new ghana/west africa mining · 2018. 2. 18. · 36 e&mj † september 2010 ghana/west africa...

Ghana/West Africa MiningGhana has become a leading gold producerand several West African nations with considerable mineral wealth are looking toemulate its path.

A REPORT BY GBR FOR E&MJ

2010SEPTEMBER 2010

This report was researched and compiled by Global Business Reports(www.gbreports.com) for Engineering & Mining Journal. Editorial researched andwritten by Oliver Cushing ([email protected]) and Sharon Saylor ([email protected]).

TABLE OF CONTENTSGhana

Ghana’s New Golden Era ........................................................36Ghana’s Gold Scene Today ....................................................36Politics, Taxes and Permits ..................................................42Interview with Hon. Alhaji Collins Dauda ..............................43Modern Gold Mining in Ghana................................................45Emerging Producers and Exploration ..................................47From Prospector to Junior ....................................................48Ghana’s Value Chain ..............................................................49Corporate Social Responsibility ............................................52Illegal Mining..........................................................................52

West AfricaWest Africa Hosts Untapped Mineral Wealth ........................54Burkina Faso: Darling of Africa ............................................54Niger: More Than Yellowcake ................................................56Well-Endowed, Liberia Looks to Rebuild Mining Sector ......57Prospectors Realize Guinea’s Diverse Mineral Wealth ........59

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GHANA/WEST AFRICA MINING

As gold prices continue to climb to newhighs, Ghana has an opportunity to capital-ize upon its long history of mining and posi-tion itself as a mining friendly, low risk des-tination for capital. Ghana has long beenthe choice for service companies lookingfor a regional hub, but as mining takes offacross the region, the country has theopportunity to add value and create highlyskilled jobs throughout the value chain.

Mining, particularly for gold, forms partof the heritage of Ghana. In 1890, localtraders Joseph E. Ellis and Chief Joseph E.Biney negotiated a lease with the King ofthe Ashanti for 25,900 hectares of miningconcessions in the Obuasi district andstarted work on what became the first mod-ern mine on the continent outside of SouthAfrica. Ellis and Biney had purchased aprime parcel of what was later recognizedas one of the world’s greatest orebodies;the Ashanti Gold Belt. Over a century laterthe mine Ellis and Biney founded has pro-duced in excess of 30 million oz, and theman in charge of Obuasi today, Senior VicePresident of Anglo Gold Ashanti Dr. Toby

Bradbury, said: “At current production lev-els the mine has the resources to operatefor another century.”

Ghana’s association with gold datesback well beyond Ellis and Biney. Ghana isthe land of the fabled Ashanti kings, whoseincredible gold jewelery attracted the noticeof Portuguese explorers to the region in the16th century. Such is the enduring signifi-cance of gold to the social, political andeconomic fabric of the country, the found-ing fathers of independent Ghana incorpo-rated gold into the country’s new flag.

“Ghana is by far the most developedmining country in West Africa and we havesome of the most talented and experiencedworkers on the continent,” said AlhajiAbudulai, president, Ghana Chamber ofCommerce, and CEO of consultancy CMEGhana.

Today, the country remains goldfocused and consistently ranks as Africa’ssecond largest producer. Gold representedthe lion’s share of revenue from mining,accounting for $2.84 billion of a total$2.95 billion generated from mining in

Ghana. In the premier league are GoldFields with 30% of production, followed byAngloGold Ashanti with 19% and New-mont with 18%. Behind these sit GoldenStar with 14% and Red Back Mining’sChirano subsidiary at 6%.

The Precious Minerals Marketing Co., agovernment body mandated to purchasesmall scale miners’ production, sold 13%of Ghana’s gold in 2008. Concerning otherminerals, the Ghana Manganese Co., oper-ator of a 100-year-old mine, sold 1 millionmetric tons (mt) generating revenue of$64 million, while its neighbor, GhanaBauxite Co., mined 613,000 mt repre-senting $11 million.

Ghana’s Gold Scene TodayAfter decades under state control, AshantiGold Fields, which owned Obuasi and thesmaller Iduapriem mine, merged withAngloGold to form AngloGold Ashanti.While AngloGold Ashanti is perhaps thecompany most readily associated withGhana, it has been pushed into the No. 2spot by fellow South African company Gold

Gold Fields Tarkwa mine, located in southwestern Ghana, recently completed the construction of a CIL plant that is expected to increase throughput to 1 million tons of ore per monthon a sustainable basis. (Photo courtesy of Gold Fields Ghana Ltd.)

Ghana’s New Golden EraA stable mining climate attracts investments from the majors while a group ofemerging explorers use Ghana as a launch pad to achieve producer status


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Fields. Gold Fields produced 870,000 oz(against AngloGold Ashanti’s 570,000 oz)in 2009 and Obuasi has now been over-taken by Gold Fields’ open-pit, high-vol-ume, low-grade Tarkwa concession whichis now the largest mine in Ghana.

Newmont entered Ghana following itsacquisition of Normandy, and its Ahafo andAkyem deposits have proven to be some ofthe best properties in its portfolio. Ahafo isa highly efficient bulk, low-grade pit which

has become the second largest gold minein Ghana at about 500,000 oz/y.

