate Ken Lomberg (Director Geology and Resources)
As the Lead Qualified Person and Complier of the report entitled "Xtra-Gold Resources Corporation Kibi Gold Project" with an effective date of 30 September 2021, I hereby state:
1. My name is Kenneth Graham Lomberg and I am the Director (Geology and Resources) for Pivot Mining Consultants (Pty) Ltd, Lower Ground Floor, Island House, Constantia Office Park, Corner 14th Avenue and Hendrik Potgieter Road, Weltevreden park, 1709, Roodepoort, South Africa.
2. I am a practicing geologist and a registered with the South African Council for Natural Professionals.
3. I have a B.Sc. (Hons) (Geology), B.Com. (Economics and Statistics) and an M.Eng. (Mining Engineering). I have been 36 years mining industry experience (especially in platinum and gold). I have practiced my profession continuously since 1985.
4. I have over 5 years of relevant experience, having completed Mineral Resource estimations on various gold properties hosting Magmatic orogenic-style mineralization. I have the relevant experience of the type of deposit and of the resource estimation that is the subject of this report.
5. I have performed consulting work on various projects. These assignments have ranged from listings documents, CPRs, ITRs, feasibility studies, NI43-101 compliant resource estimations and valuations.
6. I am a 'Qualified Person' that term is defined in and for the purposes of the National Instrument 43-101 (Standards of Disclosure for Mineral Projects) (the Instrument).
7. I have visited the Kibi Project for personal inspection on 29 November to 5 December 2020.
8. I have prepared all sections of this report and am responsible for the Report and the Mineral Resource declaration.
9. I am not aware of any material fact or material change with respect to the subject matter of the Report that is not reflected in the Report, the omission of which would make the Report misleading.
10. I declare that this Report appropriately reflects the Qualified Person's/author's view.
11. I do not have nor do I expect to receive a direct or indirect interest in the Mineral Properties of Xtra-Gold Resources Corporation, and I do not beneficially own, directly or indirectly, any securities of Xtra-Gold Resources Corporation or any associate or affiliate of such company.
12. I am independent of Xtra-Gold Resources Corporation.
13. I have read the Instrument and Form 43-101F1 (the Form) and the Report has been prepared in compliance with the Instrument and the Form.
14. At the effective date of the Report, to the best of my knowledge, information and belief, the Report contains all scientific and technical information that is required to be disclosed to make the Report not misleading.
Dated at Johannesburg and 16 November 2021.
Mr Kenneth Lomberg Director (Geology and Resources) |
Pivot Mining Consultants (Pty) Ltd |
Authors Certificate Corné Koegelenberg (Principal Geoscientist)
As the Lead Qualified Person and Complier of the report entitled "Xtra-Gold Resources Corporation Kibi Gold Project" with an effective date of 30 September 2021, I hereby state:
1. My name is Corné Koegelenberg and I am the Principal Geoscientist for Tect Geological Consulting (CC), Unit 3, Metrohm House, 20 Gardner Williams Avenue, Paardevlei, Somerset West, 7130, Western Cape, South Africa.
2. I am a practicing geologist and am registered with the South African Council for Natural Professionals (SACNASP - 114569).
3. I have a B.Sc. (Hons) (Applied Geology), M.Sc. (Economic Geology) and Ph.D. (Structural Geology and Tectonics). I have been 9 years mining industry experience (especially in gold, copper, iron, PGE). I have practiced my profession continuously since 2012.
4. I have over 8 years of relevant experience, having completed structural investigations and the construction of 3D geological models on various gold properties hosting either magmatic or orogenic style mineralization. I have the relevant experience of the type of deposit, its structural setting(s) and best-practise 3D modelling methodologies that are the subject of this report.
5. I have performed consulting work on various projects. These assignments have ranged from structural investigations to 3D geological modelling for exploration, mining resource management and geotechnical engineering, and NI43-101 compliant resource estimations and valuations.
6. I am a 'Qualified Person' as defined in and for the purposes of the National Instrument 43-101 (Standards of Disclosure for Mineral Projects) (the Instrument).
7. I have visited the Kibi Project for personal inspection on 29 November to 10 December 2020.
8. I prepared 1, 2, 7, 17 and 18 sections of this report and am responsible for the Report. I am responsible for the Geology (Lithology, Structure, Mineralization) and 3D Deposit Modelling.
9. I am not aware of any material fact or material change with respect to the subject matter of the Report that is not reflected in the Report, the omission of which would make the Report misleading.
10. I declare that this Report appropriately reflects the Qualified Person's/author's view.
11. I do not have nor do I expect to receive a direct or indirect interest in the Mineral Properties of Xtra-Gold Resources Corporation, and I do not beneficially own, directly or indirectly, any securities of Xtra-Gold Resources Corporation or any associate or affiliate of such company.
12. I have read the Instrument and Form 43-101F1 (the Form) and the Report has been prepared in compliance with the Instrument and the Form.
13. At the effective date of the Report, to the best of my knowledge, information and belief, the Report contains all scientific and technical information that is required to be disclosed to make the Report not misleading.
Dated at Somerset West on 16 November 2021.
Dr Corné Koegelenberg Principal Geoscientist (Structural and Economic Geology) |
Pivot Mining Consultants (Pty) Ltd |
Authors Certificate Ian Basson (Principal Geoscientist)
As the Qualified Person and Complier of the report entitled "Xtra-Gold Resources Corporation Kibi Gold Project" with an effective date of 30 September 2021, I hereby state:
1. My name is Ian James Basson and I am the Principal Geoscientist for Tect Geological Consulting (CC), Unit 3, Metrohm House, 20 Gardner Williams Avenue, Paardevlei, Somerset West, 7130, Western Cape, South Africa.
2. I am a practicing geologist and a registered with the South African Council for Natural Professionals (SACNASP - 400006/04).
3. I have a B.Sc. (Hons) (Geology and Applied Geology) and Ph.D. (Structural Geology). I have 23 years mining industry experience (especially in gold, copper, iron and PGE). I have practiced my profession continuously since 1997.
4. I have over 22 years of relevant experience, having completed structural investigations and the construction of 3D geological models on various gold properties hosting either magmatic, orogenic, greenstone or Birimian-style mineralization. I have the relevant experience of the type of deposit, its structural setting(s) and best-practise 3D modelling methodologies that are the subject of this report.
5. I have performed consulting work on various projects. These assignments have ranged from listings documents, structural investigations and 3D geological modelling for exploration, mining resource management and geotechnical engineering, and NI43-101 compliant resource estimations and valuations.
6. I am a 'Qualified Person' as defined in and for the purposes of the National Instrument 43-101 (Standards of Disclosure for Mineral Projects) (the Instrument).
7. I have not visited the Kibi Project for personal inspection.
8. I prepared Sections 1, 2, 7, 17 and 18 of this report .I am responsible for reviewing the Geology (Lithology, Structure, Mineralization) and 3D Deposit Modelling.
9. I am not aware of any material fact or material change with respect to the subject matter of the Report that is not reflected in the Report, the omission of which would make the Report misleading.
10. I declare that this Report appropriately reflects the Qualified Person's/author's view.
11. I do not have nor do I expect to receive a direct or indirect interest in the Mineral Properties of Xtra-Gold Resources Corporation, and I do not beneficially own, directly or indirectly, any securities of Xtra-Gold Resources Corporation or any associate or affiliate of such company.
12. I have read the Instrument and Form 43-101F1 (the "Form) and the Report has been prepared in compliance with the Instrument and the Form.
13. At the effective date of the Report, to the best of my knowledge, information and belief, the Report contains all scientific and technical information that is required to be disclosed to make the Report not misleading.
Dated at Somerset West 16 November 2021.
Dr Ian James Basson Principal Geoscientist (Structural and Economic Geology) |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Xtra-Gold Resources Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Xtra-Gold Resources Corp. and subsidiaries (The "Company") as of December 31, 2020 and 2019 and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years in the two-year period ended December 31, 2020 and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2020, and 2019 and the consolidated results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
The Company's Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has an accumulated deficit and expects future losses that raise substantial doubt exists about the Company's ability to continue as a going concern. Management's evaluation of the events and conditions and management's plans regarding these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
New York | Washington, DC | California | Nevada
China | India | Greece
Member of ANTEA International with offices worldwide
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ RBSM LLP
RBSM LLP
We have served as the Company's auditor since 2015, which ended in 2021.
Henderson, Nevada
March 31, 2021
New York | Washington, DC | California | Nevada
China | India | Greece
Member of ANTEA International with offices worldwide
Exhibit 12.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13A-14(A) OR RULE 15D-14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, JAMES LONGSHORE, certify that:
1. I have reviewed this annual report on Form 20-F of Xtra-Gold Resources Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect the company's internal control over financial reporting; and
5. The company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):
a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and
b. any fraud, whether or not material, that involves management or other employees who have a significant role in the company's control over financial reporting.
Date: March 31, 2022
James Longshore | |
James Longshore |
|
President and Chief Executive Officer |
Exhibit 12.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13A-14(A) OR RULE 15D-14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, VICTOR NKANSA, certify that:
1. I have reviewed this annual report on Form 20-F of Xtra-Gold Resources Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect the company's internal control over financial reporting; and
5. The company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):
a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and
b. any fraud, whether or not material, that involves management or other employees who have a significant role in the company's control over financial reporting.
Date: March 31, 2022
Victor Nkansa | |
Victor Nkansa Chief Financial Officer |
Exhibit 13.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Xtra-Gold Resources Corp. (the "company") on Form 20-F for the year ended December 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James Longshore, President and Chief Executive Officer of the company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:
(a) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(b) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company.
Date: March 31, 2022
James Longshore | |
James Longshore President and Chief Executive Officer |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 13.2
CERTIFICATION CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Xtra-Gold Resources Corp. (the "company") on Form 20-F for the year ended December 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Victor Nkansa, Chief Financial Officer of the company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:
(a) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(b) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company.
Date: March 31, 2022
Victor Nkansa | |
Victor Nkansa Chief Financial Officer |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
XTRA-GOLD RESOURCES CORP.
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021
(expressed in U.S. Dollars, except where noted)
INDEX TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Xtra-Gold Resources Corp.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of Xtra-Gold Resources Corp. and subsidiaries (the "Company") as of December 31, 2021, and the related consolidated statements of operations, equity, and cash flows for the year then ended and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are required to be independent with respect to the Company in accordance with the relevant ethical requirements relating to our audit.
We conducted our audit in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States) and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures including examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current year audit of the financial statement that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
Emphasis of Matter
The accompanying financial statements have been prepared assuming that Xtra-Gold Resources Corp. will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has incurred significant operating losses from operations since inception. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also discussed in Note 2 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Harbourside CPA
Vancouver, Canada
March 31, 2022
We have served as the Company's auditor since January 2022. 649800001
CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. Dollars)
AS AT | December 31, 2021 |
December 31, 2020 |
December 31, 2019 |
||||||
ASSETS | |||||||||
Current | |||||||||
Cash and cash equivalents | $ | 4,675,328 | $ | 4,451,256 | $ | 3,981,239 | |||
Investment in trading securities, at cost of $3,268,618 (December 31, 2020 - $1,977,477, December 31, 2019 - $923,009) (Note 4) | 3,373,358 | 2,345,984 | 887,143 | ||||||
Receivables and other assets | 103,204 | 100,605 | 177,441 | ||||||
Inventory (Note 8) | 975,270 | 841,978 | 393,034 | ||||||
Total current assets | 9,127,160 | 7,739,823 | 5,438,857 | ||||||
Restricted cash (Note 7) | 296,322 | 296,322 | 296,322 | ||||||
Equipment, net (Note 5) | 600,127 | 570,375 | 405,724 | ||||||
Mineral properties (Note 6) | 734,422 | 734,422 | 734,422 | ||||||
TOTAL ASSETS | $ | 10,758,031 | $ | 9,340,942 | $ | 6,875,325 | |||
LIABILITIES AND EQUITY | |||||||||
Current | |||||||||
Accounts payable and accrued liabilities | $ | 1,029,140 | $ | 286,422 | $ | 147,313 | |||
Warrant liability (Note 9) | - | - | 137,313 | ||||||
Asset retirement obligation (Note 7) | 93,343 | 140,397 | 158,914 | ||||||
Total current liabilities | 1,122,483 | 426,819 | 443,540 | ||||||
Total liabilities | 1,122,483 | 426,819 | 443,540 | ||||||
Equity | |||||||||
Capital stock (Note 9) | |||||||||
Authorized - 250,000,000 common shares with a par value of $0.001 | |||||||||
Issued and outstanding | |||||||||
46,687,517 common shares (December 31, 2020 - 46,817,017 common shares, December 31, 2019 - 45,844,117 common shares) | 46,688 | 46,817 | 45,844 | ||||||
Additional paid in capital | 31,770,515 | 31,998,045 | 31,523,284 | ||||||
Shares in treasury | (13,294 | ) | (4,857 | ) | (9,430 | ) | |||
Accumulated deficit | (21,977,165 | ) | (22,813,141 | ) | (24,673,390 | ) | |||
Total Xtra-Gold Resources Corp. stockholders' equity | 9,826,744 | 9,226,864 | 6,886,308 | ||||||
Non-controlling interest | (191,196 | ) | (312,741 | ) | (454,523 | ) | |||
Total equity | 9,635,548 | 8,914,123 | 6,431,785 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 10,758,031 | $ | 9,340,942 | $ | 6,875,325 |
History and organization of the Company (Note 1) | APPROVED ON BEHALF OF THE BOARD |
Continuance of operations (Note 2) | |
Contingency and commitments (Note 14) |
"James Longshore" | "James Schweitzer" | |
Director | Director |
The accompanying notes are an integral part of these consolidated financial statements.
1
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. Dollars)
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2019 |
|||||||
EXPENSES | |||||||||
Amortization | $ | 173,667 | $ | 154,939 | $ | 142,323 | |||
Exploration | 1,610,502 | 748,497 | 474,025 | ||||||
General and administrative | 377,345 | 578,176 | 344,710 | ||||||
LOSS BEFORE OTHER ITEMS | (2,161,514 | ) | (1,481,612 | ) | (961,058 | ) | |||
OTHER ITEMS | |||||||||
Foreign exchange gain (loss) | (426,420 | ) | (124,558 | ) | (40,849 | ) | |||
Net gain (loss) on trading securities | 714,523 | 1,346,699 | 1,485,100 | ||||||
Other income | 55,972 | 45,589 | 48,476 | ||||||
Impairment on marketable securities | (211,018 | ) | - | - | |||||
Recovery of gold | 4,074,170 | 2,373,592 | 1,878,198 | ||||||
Change in fair value warrant derivative liability | - | 137,313 | (21,520 | ) | |||||
4,207,227 | 3,778,635 | 3,349,405 | |||||||
Consolidated pre tax income for the year | 2,045,713 | 2,297,023 | 2,388,347 | ||||||
Income tax expense | (1,088,192 | ) | (294,992 | ) | - | ||||
Net income after tax | 957,521 | 2,002,031 | 2,388,347 | ||||||
Net gain attributable to non-controlling interest | (121,545 | ) | (141,782 | ) | (140,390 | ) | |||
Net income attributable to Xtra-Gold Resources Corp. | $ | 835,976 | $ | 1,860,249 | $ | 2,247,957 | |||
Basic income attributable to common shareholders per common share |
$ | 0.02 | $ | 0.04 | $ | 0.05 | |||
Diluted income attributable to common shareholders per common share |
$ | 0.02 | $ | 0.04 | $ | 0.05 | |||
Basic weighted average number of common shares outstanding | 46,779,574 | 46,645,387 | 46,095,232 | ||||||
Diluted weighted average number of common shares outstanding | 48,925,574 | 49,033,887 | 49,589,430 |
The accompanying notes are an integral part of these consolidated financial statements.
