African Gold has bought 70 per cent of the Konongo Owere gold resource in Ghana for $4 million (€3.3 million), it announced yesterday.

The acquisition covers 125 square kilometres in the Konongo Owere district of the Ashanti Gold Belt. There is also an option to acquire an additional 10 per cent.

The company said an independent report shows the licence area contains a resource in excess of 950,000 ounces of gold at an average grade of 2.30 g/t gold.

Diamond drilling will begin shortly, focusing on converting inferred and indicated ounces to the measured category, it said.

Three other properties in the Ashanti Gold belt are under option to the firm, which has its headquarters in Dublin, and are subject to due diligence.

Canaccord has been appointed nominated advisor and stockbroker to the company.

Mr John Teeling, joint-chair of African Gold said: "This is the beginning of the African Gold development strategy. The Konongo acquisition, together with our assets in Zimbabwe, gives us a gold resource in excess of 1 million ounces."

He added:"We have an active deal flow at present which I am confident will lead to additional acquisitions in the near future."

In a separate announcement, African Gold said Mr Oliver Baring has been appointed joint-chairman.

He will focus on the development strategy of the company. He is executive chairman of First Africa Group, and recently retired as managing director of the corporate finance division of UBS, where he held responsibility for Africa and mining.

Payment for the Konongo deal will be in two stages: $2 million cash plus $1 million in African Gold shares immediately; and $1 million cash paid after 180 days.