Despite a tradition of mining datingback a century and playing host to some ofthe world’s largest gold mining companies,Ghana is still not fully understood from ageological perspective and remains farfrom fully explored. “There is an enormousamount of opportunity in Ghana. There isstill a lot of exploration potential,” saidStuart Love, regional manager-West Africa,Coffey Mining.

John Agui, head of the Ghana GeologicalSurvey Department, noted the last widescale survey of the country was conducted inthe 1950s. His department recentlylaunched a new geological mapping of thecountry based on a €12 million EuropeanUnion-funded airborne survey. This shouldincrease understanding of the country’s geol-ogy and draw attention to the large portionsof the East covered by sedimentary rock.

The significance of mining to Ghanacannot be underestimated. Dr. ToniAubynn, head of corporate affairs andsocial development at Gold Fields Ghana,estimates more than 40% of Ghana’sexport earnings are attributable to the sec-tor. Sulemanu Koney, director of researchat the Ghana Chamber of Mines, claims

18% of national tax revenue is paid by themining industry directly, with a substantialfurther amount being contributed by firmsin the value chain that support the sectorand through income tax of employees.

An important addition to the legal min-ing industry is the role of artisanal, or “gal-lamsay” mining in Ghana. The HonorableOhena Kena, chairman of the governmentregulatory body, the Minerals Commission,estimates between 500,000 and 1 millionpeople work in the small scale sector, rep-



Dr. Toni Aubynn, of AngloGold Ashanti, is also head of corpor-ate affairs and social development for Gold Fields Ghana Ltd.Peter Tuner, executive vice president, head of West Africa

operations, Gold Fields.


resenting an incredible 5% to 10% ofGhana’s labor force. The gallamsay issue isnever far from the surface in Ghana andthe country’s management of the problemwill help determine how successful thecountry is at attracting investment from thelarge scale, legal mining companies.

Ghana was the first African nation towin independence from Britain in 1957and has maintained a proud tradition ofstability, peace and (through much of itshistory) democracy since. “Ghana is recog-nized as a stable democracy. The 2008election was very peaceful despite the nar-rowest of margins and this has further builtinvestor confidence in the country,” saidJeffrey Huspeni, regional senior vice presi-dent, African operations, Newmont.

Ghana had a GDP per capita of just$1,500 in 2009, making it one of the 30poorest nations on earth. Despite this,Ghana is often used as an example of goodgovernance and a model from which otherAfrican nations can learn. It is no coinci-dence Barack Obama made the country thefirst African port of call of his presidency.

Huspeni’s sentiments regarding the sta-bility of Ghana are echoed throughout theindustry and there seems to be a widespreadbelief that Ghana is a good place to invest.“The value system of individuals we dealwith in this country is very good and our cli-mate surveys, which we perform annually,clearly highlight this. This is a nation withreally good people, which is a huge advan-tage for us as a company. Mining has beena culture in Ghana for a long time, with avery old chamber of mines, mining institu-tions and universities educating the society



Jeff Huspeni of Newmont Ghana is also the regional senior vice president of African operations.


about the mining industry. The systems, reg-ulations and laws in Ghana work,” said GoldFields’ executive vice president and Head ofWest African Operations Peter Turner.

Politics, Taxes and PermitsGhana’s current mining code was imple-mented in 1992 and falls under the remit

of the recently amalgamated Ministry ofLand, Forestry and Mines, currently theportfolio of Minister Alhaji Collins Dauda.The code is administered by the MineralsCommission, which is a professionallystaffed body intended to act as a “one stopshop” for explorers, miners and other rele-vant parties. Unlike in some other jurisdic-

tions, the granting of environmental per-mits is dealt with by a second body, theEnvironmental Protection Authority.

An explorer will likely only need to dealwith the Minerals Commission up until thepoint when a resource is defined and adevelopment phase is initiated. Under thecode, foreign companies are not required to



Newmont Ghana’s Ahafo mine processing plant at night. (Photo courtesy of Newmont Ghana)


have local partners and this holds true in reallife, unlike in many other emerging markets.

A company wishing to prospect inGhana can either acquire a Reconnais-sance License in a private deal with anexisting holder, or apply for an open con-

cession from the Minerals Commission. “Ifthe Commission sees you are a reputablecompany that can finance what you pro-pose, after a 21-day local consultationperiod, the Commission will recommend tothe Minister that the license is granted,”

said Simon Meadows Smith, SEMSExploration Services.

The Reconnaissance License allows acompany to conduct surface work and lastsfor a period of two years. If the decision istaken to pursue work and undertake sub-

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One of the government’s stated aims when it came to power was

to build the mining services industry in Ghana. How can the min-

ing sector contribute to the creation of skilled, value-adding jobs

in the country?

Increased mining activities due to the high price of gold automati-cally come with increased demand for expert mine support servic-es such as contract drilling, assay laboratories, contract mining andgeological consultancies by mining companies. This motivates boththe mining and mine support service companies to train their work-ers to acquire the requisite skills for their work. The government’saim is to ensure Ghana’s mineral endowment is managed on a sus-tainable, economic, social and environmental basis. The govern-ment has funded minerals related education, training and careerdevelopment for personnel in the Regulatory Agencies and studentsin mining related Universities in Ghana. This provides adequateskills to personnel in the mining industry and enables them to per-form their duties efficiently and effectively.