2
CONSOLIDATED STATEMENT OF EQUITY
(Expressed in U.S. Dollars)
Common Stock |
|||||||||||||||||||||
Number of Shares |
Amount | Additional Paid in Capital |
Shares in Treasury |
Accumulated Deficit |
Non- Controlling Interest |
Total | |||||||||||||||
Balance, December 31, 2018 | 46,245,917 | $ | 46,246 | $ | 31,636,385 |
$ |
- | $ | (26,921,347 | ) | $ | (594,913 | ) | $ | 4,166,371 | ||||||
Stock-based compensation | - | - | 10,642 | - | - | - | 10,642 | ||||||||||||||
Repurchase of shares | (401,800 | ) | (402 | ) | (123,743 | ) | - | - | - | (124,145 | ) | ||||||||||
Shares in treasury | - | - | - | (9,430 | ) | - | - | (9,430 | ) | ||||||||||||
Income for the year | - | - | - | - | 2,247,957 | 140,390 | 2,388,347 | ||||||||||||||
Balance, December 31, 2019 | 45,844,117 | 45,844 | 31,523,284 | (9,430 | ) | (24,673,390 | ) | (454,523 | ) | 6,431,785 | |||||||||||
Stock-based compensation | - | - | 196,115 | - | - | - | 196,115 | ||||||||||||||
Exercise of warrants | 885,000 | 885 | 333,247 | - | - | - | 334,132 | ||||||||||||||
Exercise of stock options | 346,500 | 346 | 71,566 | - | - | - | 71,912 | ||||||||||||||
Repurchase of shares | (258,600 | ) | (258 | ) | (126,167 | ) | 9,430 | - | - | (116,995 | ) | ||||||||||
Shares in treasury | - | - | - | (4,857 | ) | - | - | (4,857 | ) | ||||||||||||
Income for the year | - | - | - | - | 1,860,249 | 141,782 | 2,002,031 | ||||||||||||||
Balance, December 31, 2020 | 46,817,017 | 46,817 | 31,998,045 | (4,857 | ) | (22,813,141 | ) | (312,741 | ) | 8,914,123 | |||||||||||
Stock-based compensation | - | - | 2,504 | - | - | - | 2,504 | ||||||||||||||
Exercise of stock options | 255,000 | 255 | 94,674 | - | - | - | 94,929 | ||||||||||||||
Repurchase of shares | (384,500 | ) | (384 | ) | (324,708 | ) | 4,857 | - | - | (320,235 | ) | ||||||||||
Shares in treasury | - | - | - | (13,294 | ) | - | - | (13,294 | ) | ||||||||||||
Income for the year | - | - | - | - | 835,976 | 121,545 | 957,521 | ||||||||||||||
Balance, December 31, 2021 | 46,687,517 |
$ |
46,688 |
$ |
31,770,515 |
$ |
(13,294 | ) |
$ |
(21,977,165 | ) |
$ |
(191,196 | ) |
$ |
9,635,548 |
The accompanying notes are an integral part of these consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2019 |
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
Income for the year | $ | 957,521 | $ | 2,002,031 | $ | 2,388,347 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
Amortization | 173,667 | 154,939 | 142,323 | ||||||
Stock-based compensation | 2,504 | 196,115 | 10,642 | ||||||
Change in fair value warrant derivative liability | - | (137,313 | ) | 21,520 | |||||
Unrealized foreign exchange loss (gain) | (40,017 | ) | (296,022 | ) | (49,478 | ) | |||
Purchase of trading securities | (2,537,144 | ) | (1,378,637 | ) | (801,932 | ) | |||
Proceeds on sale of trading securities | 2,053,292 | 1,562,517 | 1,921,090 | ||||||
Net loss (gain) on sales of trading securities | (714,523 | ) | (1,346,699 | ) | (1,485,100 | ) | |||
Impairment on trading securities | 211,018 | - | - | ||||||
Changes in non-cash working capital items: | |||||||||
(Increase) decrease in receivables and other assets | (2,599 | ) | 76,836 | (105,270 | ) | ||||
Decrease (increase) in inventory | (133,292 | ) | (448,944 | ) | (242,098 | ) | |||
Change in asset retirement obligation | (47,054 | ) | (18,517 | ) | (29,314 | ) | |||
Increase (decrease) in accounts payable and accrued liabilities | 742,718 | 139,110 | (172,871 | ) | |||||
Net cash provided by operating activities | 666,091 | 505,415 | 1,597,859 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||
Acquisition of equipment | (203,419 | ) | (319,590 | ) | (47,170 | ) | |||
Net cash used in investing activities | (203,419 | ) | (319,590 | ) | (47,170 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
Proceeds from exercise of options and warrants | 94,929 | 406,044 | - | ||||||
Repurchase of capital stock | (333,529 | ) | (121,852 | ) | (133,575 | ) | |||
Net cash (used in) provided by financing activities | (238,600 | ) | 284,192 | (133,575 | ) | ||||
Change in cash and cash equivalents and restricted cash during the year | 224,072 | 470,017 | 1,417,114 | ||||||
Cash and cash equivalents and restricted cash, beginning of the year | 4,747,578 | 4,277,561 | 2,860,447 | ||||||
Cash and cash equivalents and restricted cash, end of the year | $ | 4,971,650 | $ | 4,747,578 | $ | 4,277,561 | |||
Reconciliation of Cash and Cash Equivalents and Restricted Cash | |||||||||
Cash and cash equivalents at beginning of year | $ | 4,451,256 | $ | 3,981,239 | $ | 2,564,125 | |||
Restricted cash at beginning of year | 296,322 | 296,322 | 296,322 | ||||||
Cash and cash equivalents and restricted cash at beginning of year | $ | 4,747,578 | $ | 4,277,561 | $ | 2,860,447 | |||
Cash and cash equivalents at end of year | $ | 4,675,328 | $ | 4,451,256 | $ | 3,981,239 | |||
Restricted cash at end of year | 296,322 | 296,322 | 296,322 | ||||||
Cash and cash equivalents and restricted cash at end of year | $ | 4,971,650 | $ | 4,747,578 | $ | 4,277,561 |
Supplemental disclosure with respect to cash flows (Note 11)
1. HISTORY AND ORGANIZATION OF THE COMPANY
Xtra-Gold Resources Corp., previously Silverwing Systems Corporation, was incorporated under the laws of the State of Nevada on September 1, 1998, pursuant to the provisions of the Nevada Revised Statutes. In 2003, the Company became a resource exploration company. On November 30, 2012, the Company redomiciled from the USA to the British Virgin Islands.
In 2004, the Company acquired 100% of the issued and outstanding capital stock of Canadiana Gold Resources Limited ("Canadiana") and 90% of the issued and outstanding capital stock of Goldenrae Mining Company Limited ("Goldenrae"). Both companies are incorporated in Ghana and the remaining 10% of the issued and outstanding capital stock of Goldenrae is held by the Government of Ghana. On December 21, 2005, Canadiana changed its name to Xtra-Gold Exploration Limited ("XG Exploration"). On January 13, 2006, Goldenrae changed its name to Xtra-Gold Mining Limited ("XG Mining").
2. CONTINUANCE OF OPERATIONS - GOING CONCERN
The Company is in development as an exploration company. It may need financing for its exploration and acquisition activities. Although the Company has incurred a gain of $835,976 for the year ended December 31, 2021, it has an accumulated a deficit of $21,977,165. Results for the year ended December 31, 2021 are not necessarily indicative of future results. The uncertainty of gold recovery and the fact the Company does not have a demonstrably viable business to provide future funds, raises substantial doubt about its ability to continue as a going concern for one year from the issuance of the financial statements. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and implement its business plan, which is typical for junior exploration companies. The financial statements do not include any adjustments related to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company's operations could be significantly adversely affected by the effects of a widespread global outbreak of a contagious disease, including the recent outbreak of respiratory illness caused by COVID-19. The Company cannot accurately predict the impact COVID-19 will have on its operations and the ability of others to meet their obligations with the Company, including uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the length of travel and quarantine restrictions imposed by governments of affected countries. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could further affect the Company's operations and ability to finance its operations.
Currently, Covid-19 has not affected any of the Company's operations in Ghana. The first cases of Covid-19 were detected much later in Ghana than other parts of the world, and Government action has limited the incidence of transmission. The Company continues to monitor the potential effects on its operations and is implementing protocol to hopefully help in minimize its impact. However, investors are cautioned this is an evolving issue, and that there is not guarantee the Company's protocols will be effective.
Management of the Company ("Management") is of the opinion that sufficient financing will be obtained from external sources and further share issuances will be made to meet the Company's obligations. The Company's discretionary exploration activities do have considerable scope for flexibility in terms of the amount and timing of exploration expenditure, and expenditures may be adjusted accordingly if required.
3. SIGNIFICANT ACCOUNTING POLICIES
Generally accepted accounting principles
These consolidated financial statements have been prepared in conformity with generally accepted accounting principles of the United States of America ("US GAAP").
XTRA-GOLD RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) December 31, 2021 |
Principles of consolidation
These consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, XG Exploration (from February 16, 2004) and its 90% owned subsidiary, XG Mining (from December 22, 2004). All intercompany accounts and transactions have been eliminated on consolidation.
Use of estimates
The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant areas requiring the use of estimates include the carrying value and recoverability of mineral properties, inputs used in the calculation of stock-based compensation and warrants, inputs used in the calculation of the asset retirement obligation, and the valuation allowance applied to deferred income taxes. Actual results could differ from those estimates, and would impact future results of operations and cash flows.
Cash and cash equivalents
The Company considers highly liquid investments with original maturities of three months or less to be cash equivalents. At December 31, 2021, 2020 and 2019, cash and cash equivalents consisted of cash held at financial institutions.
The Company has been required by the Ghanaian government to post a bond for environmental reclamation. This cash has been recorded as restricted cash, a non-current asset.
Receivables
Management has evaluated all receivables and has provided allowances for accounts where it deems collection doubtful. As of December 31, 2021, 2020, and 2019, the Company had not recorded any allowance for doubtful accounts.
Inventory
Inventories are initially recognized at cost and subsequently stated at the lower of cost or net realizable value. The Company's inventory consists of raw gold. Costs are determined using the first-in, first-out ("FIFO") method and includes expenditures incurred in extracting the raw gold, other costs incurred in bringing them to their existing location and condition, and the cost of reclaiming the disturbed land to a natural state.
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale. Inventories are written down to net realizable value when the cost of inventories is not estimated to be recoverable due to declining selling prices, or other issues related to the sale of gold.
Recovery of gold
Recovery of gold and other income is recognized when title and the risks and rewards of ownership to delivered bullion and commodities pass to the buyer and collection is reasonably assured.
Trading securities
The Company's trading securities are reported at fair value, with realized and unrealized gains and losses included in earnings.
Non-Controlling Interest
The consolidated financial statements include the accounts of XG Mining (from December 22, 2004). All intercompany accounts and transactions have been eliminated upon consolidation. The Company records a non-controlling interest which reflects the 10% portion of the earnings (loss) of XG Mining allocable to the holders of the minority interest.
XTRA-GOLD RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) December 31, 2021 |
Equipment
Equipment is recorded at cost and is being amortized over its estimated useful lives using the declining balance method at the following annual rates:
Furniture and equipment |
20% |
Computer equipment |
30% |
Vehicles |
30% |
Mining and exploration equipment |
20% |
Mineral properties and exploration and development costs
The costs of acquiring mineral rights are capitalized at the date of acquisition. After acquisition, various factors can affect the recoverability of the capitalized costs. If, after review, management concludes that the carrying amount of a mineral property is impaired, it will be written down to estimated fair value. Exploration costs incurred on mineral properties are expensed as incurred. Development costs incurred on proven and probable reserves will be capitalized. Upon commencement of production, capitalized costs will be amortized using the unit-of-production method over the estimated life of the ore body based on proven and probable reserves (which exclude non-recoverable reserves and anticipated processing losses). When the Company receives an option payment related to a property, the proceeds of the payment are applied to reduce the carrying value of the exploration asset.
Impairment of non-financial assets
At the end of each reporting period, the Company reviews the carrying amounts of its non-financial assets with finite lives to determine whether there is any indication that those assets are impaired. Where such an indication exists, the recoverable amount of the asset is estimated. For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units or "CGUs"). The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use (being the present value of the expected future cash flows of the relevant asset or CGU). An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount.
The Company has assessed the assets of all its operating entities and has determined that no impairment was considered necessary for the Company's non-financial assets as at December 31, 2021, 2020 and 2019.
Long-lived assets
Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets, the recoverability test is performed using undiscounted net cash flows related to the long-lived assets. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of their carrying amount or fair value less costs to sell.
Asset retirement obligations
The Company records the estimated rehabilitation value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development, and/or normal use of the long-lived assets. Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the changes in the estimated future cash flows underlying the obligation (asset retirement cost).
XTRA-GOLD RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) December 31, 2021 |
Stock-based compensation
The Company accounts for stock compensation arrangements under ASC 718 "Compensation - Stock Compensation" using the fair value based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments.
The Company uses the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options. The stock based fair value compensation is determined as of the date of the grant (measurement date) and is recognized over the vesting periods.
Warrants
The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value using the appropriate valuation methodology and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The warrants are presented as a liability because they do not meet the criteria of Accounting Standard Codification ("ASC") topic 480 for equity classification. Subsequent changes in the fair value of the warrants are recorded in the consolidated statement of operations.
Share repurchases
The Company accounts for the repurchase of its common shares as an increase in shares in treasury for the market value of the shares at the time of purchase. When the shares are cancelled, the issued and outstanding shares are reduced by the $0.001 par value and the difference is accounted for as a reduction in additional paid in capital.
Share-based payment transactions
The fair value is measured at grant date and recognized over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the options were granted. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that are expected to vest.
An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee, including directors of the Company.
In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at fair value of the share-based payment. Otherwise, share-based payments are measured at the fair value of the goods and services received.
Income taxes
The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under the asset and liability method the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion or all of the deferred tax asset will not be recognized.
XTRA-GOLD RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) December 31, 2021 |
Income (Loss) per share
Basic income (loss) per common share is computed using the weighted average number of common shares outstanding during the period. To calculate diluted income per share, the Company uses the treasury stock method and if converted method. As of December 31, 2021, there were Nil warrants (December 31, 2020 - Nil, December 31, 2019 - 1,250,000) and 2,381,000 stock options (December 31, 2020 - 2,636,000, December 31, 2019 - 2,615,000). For the year ending December 31, 2021, the fully diluted weighted average shares outstanding would increase to 48,925,574 (December 31, 2020 - 49,033,887, December 31, 2019 - 49,589,430) from the basic weighted average shares outstanding of 46,779,574 (December 31, 2020 - 46,645,387, December 31, 2019 - 46,095,232). This increase did not change the income per share from the basic income per share number.
Foreign exchange
The Company's functional currency is the U.S. dollar. Any monetary assets and liabilities that are in a currency other than the U.S. dollar are translated at the rate prevailing at year end. Revenue and expenses in a foreign currency are translated at rates that approximate those in effect at the time of translation. Gains and losses from translation of foreign currency transactions into U.S. dollars are included in current results of operations.
Financial instruments
The Company's financial instruments consist of cash and cash equivalents, trading securities, receivables, accounts payable and accrued liabilities. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from its financial instruments. The fair values of these financial instruments approximate their carrying values unless otherwise noted. Cash in Canada is primarily held in financial institutions. Balances on hand may exceed insured maximums. Cash in Ghana is held in banks with a strong international presence. Ghana does not insure bank balances.
