Senegal maintains its place among African miners
Michael Schwartz discovers how vast mineral resources and stable conditions are driving Senegal’s rise to prominence in African mining.
Senegal is located on the extreme west of Africa where it is bordered by other emerging mining countries such as Mauritania and Mali. In recent years, a combination of stable politics and highly attractive geology has helped create a thriving mining sector in the region. Key to Senegal’s gold wealth are the Birimian deposits. These resources are a driving force behind the emergence of West Africa as a gold-mining region. In addition, the Birimian rocks are drained by rivers, which hold alluvial gold deposits.
Teranga Gold’s significance within Senegal is characterised by the fact that it operates the only industrial gold mine and mill in the country. Teranga went public in 2010 on two exchanges for mining companies – TSX and ASX. Since its initial public offering, Teranga has increased its reserve base by 80%, while producing more than 1.2Moz of gold at the company’s flagship asset, the Sabodala gold mine. Situated on the West African Birimian gold belt, Sabodala is host to several open pits within short trucking distance of its central processing plant. The area, which only opened for mining after Senegal passed its mining code in 2003, has witnessed the discovery of more than 10Moz of gold over the last 10 years.
In addition to increasing reserves and production, Teranga has achieved many major accomplishments at Sabodala, such as integrating a complex acquisition by doubling its reserve base and annual throughput with a plant expansion and, most recently, completing a mill optimisation project to further increase throughput and reduce processing costs. The company is now hoping to replicate its Senegal success in Burkina Faso, where it is advancing development of a new project.
To be successful in countries such as Senegal, a company must earn the trust of its hosts and deliver on a shared vision of success with local communities to maximise long-term sustainable value for the country and its people. Since commencing business in Senegal, Teranga has made it a priority to set the benchmark for responsible mining in West Africa. The company has taken a transparent, consultative and collaborative approach with Government and communities to develop initiatives that will make long lasting contributions in the priority areas of food security, youth education and training, and sustainable economic growth. In addition to providing a safe workplace, Teranga invests in infrastructure, medical facilities, training and schools. The company has received several awards for its corporate social responsibility efforts.
Mineral deposit operations
TiZir Limited is a zircon and titanium business that owns the Grande Côte Operations (GCO) in Senegal and a titanium and iron ilmenite upgrading facility in Norway. Ownership is 50/50 between Mineral Deposits, Australia and Eramet, France, the former specialising for more than 60 years in mineral sands mining on the eastern Australian seaboard – the latter in metals production, notably manganese, nickel and high-performance special steels. Mineral Deposits brought GCO to construction before moving it to TiZir in 2011.
GCO has a 25-year-plus mine-life set to generate 6% of global zircon and 5% of titanium feedstock. Located 50km north-east of Dakar, it stretches more than 10km along Senegal’s coastline – dredging and processing are relatively easy as the coastal dunes contain no overburden, minor vegetation, free-flowing sands and no slimes. The area specialises in the mining of heavy mineral sands, with high concentrations of zircon and ilmenite. Annual extraction totals are 85,000t of zircon, 15,000t of rutile and leucoxene and 570,000t of ilmenite. Senegal is one of the world’s largest producers of these minerals. The mine can be powered by heavy and light fuel oil (as at present), or natural gas or diesel, giving the security of continuous power supply.
From explorer to producer
Bassari Resources is an ASX-listed gold company transitioning from explorer to producer. Its focus lies in bringing its 1Moz Makabingui Gold Project to an average annual production of 50,000oz. The company recently announced a maiden ore reserve of 158,000oz in 860,000t at 5.7g/t gold. Working on US$1,200/oz gold price, net direct cash costs (C1) are US$683/oz, capital cost is US$12m and internal rate of return (IRR) is 404%. Bassari reports that capital costs are low at Makabingui because of Bassari’s own infrastructure and equipment. An existing gravity plant will be upgraded to treat hard rock and a dam will supply water to the processing plant where metallurgical recoveries of 95% are confidently expected. The Senegal Government has granted a mining production permit and a strategic alliance announced with Chinese sourcing and procurement firm, Vanture International, for processing equipment.
Toro Gold Limited focuses its exploration and development on both the Birimian and Archean geological terrains. It is establishing a multi-million ounce portfolio of gold projects across several jurisdictions including Côte d’Ivoire and Gabon – investors will be offered proven and emerging gold provinces.
The flagship asset is Petowal (formerly the Mako Project), a 90km2 exploitation permit in eastern Senegal. Toro Gold’s 2015 feasibility study indicates a 1.4Moz resource including a 1Moz reserve at an average 2.25g/t. Development capex runs to US$157 million including both contingency (US$9 million) and working capital (US$4.5 million). Over life-of-mine the average all-in sustaining cost is US$703/oz and, on 100% ownership and assuming US$1,150/oz gold price, a net present value 5% of US$152 million and an IRR of 30%.
Mining at Petowal will be open-pit with moderate strip ratios and an initial eight-year life likely to be extended through identified exploration targets. Petowal is supported by a 1.8Mt/y carbon-in-leach processing facility with a life-of-mine 89.6% recovery rate, producing around 130,000oz/y over the first six years of production and housing a lined tailings management facility, water storage facility and a 14MW diesel power station. Mining will be completed by contract with first gold expected in early 2018.