In 2009, Ghana produced 3 million oz of gold. In spite of thislevel of production, there is no big gold refinery in the country andthe bullion is exported for final refining elsewhere. The governmentis giving priority to the granting of licenses to prospective minesupport services companies which are interested in the openingand active operations of refineries and other value-added jobs.

Ghana has a long tradition of artisanal mining, but small local

miners are now being supplanted by larger scale illegal mining

operations. What is the government doing to combat this?

The government acknowledges illegal mining is a major issue inthe country and is taking appropriate steps to curb it. These stepsinclude the establishment of District Mining Committees chairedby the Chief Executive of Assemblies to assist the District MiningOfficer in carrying out relevant educational programs for the reg-ularization and proper monitoring of their activities. Where theproblems are out of control, district, regional and national secu-rity councils are brought in to handle the situation. A nationalcommittee on illegal mining, comprising members from theNational Security Council and the mining sector agencies hasalso been formed.

More areas are being explored to find suitable areas for smallscale miners. A total area of 300 km2 has been identified for geo-logical investigation. It is expected that a significant percentage ofthese areas would prove viable for parceling to small-scale miners.Under this project about 2,000 small-scale miners are expected tobe employed after viable areas have been made available.

Credit Facilities to organized, licensed and credible SmallScale Mining Associations and Cooperatives for acquisition of min-ing equipment to improve production will continue as an incentivefor miners. Alternative Livelihood Projects (ALPs) are being devel-oped by government along with those of mining companies in min-ing communities to ensure excess labor is employed.

The law states pro-

portions of the royal-

ties paid by a mine

must be spent with-

in the local commu-

nities. Are you confi-

dent the appropriate

amounts are being

paid to local govern-

ments and they are

being spent in the

correct manner?

There are records toshow the appropri-ate amounts fromroyalties are paid tolocal governments.Many local governments had no guidelines on the usage of theshare of the royalty payments and as a result they used the fundsfor district wide projects or other expenditures. Guidelines on theusage of royalties have been developed for government’sapproval. When these guidelines are approved government willensure the local governments follow them to the letter.

What is your final message to readers about investing in Ghana?

Ghana remains an attractive destination for mining and relatedinvestment in Africa for the following reasons: • Political stability: Ghana boasts almost two decades of multi-

party democracy. The country continues to mature in its demo-cratic principles. The result has been major national economic gains over the years.

• Availability of geological data: For the first time in the history of the country, high-resolution airborne data, made up of magnetic and radiometric information, covering the whole country is avail-able. Some areas have also been covered with gravity and elec-tromagnetic surveys, the data of which is also available.

• Favorable investment climate: Ghana operates an attractive legal and fiscal regime that is in line with international best practices. This is evident in the number of major multi-national companies investing in the country

• Improved governance: Government has created a stable regula-tory environment that provides for transparent and even handed treatment of all investors.I look forward to your early participation in the development of

our enormous natural resources in an efficient, economic andenvironmentally-sustainable manner to ensure mining con-tributes to the sustainable development of our people as well asensuring good returns to investors. I extend to you all, a warmwelcome to Ghana: the investment gateway to the West Africasub-region.

Exclusive Interview with Hon. Alhaji Collins Dauda, Ghana’s Minister for Lands and Natural Resources


surface exploration, the company mustthen apply for a Prospecting License, whichcan cover 150 sq km and lasts for twoyears. After the conclusion of the two yearReconnaissance License, there is a facilityfor one year extensions of the permit andthe consensus in the industry seems to bethe Minerals Commission is reasonable inits granting of these. However, at the end ofthe initial term the licensee is required toshed 50% of the concession.

Assuming an economically viableresource is defined, a Mining Permit fromthe commission and approval from theEnvironmental Protection Agency (EPA) arerequired prior to the construction of anymine. Unsurprisingly, this is the greatesthurdle any developer is likely to face and theprocess, though not the code itself, hasdrawn criticism from those who have madeapplications in recent years. The period ittakes to get approval appears to haveincreased. There are a number of reasonswhy this might be the case, including amore questioning approach to mining sincethe election of President Mills’ NDP in

2008 and because an under-resourced EPAand commission are struggling to cope withan ever increasing number of applications.

Ghana has a carefully cultivated reputa-tion for respecting tenure, but the cases oftwo Canadian investors threaten to under-mine this. The first involves VoltaResources, currently developing the 2.65-million-oz-plus Kiaka site in neighboringBurkina Faso, who has been active inGhana since 1994 (through its predecessorcompany Birim Gold Fields). “We havespent more than $25 million in the Bui beltof Ghana and are currently at a stalemateas the EPA feels that a discovery on one ofour properties that leads to a mining oper-ation might affect the structural integrity ofa new dam being built upriver,” said KevinBullock, CEO, Volta. “As our nearest targetis 25 km away we don’t feel this would bethe case and are currently trying to meetwith the EPA to resolve the issue.”