Fair value of financial assets and liabilities
Our financial assets and liabilities that are measured at fair value on a recurring basis include cash equivalents, marketable securities, derivative contracts, and marketable debt securities. Our financial assets measured at fair value on a nonrecurring basis include non-marketable equity securities, which are adjusted to fair value when observable price changes are identified or when the non-marketable equity securities are impaired (referred to as the measurement alternative). Other financial assets and liabilities are carried at cost with fair value disclosed, if required.
Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:
Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 - Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings.
Level 3 - Unobservable inputs that are supported by little or no market activities.
The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Cash, Cash Equivalents, and Marketable Securities
We invest all excess cash primarily in time deposits, money market funds, corporate debt securities, equities, limited partnerships, and rights and warrants.
XTRA-GOLD RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) December 31, 2021 |
We classify all marketable debt securities that have stated maturities of three months or less from the date of purchase as cash equivalents and those with stated maturities of greater than three months as marketable securities on our Consolidated Balance Sheets.
We determine the appropriate classification of our investments in marketable debt securities at the time of purchase and reevaluate such designation at each balance sheet date. We have classified and accounted for our marketable debt securities as trading securities. After consideration of our risk versus reward objectives, as well as our liquidity requirements, we may sell these debt securities prior to their stated maturities. For all of our marketable debt securities we have elected the fair value option, for which changes in fair value are recorded in other income (expense), net. We determine any realized gains or losses on the sale of marketable debt securities on a specific identification method, and we record such gains and losses as a component of other income (expense), net.
The following tables summarize our debt securities, at their fair value, by significant investment categories as of December 31, 2021, 2020 and 2019:
Level 1 - Cash equivalents | December 31, 2021 | December 31, 2020 | December 31, 2019 | ||||||
Money market funds | $ | 2,688,758 | $ | 3,772,568 | $ | 3,620,109 | |||
$ | 2,688,758 | $ | 3,772,568 | $ | 3,620,109 |
December 31, 2021 |
Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||
Cash and cash equivalents | $ | 4,675,328 | $ | 4,675,328 | $ | - | $ | - | ||||
Restricted cash | 296,322 | 296,322 | - | - | ||||||||
Marketable securities | 3,373,358 | 2,680,755 | 692,603 | - | ||||||||
Total | $ | 8,345,008 | $ | 7,652,405 | $ | 692,603 | $ | - |
December 31, 2020 |
Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||
Cash and cash equivalents | $ | 4,451,256 | $ | 4,451,256 | $ | - | $ | - | ||||
Restricted cash | 296,322 | 296,322 | - | - | ||||||||
Marketable securities | 2,345,984 | 2,345,984 | - | - | ||||||||
Total | $ | 7,093,562 | $ | 7,093,562 | $ | - | $ | - |
XTRA-GOLD RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) December 31, 2021 |
December 31, 2019 |
Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||
Cash and cash equivalents | $ | 3,981,239 | $ | 3,981,239 | $ | - | $ | - | ||||
Restricted cash | 296,322 | 296,322 | - | - | ||||||||
Marketable securities | 887,143 | 887,143 | - | - | ||||||||
Warrant liability | (137,313 | ) | - | - | (137,313 | ) | ||||||
Total | $ | 5,027,391 | $ | 5,164,704 | $ | - | $ | (137,313 | ) |
The fair values of cash and cash equivalents and marketable securities are determined through market, observable and corroborated sources. The fair value of the warrant liability was determined through the Black Scholes valuation model.
Debt Securities
We classify our marketable debt securities, which are accounted for as trading securities, within Level 1 or 2 in the fair value hierarchy because we use quoted market prices to the extent available or alternative pricing sources and models utilizing market observable inputs to determine fair value.
Investment in trading securities
The following discusses our marketable equity securities, non-marketable equity securities, gains and losses on marketable and non-marketable equity securities, as well as our equity securities accounted for under the equity method.
Our marketable equity securities are publicly traded stocks or funds measured at fair value and classified within Level 1 and 2 in the fair value hierarchy because we use quoted prices for identical assets in active markets or inputs that are based upon quoted prices for similar instruments in active markets.
Our non-marketable equity securities are investments in privately held companies without readily determinable market values. The carrying value of our non-marketable equity securities is adjusted to fair value for observable transactions for identical or similar investments of the same issuer or impairment (referred to as the measurement alternative). Non-marketable equity securities that have been remeasured during the period based on observable transactions are classified within Level 2 or Level 3 in the fair value hierarchy because we estimate the value based on valuation methods which may include a combination of the observable transaction price at the transaction date and other unobservable inputs including volatility, rights, and obligations of the securities we hold.
Concentration of credit risk
The financial instrument which potentially subjects the Company to concentration of credit risk is cash. The Company maintains cash in bank accounts that, at times, may exceed federally insured limits. As of December 31, 2021, the Company held $4,578,256 (December 31, 2020 - $4,305,287, December 31, 2019 - $3,646,758) in low-risk cash and money market funds which are not federally insured. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts. The Company has contracted to sell all its recovered gold through a licensed exporter in Ghana.
The Company uses one smelter to process its raw gold. Ownership of the gold is transferred to the smelting company at the mine site. The Company has not experienced any losses from this sole sourced smelter and believes it is not exposed to any significant risks on its gold processing.
XTRA-GOLD RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) December 31, 2021 |
Segregated information
The Company has exploration assets in Ghana. The remainder of the Company's assets are divided between corporate and Ghana.
Related parties
The Company follows the ASC 850-10, Related Party for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825-10-15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
Commitments and contingencies
The Company follows the ASC 450-20, Commitments to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company's consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company's financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company's business, financial position, and results of operations or cash flows.
XTRA-GOLD RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) December 31, 2021 |
Recent accounting pronouncements
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes: Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020, with early adoption permitted. Adoption of the standard requires certain changes to be made prospectively, with some changes to be made retrospectively. The adoption of this standard did not have a material impact on its financial position, results of operations or cash flows.
In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contract's in an Entity's Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU simplifies the diluted net income per share calculation in certain areas. The ASU is effective for annual and interim periods beginning after December 31, 2021, and early adoption is permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company does not expect the adoption of this standard to have a material impact on its consolidated statements of financial position, results of operations, or cash flows.
4. INVESTMENTS IN TRADING SECURITIES
At December 31, 2021, the Company held investments classified as trading securities, which consisted of various equity securities. All trading securities are carried at fair value. Private company investments are valued using Level 3 methods. Private company investments are initially valued at the cost of the investment. If a subsequent investment in the same security is made at a different price, the entire investment is valued at the new price and any gain or loss is recognized in other income, net. All other marketable securities are publicly traded and valued using Level 1 methods. As of December 31, 2021, the fair value of trading securities was $3,373,358 (December 31, 2020 - $2,345,984, December 31, 2019 - $887,143).
December 31, 2021 |
December 31, 2020 | December 31, 2019 | |||||||
Investments in trading securities at cost | $ | 3,268,618 | $ | 1,977,477 | $ | 923,009 | |||
Unrealized gains (losses) | 104,740 | 368,507 | (35,866 | ) | |||||
Investments in trading securities at fair market value | $ | 3,373,358 | $ | 2,345,984 | $ | 887,143 |
The fair value carrying value of investments by category is as follows:
December 31, 2021 | December 31, 2020 | December 31, 2019 | |||||||
Level 1 | $ | 2,680,755 | $ | 1,866,989 | $ | 656,053 | |||
Level 2 | 692,603 | 101,437 | - | ||||||
Level 3 | - | 377,558 | 231,090 | ||||||
Total investments | $ | 3,373,358 | $ | 2,345,984 | $ | 887,143 |
The gains and losses on investments by category is as follows:
December 31, 2021 | December 31, 2020 | December 31, 2019 | |||||||
Marketable Equity Securities - Level 1 | |||||||||
Publicly traded investments - realized gain (loss) | $ | 559,850 | $ | 931,440 | $ | 1,481,192 | |||
Publicly traded investments - unrealized gain (loss) | 235,916 | 385,076 | 2,552 | ||||||
Non-Marketable Debt Securities - Level 2 | |||||||||
Private bonds - unrealized gain (loss) | 11,720 | 937 | - | ||||||
Private investments - unrealized gain (loss) | (92,963 | ) | - | - | |||||
Non-Marketable Equity Securities - Level 3 | |||||||||
Private investments - realized gain (loss) | - | - | (8,499 | ) | |||||
Private investments - impairment | (211,018 | ) | - | - | |||||
Private investments - unrealized gain (loss) | - | 29,246 | 10,110 | ||||||
Total investments | $ | 503,505 | $ | 1,346,699 | $ | 1,485,100 |
5. EQUIPMENT
December 31, 2021 | |||||||||
Cost | Accumulated Amortization |
Net Book Value |
|||||||
Exploration equipment | $ | 2,067,077 | $ | 1,682,822 | $ | 384,255 | |||
Vehicles | 718,505 | 502,633 | 215,872 | ||||||
$ | 2,785,582 | $ | 2,185,455 | $ | 600,127 |
The Company expensed $173,667 for amortization in 2021.
December 31, 2020 | |||||||||
Cost | Accumulated Amortization |
Net Book Value |
|||||||
Exploration equipment | $ | 2,034,869 | $ | 1,591,813 | $ | 443,056 | |||
Vehicles | 547,294 | 419,975 | 127,319 | ||||||
$ | 2,582,163 | $ | 2,011,788 | $ | 570,375 |
The Company expensed $154,939 for amortization in 2020.
December 31, 2019 | |||||||||
Cost | Accumulated Amortization |
Net Book Value |
|||||||
Exploration equipment | $ | 1,805,789 | $ | 1,472,127 | $ | 333,662 | |||
Vehicles | 456,784 | 384,722 | 72,062 | ||||||
$ | 2,262,573 | $ | 1,856,849 | $ | 405,724 |
The Company expensed $142,323 for amortization in 2019.
XTRA-GOLD RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) December 31, 2021 |
6. MINERAL PROPERTIES
December 31, 2021 |
December 31, 2020 |
December 31, 2019 |
|||||||
Acquisition costs | $ | 1,607,729 | $ | 1,607,729 | $ | 1,607,729 | |||
Asset retirement obligation (Note 7) | 8,133 | 8,133 | 8,133 | ||||||
Option payments received | (881,440 | ) | (881,440 | ) | (881,440 | ) | |||
Total | $ | 734,422 | $ | 734,422 | $ | 734,422 |
The Projects were purchased as a group in 2003, and the purchase price was not allocated between the properties and camp facilities.
Kibi, Kwabeng and Pameng Projects
The Company holds the mineral rights over the lease area for Kibi , Kwabeng, and Pameng Projects, all of which are located in Ghana. All three mining leases grant the Company the right to produce gold. The Kwabeng and Pameng mining leases expired on July 26, 2019.
All required documentation to extend the lease for our Kibi Project (formerly known as the Apapam Project) for 15 years from December 17, 2015 has been submitted to the Ghana Minerals Commission. No additional information was requested or submitted in the year ended December 31, 2021. As of these extensions generally take years for the regulatory review to be completed, and the Company is not yet in receipt of the renewal extension approval. However, until the Company receives the renewal extension approval, the old lease remains in force under the mineral laws. The renewal extension is in accordance with the terms of application and payment of fees to the Minerals Commission.
The Company has applied to Minerals Commission for a renewal extension for the Kwabeng and Pameng mining leases and has submitted all the required documentation to renew and extend these leases for a further 15 years.
All gold production will be subject to a production royalty of the net smelter returns ("NSR") payable to the Government of Ghana.
Banso and Muoso Projects
During the year ended December 31, 2010, the Company made an application to Mincom to convert a single prospecting license ("PL") securing its interest in the Banso and Muoso Projects located in Ghana to a mining lease covering the lease area of each of these Projects. This application was approved by Mincom who subsequently made recommendation to the Minister of Lands, Forestry and Mines to grant an individual mining lease for each Project. On January 6, 2011, the Government of Ghana granted two mining leases for these Projects. These mining leases grant the Company mining rights to produce gold in the respective lease areas until January 5, 2025 with respect to the Banso Project and until January 5, 2024 with respect to the Muoso Project. These mining leases supersede the PL previously granted to the Company. Among other things, both mining leases require that the Company:
i) pay the Government of Ghana a fee of $30,000 in consideration of granting of each lease (paid in the March 2011 quarter);
ii) pay annual ground rent of GH¢189,146 (approximately USD$35,688) for the Banso Project and GH¢202,378 (approximately USD$38,185) for the Muoso Project;
iii) commence commercial production of gold within two years from the date of the mining leases; and
iv) pay a production royalty to the Government of Ghana. The Company has filed for the necessary permits to commence work on the project. The permits were approved and work has commenced on the properties.
Mining Lease and Prospecting License Commitments
The Company is committed to expend, from time to time fees payable
(a) to the Minerals Commission for:
(i) a grant or renewal of an expiry date of a prospecting license (currently an annual fee maximum of $70.00 per cadastral unit/or 21.24 hectare);
XTRA-GOLD RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) December 31, 2021 |
(ii) a grant or renewal of a mining lease (currently an annual fee maximum of $1,000.00 per cadastral units/or 21.24 hectare); and
(iii) annual operating permits;
(b) to the Environmental Protection Agency ("EPA") (of Ghana) for:
i) processing and certificate fees with respect to EPA permits;
ii) the issuance of permits before the commencement of any work at a particular concession; or
iii) the posting of a bond in connection with any mining operations undertaken by the Company;
(c) for a legal obligation associated with our mineral properties for clean up costs when work programs are completed.
7. ASSET RETIREMENT OBLIGATION
December 31, 2021 |
December 31, 2020 |
December 31, 2019 |
|||||||
Balance, beginning of year | $ | 140,397 | $ | 158,914 | $ | 188,228 | |||
Change in obligation | (47,054 | ) | (18,517 | ) | (29,314 | ) | |||
Accretion expense | - | - | - | ||||||
Balance, end of year | $ | 93,343 | $ | 140,397 | $ | 158,914 |
The Company has a legal obligation associated with its mineral properties for clean up costs when work programs are completed. Most of the cash will be spent to return the grade of disturbed land to its original state and to plant vegetation.
The rehabilitation obligation is estimated at $93,343 (2020 - $140,397, 2019 - $158,914). During 2021, 2020 and 2019, the obligation was estimated based on actual reclamation cost experience on an average per acre basis and the remaining acres to be reclaimed. It is expected that this obligation will be funded from general Company resources at the time the costs are incurred. The Company has been required by the Ghanaian government to post a bond of US$296,322 which has been recorded in restricted cash.
8. INVENTORIES
Inventories consisted of the following:
December 31, 2021 | December 31, 2020 | December 31, 2019 | |||||||
Raw materials | $ | 975,270 | $ | 841,978 | $ | 393,034 |
Inventory consists of raw gold awaiting transport to the smelter.
9. CAPITAL STOCK
Authorized stock
The Company's authorized shares are 250,000,000 common shares with a par value of $0.001 per share.
Issuances of shares
During the year ended December 31, 2021, the Company issued 255,000 shares at prices between CAD$0.23 and CAD$0.65 per share for proceeds of CAD$118,750 ($94,929) on exercise of stock options.
During the year ended December 31, 2020, the Company issued 885,000 shares at CAD$0.50 per share for proceeds of CAD$442,500 ($334,132) on exercise of warrants and issued 346,500 shares at prices between CAD$0.15 and CAD$0.50 per share for proceeds of CAD$94,575 ($71,912) on exercise of stock options.
