Burkina Faso emerges as a key African mining state
Michael Schwartz takes a look at several key mining projects in Burkina Faso.
Africa hosts some of the world's most ambitious mining operations. Burkina Faso is no exception, and its importance was recently demonstrated when the influential MineAfrica conference welcomed as a keynote speaker Burkina Faso’s Minister of Energy, Mines and Quarries.
Burkina Faso is a fast-growing African gold producer, having witnessed the commission of several new gold mines in the last decade. In addition to its abundant geological resources, Burkina Faso’s Government is highly sympathetic to both foreign investment and mining.
The country’s geological wealth partly lies in the Greenstone Belts continuing north from Ghana and Côte d'Ivoire with gold mainly mined from Proterozoic rocks and alluvial/eluvial deposits. Burkina Faso has experienced 15 years of modern exploration – a very brief period compared with Ghana, but of crucial significance to its economy.
Burkina Faso’s second-largest gold producer, Russian-headquartered Nordgold, has operated in the country since 2007 with a strong working relationship with the Government. Olga Ulyeva, Nordgold’s Head of Media, told Materials World, ‘The country’s authorities are open to foreign investors as they understand the positive impact of our activities for the economy and for the overall wellbeing of the Burkina Faso population. Nordgold has invested more than US$800 million in Burkina Faso since 2007, when it started there.’
Nordgold has just launched its Bouly gold heap leach operation, in turn located 5km from its existing Bissa mine (both are greenfield sites approximately 100km from capital Ougadougou). Exploration has revealed mineral resources at Bouly of 3.5Moz at 0.57g/t and ore reserves of 1.3Moz at 0.56g/t. Bouly is a single open pit where ore is crushed with primary jaw and secondary cone crushers, followed by agglomeration before stacking on HDPE-lined pads for irrigation with sodium cyanide leach solution.
Bouly was completed in its intended 13 months for US$140 million (US$15 million under budget) with internal rate of return at 40% and US$1,250/oz gold. Payback period will be 30 months if a US$1,250/oz price is maintained. In its 10-year life of mine, Bouly will produce 120,000oz of Nordgold’s targeted annual production of 400,000oz and employ 350 people.
Nordgold’s first mine
Taparko, two hours by road and 200km northeast of Ougadougou, was Burkina Faso’s first gold mine, with the initial gold poured in late 2007 before acquisition by Nordgold in 2008. The mine is operated by Somita SA, a company 90% owned by Nordgold’s subsidiary High River Gold, the other 10% belonging to the Government of Burkina Faso.
Nordgold carries out mining and milling from Taparko at a satellite site, Bouroum, around 50km from Taparko, where 2015 gold production decreased to 83,200oz because of significantly higher capitalised stripping related to an extension of Taparko.
Ulyeva notes that, ‘Nordgold is capable of mining economic minerals both on the surface and underground. In Burkina Faso, our mines are currently focused on mining oxide ores from the surface to a depth of less than 200m. In fact, there are only a few underground mines in Burkina Faso, primarily because near-surface oxide ores are more effective to mine by open pit mining and to process using conventional extraction techniques.’ The gold itself, she adds, ‘is sold to banks and refineries, not to the markets directly.’
Essakane is the sole mine owned in Burkina Faso by IAMGOLD, a mid-tier mining company also operating gold mines in Canada, Suriname and Mali, and has exploration projects in these countries as well as Senegal, Nicaragua and several South American countries. IAMGOLD is TSX- and NYSE-listed, and in 2016 is expected to yield 365–375,000oz of gold at Essakane alone and 770–800,000oz in total. It has produced gold commercially at Essakane since 2010. Recognising its potential, the company expanded its plant to accommodate a major rise in hard rock treatment.
The open-pit Essakane mine lies in north-eastern Burkina Faso, 330km from Ougadougou. Its permit area measures 100km2, surrounded by seven exploration permits totalling 1,093km2. Geologically, it is an orogenic gold deposit within the Paleoproterozoic Gorouol greenstone belt. The strike length is 2,500m and open to the north, although economic mineralisation follows a fold plunge to become progressively deeper. Mineralisation exists to at least 270m vertically below surface but the full depth has not been tested.
Efficient and economic energy policies are pursued at Essakane. A hybrid solar/thermal power plant is IAMGOLD’s intention and negotiations are in hand to have a 15MW solar project built as an adjunct to the existing 57MW thermal power plant. In addition, IAMGOLD is looking towards 15% of power generation from renewables in the next two-to-three years.