The second case concerns Ghana andNiger focused AMI Resource, who hasdrilled in excess of 20,000 m at its 162-km2 North Ashanti gold project and have

identified 327,000 oz and numerous fur-ther targets along a 15-km anomalouszone. The site sits adjacent to a lake andthe company has adapted its mining pro-posal in line with the findings of an inde-pendent government commissioned reportto ensure tat the lake is not impacted.Despite the alterations, which includeavoiding any activity on the lake side of thewatershed, the company has not been ableto progress their application.

The key problem for both companies isthat the decisions have, after extended peri-ods, yet to be formally confirmed. Thismeans the companies cannot seek compen-sation, as might be expected when policychanges are made after an exploration leaseis granted and executed. In the case of AMI,whose problems relate to a natural ancientwater body, an exploration license shouldnot have been granted if the area was off-limits to miners. Volta and AMI hold exten-sive portfolios in other West African jurisdic-tions and are focused on developing theirnon-Ghanaian assets. Ghana risks a moresystemic diversion of exploration budgets toits rival jurisdictions unless a swift and fareresolution is achieved in both cases.

Ghana’s “take” from mining is in-line,or perhaps slightly below, international andregional norms. The government takes a10% carried interest in any mining projectand the industry seems comfortable withboth the principle of carried interest (per-ceiving it to focus both parties on a com-mon goal) and the level at which it is cur-rently set. Corporate tax is set at 25%, withexemptions for manufacturing companieslocated in the hinterlands.

The mining industry is fighting a battlewith the government over a proposed



AngloGold Ashanti’s Obuasi gold mine, located in the Ashanti region of southern Ghana, has more than 100 years of mining history and has produced more than 30 million oz of gold. (Photo courtesy of AngloGold Ashanti)

Dr. Toby Bradbury, senior vice president, AngloGold Ashanti.


increase in royalties from 3% to 5%. Thegovernment argues it has accepted a rela-tively low level of royalty while gold priceswere depressed, and it is only fair thecountry take its share now that prices arebuoyant. Benjamin Aryee, CEO of theMinerals Commission, pointed out that thecurrent law allowed for royalties to beincreased by up to 12% and the new capwill be half this amount.

Those who have already built operationsare pragmatic on the issue, as Peter Turner,executive vice president and head of WestAfrica for Gold Fields, said: “If fiscalchanges are due, we have to comply andwork with these changes objectively. But itis important not to damage the fiscalregime or model as it increases all costsand we are very sensitive to price. GoldFields has invested about $3 billion inGhana, thus the significance of ensuring areturn on investment.”

The fear is any royalty hike will reducereturn and also create a climate of uncer-tainty as companies realize a crucial part ofthe ‘contract’ between themselves and thegovernment is not a golden as once thought.

Many of the larger mining companieshold confidential tax stabilization agree-ments with the government and it is clearprojects that have the potential to createlarge numbers of jobs and revenue havehistorically been favored. However, the roleof miners in supporting the state shouldnot be understated; Gold Fields is Ghana’snumber one taxpayer and Newmont isnumber two.

Modern Gold Miningin GhanaAs much as 87% of Ghana’s legally soldgold is produced by five companies operat-ing eight mines. The expansion, closure orsuspension of operations at any one mineis therefore likely to have a substantialimpact on the country’s production figuresand indeed its wider economic perform-ance. Currently, Ghana produces some 2.9million oz/y of gold, approximately 4% ofglobal production, making the country thesecond largest producer in Africa and thetenth largest in the world.

The key challenge faced by the miningsector is offsetting low grade ore againstrising costs and managing expectations setby the rapidly rising price of gold. Howcompanies manage their relationships withthe central government, local chiefs andofficials, their workforces and the commu-nities in which they operate represents at




least as much of a challenge as any engi-neering problem presented by Ghana’sdiverse orebodies.

The trend in Ghana over recent yearshas been to focus on low grade, surfaceoperations where volume and cost man-agement are the key to success. This trendis largely a reflection of the country’s geol-ogy, but also demonstrates that mininghouses, who find it ever more difficult togain permission for open-pits in Westernjurisdictions, are drawn to countries suchas Ghana that have a more excepting atti-tude to open cast mining.

Tarkwa is Ghana’s largest mine interms of current production. This mine iscentered around an old state-owned sub-surface operation, but the current owner,Gold Fields, closed the shafts and hasinstead turned its attention to building a

high volume, low grade operation.“Ghana has been a major contributor toprofit growth, notably due to cost of pro-duction,” said Toni Aubynn, head of cor-porate affairs and social development,Gold Fields Ghana. “The grade that weoperate with in Ghana is quite low (1.2-1.5 g/mt)... you have to be meticulous onhow you manage the mine to alleviateunnecessary costs and avoid diluting yourprofitability. There is also a huge employ-ment of technology to keep costs low[$521/oz cash cost in 2009] and mar-gins acceptable.”

Gold Fields continue to focus on build-ing output, improving efficiencies andincreasing mine life at Tarkwa. “The com-pany has invested more than $1 billionsince commencing operations,” saidAubynn.

Gold Fields has been focused on bring-ing a new CIL plant into operation atTarkwa. After teething problems in 2009,the plant is now up and running and hasincreased recovery rates and volume sub-stantially. The CIL plant, which has a 90%recovery rate, is running alongside twoexisting heap leaches (which ensure recov-ery of 60%). “Investment at Tarkwa is anintegral part of how Gold Fields canachieve its vision of producing 1 millionoz/y (in West Africa) within the next fiveyears,” said Turner.