XTRA-GOLD RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) December 31, 2021 |
The Company did not issue shares during the year ended December 31, 2019.
Cancellation of shares
During the year ended December 31, 2021, a total of 379,300 shares were re-purchased for $315,235 and were cancelled. A further total of 5,200 common shares were re-purchased in 2020 for $4,857 were cancelled in 2021. A total of 17,600 common shares were re-purchased in 2021 for $13,294 and held in treasury. These 17,600 shares were cancelled in January 2022.
During the year ended December 31, 2020, a total of 233,600 shares were re-purchased for $116,954 and were cancelled. A further total of 25,000 common shares were re-purchased in 2019 for $9,430 were cancelled in 2020. A total of 5,200 common shares were re-purchased in 2020 for $4,857 and held in treasury. These 5,200 shares were cancelled in January 2021.
During the year ended December 31, 2019, a total of 401,800 common shares were re-purchased for $124,145 and cancelled. A total of 25,000 common shares were re-purchased for $9,430 and held in treasury. These 25,000 shares were cancelled in January 2020.
Stock options
At June 30, 2011, the Company adopted a new 10% rolling stock option plan (the "2011 Plan") and cancelled the 2005 equity compensation plan. Pursuant to the 2011 Plan, the Company is entitled to grant options and reserve for issuance up to 10% of the shares issued and outstanding at the time of grant. The terms and conditions of any options granted, including the number and type of options, the exercise period, the exercise price and vesting provisions, are determined by the Compensation Committee which makes recommendations to the board of directors for their approval. The maximum term of options granted cannot exceed 10 years.
The TSX's rules relating to security-based compensation arrangements require that every three years after the institution of a security-based compensation arrangement which does not have a fixed maximum aggregate of securities issuable, all unallocated options must be approved by a majority of the Company's directors and by the Company's shareholders. The Board approved all unallocated options under the Option Plan on March 26, 2020 which was approved by the Company's shareholders at the annual and special meeting held on June 25, 2020.
At December 31, 2021, the following stock options were outstanding:
Stock option transactions and the number of stock options outstanding are summarized as follows:
XTRA-GOLD RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) December 31, 2021 |
December 31, 2021 | December 31, 2020 | December 31, 2019 | ||||||||||||||||
Number of Options |
Weighted Average Exercise Price |
Number of Options |
Weighted Average Exercise Price |
Number of Options |
Weighted Average Exercise Price |
|||||||||||||
Outstanding, beginning of year | 2,636,000 | $ | 0.35 | 2,615,000 | $ | 0.23 | 2,615,000 | $ | 0.23 | |||||||||
Granted | - | - | 534,000 | 0.80 | - | - | ||||||||||||
Exercised | (255,000 | ) | 0.38 | (346,500 | ) | 0.21 | - | - | ||||||||||
Cancelled/Expired | - | - | (166,500 | ) | 0.31 | - | - | |||||||||||
Outstanding, end of year | 2,381,000 | $ | 0.32 | 2,636,000 | $ | 0.35 | 2,615,000 | $ | 0.23 | |||||||||
Exercisable, end of year | 2,381,000 | $ | 0.32 | 2,636,000 | $ | 0.35 | 2,615,500 | $ | 0.23 |
The aggregate intrinsic value for options vested and for total options as of December 31, 2021 is approximately $1,096,069 (December 31, 2020 - $1,666,776, December 31, 2019 - $688,753). The weighted average contractual term of stock options outstanding and exercisable as at December 31, 2021 is 1.92 years (December 31, 2020 - 3.3 years, December 31, 2019 - 4.1 years).
The fair value of stock options granted, vested, and modified during the year ended December 31, 2021 was $2,504, (December 31, 2020 - $196,115, December 31, 2019 was $10,642) which has been included in general and administrative expense.
The following assumptions were used for the Black-Scholes valuation of stock options issued during the years ended December 31, 2021, 2020, and 2019:
|
2021 |
2020 |
2019 |
|
|
|
|
Risk-free interest rate |
- | 1.75% | 1.75% |
Expected life |
- |
1.8 to 2.6 years |
1.8 to 2.6 years |
Annualized volatility |
- | 73% | 73% |
Dividend rate |
- | - | - |
The Company did not issue stock options during the years ended December 31, 2021.
During 2020 the Company granted 314,000 options to insiders at a prices between $0.47 (CAD$0.60) and $0.96 (CAD$1.23). A further 100,000 options were granted to non-insiders at between $0.47 (CAD$0.60) and $0.96 (CAD$1.23). Consultants received 120,000 options priced at $0.47 (CAD$0.60).
The Company did not issue stock options during the years ended December 31, 2019.
Warrants
At December 31, 2021 and 2020, there were no warrants outstanding.
Warrant transactions and the number of warrants outstanding are summarized as follows:
2021 | 2020 | 2019 | |||
Balance, beginning of period | - | 1,250,000 | CAD$0.50 | 1,250,000 | CAD$0.50 |
Issued | - | - | - | - | |
Exercised | - | (885,000) | - | ||
Expired | - | (365,000) | - | ||
Balance, end of period | - | - | - | 1,250,000 | CAD$0.50 |
XTRA-GOLD RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) December 31, 2021 |
Under US GAAP when the strike price of the warrants is denominated in a currency other than an entity's functional currency, the warrants would not be considered indexed to the entity's own stock, and would consequently be considered to be a derivative liability. The common share purchase warrants described above are denominated in CAD dollars and the Company's functional currency is the US dollar. As a result, the Company determined that these warrants are not considered indexed to the Company's own stock and characterized the fair value of these warrants as derivative liabilities upon issuance. The derivative will be subsequently marked to market through income.
The Company determined that the fair value of the warrant liability using the Black-Scholes Options Pricing Model at May 25, 2016 to be $70,712. In August 2017, the Company extended the term of the non-broker warrants until August 25, 2018 and decreased the strike price of the warrants to CAD$0.50. The Company determined that the warrant extension created a fair value of the warrant liability using the Black-Scholes Options Pricing Model at August 25, 2017 of $17,112.
The Company recorded the full value of the derivative as a liability at issuance and recognized the amount as financing expense in the consolidated statement of operations. In August 2017, a further charge was recognized when the non-broker warrants were extended and the strike price was changed. At December 31, 2021, 2020, and 2019, the fair value adjustment was recognized in the consolidated statement of operations.
The fair value of the warrants estimated at December 31, 2021 using the Black-Scholes Options Pricing Model was $Nil (December 31, 2020 - $Nil, December 31, 2019 - $137,313).
10. RELATED PARTY TRANSACTIONS
During the years ended December 31, 2021, 2020 and 2019, the Company entered into the following transactions with related parties:
December 31, 2021 |
December 31, 2020 |
December 31, 2019 |
|||||||
Consulting fees paid or accrued to officers or their companies | 1,124,304 | $ | 894,616 | $ | 701,957 | ||||
Directors' fees | 2,398 | 2,238 | 2,257 | ||||||
Stock option grants to officers and directors | - | 123,837 | - | ||||||
Stock option grant price range | - | CAD$0.60 to CAD $1.23 | - |
Of the total consulting fees noted above, $772,494 (December 31, 2020 - $531,527, December 31, 2019 - $399,365) was incurred by the Company to a private company of which a related party is a 50% shareholder and director. The related party was entitled to receive $386,247 (December 31, 2018 - $265,764, December 31, 2019 - $199,683) of this amount. As at December 31, 2021, a balance of $90,538 is included in accounts payable (December 31, 2020 - a prepaid balance of $12,065, December 31, 2019, $83,592 balance payable,) exists to this related company and $Nil remains payable (December 31, 2020 - $Nil, December 31, 2019 - $3,800) to the related party for expenses earned for work on behalf of the Company. The CEO of the Company made a $50,000 payment on behalf of the Company in 2021. This balance was repaid in 2022.
During 2020 the Company granted 314,000 options to insiders at a prices between of $0.47 (CAD$0.60) and $0.96 (CAD$1.23). A total of $123,837 was included in consulting fees related to these options. During 2021 and 2019 the Company did not grant stock options to insiders.
11. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
December 31, 2021 |
December 31, 2020 |
December 31, 2019 |
|||||||
Cash paid during the period for: | |||||||||
Interest | $ | - | $ | - | $ | - | |||
Income taxes | $ | 288,192 | $ | 94,992 | $ | - |
XTRA-GOLD RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) December 31, 2021 |
The Company paid $288,192 (December 31, 2020 - $94,992, December 31, 2019 - $Nil) related to income tax in the period and accrued a further $800,000 (December 31, 2020 - $200,000, December 31, 2019 - $ ) for expected income tax payments related to activities in Ghana. There were no other significant non-cash transactions during the years ended December 31, 2021, 2020, or 2019.
12. DEFERRED INCOME TAXES
On November 30, 2012, the Company changed its residency address from the USA to the British Virgin Islands("BVI"). The Company has no presence/nexus within the United States of America, nor any of its States and therefore is not required to file Income/Franchise, etc. tax returns in the United States of America, nor any of its States. Therefore, no US Tax provision is required with this filing, based upon Management representations, as described. The Company is not subject to any corporate income tax in the BVI. In Ghana, the Company is subject to a 35% income tax rate.
2021 | 2020 | 2019 | |||||||
Pre tax income | $ | 2,303,646 | $ | 2,155,241 | $ | 2,247,957 | |||
Tax at the BVI rate 0% | - | - | - | ||||||
Tax in Ghana at 35% | 806,761 | 446,612 | 442,229 | ||||||
Temporary differences |
281,431 | (151,620 | ) | (442,229 | ) | ||||
Income tax | $ | 1,088,192 | $ | 294,992 | $ | - |
The Company does not have any deferred tax assets or deferred tax liabilities available for use at December 31, 2021.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The major temporary differences that gave rise to the deferred tax assets and liabilities are as follows: net operating losses carryforwards, and tax credits carryforwards. The deferred tax assets were fully used to shelter income tax in 2019.
13. SEGMENTED INFORMATION
The Company has one reportable segment, being the exploration and development of resource properties.
Geographic information is as follows:
December 31, 2021 |
December 31, 2020 |
December 31, 2019 |
||||||||
Cash and restricted cash: | ||||||||||
Canada | $ | 4,649,019 | $ | 4,330,650 | $ | 3,704,205 | ||||
Ghana | 322,631 | 416,928 | 573,356 | |||||||
Total cash and restricted cash | 4,971,650 | 4,747,578 | 4,277,561 | |||||||
Capital assets | ||||||||||
Canada | - | - | - | |||||||
Ghana | 1,334,549 | 1,304,797 | 1,140,147 | |||||||
Total capital assets | 1,334,549 | 1,304,797 | 1,140,147 | |||||||
Total | $ | 6,306,199 | $ | 6,052,375 | $ | 5,417,708 |
14. CONTINGENCY AND COMMITMENTS
a) Bond deposit
XTRA-GOLD RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) December 31, 2021 |
The Government of Ghana initially required an environmental bond of $385,000 for the Banso permit and $327,000 for the Muoso permit. The Company has submitted a request for a reduction of these fees to the government and is awaiting a response.
The Company has been required by the Ghanaian government to post a bond of US$296,322 which has been recorded in restricted cash (see Note 7).
b) Litigation
From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company's business. The Company is not aware of any such legal proceedings other than below disclosed that will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results.
The Company is a party to three pending lawsuits. The first lawsuit claims mining activities of the Company are illegal and cause substantial environmental damage to the community. The second lawsuit claims that all leases issued to mining companies in Ghana violate the Ghana Constitution and are therefore illegal. The third lawsuit claims that an XG Mining contracted worker caused bodily harm on another person. The Company will defend itself in each of these lawsuits if required, and believes all cases are completely without merit and frivolous.
The Company is subject to additional legal proceedings and claims which arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters should not have a material adverse effect on its financial position, results of operations or liquidity.
On July 23, 2019, Minerals Commission issued four invoices totaling $4,654,800 to our Ghanaian subsidiary. These invoices were titled "Outstanding Annual Mineral Right Fees" for four of our concessions (Muoso, Banso, Pameng and Apapam), which Minerals Commission indicated were related to the period from 2013 to 2018, for new annual mineral fees. However, all of our mining leases all have a one-time fixed consideration fee, which was paid when our leases were granted. We responded to Minerals Commission (the "Letters") on September 23, 2019, objecting to the four improper invoices. Our Letters outline the specific violated terms of our leases and various mineral laws. The Minerals Commission has not responded to our Letters. Should Minerals Commission challenge our Letters, our Company could enter dispute resolution arbitration clause under the Mineral Act. We believe the invoices are not legally enforceable under the Mineral Act, and have not included any amount related to these invoices in our accounts.
(c) Credit risk
Financial instruments that are potentially subject to credit risk consist principally of trade receivables. The Company believes the concentration of credit risk in its trade receivables is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.
(d) Exchange rate risk
The functional currency of the Company is US$, to date the majority of the revenues and costs are denominated in Ghana and a significant portion of the assets and liabilities are denominated in both Canada and Ghana. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between US$and Ghana currency. If Ghana depreciates against US$, the value of Ghana revenues and assets as expressed in US$financial statements will decline. The Company does not hold any derivative or other financial instruments that expose to substantial market risk.
(e) Economic and political risks
XTRA-GOLD RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) December 31, 2021 |
The Company's operations are conducted in Ghana. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environment in Ghana, and by the general state of the Ghana economy.
The Company's operations in the Ghana are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in Ghana, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation.
f) Commodity price risk
We are exposed to fluctuations in commodity prices for gold. Commodity prices are affected by many factors, including but not limited to, supply and demand.
g) The Kwabeng and Pameng mining leases expired on July 26, 2019.
All required documentation to extend the lease for our Kibi Project (formerly known as the Apapam Project) for 15 years from December 17, 2015 has been submitted to the Ghana Minerals Commission. No additional information was requested or submitted in the year ended December 31, 2021. As of these extensions generally take years for the regulatory review to be completed, and the Company is not yet in receipt of the renewal extension approval. However, until the Company receives the renewal extension approval, the old lease remains in force under the mineral laws. The renewal extension is in accordance with the terms of application and payment of fees to the Minerals Commission.
15. SUBSEQUENT EVENT NOTE
Subsequent to December 31, 2021, 17,600 shares which were purchased in December 2021 were cancelled. In January 2022 and February 2022, a total of 84,000 shares were purchased and cancelled. In March 2022, the Company purchased 25,000 shares under the 2022 repurchase plan and these shares will be cancelled in the normal course of business.
Subsequent to December 31, 2021, the Company announced that it would proceed with a share repurchase plan in 2022. Under the terms of the plan, which commences on March 16, 2021, the Company will be able to repurchase up to 4,000,000 shares. In March 2022 the Company purchased 27,200 shares under the 2021 repurchase plan, which will be cancelled in the ordinary course of business.
22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the consolidated financial conditions and results of operations for the years ended December 31, 2021, 2020, and 2019 of Xtra-Gold Resources Corp. ("Xtra-Gold" or the "company") should be read in conjunction with the consolidated financial statements and the related notes to our consolidated financial statements and other information presented in our annual report on Form 20-F which has been filed with the Securities and Exchange Commission (the "SEC") and can be viewed at www.sec.gov and has also been filed with SEDAR and can be viewed at www.sedar.com. Our consolidated audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles ("US GAAP").
Additional information relating to our company, including our consolidated audited financial statements and the notes thereto for the years ended December 31, 2021, 2020 and 2019 and our annual report on Form 20-F, can be viewed on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include but are not limited to those discussed below and elsewhere in our 20-F annual report, particularly in the item entitled "Risk Factors" beginning on page 8 of our 20-F annual report.