Bob Tait, VP investor relations, informed Materials World that, ‘IAMGOLD sells its unrefined gold doré bars to specific gold refineries with whom we have contracts. For the Essakane Mine in Burkina Faso, the primary refinery we use is in Europe.’ Tait also outlined IAMGOLD’s status in Burkina Faso, ‘The Burkinabé Government is very supportive of our Essakane Mine. They are, in fact, a 10% owner. In addition, they collect revenue through taxes and royalties. They are very appreciative of the investment we have made in their country, the supplies and services we purchase locally, the jobs we have created and the contributions we make to community programmes, such as Project Triangle to improve access to potable water and sanitation in the region, youth training programmes in various parts of the country and small business opportunities we support in the communities adjacent to the mine operation. As a result of this, IAMGOLD has a very positive reputation in the country and has been cited by government officials as a good example of responsible mining.’
One company with a growing footprint in West Africa is Teranga Gold, active in Burkina Faso, Senegal and Côte d’Ivoire. Its presence in Burkina Faso is very recent, dating back to October 2016, when it acquired Gryphon Minerals and thereby the Banfora project with proven and probable gold reserves of around 1Moz. Teranga's IR group said, ‘At Teranga’s Banfora gold project, the mineralisation often starts from the surface and has been drilled down to on average 100m with a low percentage deeper than 150m. The depth of oxidation varies.’
Banfora – 90% owned by Teranga Gold, 10% by the Burkina Faso Government – is undergoing an aggressive exploration programme. Paul Chawrun, COO of Teranga Gold, identifies three growth objectives – namely, to confirm, increase and restart exploration at two other projects, Golden Hill and Gourma, and to update the company’s feasibility study at end of Q2 2017. Construction work is expected to start in the second half of 2017 with first gold pour expected to take place in 2019.
Within the Loumana Birimian greenstone belt, Banfora lies 450km by road from Ougadougou and is planned to be an open pit site close to milling facilities. The potential exists to add reserves through several exploration targets and this is currently being confirmed by 200m and 400m strike extensions at the Nogbele deposit, among others within Banfora.
The tax regime
Nordgold stresses its role in the Burkina Faso economy, contributing US$690 million from 2009–2015. In 2015 alone, Nordgold paid 5% of Burkina Faso’s entire income tax. Over life of mine, Bouly will pay US$120 million in tax and royalties. The company also hires and promotes local citizens in all domestic operations. At the time of press, Nordgold employs 1,400 people in all such operations – only 5% are expats.
Ulyeva comments on Nordgold’s taxes, ‘The industry has been through a period of significant challenge over the past four years, as commodity prices generally have been under considerable pressure. As a result, we believe budgets allocated to the construction of new projects are still limited and countries that wish to continue to attract investment need to make sure that their tax and investment regimes remain competitive. This applies equally to Burkina Faso.’
But Tait believes the new tax regime could be a good thing, ‘The fiscal terms are fair, allowing the company to earn a return on its investment and the country to receive fair value for its mineral resource in the form of taxes and royalties.’ Teranga also agrees, ‘Overall the tax regime is a consistently applied stable regime. It's not considered much more punitive than say Canadian tax regulations for miners. Unlike some places, royalties in Burkina are tied to production and reserves totals – for example – the Government would recieve royalties for ounces actually produced. Their mining convention is essentially a non-negotiable mining convention, a template that is easily applied to all companies […] I know there was some artisanal activity but they have recently peacefully transitioned off the land package.’
IAMGOLD gave differing views from Nordgold and Teranga Gold on artisanal mining. Tait replied, ‘There are artisanal miners operating in the same region as the Essakane mine. While there has been negotiation and some relocation necessary with the artisanal miners whenever we have extended our mining operation, such as at Essakane’s Falagountou satellite pit, they and the company co-exist without interaction in the region.’
Nordgold was more critical, ‘With support from the Burkina Faso authorities, these activities were stopped peacefully and we were able to start mining operations. Artisanal mining is highly dangerous for those undertaking it, and is a major impediment to the safe development of large scale mining operations which in turn generate significant revenues for the host government,’ said Ulyeva.
Teranga Gold shared its final words, ‘The Government has been very supportive of the mining industry and, as a result, Burkina Faso has emerged as the fourth largest gold producer in Africa. The Goverment's responsiveness and support relating to our acquisition of Gryphon Minerals clearly reflects their commitment to the mining industry and demonstrates why more mines have been developed in Burkina Faso in the last 10 years than in any other country in Africa.’