Newmont’s Ahafo mine is only fouryears old. “It already produces about 10%of our global gold production [and repre-sents] an important slice of our revenue,”said Huspeni.

Newmont, consistently ranked as theworld’s largest or second largest gold min-ing company, views Ghana as a major driv-er of growth in the medium term. “Ghanais also a place where Newmont can grow[as it holds] about 25% of our globalreserves,” said Huspeni.

In addition to the Akyem advancedstage project, where Newmont hopes tobuild a second 500,000-oz/y mine, thecompany is evaluating two projects atAhafo that have the potential to increaseproduction levels and change the footprintand the nature of the mine substantially.

“Ahafo North is a series of seven oreight individual deposits 30- to 40-km tothe north of the Ahafo mine. This area hasabout 5 million oz of combined reservesand we are working on optimizing thisseries of projects,” said Huspeni.

The company has a good hold on thedeposits from a geological perspective andwould process the ore at its existing facili-ties on the core site offering a neat and lowcapex way to increase production. “Thechallenges we face are making sure weunderstand the community impact, thecosts of land access and working on somere-engineering,” said Huspeni, reflectingon some of the social issues that present amajor challenge to mine developers acrossthe country.

In the core Subika pit Newmont hasstarted on a decline. The decline will sup-plement lower grade ore being extractedfrom the current open-pit mine with highergrade ore extracted from deeper depositsand will help Newmont optimize the ore itfeeds through Ahafo’s CIL plant.

Obuasi, the mine that started it all,enjoys a special place in the heart of thenation and this, combined with legacy



NADEf—Representatives of Newmont Ghana Gold Ltd. and leaders of its Ahafo mine host communities signing the contractu-al Ahafo Social Responsibility Agreements on Employment, Foundation and Relationship. (Photo courtesy of Newmont Ghana)


issues associated with a century’s worth ofmining, exacerbated by underinvestmentwhile under state control, means the prop-erty is every bit as challenging as it isappealing.

“Obuasi is still a world class resource[even] after more than 100 years,” said Dr.Toby Bradbury, AngloGold Ashanti’s newlyappointed head of Ghana Operations. “Ourkey competitive advantage in Ghana is thehigh grade of the Obuasi deposit. To takeadvantage of this ore body and turn it intoa world class mine, AngloGold Ashanti willfocus on its current operations to continu-ally improve its efficiencies.”

Its strategy includes an extensiveinvestment program and substantialchanges to working practices and miningtechniques. The decision has been madeto move from a transverse to a longitudinalsystem across much of the mine. “The lon-gitudinal approach will have the positiveimpact of reducing the amount of wastedevelopment we have to undertake,” saidFrederick Attakumah, general manager-engineering, Obuasi.

The company has placed great empha-sis on improving the working conditions ofGhana’s largest mine workforce. Anglo-

Gold Ashanti recently installed industrialwashing machines so employees no longerhave to wash their uniforms and, at greatcost, chillers to cool this deep mine. Thecompany is in the process of moving froman 8-hr shift system to a 12-hr systemwhich will reduce blasting down time andthe amount of time workers have to spendtravelling from pit heads to the work faces.

Gold Fields’ second mine, Damang,produced some 200,000 oz in 2009, rep-resenting a small but significant contribu-tion the country’s output. Damang demon-strates that the major mining companiescan operate smaller operations profitably inWest Africa and goes against the doctrinethat the majors are only interested in +5-million-oz deposits in the region.

AngloGold Ashanti’s second mine,Iduapriem, lies contiguous to Gold Fields’Tarkwa concession in the West of Ghana.Iduapriem, an open-pit operation, producesore at 1.76 g/mt to turn out 200,000 oz in2008 with extraction facilities focusedaround a carbon-in-pulp (CIP) plant.

In the second tier of production comeAmerican Golden Star which produced410,000 oz in 2009 from its Bogoso/Prestea and Wassa mines and Canadian

Red Back’s 183,000 oz/y Chirano mine.For both companies, Ghana is the bedrockof operations; Golden Star’s reputation wasbuilt upon turning around Bogoso andWassa, and today they remain its only oper-ating mines.

Emerging Producers and ExplorationIn addition to the brownfield growth,Ghana has a healthy pipeline of new pro-jects in the advanced stages of planning ordevelopment, and an extremely activeexploration sector. Ghana’s output lookslikely to grow substantially over the nextfive years from its current 2.9 million oz/y.All eight operating mines have relativelylong projected lives and, there are sub-stantial options for growth. In addition tobrownfield growth, three new mines lookset to change the landscape, adding outputof nearly 1 million oz/y within five years.Australia-based Adamus Resources andPerseus Mining aim to bring their minesinto operation during the first quarter of2011, adding 330,000 oz/y to the coun-try’s output. Newmont also has a mininglicense and EPA approval for its secondmega pit, Akyem, and intends to make a




development decision in the second half of2010. Akyem could add as much as550,000 oz/y to Ghana’s output.