Highlights for the Year Ended December 31, 2021
During the year ended December 31, 2021:
● in connection with our gold recovery operations, we produced 4,113 ounces of raw gold. We sold 4,318 fine ounces of gold at an average price of US$1,789 per ounce.
● cash on hand, excluding restricted cash, increased to $4.7 million at December 31, 2021, from $4.6 million at December 31, 2020.
● on November 1, 2021, announced the results of an updated Mineral Resource Estimate for the Kibi Gold Project, including 623,700 ounces of gold in the Indicated category (13,893,000 tonnes at an average grade of 1.40 g/t gold) and an additional 180,700 ounces of gold in the Inferred category (5,694,000 tonnes at an average grade of 0.96 g/t gold), at a base case 0.5 g/t cut-off.
● a total of 75 diamond core boreholes totaling 11,343 metres completed by the Company's in-house drilling crews on the Kibi Gold Project.
● exploration drilling advancing early-stage Boomerang West, Boomerang East, and Twin Zone targets towards resource definition stage with potential to significantly increase Kibi Gold Project resource base.
Overview
We are engaged in the exploration of gold properties exclusively in Ghana, West Africa in the search for mineral deposits and mineral reserves which could be economically and legally extracted or produced. Our exploration activities include the review of existing geological data, grid establishment and soil geochemical sampling, geological mapping, geophysical surveying, trenching and pitting to test gold-in-soil anomalies and diamond core and/or reverse circulation (RC) drilling to test targets followed by infill drilling, if successful, to define a mineral reserve.
Our mining concession portfolio currently consists of 225.87 square kilometers comprised of 33.65 square kilometers for our Kibi project, 51.67 square kilometers for our Banso project, 55.28 square kilometers for our Muoso project, 44.76 square kilometers for our Kwabeng project, and 40.51 square kilometers for our Pameng project, or 55,873 acres, pursuant to the leased areas set forth in our mining leases.
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Technical Disclosure
The hardrock, lode gold exploration technical information relating to our mineral properties contained in this MD&A is based upon information prepared by or the preparation of which was supervised by Yves Clement, P.Geo., our Vice-President, Exploration. Mr. Clement is a Qualified Person as defined by Canadian Securities National Instrument 43-101 concerning standards of disclosure for mineral projects.
Plan of Operations
Our strategic plan is, with respect to our mineral projects, to conduct an exploration program, consisting of the following:
at our Kibi project:
● follow-up trenching of Zone 1 - Zone 2 - Zone 3 early stage gold shoots / showings to guide future mineral resource expansion drilling efforts;
● prospecting, reconnaissance geology, hand augering and/or scout pitting, and trenching of high priority gold-in-soil anomalies and grassroots gold targets across the extent of the Apapam concession; and
● a diamond core drill program of approximately 15,000 metres, at an estimated cost of $750,000, to be implemented utilizing the Company's in-house operated drill rigs; consisting of a combination of follow up drilling of early stage gold targets and scout drilling of prospective litho-structural gold settings within the mineral resource footprint area; and scout drilling of new grassroots gold targets across the Apapam concession.
at our Kwabeng project:
● ongoing geological compilation, prospecting, soil geochemical sampling, hand augering and/or scout pitting, and trenching to identify and/or further advance grassroots targets; and
● the continuation of placer gold recovery operations at this project (commenced in March 2013);
at our Pameng project:
● ongoing geological compilation, prospecting, soil geochemical sampling, hand augering and/or scout pitting, and trenching to identify and/or further advance grassroots targets; and
at our Banso and Muoso projects:
● ongoing geological compilation, prospecting, soil geochemical sampling, hand augering and/or scout pitting, and trenching to identify and/or further advance grassroots targets; and
● the continuation of placer gold recovery operations at these projects (commenced in 2015);
As at the date of this annual report, we have estimated $500,000 for the cost for soil sampling, hand augering and/or scout pitting, and trenching at our Kibi, Kwabeng, Pameng, Banso and Muoso projects.
As part of our current business strategy, we plan to continue engaging technical personnel under contract where possible as our management believes that this strategy, at its current level of development, provides the best services available in the circumstances, leads to lower overall costs and provides the best flexibility for our business operations. For example, the purchase of an exploration drill as opposed to using contract drillers has generated significant savings to the company.
We anticipate that our ongoing efforts will continue to be focused on the exploration and development of our projects and completing acquisitions in strategic areas. We will look to acquire further interests in gold mineralized projects that fall within the criteria of providing a geological basis for development of drilling initiatives that can enhance shareholder value by demonstrating the potential to define reserves.
We continued with our recovery of placer gold operations at our Kwabeng Banso and Muoso properties in 2020. We contract out as many services as possible on our placer gold recovery operations to local Ghanaians in order to maximize cost efficiencies.
Our fiscal 2022 budget to carry out our plan of operations is approximately $2,250,000 as follows and as disclosed in our 20-F annual report under Item 4.B - Information on Xtra-Gold - Business Overview:
Soil sampling / trenching | $ | 500,000 | |
Drilling | 750,000 | ||
Administration | 750,000 | ||
Stock-based compensation (non-cash) | 250,000 | ||
TOTAL | $ | 2,250,000 |
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These expenditures are subject to change if management decides to scale back or accelerate operations.
Our company has historically relied on funds from gold recovery from alluvial operations, equity and debt financings to finance its ongoing operations. Existing working capital, possible debt instruments, further private placements and anticipated cash flow from placer gold recovery operations are expected to be adequate to fund our company's operations over the next year. During the current year and subsequent to 2022, we will not require additional capital to implement our plan of operations.
Trends
Gold prices closed in 2021 at $1,806 per ounce, just above the 2021 average of $1,807 per ounce. The low for 2021 occurred in March, with prices gradually demonstrating strength from that time forward. We continue to see positive indicators for gold prices in the future.
The WHO-declared coronavirus pandemic continues to create a significant amount of economic uncertainty across the world. While gold prices originally surged with this announcement, prices have fallen back recently with a global asset sell off. Indicators are of significant spending programs by all governments to combat this issue while supporting national economies.
The coronavirus has negatively affected world GDP's and resulted in significant amounts of money printing by governments. This response has resulted in inflation in previous cycles.
Gold does well in times of uncertainty. National, corporate and individual debt levels increase this uncertainty and leave less room to safely manage any potential crisis.
Gold prices per ounce over the year ended December 31, 2021 and previous two years are as follows:
2021 | 2020 | 2019 | |||||||
High | $ | 1,943 | $ | 2,067 | $ | 1,546 | |||
Low | 1,684 | 1,474 | 1,270 | ||||||
Average | 1,800 | 1,770 | 1,392 |
The tone for the precious metals market in the near future will depend on the U.S. dollar strength. While the US Federal Reserve has continued to express a neutral stance to interest rates, current events have led to significant rate decreases recently. The focus going forward will be on how much economic growth, government deficits and debts affect the ability of the Federal Reserve to increase future rates or shrink its balance sheet. Any further wobble or extension of the time to address the issues related to the pandemic in the US economy could interfere with the rate increases and create uncertainty about the US economy, which would be good for gold prices.
Overall, a lower U.S. dollar should lead to higher costs in U.S. dollar terms to identify and explore for gold but could be more than offset by higher gold prices, resulting in greater interest in gold exploration companies. Conversely, if the U.S. dollar strengthens further, interest in the gold exploration sector could be reduced.
Currently, Covid-19 has not affected any of the Company's operations in Ghana. The first cases of Covid-19 were detected much later in Ghana than other parts of the world, and Government action has limited the incidence of transmission. The Company continues to monitor the potential effects on its operations and is implementing protocol to hopefully help in minimize its impact. However, investors are cautioned this is an evolving issue, and that there is not guarantee the Company's protocols will be effective.
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Summary of the last five fiscal years ending December 31
2021 | 2020 | 2019 | 2018 | 2017 | |
$ | $ | $ | $ | ||
Operating revenues | Nil | Nil | Nil | Nil | Nil |
Consolidated pre tax income for the year | 2,045,713 | 2,297,023 | 2,388,347 | 1,539,294 | 453,932 |
Net gain attributable to non-controlling interest | (121,545) | (141,782) | (140,390) | (233,111) | (98,077) |
Income tax | (1,088,192) | (294,992) | Nil | Nil | Nil |
Net gain (loss) Xtra-Gold Resources Corp. | 957,521 | 1,860,249 | 2,247,957 | 1,306,183 | 355,855 |
Basic and diluted income (loss) attributable to common shareholders per common share | 0.02 | 0.04 | 0.05 | 0.03 | 0.01 |
Total current assets | 9,127,160 | 7,739,823 | 5,438,858 | 3,258,955 | 1,825,775 |
Total assets | 10,758,031 | 9,340,942 | 6,875,325 | 4,790,576 | 3,328,082 |
Total current liabilities | 1,122,483 | 426,819 | 443,540 | 624,205 | 443,457 |
Total liabilities | 1,122,483 | 426,819 | 443,540 | 624,205 | 443,457 |
Working capital | 8,004,677 | 7,313,004 | 4,995,317 | 2,634,750 | 1,382,318 |
Capital stock | 46,688 | 46,817 | 45,844 | 46,246 | 47,782 |
Total equity | 9,635,548 | 8,914,123 | 6,431,785 | 4,166,371 | 2,884,625 |
Total Xtra-Gold Resources Corp. stockholders' equity | 9,826,744 | 9,226,864 | 6,886,308 | 4,761,284 | 3,712,649 |
Dividends declared per share | Nil | Nil | Nil | Nil | Nil |
Basic weighted average number of common shares outstanding | 46,779,574 | 46,645,387 | 46,095,232 | 47,089,027 | 47,948,596 |
Basic and diluted weighted average number of common shares outstanding | 48,925,574 | 49,033,887 | 49,589,430 | 49,405,027 | 51,339,216 |
Summary of Quarterly Results
Three Months Ended |
Net Income (Loss) $ |
Basic and Diluted Income (Loss) Per Share $ |
||||
December 31, 2021 | $ | (739,525 | ) | $ | (0.01 | ) |
September 30, 2021 | (664,900 | ) | (0.01 | ) | ||
June 30, 2021 | 319,729 | 0.01 | ||||
March 31, 2021 | 1,920,672 | 0.04 | ||||
December 31, 2020 | (427,897 | ) | (0.01 | ) | ||
September 30, 2020 | 714,181 | 0.02 | ||||
June 30, 2020 | 1,216,221 | 0.03 | ||||
March 31, 2020 | 357,744 | 0.01 | ||||
December 31, 2019 | (147,234 | ) | (0.00 | ) | ||
September 30, 2019 | 1,501,085 | 0.03 | ||||
June 30, 2019 | 513,774 | 0.01 | ||||
March 31, 2019 | 380,332 | 0.01 |
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Results of Operations for the Year Ended December 31, 2021 as Compared to the Year Ended December 31, 2020 and December 31, 2019
Our company reported a net gain after tax for the year ended December 31, 2021 of $835,976 (December 31, 2020 - gain of $1,860,249, December 31, 2019 - gain of $2,247,957). Our company's basic and diluted gain per share for the year ended December 31, 2021 was $0.02 (December 31, 2020 - $0.05, December 31, 2019 - $0.05). All years benefited from gold recovery results and from a large gain on investment portfolio holdings. The most significant change is the tax expense as the company has used its tax shelter position.
The weighted average number of shares outstanding was 46,779,574 (December 31, 2020 - 46,645,387, December 31, 2019 - 46,095,232). Average shares were increased in 2021 via the exercise of warrants and stock options in 2020, and reduced from share repurchases. Average shares were increased in 2020 via the exercise of warrants and stock options, and reduced from share repurchases. Average shares outstanding were reduced in 2019 through share repurchases. Average fully diluted shares in 2021 were 48,925,574 (2020 - 49,033,887, 2019 - 49,589,430), with the difference being in the money stock options and warrants. These items did not materially affect earnings per share.
We incurred expenses of $2,161,514 in the year ended December 31, 2021 (December 31, 2020 - $1,481,612, December 31, 2019 - $961,058). Exploration expense increased significantly in 2021 as more consultants were engaged to assist with the hard rock program, work on the NI 43-101 technical report, and more drilling was undertaken. Exploration expense in 2020 was increased from 2019 with the addition of a second drill and a more intense hard-rock exploration program. We expense all exploration costs. Amortization in 2021 increased with the addition of three pickup trucks, while 2020 increased with the late-2019 addition of a trommel and with the 2020 addition of a drill, pickup trucks and a dozer. General and administrative expense in 2021 of $377,345 decreased from $578,176 in 2020 but was in line with the 2019 expense of $344,710. Most of the difference in general and administrative expense was created by stock-based compensation. Non-cash stock-based compensation expense was $2,504 in 2021, $196,115 in 2020, and $10,642 in 2019. The company did not grant stock options in 2021. The company granted 534,000 stock options in 2020. Revaluation of consultants' options in 2020 did not materially affect the 2020 expense. No options were granted in 2019, with the expense related to valuation of consultant's options.
Exploration activities for the 2021 year continued to focus on the Kibi Gold Project (Apapam Mining Lease). With exploration efforts highlighted by the release of an updated Mineral Resource Estimate for the Company's flagship Kibi Gold Project in the December 2021 quarter (see the Company's news release of November 1, 2021). Seventy-five (75) diamond core boreholes totalling 11,343 metres were completed by the Company's in-house drilling crews in 2021 with drilling efforts primarily targeting resource expansion opportunities within Zone 3 of the Kibi Gold Project.
We did not conduct any exploration activities on our Kwabeng, Pameng, Banso and Muoso projects during the 2021 year.
On November 1, 2021, the Company announced the results of an updated Mineral Resource Estimate for its Kibi Gold Project located on the Apapam Mining Lease. The updated resource estimate, with an effective date of September 30, 2021, was prepared in accordance with the Definition Standards for Mineral Resources and Mineral Reserves set out by the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM"). The Mineral Resource Estimate was filed in accordance with National Instrument 43-101 (NI 43-101) requirements with the Technical Report entitled "Xtra-Gold Resources Corporation Kibi Gold Project", jointly prepared by Pivot Mining Consultants (Pty) Ltd and Tect Geological Consulting of Johannesburg and Somerset West, South Africa, respectively, and dated November 16, 2021, filed under the Company's profile on SEDAR at www.sedar.com.
The updated Mineral Resource incorporates an additional 212 diamond core boreholes (25,198.55 m) completed since the October 2012 Maiden Resource Estimate. This includes 158 holes (21,321.45 m) completed from February 2018 - June 2021 by Xtra-Gold's in-house drilling crews on resource expansion targets within the Zone 1 - Zone 2 - Zone 3 resource estimate footprint area. The resource estimate encompasses drill hole and trench data available as of July 30, 2021.
The new Mineral Resource encompasses updated resource estimates for the following five (5) deposits: Big Bend, East Dyke, Mushroom, South Ridge and Double 19; and initial resource estimates for the following three (3) deposits, which were at an early exploration stage at the time of the 2012 resource estimate: Road Cut, Gatehouse and Gold Mountain. In aggregate, these eight (8) gold deposits lying within approximately 1.6 kilometres of each other are estimated to contain an Indicated Mineral Resource of 623,700 ounces of gold based on 13,893,000 tonnes at an average grade of 1.40 grams per tonne ("g/t") gold and an additional Inferred Mineral Resource of 180,700 ounces of gold based on 5,694,000 tonnes at an average grade of 0.96 g/t gold (at a base case 0.5 g/t cut-off).