Materials World asked all four companies to comment on their experiences of mining in Senegal. Respondents were Richard Young (RY) President and CEO of Teranga Gold, Jean-Michel Fourcade (JMF), CEO of TiZir, Alex MacKenzie (AM), Executive Chairman of Bassari Resources and Martin Horgan (MH), CEO of Toro Gold.
How are the companies commited to corporate social responsibility (CSR)?
RY: We are committed to the local community through initiatives, such as community market gardens, livestock health programmes, improved agricultural farming techniques, supporting schools through bursaries, donating supplies and building school infrastructures, as well as programmes that empower local procurement and develop SMEs. Teranga has received several awards in recognition of its CSR efforts in Senegal, including, most recently, the 2017 Prospectors and Developers Association of Canada Environmental and Social Responsibility Award.
JMF: GCO promotes corporate good governance, providing a safe workplace, while managing the environmental impact of its operations and developing the socio-economic aspects of its host communities.
AM: We are active on social work and during exploration have spent more than US$1.2 million on schools, medical clinics, ambulance devices and water boreholes.
MH: Toro Gold underlined its commitment to meeting both national and international standards of good practice in social development, environmental protection and health, safety and security. At Petowal infrastructure seeks to minimise the mining footprint and to use local topography to ensure a layout sympathetic to local communities and the surrounding environment. Proximity to the Niokolo Koba National Park and the Gambia River have been respected – a detailed biodiversity action plan was developed by Toro Gold to mitigate project-related impacts and to achieve a no net loss of biodiversity. We believe that this action plan will form a model for conservation management in Senegal.
Do you have any problems with artisanal miners?
None of the companies are currently experiencing problems with artisanal miners. Teranga Gold explained that the Senegalese government has established artisanal mining corridors and the registration of artisanal miners by issuing mining cards. This system aims to address problems commonly associated with illegal artisanal mining, such as health, safety, uncontrolled use of toxic substances and child labour.
Bassari further outlined the problem by pointing out that a year ago there were around ‘30,000 illegal miners from all over West Africa inundating our gold exploration permits. However, they were poisoning the water table with cyanide and mercury as well as causing many deaths due to collapsed mine tunnels.’
How do you find the taxation and royalty system in Senegal?
All four companies expressed satisfaction with Senegal’s tax regime. Teranga Gold describes mining as ‘a key pillar of economic growth in Senegal.’ Senegal’s Government modernised its mining code in 2003 and again in November 2016 to attract and promote mineral investment and development. In 2013, the Government signed a global agreement with Teranga Gold to establish a predictable and stable fiscal operating environment for Teranga Gold’s future investment. Following a tax holiday that ended in May 2015, Teranga now pays 25% income tax plus 5% royalties on sales. In February 2016, Teranga Gold was granted an exemption from the payment and collection of refundable VAT until 2022.
GCO also benefited from major exonerations from tax as well as 5% royalties, a 10% production share and no customs duties or VAT. Bassari and Toro Gold both described the tax and royalty regime as fair and, for Toro Gold, Hogan said it was ‘Competitive when benchmarked against other African jurisdictions.’
How accessible are your deposits in Senegal?
RY: Sabodala is approximately 650km southeast of Dakar and can be accessed from there by sealed road or public airstrip. On the mine licence, the majority of deposits currently being mined are within a short trucking distance of about 15km from the central mill, except for our high-grade Gora deposit, approximately 25km from the mill and easily accessible by haul road on flat lying terrain.
JMF: Our deposits are easily accessible from any part of Senegal by road in good conditions, especially from Dakar, Saint Louis in the north and from central Senegal via Mekhe, some 25km from GCO. There is also rail access with the new 22km line built and owned by GCO, which also owns two locomotives and 52 wagons. GCO can transport 2,400t/d 140km from the mine to Dakar port. By air, there are two helipads – the closest airstrip is 60km from Thies, accessible only by small planes and owned by the Senegalese army.
AM: Our permits are 800km inland and reasonable access is via road and charter plane to Kedougou or Sabodala. Toro Gold’s Petowal Project is situated in eastern Senegal near several other gold mining operations and development projects (around 30km from Teranga’s Sabodala). The Dakar-Bamako Millennium Highway runs through the permit, while the Kedougou metaled airstrip is 30 minutes’ drive away from site. From Dakar, the project is approximately 10 hours’ drive or a 90-minute flight by chartered plane to Kedougou.
Does the weather affect operations?
While Toro Gold stated that the weather presents no particular problem, Teranga CEO Young explained that, ‘Operating schedule is adjusted during the rainy season (June–October) to accommodate the change in operating conditions and mitigate any impacts. The mine has ample water supply drawn from two dams, which can also be supplemented from water sourced via a pipeline from the Faleme River, though this alternative has yet to be required.’
GCO also reported no issues from the weather based on wind, temperature and rain, but MacKenzie mentioned, ‘A three-month wet season can cause a short interruption to exploration drilling if flooding occurs. During the nine-month dry season mining companies have alternatives – build an existing dam, which we have done, or build a pipeline to either of the nearby Faleme or Gambia rivers.’
Senegal’s vast mineral resources and stable, favourable conditions are the driving forces behind its rise to prominence in African mining.