Perseus Mining chose to focus ondeveloping an old mine rather than godown the pure exploration route for thecompany’s first project. The project has,however, been as much, if not more, aboutredefining and extending the resource baseas it has about designing a new mine. “In2006, Perseus conducted a deal to acquirethe Ayanfuri project from Ashanti Gold,”said Kevin Thompson, exploration manag-er, Perseus. “The initial six month due dili-gence entailed drilling to confirm that goldpersisted to depth below the old mined outoxide pits at Ayanfuri. We started off slow-ly and then became considerably moreaggressive throughout 2007 and 2008,driven by very encouraging results andinvestor interest.”

In 2008, Perseus drilled an impressive170,000 m at Ayanfuri and its secondTengrela project in Ivory Coast. “This year[2010] will be an even bigger year ofdrilling for us,” said Thompson.

Perseus is the first of a spate of com-panies who are using Ghana as the launchpad to make the step up from explorer toproducer status. “Perseus has grown acompany resource base shy of 1 million ozto more than 7 million oz. We expect to seethe Ayanfuri project produce 200,000 oz/yto 300,000 oz/y for the next 15 years orso,” said Thompson.

The Perseus story illustrates that Ghanais not just the domain of the powerfulmultinational mining houses and that thecountry has the environment required forjuniors to succeed.

From Prospector to JuniorAt a similar stage to Perseus is fellowAustralian junior Adamus Resources. Thecompany is in the final stages of develop-ing its 1.1 million oz fully-permitted green-field Nzema mine. The company secured amining lease and EPA approval in 2008and moved rapidly to raise capital anddevelop the property. The Nzema conces-sion is located in a well populated area, incommon with most of Ghana’s gold belts,and securing a social license was as impor-tant to building the mine as any of the cen-tral government permits.

“Adamus has agreements with all of thesurrounding tribes, the community hasembraced our project and we are having apositive impact on seven surrounding com-munities. They have given us great sup-

port, this has endorsed Adamus in Ghana,”said Mark Connelly, COO, Adamus.

“Once we decided to mine, we built600 structures in four months to resettlethe resident population,” said Connelly,who, at the peak of construction, employed2,000 people on the site.

Adamus has focused on developing amine to create cash flow and transform thestock from prospector to junior miner. “It isimportant and crucial to have an asset thatis real and not just great ideas,” saidConnelly.

A common theme among explorers whohit pay dirt (and chose to develop in house)is the stock is very much viewed in termsof the asset under development and capi-tal markets neglect the upside potential ofthe company’s remaining exploration port-folio. The mine at Nzema is only for 150-km2 of the total 650-km2 package. Thecompany has yet to explore 400-km2 of thehighly prospective property, to say nothingof further concessions in the Ivory Coast.

Following rapidly behind the likes ofAdamus and Perseus are a group ofCanadian and Australian juniors bent ondefining, and in some cases developing,viable gold reserves in Ghana. PMI Gold isat the advanced stages of exploration, hav-ing chosen to follow a similar route toPerseus. President Douglas MacQuarriehas been acquiring concessions in Ghanasince 1993. “By 2003, I had acquiredenough property to make a deal with PMI[of which he subsequently became presi-dent]. In 2006, we took over the Obotanproject and, as the price of gold began tocreep up, it made it viable to start extract-ing the lower grade reserves. In 2007, weacquired the former Kubi mine fromNevsun Resources.”

PMI’s strategy has been to acquireproperties which the management arefamiliar with, but have been misunder-stood or ignored by the wider market. PMI’sObotan and Kubi concessions had bothbeen worked, but lacked modern resourceestimates. As well as pursuing the drillingprograms that are a junior’s bread and but-ter, PMI had focused on establishing com-pliant resource estimates at the old work-ings. The company currently has an NI43-101 indicated resource of 604,000 oz atKubi and 241,900 oz at Obotan. However,MacQuarrie estimates the company willdouble its compliant resource base in thenear future. PMI are targeting near termproduction. “On completion of financing,we expect that a full mine mill complex




can be completed at Kubi for circa $50million—with a 12- to 16-month time toproduction,” said MacQuarrie.

The intention is to produce 60,000 oz/yat Kubi, while development across thecompany’s portfolio leads MacQuarrie toaim for. “Production up to circa 150,000oz/y of gold in five years time.”

Next door to Obotan is Ghana andTanzania focused Midland Mineral’sKaniago concession. This 50-km2 highlyprospective property is the company’s sec-ond Ghanaian asset with attention verymuch focused on developing it and theadjacent Sian-Kwahu Praso concession.

Midlands Minerals acquired the Sianconcession from a troubled Ghanaian-Chinese consortium in 2006. By combin-ing it with their adjacent Kwahu Prasoproperty they neatly avoided the rigmaroleof securing licenses and EPA approval.“We reached an agreement through whichMidlands acquired the 50-km2 property,which was fully permitted, had a 30 yearmining lease and the entire infrastructurein place, and a 500 tons per day CIL plantwhich can be expanded. The Sian goldproject has everything,” said Kim Harris,CEO, Midland Minerals.

At Sian, Midlands inherited about 2million tons of low grade ore left behind bythe previous owners, and have a NI43-101compliant proven reserve of 400,000 oz.“Our priority now is to increase the ounces.We have 20,000 m of drilling planned forand we are about 30% into that right now,”said Harris in mid-2010.