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In comparison to the 2012 Maiden Resource Estimate, the updated Mineral Resource represents increases of 124.4% in the Indicated category and 22.9% in the Inferred category. Approximately 73% of the Indicated Mineral Resources (456,200 oz.) is contained within the essentially contiguous Big Bend and East Dyke deposits.
Gold mineralization within the Mineral Resource footprint area consists predominantly of tensional arrays of auriferous quartz-carbonate veins hosted by folded diorite bodies with an interpreted Belt-type granitoid affinity. The gold-bearing zones occupy the hinges and limbs of predominantly anticlinal fold structures. Over 20 significant gold occurrences hosted by Belt (Dixcove)- and Basin (Cape Coast)-type granitoids are known in Ghana, with a number constituting significant deposits. These deposits represent a relatively new style of gold mineralization for orogenic gold deposits within the West African Birimian terrain. Belt-type intrusion-hosted gold deposits include Newmont Mining's Subika deposit at their Ahafo mine and Kinross Mining's Chirano deposit within the Sefwi gold belt, as well as the former Golden Star Resources' Hwini-Butre deposit at the southern extremity of the Ashanti gold belt.
Cautionary Note on Mineral Resources: Mineral Resources are not Mineral Reserves and by definition do not demonstrate economic viability. The Mineral Resource Estimate disclosed herein includes Inferred Mineral Resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as Mineral Reserves. There is also no certainty that these Inferred Mineral Resources will be converted to the Measured and Indicated resource categories through further drilling, or into Mineral Reserves, once economic considerations are applied. The stated figures for contained gold are in-situ Mineral Resources.
Exploration activities for the first half of 2021 focussed on resource expansion drilling on the Double 19 resource body (3,292 m) and exploration drilling targeting resource expansion opportunities within Zone 3 of the Kibi Gold Project (2,150 m). The Zone 3 target generation drilling program was designed to follow up on early-stage gold shoots / showings discovered by previous drilling / trenching efforts (2008 - 2012) and to test prospective litho-structural gold settings identified by recently completed 3D geological modelling. The assay results for the 36 boreholes (5,982 m) completed from January to June 2021 (#KBDD21379 - #KBDD21414), were reported by the Company on April 14 and August 11, 2021, including the following highlights:
- 48.8 m at 0.76 grams per tonne gold ("g/t Au"), including 6.9 m at 1.91 g/t Au, from 134.0 m in hole #KBDD21387; and 15.1 m at 1.24 g/t Au from 200.0 m in undercut hole #KBDD21391 (Double 19 - Resource Expansion Drilling)
- 13.5 m at 1.92 g/t Au from 138.5 m in hole #KBDD21384; 11.6 m at 1.00 g/t Au and 17.1 m at 1.13 g/t Au from 92.0 m and 121.9 m respectively in #KBDD21386; and 7.6 m at 2.12 g/t Au and 8.75 m at 1.03 g/t Au from 101.0 m and 125.25 m in respectively in # KBDD21390 (Double 19 - Resource Expansion Drilling)
- 65.0 m at 1.03 g/t Au, including 13.5 m at 2.42 g/t Au, from 33.0 m in hole #KBDD21411; and 43.1 m at 0.75 g/t Au, including 3.0 m at 3.65 g/t Au and 9.0 m at 1.29 g/t Au, from 28.5 m in #KBDD21402 (Boomerang West Target - Exploration Drilling)
- 7.3 m at 1.93 g/t Au from 70.7 m in hole #KBDD21409; and 15.0 m at 1.02 g/t Au from 99.0 m in undercut hole #KBDD21410 (Twin Zone Target - Exploration Drilling)
Exploration activities for the second half of 2021, corresponding to exploration drilling conducted after the late July 2021 database close-out date for the updated Mineral Resource Estimate, continued to target resource expansion opportunities along the southwestern (Zone 3) segment of the over three-kilometre-long Zone 2 - Zone 3 anticlinal fold structure. With the exploration program focussing on follow up drilling of the early-stage Boomerang East, Boomerang West, and Twin Zone (formerly JK East) targets positioned along similar second-order fold hinge structures as the neighbouring Double 19 resource body, and scout drilling of prospective litho-structural gold settings identified by recently completed detailed 3D geological modelling. The assay results for the 39 boreholes (5,982 m) completed from late July to December 2021 (#KBDD21415 - #KBDD21453), as well as five (5) boreholes completed in January 2022 (#KBDD22454 - #KBDD22458), were reported by the Company on February 18, 2022, including the following highlights:
Boomerang East Target
- 6.0 metres ("m") at 6.19 grams per tonne gold ("g/t Au"), including 2.6 m at 13.82 g/t Au, from 52.0 m in hole #KBDD21434
- 33.5 m at 1.22 g/t Au, including 7.5 m at 3.76 g/t Au, from 31.5 m in hole #KBDD21453
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- 16.5 m at 6.23 g/t Au, including 6.5 m at 13.74 g/t Au, from 1.5 m in hole #KBDD22455
- 13.5 m at 1.64 g/t Au, including 6.0 m at 3.35 g/t Au, from 0.0 m in #KBDD22458; followed by second interval of 21.0 m at 1.46 g/t Au from 39.0 m, including 11.0 m at 2.49 g/t Au
- gold mineralization at Boomerang East target traced over an approximately 400 m section across the southeastern limb of the NE-trending Zone 2 - Zone 3 anticlinal fold structure; with the mineralization predominantly being spatially associated with a series of apparent second-order (parasitic) fold structures
Boomerang West Target
- 29.0 m at 1.04 g/t Au, including 4.5 m at 3.27 g/t Au, from 50.0 m in #KBDD21423
- 6.0 m at 3.12 g/t Au from 9.0 m in hole #KBDD21425
- Boomerang West target occupies a NE-plunging, tight to isoclinal, anticlinal fold hinge zone; with gold mineralization traced over an approximately 240 m trend-length and 80 m width of the anticlinal fold structure, and down to a vertical depth of approximately 165 m
Twin Zone Target
- 13.2 m at 1.07 g/t Au from 161.0 m in hole #KBDD21419
- 4.0 m at 3.53 g/t Au from 157.0 m in hole #KBDD21448
- gold mineralization at the early-stage Twin Zone target intermittently traced over an approximately 275 m down-plunge distance, and down to a vertical depth of approximately 150 m, along the limbs of two parallel, NE-trending, second-order (parasitic) fold structures
Exploration activities for the 2020 year continued to focus on the Company's flagship Kibi Gold Project (Apapam Mining Lease) with the continuation of the resource expansion target generation drill program initiated in 2019. Seventy-four (74) diamond core boreholes totalling 9,615 metres were completed in 2020 with drilling efforts targeting resource expansion opportunities within the Zone 2 - Zone 3 maiden mineral resource footprint area. The target generation drilling program is designed to follow up on early stage gold shoots / showings discovered by previous drilling / trenching efforts (2008 - 2012), test down-plunge extensions and/or fold limbs of existing resource bodies, and to test prospective litho-structural gold settings identified by recently completed 3D geological modelling. A total of 85 boreholes totaling 10,819 metres have been completed to date by the Company's in-house drilling crews during the ongoing Zone 2 - Zone 3 resource expansion drilling program initiated in late September 2019.
The maiden Kibi Gold Project mineral resource estimate (October 26, 2012) encompasses the Big Bend, East Dyke, South Ridge and Mushroom deposits in Zone 2 and the Double 19 deposit in Zone 3. In aggregate, these five gold deposits lying within approximately 1.6 kilometres of each other are estimated to encompass an indicated mineral resource of 3.38 million tonnes grading 2.56 g/t gold for 278,000 ounces of contained gold and an additional inferred mineral resource of 2.35 million tonnes grading 1.94 g/t gold for 147,000 ounces of contained gold (@ base case 0.5 g/t cut-off). The Zone 2 - Zone 3 maiden mineral resource represents the first ever mineral resource generated on a lode gold project within the Kibi Gold Belt. Gold mineralization is characterized by auriferous quartz vein sets hosted in Belt-type granitoids geologically analogous to other "Granitoid-hosted" gold deposits of Ghana, including Kinross Gold's Chirano and Newmont Mining's Subika deposits in the Sefwi gold belt. The above mineral resource estimate was filed in accordance with National Instrument 43-101 (NI 43-101) requirements with the Technical Report entitled "Independent Technical Report, Apapam Concession, Kibi Project, Eastern Region, Ghana", prepared by SEMS Explorations and dated October 31, 2012, filed under the Company's profile on SEDAR at www.sedar.com.
Drilling activities for the 2020 year focussed primarily on the following Zone 2 - Zone 3 resource expansion targets: 23 holes (3,109 metres) on the Double 19 Zone; 13 holes (1,660 metres) on the Gatehouse Zone; 8 holes (857 metres) on the Boomerang Zone; and 15 holes (2,095 metres) on the Road Cut Zone.
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The 2020 resource expansion drilling on the Double 19 deposit successfully extended the gold mineralization approximately 115 metres down plunge from the previous 2012 drilling and identified a new, apparent fold limb-controlled gold zone (i.e., NW Limb Zone) along the northwest limb of the Double 19 fold structure. Recent detailed 3D litho-structural modelling indicates that the Double 19 gold mineralization is emplaced within the inner arc of a tight, steep NE-plunging, isoclinally folded diorite body. The present drilling efforts have extended the gold mineralization along the Fold Hinge zone over an approximately 285 metre down-plunge distance from surface (~150 metres vertical) and demonstrated the continuity of the NW Limb zone over an approximately 110 metre trend-length of the fold structure (~150 metre down-plunge distance), and down to a vertical depth of approximately 100 metres. The Double 19 deposit has a current inferred mineral resource of 48,000 ounces of gold (0.61 million tonnes at an average grade of 2.43 g/t gold).
The assay results for the 23 boreholes (3,109 metres) of the ongoing Double 19 resource expansion drilling program, completed from August to December 2020, were reported by the Company on October 20 and December 16, 2020, and February 17, 2021, including the following highlights:
- 55.3 metres grading 2.1 grams per tonne ("g/t") gold, including 3.47 g/t gold over 16.6 metres, from down-hole depth of 96.2 metres in #KBDD20341; and 20.0 metres grading 1.02 g/t gold and 27.0 metres grading 2.5 g/t gold from down-hole depths of 142 metres and 187 metres respectively in #KBDD20351; confirming down plunge extension of Fold Hinge gold zone
- 61.57 metres grading 2.42 g/t gold, including 5.13 g/t gold over 21.5 metres, from down-hole depth of 18.2 metres in #KBDD20346; new fold limb gold zone on NW flank of Double 19 fold structure
- 30.0 metres grading 6.20 g/t gold, including 10.1 g/t gold over 12.0 metres, from down-hole depth of 56.0 metres in #KBDD20369 on NW Limb zone; with #KBDD20369 cross-cutting above #KBDD20346 intercept which was drilled down dip of the fold limb
- 44.0 metres grading 2.78 g/t gold, including 4.14 g/t gold over 17.5 metres and 9.10 g/t gold over 3.0 metres, from a down-hole depth of 50.5 metres in #KBDD20375 and 20.0 metres grading 1.61 g/t gold, including 2.68 g/t gold over 11.0 metres, from a down-hole depth of 92.0 metres in #KBDD20378; demonstrating continuity of NW Limb zone mineralization along approximately 110 metres trend-length of the fold structure
- 17.5 metres grading 3.89 g/t gold, including 6.03 g/t gold over 7.0 metres, from a down-hole depth of 4.5 metres in #KBDD20377; undercutting trench #TAD045 returning 6.32 g/t gold over 15.0 metres along southeastern margin of Double 19 Fold Hinge zone
The Gatehouse Zone, located approximately 500 metres southeast of the Zone 2 gold resource footprint area, was originally identified by 2011 - 2012 scout trenching / drilling targeting a gold-in-soil anomaly with a coincidental Induced Polarization (IP) / Resistivity geophysical signature. Follow up drilling of this prospect during the present 2020 resource expansion target generation program extended the mineralization approximately 235 metres further southwest along the host granitoid body than the gold zone originally outlined by the 2011 - 2012 trenching / drilling. Typical Kibi-type (Zone 2) Granitoid-hosted gold mineralization has been traced to date over an approximately 325 metre strike length and to a 165 metre vertical depth along the NE-trending Gatehouse zone.
The assay results for the 13 follow up boreholes (1,660 metres) on the Gatehouse Zone were reported by the Company on September 8, October 20, and December 16, 2020, including the following highlights:
- 14.4 metres grading 1.7 g/t gold, including 2.42 g/t gold over 4.2 metres, from a down-hole depth of 66.9 metres in #KBDD20350; 150 metre step-out from original 2012 scout drilling
- 17.0 metres grading 1.05 g/t gold, including 4.51 g/t gold over 1.0 metre, from a down-hole depth of 104.0 metres in #KBDD20352 and 12.5 metres grading 1.24 g/t gold, including 2.72 g/t gold over 4.0 metres, from a down-hole depth of 31.5 metres in #KBDD20370, approximately 50 metres down-dip and 35 metres up-dip of the #KBDD20350 intercept, respectively; establishing mineralization to a vertical depth of approximately 120 metres on the #KBDD20350 - #352 - #370 drill fence
The Boomerang Zone was originally identified during a 2012 scout drilling program designed to test geophysical targets located along the approximately 2.5 km long by 0.5 km to 1.2 km wide Zone 3 anomalous gold-in-soil trend. Follow up drilling of this prospect during the 2020 drilling campaign defined a typical Kibi-type (Zone 2) Granitoid-hosted gold zone located over 1,500 metres to the southwest of the current Zone 2 gold resource footprint. Gold mineralization at the Boomerang Zone has been traced to date over an approximately 80 metre down-plunge distance from surface along an apparent NE-plunging fold structure.
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The assay results for the 8 follow up boreholes (857 metres) on the Boomerang Zone were reported by the Company on September 8 and October 20, 2020, including the following highlights:
- 43.5 metres grading 1.21 g/t gold, including 2.16 g/t gold over 7.5 metres and 4.3 g/t gold over 6.0 metres, from a down-hole depth of 3.0 metres in #KBDD20335 and 24.0 metres grading 1.35 g/t gold, including 1.99 g/t gold over 9.0 metres, from a down-hole depth of 56.5 metres in undercut hole #KBDD20338; approximately 30 metres down plunge of the #KBDD20335 gold intercept
The Road Cut Zone, lying approximately 65 metres from the southern margin of the Kibi Gold Project's flagship Big Bend gold deposit, was subjected to follow up drilling from mid-November 2019 to late April 2020 as part of the ongoing resource expansion target generation program designed to follow up on early stage gold shoots / showings discovered by previous drilling / trenching efforts. Based on recent detailed 3D geological modelling, the follow up drilling tested the Road Cut zone with optimized North-South drill targeting, unlike the ESE-trending drill orientation utilized in the original 2011 drilling. Present drilling efforts traced the gold mineralization over an approximately 200 metre strike length and to an approximately 170 metre vertical depth within a parallel diorite body lying along the southern (footwall) flank of the Big Bend diorite. With the auriferous vein system centred on the same apparent NE-plunging, open fold hinge zone controlling the Big Bend deposit gold mineralization. The Big Bend deposit has a current indicated mineral resource of 213,000 ounces of gold (2.72 million tonnes at an average grade of 2.44 g/t gold) and an additional inferred mineral resource of 27,000 ounces of gold (0.52 million tonnes at an average grade of 1.6 g/t gold).
The assay results for the 18 follow up Road Cut zone boreholes (2,446 metres), including 3 holes (351 metres) drilled in late 2019, were reported by the Company on February 26 and September 8, 2020, including the following highlights:
- 49 metres grading 1.1 g/t gold, including 1.42 g/t gold over 31.6 metres and 45.1 metres grading 1.51 g/t gold, including 2.24 g/t gold over 26.4 metres from down-hole depths of 47 metres and 32 metres in #KBDD19304 and #KBDD20306 respectively, on adjacent 25 metre spaced drill-fan patterns
Exploration activities on our Kwabeng, Pameng, Banso and Muoso projects during the 2020 year were limited to airborne geophysical survey compilation and satellite remote sensing imagery.
Exploration activities for the 2019 year focused on the Kibi Gold Project located on the Apapam Mining Lease with exploration efforts primarily geared towards the continued advancement of early stage gold shoots / showings within the Zone 2 - Zone 3 maiden mineral resource footprint area. A total of 32 diamond core boreholes totalling 3,553 metres were completed by the Company's in-house drilling crew during the 2019 year, including: 22 boreholes totalling 2,367 metres targeting resource expansion opportunities in the Zone 2 resource area; and 10 scout holes totalling 1,186 metres on the Akwadum South ("Zone 7") grassroots gold-in-soil anomaly target.
The resource expansion drill program initiated in February 2018 was completed during the March 2019 quarter with 11 diamond core boreholes totalling 1,163 metres drilled from January 28 to April 1 at the South Ridge gold deposit on Zone 2 of the Kibi Gold Project. A total of 37 boreholes encompassing 4,577 metres were completed during the 2018 - 2019 resource expansion drill program with the program designed to test an approximately 400 metre strike length of the South Ridge gold zone at a nominal 50 metre section spacing and to further define the litho-structural setting of the gold mineralization.
The assay results for the final 19 boreholes (2,305 metres) of the South Ridge mineral resource expansion drill program completed from October 24, 2018 to April 1, 2019 were reported by the Company on May 1, 2019, including the following highlights:
- 30.25 metres grading 1.5 grams per tonne ("g/t") gold, including 2.26 g/t gold over 8.5 metres and 2.56 g/t gold over 9.55 metres from a down-hole depth of 62.65 metres in #KBDD18278;
- 11.0 metres grading 3.3 g/t gold (uncut), including 5.96 g/t gold over 5.15 metres from a down-hole depth of 22.0 metres in #KBDD19287, 25 metres NW of previously reported high-grade #KBDD18264 intercept of 27.0 metres grading 2.85 g/t gold, including 4.84 metres grading 5.12 g/t gold (see the Company's news release of August 8, 2018);
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- 15.0 metres grading 2.85 g/t gold, including 5.67 g/t gold over 6.0 metres and 8.5 metres grading 3.33 g/t gold, including 6.02 g/t gold over 4.5 metres from down-hole depths of 9.0 metres and 10.5 metres in #KBDD19293 and #KBDD19292 respectively, 25 metres and 50 metres up-dip from the high-grade #KBDD18264 intercept; and
- 7.5 metres grading 6.71 g/t gold (uncut), including 31.00 g/t gold over 1.5 metres from a down-hole depth of 1.5 metres on the zone's most northwesterly drill section.
The final phase of the resource expansion drill program (19 holes) included: a series of drill fences (12 holes) targeting the depth continuity of the southeastern 200 metre segment of the South Ridge gold zone at downdip depths extending from approximately 70 metres to 220 metres from surface; 4 infill holes to further test the high-grade gold mineralization intersected in holes #KBDD18263 / #KBDD18264 at 25 metre section spacing; and 3 holes targeting near surface mineralization at the northwestern extremity of the South Ridge gold zone, including 2 holes testing the shallow, up-dip extension of the previously reported #KBDD18264 high-grade gold mineralization (see the Company's news release of August 8, 2018).
The 2018 - 2019 South Ridge drilling data was outsourced to Goldspot Discoveries Inc. ("Goldspot") of Montreal, Canada for integration into an updated 3D geological model of the Zone 2 - Zone 3 mineral resource footprint area. The new 3D geological model was completed by Goldspot in late July 2019 with the detailed modelling geared towards the identification of prospective litho-structural gold settings to help guide upcoming resource expansion drilling efforts.
The South Ridge deposit consists of a northwest striking / northeast dipping quartz diorite-hosted gold mineralization body traced to date along an approximately 400 metre strike length and 230 metre downdip depth from surface. Gold mineralization is associated with quartz-albite-carbonate-sulphide vein arrays developed within the quartz diorite body.
The South Ridge deposit has a current inferred mineral resource estimate of 0.9 million tonnes grading 1.48 grams per tonne ("g/t") gold for 43,000 ounces of contained gold. The South Ridge deposit, along with the Big Bend, East Dyke, and Mushroom deposits in Zone 2 and the Double 19 deposit in Zone 3, form part of a maiden mineral resource estimate (October 26, 2012) on the Company's Kibi Gold Project. In aggregate, these five gold deposits lying within approximately 1.6 kilometres of each other are estimated to encompass an indicated mineral resource of 3.38 million tonnes grading 2.56 g/t gold for 278,000 ounces of contained gold and an additional inferred mineral resource of 2.35 million tonnes grading 1.94 g/t gold for 147,000 ounces of contained gold (@ base case 0.5 g/t cut-off). The Zone 2 - Zone 3 maiden mineral resource represents the first ever mineral resource generated on a lode gold project within the Kibi Gold Belt. Gold mineralization is characterized by auriferous quartz vein sets hosted in Belt-type granitoids geologically analogous to other "Granitoid-hosted" gold deposits of Ghana, including Kinross Gold's Chirano and Newmont Mining's Subika deposits in the Sefwi gold belt. The above mineral resource estimate was filed in accordance with National Instrument 43-101 (NI 43-101) requirements with the Technical Report entitled "Independent Technical Report, Apapam Concession, Kibi Project, Eastern Region, Ghana", prepared by SEMS Explorations and dated October 31, 2012, is filed under the Company's profile on SEDAR at www.sedar.com.
A target generation drilling program geared towards the identification of new resource expansion opportunities within the Zone 2 - Zone 3 maiden mineral resource footprint area of the Kibi Gold Project was initiated in late September 2019; with a total of 11 diamond core boreholes totaling 1,204 metres completed by the Company's in-house drilling crew by the end of the 2019 year. The ongoing drilling program is designed to follow up on early stage gold shoots / showings discovered by previous drilling / trenching efforts (2008 - 2012) and to test prospective litho-structural gold settings identified by recently completed 3D geological modelling.
The assay results for the initial 16 boreholes (1,643 metres) of the ongoing resource expansion target generation program completed from September 24, 2019 to January 27, 2020 were reported by the Company on February 26, 2020, including the following highlights:
- 49 metres grading 1.1 grams per tonne ("g/t") gold, including 1.42 g/t gold over 31.6 metres and 45.1 metres grading 1.51 g/t gold, including 2.24 g/t gold over 26.4 metres from down-hole depths of 47 metres and 32 metres in #KBDD19304 and #KBDD20306 respectively, on adjacent 25 metre spaced drill-fan patterns (Road Cut Zone);
- gold mineralization now traced over an approximately 110 metre strike length and to 90 metre vertical depth on the Road Cut Zone; with newly developing gold body lying within 65 metres of the southern margin (footwall) of the flagship Big Bend gold deposit; and
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- step-out drilling successfully traced gold mineralization over an approximately 200 metre strike length of the host diorite body to the southeast of the South Ridge gold deposit; including exploration significant drill intercepts of 1.5 metres grading 4.94 g/t gold and 6.2 metres grading 0.87 g/t gold in #KBDD19297 and #KBDD19303 respectively (South Ridge - SE Extension target).
The initial phase of the resource expansion target generation drill program focussed primarily on the Road Cut Zone and the South Ridge - SE Extension target with 8 holes (790.5 metres) and 4 holes (468 metres) on each target respectively. The Road Cut Zone was subjected to follow up drilling with North-South drill targeting based on recent detailed geological modelling work. The drilling (8 holes) tested the ENE-trending / steep northerly dipping Road Cut auriferous system over an approximately 100 metre strike length, including: three (3) south trending drill-fan patterns (-55o / -75o) at 25 metre spacing and two (2) northerly trending boreholes (scissor-pattern) designed to further define the geometry / attitude of the host diorite body and of the gold-bearing vein system.
To date gold mineralization has been traced over an approximately 110 metre strike length and to a 90 metre vertical depth on the Road Cut Zone; with the newly developing gold body lying within 65 metres of the southern margin (footwall) of the Kibi Gold Project's flagship Big Bend gold deposit. The Road Cut auriferous vein system is emplaced in a parallel diorite body exhibiting a similar NW to ENE flexure in strike-geometry has the flexure appearing to control the Big Bend deposit gold mineralization. The Big Bend deposit has a current indicated mineral resource of 213,000 ounces of gold (2.72 million tonnes at an average grade of 2.44 g/t gold) and an additional inferred mineral resource of 27,000 ounces of gold (0.52 million tonnes at an average grade of 1.6 g/t gold).
Step-out drilling (4 holes) successfully traced gold mineralization over an approximately 200 metre strike length of the host diorite body to the southeast of the South Ridge gold deposit (i.e., South Ridge - SE Extension target). Of exploration significance are typical Kibi-type granitoid hosted gold mineralization intercepts produced by a drill-fan pattern (-60o / -80o) collared approximately 200 metres southeast of the South Ridge resource body, including: 5.2 metres grading 0.41 g/t gold from a down-hole depth of 62.8 metres in the upper #KBDD19302 hole; and 6.2 metres grading 0.87 g/t gold from a down-hole depth of 73 metres in the lower #KBDD19303 hole, approximately 25 metres down dip from the #KBDD19302 intercept.
Exploration efforts on the Kibi Gold Project during the 2019 year also included a scout drilling program on the high-priority Akwadum South ("Zone 7") gold-in-soil anomaly located at the southeastern extremity of the Apapam concession; with the first pass drilling program forming part of an ongoing exploration initiative geared towards the continued advancement of grassroots gold targets across the Apapam concession. A total of 10 boreholes (1,186 metres) ranging in depth from 73 metres to 190 metres were completed by the company's in-house drilling crew from late May to mid-September 2019. The scout drilling program was designed to test an approximately 1,000 metre strike-length of the Akwadum South gold target and to further define the litho-structural setting of the gold mineralization.
The Akwadum South target is characterized by an approximately 1,200 metres long by 100 metres to 400 metres wide, NE-trending gold-in-soil anomaly spatially associated with a volcaniclastic rock package exhibiting widespread silica alteration, quartz veining and sulphide mineralization. Of the 157 soil geochemistry samples collected from the Akwadum South gold-in-soil trend: 11 yielded less than 25 parts per billion ("ppb") gold; 89 returned gold values from 25 ppb to 100 ppb; 50 between 100 ppb to 300 ppb gold; and 7 samples yielded values over 300 ppb gold, including maximum gold values of 444 ppb and 725 ppb.
In early September 2019, also in relation to our Kibi Gold Project, Tect Geological Consulting of West Somerset, South Africa ("Tect") conducted a structural analysis / interpretation of the Cobra Creek gold zone located at the northeast extremity of the Apapam concession. The study encompassing structural mapping and drill core observations, in combination with compilation of existing surface sampling and geophysical data, was designed to further define the structural controls of the gold mineralization and provide high-priority exploration targets to help guide future drilling campaigns on the Cobra Creek gold zone. The Company received the final product of the Tect structural study in late September, including a generative exploration model for the Cobra Creek project, and study result compilation is currently ongoing.
Xtra-Gold completed 2,639 metres of drilling comprised of 43 diamond core holes on the Cobra Creek gold zone in 2016. Initial drilling efforts yielded some very exploration significant high-grade mineralized intercepts, including highlights of 4.5 metres grading 10.9 g/t gold and 5.2 metres grading 9.51 g/t gold (see the Company's news release of October 19, 2016).
In mid-May 2019, Xtra-Gold engaged Goldspot Discoveries Inc. ("Goldspot") of Montreal, Canada to undertake a multifaceted target generation study, including: 3D Geological Modeling of the Zone 2 - Zone 3 maiden mineral resource footprint area on the Kibi gold project; and Traditional Targeting encompassing geophysical / structural / geochemistry datasets and Machine Learning Targeting (i.e., Artificial Intelligence) covering all five (5) of the company's Kibi Gold Belt concessions. The Company received the final product of the Goldspot study in late July and study result compilation is currently ongoing.
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Exploration activities on our Kwabeng, Pameng, Banso, and Muoso projects during the 2019 year were limited to the Goldspot target generation study.
We recognized gains related to other items of $4,207,227 in 2021 (2020 - $3,778,635, 2019 - $3,349,405). The gains can mostly be attributed to the recovery of gold and gain on sales of securities, offset by foreign exchange losses in all years. During the year ended December 31, 2021, we sold 4,318 fine ounces of gold at an average price of US$1,789 for net proceeds of $4,074,170 (2020 - 3,137 ounces of gold at an average price of $1,695 for net proceeds of $2,373,592, 2019 - 2,945 fine ounces of gold at an average price of $1,356 for net proceeds of $1,878,198). Gold sales relating to our share of gold is not recognized until the risks and rewards of ownership passed to the buyer. These placer gold recovery operations were contracted to local Ghanaian groups. We pay a 5% government royalty on our gold sales. Using local contractors promotes the local economy while avoiding illegal workings on our projects.
Embedded derivatives resulted from issuing Canadian denominated warrants in the May 2016 financing. Because the Company's functional currency is the US dollar, Canadian denominated warrants must be considered expense items and reported on a mark-to-market basis. During 2018 the term of these warrants was extended to February 2020.
The company had no warrants outstanding in 2021 and no mark-to-market adjustment was required. We recognized a mark-to-market recovery of expense of $137,313 on warrants in 2020 (2019 - expense of $21,250), related to extending the warrants to February 2020. Canadian dollar denominated warrants were issued with financings. These warrants were deemed to be embedded derivatives since our company's functional currency is the U.S. dollar. The warrants are marked to market in each period with the change in value recognized in other items of the Statement of Operations and Comprehensive Loss.
During the year ended December 31, 2021, our company had a foreign exchange loss of $426,420 (2020 - loss of $124,558, 2019 - loss of $40,849) mostly due to strength in the U.S. dollar against the Ghana cedi and the Canadian dollar.
Our company recognized a trading and holding gain on marketable securities in 2021 of $714,523 (2020 - gain of $1,346,699, 2019 - gain of $1,485,100), whle recognizing an impairment on marketable securities in 2021 of $211,018. Gains in 2021 and 2020 were recognized throughout the portfolio, with significant gains reported on several investments. Most of the 2019 gain resulted on the appreciation and sale of one security in Q3 2019. Unrealized gains and losses reflect mark-to-market changes in the investment portfolio during a period. A realized gain is recognized when securities are sold from the investment portfolio, being the difference between the selling price and the purchase price of the security sold. At the time of the sale, any mark-to-market gain or loss which is related to the security sold, previously recognized in unrealized gains and losses, is reversed.
Other income of $55,972 (2020 - $45,589, 2019 - $48,476,) mostly relates to interest and dividends on investment portfolio assets.
Recent Capital Raising Transactions
Our activities, principally the exploration and acquisition of properties for gold and other metals, may be financed through joint ventures or through the completion of equity transactions such as equity offerings and the exercise of stock options and warrants.
During the year ended December 31, 2021, the Company issued 255,000 shares at prices between CAD$0.23 and CAD$0.65 per share for proceeds of CAD$118,750 ($94,929) on exercise of stock options.