Harris hopes that the nine monthdrilling program will increase the reserve to1 million oz with at least 30% of newresources in the measured category and toexpand the deposit by demonstrating a 16-km strike length.

Ghana’s Value ChainGhana is the obvious choice for any servicecompany looking for a West African base.“Ghana has had a gold mining industry for100 years or more. We can deploy ourGhanaian staff to projects in the rest of the



AngloGold Ashanti's Obuasi gold mine at night. (Photo courtesy of AngloGold Ashanti)


West Africa region...(It) is the countrywhich has people with the right skills,”said Peter Jenner, managing director,Knight Piesold Ghana.

Similarly, Michael John Gliddon, SGS’sregional manager for Geochem in West andCentral Africa, said, “Ghana has a verygood reputation. We use Ghana for support

as it is the hub of West Africa, it is stableand it offers expertise.”

The limited size of the mining sector inGhana and in the wider regional marketmeans that major capital purchases arenormally done at the international level,with a mining client head office purchasingdirectly from European or American facto-ries. “A project is normally put togetherfrom multiple Metso facilities in locationssuch as South Africa, Australia, Finland,the United States and France... [Ghana]would normally coordinate the projectswith [these] locations,” said Seth Quaye,regional manager-West Africa, MetsoMinerals. “We come in fully during theinstallation/commissioning stage of suchprojects to support them, and eventuallytake over the client management process.Our main revenue comes from after salesbusiness: supporting the operatingmines—that is 90% of what we do.”

While Ghana may be a developing coun-try, standards across the value chain haveto meet international levels. “Our EIAs areto an international standard. This is what isrequired of our larger clients such asNewmont and AngloGold,” said Chris Fell,regional manager, Golder Associates.

With multinational clients oftenrequired to meet western standards acrosstheir portfolio by governments at home, thechallenge for consultants is to meet theserequirements in an emerging market. Fell’scolleague at Golder Associates, LeadEngineer Laurent Gareau, said, “The paceis different; we have international clientsexpecting the same level of service fromus, so our biggest challenge is trying to findthe balance.”

“Our team has met with the environ-mental protection agency [EPA] and dis-cussed the international standard environ-mental impact assessments,” said Fell.“This helps them to build their capacityand work with the guidelines from thebeginning of the project so that everyone ison the same page.”

There are few misconceptions thatGhana is ready to design or manufacturecomplex machinery at this point in time.There is, however, a recognition that thecounty can benefit from provision of servicein the consultancy, logistics and engineeringsectors. After South Africa, Ghana has themost sophisticated mining education sys-tem on the continent and there is a desire tofurther build human capacity in the country.“There are abundant numbers of technicalpersons available to fill most vacancies



Newmont Ghana’s environment department has in partnership with the local communities developed natural biodegrad-able mats from the shallow-ridged bark of the invasive York tree. These jutes mats are sold to the company for use in ero-sion prevention. (Photo Courtesy of Newmont Ghana)


when they arise. Ghana’s two mining schoolsat Tarkwa and Kumasi produce graduates insignificant numbers that we recruit andtrain. As a consequence of this systemGhanaians are found in nearly every countrythat is going into mining or exploration,especially in Africa,” said ALS Ghana’sHead of Operations Francis Donkor-Baah.

Blasting services provider Maxam is aninternational company doing its bit to help.“Maxam established a program with theTarkwa University of Mines to developGhanaian engineers and give them theopportunity to train and work for Maxamglobally. Once selected, Maxam providesthe potential employees with extensivetraining lasting six months. If the graduatesuccessfully completes training, he or shecan join Maxam to be employed in one ofthe many Maxam operations around theworld,” said Maxam’s Deputy ManagingDirector Johan Kotze.

The Ghanaian skills base has alreadydeveloped significantly in recent years.“We have moved from two thirds of ourworkforce being expatriates to only one-tenth today. We aim to be wholly Ghanaianwithin 10 years,” said Jenner.

The market for both equipment andtechnical services has grown markedly inrecent years. “Since 2003, we have had avery steep growth curve, helped by theprice of gold globally,” said GeorgeApostolopoulos, managing director, AtlasCopco Ghana. “In 2006, our annualturnover in Ghana was $25 million; in2009, our turnover had doubled to $50million. In the mining sector you developclose bonds with your clients. The relation-

ships are built over many years and the loy-alty established makes it very challengingto replace existing service providers.”

Apostolopoulos sees substantial roomfor growth driven by the expanding domes-tic and regional markets as well as theemergent oil and gas sector. “I expect AtlasCopco’s business in Ghana to substantiallyincrease by 2014,” Apostolopoulos said.

With exploration cash flowing into thewider region and countries such as Senegaland Burkina Faso going from unknowns tohosts of major mines in the space of half adecade, Ghanaian-based companies areinevitably looking to expand into the widermarket. “Now that all of Ghana has beenmapped, our internal demand is moreirregular. We are focusing our attention inWest Africa,” said George Kwasi Asiamah,regional manager of Fugro AirborneSurveys, who conducted the recent aerialgeological survey of Ghana. “We now havecontracts in Nigeria, Sierra Leone andLiberia. There is still huge potential forgrowth in the mining and exploration sec-tors here in West Africa.”