During 2020, the company issued 885,000 shares at CAD$0.50 per share for cash proceeds of $334,132 on the exercise of warrants and issued 346,500 shares at prices between CAD$0.15 and CAD$0.50 per share for cash proceeds of $71,912 on the exercise of stock options.
There were no capital raising transactions in 2021 or 2019.
Liquidity and Capital Resources
We are an exploration company focused on gold and associated commodities and do not have operating revenues; and therefore, we must utilize our current cash reserves, income from placer gold sales, income from investments, funds obtained from the exercise of stock options and warrants and other financing transactions to maintain our capacity to meet the planned exploration programs, or to fund any further development activities. There is no certainty that future financing will be available to us in the amounts or at the times desired on terms acceptable to us, if at all.
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Cash on hand was increased by $224,072 during 2021. Operations provided cash of $670,947. Cash of $2,357,144 was used to purchase investments in 2021 while proceeds from the sale of investments generated $2,053,292 of cash. Inventory was reduced by $133,292 due to the timing of smelt shipments. Payables were increased, mostly due to an accrual for income taxes payable in Ghana related to 2021 operations. Other operating expenses were mostly cash neutral. Cash of $203,419 was used to purchase three pickup trucks during 2021. Cash of $338,386 was used to repurchase shares in 2021. Cash proceeds of $94,929 were received on the exercise of stock options and warrants.
During the year ended December 31, 2021, our company repurchased 379,300 of our shares at a cost of $315,235 and cancelled these shares. Also, during the month ended December 31, 2020, the company repurchased 5,200 of our shares at a cost of $4,857. These shares were reported as shares in treasury at December 31, 2020 and were cancelled in January 2021. Further, during the month ended December 31, 2021, the company repurchased 17,600 of our shares at a cost of $13,294. These shares were reported as shares in treasury at December 31, 2021 and were cancelled in January 2022.
During the year ended December 31, 2020, our company repurchased 233,600 of our shares at a cost of $107,565 and cancelled these shares. Also, during the year ended December 31, 2019, the company repurchased 25,000 of our shares at a cost of $9,430. These shares were reported as shares in treasury at December 31, 2019 and were cancelled in January 2020. Further, during the year ended December 31, 2020, the company repurchased 5,200 of our shares at a cost of $4,857. These shares were reported as shares in treasury at December 31, 2020 and were cancelled in January 2021.
In the year ended December 31, 2019, our company repurchased and cancelled 401,800 of our shares at a cost of $124,145 (December 31, 2018 - repurchased and cancelled 1,536,500 of our shares at a cost of $290,985).
At December 31, 2021, accounts payable and accrued liabilities increased by $747,575 to $1,029,140, mostly due to a $600,000 income tax accrual increase (December 31, 2020 - $200,000) and a $91,000 increase in revenue-based gold production payments. With no gold shipments in the fourth quarter, royalty payments to the government for the third quarter were remitted, reducing our balances payable. Our cash and cash equivalents as at December 31, 2021 were sufficient to pay these liabilities. We believe that our company has sufficient working capital to achieve our 2022 operating plan. However, our historical losses raise substantial doubt about our ability to continue as a going concern. Our auditors have issued an explanatory paragraph in their audit opinion for the year end December 31, 2021.
At December 31, 2021, we had total cash and cash equivalents and restricted cash of $4,971,650 (December 31, 2020 - $4,747,578, December 31, 2019 - $4,277,561). Working capital as of December 31, 2021 was $8,004,677 (December 31, 2020 - $7,313,004, December 31, 2019 - $4,995,317,). In both 2021 and 2020, the increase in working capital mostly reflects the revenue from gold recovery and the gain on the investment portfolio, combined with gold inventory on hand. The 2019 increase in working capital mostly reflects the revenue from gold recovery and the gain on sale of investments.
We are an exploration company focused on gold and associated commodities and do not have operating revenues; and therefore, we must utilize our current cash reserves, income from placer gold sales, income from investments, funds obtained from the exercise of stock options and warrants and other financing transactions to maintain our capacity to meet the planned exploration programs, or to fund any further development activities. There is no certainty that future financing will be available to us in the amounts or at the times desired on terms acceptable to us, if at all.
Our shares of common stock, warrants and stock options outstanding as at March 26, 2022, December 31, 2021, December 31, 2020, and December 31, 2019 were as follows:
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Subsequent to December 31, 2021, 17,600 shares which were purchased in December 2021 were cancelled. In January 2022 and February 2022, a total of 84,000 shares were purchased and cancelled.
As of the date of this MD&A, the exercise of all outstanding options would raise approximately $0.8 million, however such exercise is not anticipated until the market value of our shares of common stock increases in value.
We remain debt free and our credit and interest rate risk is limited to interest-bearing assets of cash and bank or government guaranteed investment vehicles. Accounts payable and accrued liabilities are short-term and non-interest bearing.
Our liquidity risk with financial instruments is minimal as excess cash is invested with a Canadian financial institution in government-backed securities or bank-backed guaranteed investment certificates.
Our fiscal 2022 budget to carry out our plan of operations is approximately $2,250,000 as disclosed in our Plan of Operations section above and in our 20-F annual report under Item 4.B - Information on Xtra-Gold - Business Overview". These expenditures are subject to change if management decides to scale back or accelerate operations. We believe that we are adequately capitalized to achieve our operating plan for fiscal 2022. However, our losses raise substantial doubt about our ability to continue as a going concern. Our auditors have issued an explanatory paragraph in their audit opinion for the year end December 31, 2021.
Going Concern
The Company is in development as an exploration company. It may need financing for its exploration and acquisition activities. Although the Company has incurred a gain of $835,976 for the year ended December 31, 2021, it has an accumulated a deficit of $21,977,165. Results for the year ended December 31, 2021 are not necessarily indicative of future results. The uncertainty of gold recovery and he fact the Company does not have a demonstrably viable business to provide future funds, raises substantial doubt about its ability to continue as a going concern for one year from the issuance of the financial statements. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and implement its business plan, which is typical for junior exploration companies. The financial statements do not include any adjustments related to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Management of the Company ("Management") is of the opinion that sufficient financing will be obtained from external sources and further share issuances will be made to meet the Company's obligations. The Company's discretionary exploration activities do have considerable scope for flexibility in terms of the amount and timing of exploration expenditure, and expenditures may be adjusted accordingly if required.
Related Party Transactions
During the years ended December 31, 2021, 2020, and 2019, the Company entered into the following transactions with related parties:
December 31, 2021 |
December 31, 2020 |
December 31, 2019 |
|||||||
Consulting fees paid or accrued to officers or their companies | $ | 1,124,304 | $ | 894,616 | $ | 701,957 | |||
Directors' fees | 2,398 | 2,238 | 2,257 | ||||||
Stock option grants to officers and directors | 123,837 | - | |||||||
Stock option grant price range | CAD$0.60 - CAD$1.23 | - |
Of the total consulting fees noted above, $772,494 (December 31, 2020 - $531,527, December 31, 2019 - $399,365) was incurred by the Company to a private company of which a related party is a 50% shareholder and director. The related party was entitled to receive $386,247 (December 31, 2020 - $265,764, December 31, 2019 - $199,683) of this amount. As at December 31, 2021, a balance of $90,538 (December 31, 2020 - a prepaid balance of $12,065, December 31, 2019, $83,592 balance payable,) exists to this related company and $Nil remains payable (December 31, 2020 - $Nil, December 31, 2019 - $3,800) to the related party for expenses earned for work on behalf of the Company. The CEO of the company made a $50,000 payment on behalf of the company in 2021. This balance was repaid in 2022.
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During 2020 the Company granted 314,000 options to insiders at a prices between of $0.47 (CAD$0.60) and $0.96 (CAD$1.23). A total of $123,837 was included in consulting fees related to these options. During 2021 and 2019 the Company did not grant stock options to insiders.
Material Commitments
Mineral Property Commitments
Our company is committed to expend, from time to time fees payable:
● to the Minerals Commission of Ghana for:
(a) to the Minerals Commission for:
(i) a new grant or renewal of an expiry date of a prospecting license (currently an annual fee maximum of $70.00 per cadastral unit/or 21.24 hectare);
(ii) a new grant or renewal of a mining lease (currently an annual fee maximum of $1,000.00 per cadastral units/or 21.24 hectare); and
(iii) annual operating permits;
(b) to the Environmental Protection Agency ("EPA") (of Ghana) for:
i) processing and certificate fees with respect to EPA permits;
ii) the issuance of permits before the commencement of any work at a particular concession; or
iii) the posting of a bond in connection with any mining operations undertaken by the Company;
(c) for a legal obligation associated with our mineral properties for clean up costs when work programs are completed.
Purchase of Significant Equipment
We consider the availability of equipment to conduct our exploration activities. In 2021 we purchased three pickups. In 2020 we purchased a second drill, a dozer, some pickups and a generator. In 2019, we purchased a trommel. While we do not expect we will be buying any additional equipment in the foreseeable future, we will continue to assess the situation and weigh our program needs against equipment availability.
Off Balance Sheet Arrangements
Our company has no off balance sheet arrangements.
Fair value of financial assets and liabilities
We invest all excess cash primarily in time deposits, money market funds, corporate debt securities, equities, limited partnerships, and rights and warrants.
We classify all marketable debt securities that have stated maturities of three months or less from the date of purchase as cash equivalents and those with stated maturities of greater than three months as marketable securities on our Consolidated Balance Sheets.
We determine the appropriate classification of our investments in marketable debt securities at the time of purchase and re-evaluate such designation at each balance sheet date. We have classified and accounted for our marketable debt securities as trading securities. After consideration of our risk versus reward objectives, as well as our liquidity requirements, we may sell these debt securities prior to their stated maturities. For all of our marketable debt securities we have elected the fair value option, for which changes in fair value are recorded in other income (expense), net. We determine any realized gains or losses on the sale of marketable debt securities on a specific identification method, and we record such gains and losses as a component of other income (expense), net.
The following tables summarize our debt securities, at their fair value, by significant investment categories as of December 31, 2021, 2020 and 2019:
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Level 1 - Cash equivalents | December 31, 2021 | December 31, 2020 | December 31, 2019 | ||||||
Money market funds | $ | 2,688,758 | $ | 3,772,568 | $ | 3,620,109 | |||
$ | 2,688,758 | $ | 3,772,568 | $ | 3,620,109 |
December 31, 2021 | Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||
Cash and cash equivalents | $ | 4,675,328 | $ | 4,675,328 | $ | - | $ | - | ||||
Restricted cash | 296,322 | 296,322 | - | - | ||||||||
Marketable securities | 3,373,358 | 2,680,755 | 692, 603 | - | ||||||||
Total | $ | 8,345,008 | $ | 7,652,405 | $ | 692,603 | $ | - |
December 31, 2020 | Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||
Cash and cash equivalents | $ | 4,451,256 | $ | 4,451,256 | $ | - | $ | - | ||||
Restricted cash | 296,322 | 296,322 | - | - | ||||||||
Marketable securities | 2,345,984 | 2,345,984 | - | - | ||||||||
Total | $ | 7,093,562 | $ | 7,093,562 | $ | - | $ | - |
December 31, 2019 | Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||
Cash and cash equivalents | $ | 3,981,239 | $ | 3,981,239 | $ | - | $ | - | ||||
Restricted cash | 296,322 | 296,322 | - | - | ||||||||
Investment in trading securities | 887,143 | 887,143 | - | - | ||||||||
Warrant liability | (137,313 | ) | - | - | (137,313 | ) | ||||||
Total | $ | 5,027,391 | $ | 5,164,704 | $ | - | $ | (137,313 | ) |
Critical Accounting Estimates and Changes in Accounting Policies
The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant areas requiring the use of estimates include the carrying value and recoverability of mineral properties, inputs used in the calculation of stock-based compensation and warrants, inputs used in the calculation of the asset retirement obligation, and the valuation allowance applied to deferred income taxes. Actual results could differ from those estimates, and would impact future results of operations and cash flows.
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Caution Regarding Forward-Looking Statements
This MD&A contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as "forward-looking statements"). These statements relate to future events or our company's future performance. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates" or "believes", or variations of, or the negatives of, such words and phrases or state that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause actual results to differ materially from those anticipated in such forward-looking statements. The forward-looking statements in this MD&A speak only as of the date of this MD&A or as of the date specified in such statement.
The following table outlines certain significant forward-looking statements contained in this MD&A and provides the material assumptions used to develop such statements and material risk factors that could cause actual results to differ materially from the forward-looking statements.
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Forward-Looking Statements |
Assumptions |
Risk Factors |
Ability to meet working capital needs for fiscal 2022 |
Operating and exploration activities and associated costs will be consistent with our current expectations. Capital markets and financing opportunities are favourable to Xtra-Gold. Sale of any investments, if warranted, on acceptable terms. Xtra-Gold continues as a going concern. |
Changes in the capital markets impacting availability and timing of future financings on acceptable terms. Increases in costs, environmental compliance and changes in environmental, other local legislation and regulation. Adjustments to currently proposed operating and exploration activities. Price volatility of gold and other commodities impacting sentiment for investment in the resource markets. |
Plans, costs, timing and capital for future exploration and development of Xtra-Gold's properties including the potential impact of complying with existing and proposed laws and regulations |
Availability of financing for our exploration and development activities. Actual results of our exploration, resource goals, metallurgical testing, economic studies and development activities will be favourable. Operating, exploration and development costs will be consistent with our expectations. Ability to retain and attract skilled staff.
Economic, political and industry market conditions will be favourable. |
Changes in the capital markets impacting availability of future financings. Uncertainties involved in interpreting geological data and confirming title to acquired properties. Possibility of future exploration results, metallurgical test work and economic studies will not be consistent with our expectations. Increases in costs, environmental compliance and changes in environmental, local legislation and regulation and political and economic climate. Price volatility of gold and other commodities impacting the economics of our projects. |
Management's outlook regarding future trends |
Availability of financing. Actual results of our exploration, resource goals, metallurgical testing, economic studies and development activities will be favourable. Prices for gold and other commodities will be favourable to Xtra-Gold. Government regulation in Ghana will support development of any deposit. |
Price volatility of gold and other commodities impacting the economics of our projects and appetite for investing in junior gold exploration equities. Possibility of future exploration results, metallurgical test work, economic studies and development activities will not be consistent with our expectations. Increases in costs, environmental compliance and changes in economic, political and industry market climate. |
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Forward-Looking Statements |
Assumptions |
Risk Factors |
Covid-19 |
Actual results of our exploration, gold recovery and continuity of operations. |
The first cases of Covid-19 were detected much later in Ghana than other parts of the world, and Government action has limited the incidence of transmission. The Company continues to monitor the potential effects on its operations and is implementing protocol to hopefully help in minimize its impact. However, investors are cautioned this is an evolving issue, and that there is not guarantee the Company's protocols will be effective. Increased costs and reduced ability to access the properties could affect exploration results and gold recovery results. |
Inherent in forward-looking statements are risks, uncertainties and other factors beyond Xtra-Gold's ability to predict or control. Please also make reference to those risk factors listed in the "Risk Factors" section above. Readers are cautioned that the above chart is not exhaustive of the factors that may affect the forward-looking statements, and that the underlying assumptions may prove to be incorrect. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this MD&A.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause Xtra-Gold's actual results, performance or achievements to be materially different from any of its future results, performance or achievements expressed or implied by forward-looking statements. All forward-looking statements herein are qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward-looking statements. Our company undertakes no obligation to update publicly or otherwise revise any forward-looking statements whether as a result of new information or future events or otherwise, except as may be required by law. If our company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements, unless required by law.
Dated: March 26, 2022