When a major international player entersthe country, an occasional but significantevent, it is likely to bring with it trusted sup-pliers and service partners. Commercialexplosives, initiating systems and blastbased services provider Orica MiningServices came to Ghana with Newmont. Ithas since chosen to go the integrated route,locating its manufacturing plant at Ahafo.However, once a major international playersuch as Orica is drawn into a marketthrough a global service alliance, there is anatural desire to grow and leverage invest-ment to build new relationships.

Inevitably growth in demand, at a timewhen revenue was collapsing in other partsof the world due to the economic crisis, haslead to increased competition in WestAfrica. “The market is extremely competi-tive,” said Gliddon. “Recently, Intertek andALS arrived, but the market in Ghana is stillexpanding and great opportunities exist.”

“An increasing number of major playersbelieve Ghana requires direct representa-tion and are opening offices or taking overtheir old partners. Buying out a local com-pany allowed us to start with a strong clientbase and revenue. While Boart Longyear isa relatively new company in Ghana, wehave been able to build on the 15 or 20years of experience that came withSaloboart (its former local partner),” saidBoart Longyear’s West African ZoneManager Salvatore Scervini. “There are a



George Apostolopoulos, general manager, Atlas CopcoGhana Ltd.




lot of opportunities, but we expect newcompetitors in the market and we are pre-pared for this.”

Corporate SocialResponsibilityAcross the mining world it is understoodthat good relationships with neighbors arekey to profitable operations. Nowhere isthis more the case than in Ghana. In devel-oping countries a miner or explorer cannotworry solely about governmental relation-ships; traditional social structures andmore novel methods of interaction mayneed to be considered in order ensure thathost communities benefit from and appre-ciate the value of the work taking placearound them.

The mining company’s CSR programsgo well beyond window dressing in Ghanaand are having a serious impact on thedevelopment of the country. AngloGoldAshanti’s malaria control program is per-haps the most well-known scheme to comeout of Ghana in recent years.

“In 2005, AngloGold Ashanti decidedto implement an integrated malaria pro-gram in the Obuasi district,” Bradburysaid. “The objective was to reduce the inci-

dence of malaria by 50%. Malaria caseshave dropped by some 73% in a commu-nity of around 200,000 people. The pro-gram has been recognized as a highlyeffective and cost efficient solution andAngloGold Ashanti has been awarded a$133 million grant by the Global Fund toimplement and operate our program acrossa much wider area of the country.”

Newmont has established a develop-ment fund and Gold Fields has created a

special foundation to support their localcommunities. The concept is the localcommunity decides on how money is spentthrough a formal process and thus reducethe risk that one group receives, or is per-ceived to have received, a disproportionateallocation. The foundations are fundedthrough a set transparent formula and helpalign both parties in the objective of pro-ducing as much gold, as efficiently as pos-sible, from the relevant mines.

There is concern within the miningindustry that CSR programs are providingservices which should normally be provid-ed by the state. “Mining is adding value tothe system; the only shortfall is that thereis little evidence of this at the local level,”said Jurgen Eijendaal, managing director,Ghana Manganese Co., and president,Ghana Chamber of Mines.

“The law states 10% of royalties paidshould go to traditional rulers in the miningcommunities, to be spent in the areasaffected by mining. We do not see enoughevidence this money is filtering down to thepeople on the ground in our neighbor-hoods. Discretion is due as the industry isimproving communal infrastructures, forexample the roads to Tarkwa. But theindustry should not be expected to replacethe state. The royalties we pay and themoney we contribute voluntarily are intend-ed to provide facilities and services overand above what the government provide,”said Eijendaal.

Illegal MiningIllegal mining is a familiar problem inmany developing markets, but in Ghana ithas reached an epidemic level. Illegal min-ing poses a very real challenge to the devel-opment of the mining sector and the coun-try as a whole. By its very nature, as anunregulated industry the size of the illegalmining sector is impossible to accuratelymeasure, but the Honorable Ohena Kena,chairman of the Minerals Commission,estimates between half and 1 million peo-ple work in small scale mining. With smallscale miners representing such an impor-tant part of the economy and the elec-torate, there appears to be a reticence todeal with the problem of illegal miningamong sections of the political hierarchy.

For the mining sector, illegal minerscan impact on the safe operation of minesand erode, literally, the economic viabilityof concessions. For the explorer, artisanalworkers can act as a useful guide to richveins but, with concessions being invaded

Alhaji Abdulai Nantogma, president, Canadian Chamber ofCommerce.




by thousands of illegal workers at a time,the highest grade ore can be stolen withinmonths. Many of Ghana’s newer mines arelarge volume, low grade concessions wherethe ore is of little interest to artisanal work-ers. But where the grade is high companiesare likely to face regular, organized incur-sions by illegal miners.

The law makes some provision for localvillagers to work their lands using tradi-tional methods, and there persists aromanticized image of farmers diggingsmall pits in the corners of fields to sup-plement their meager incomes. The realityis more often of organized gangs usinglarge earthmovers, mechanized recoveryplants and selling their product throughinternational criminal channels.

Illegal mining is having more than justan economic impact on Ghana. It is caus-ing human tragedy and environmentaldegradation with alarming regularity. InJune 2010, an underground mine in theCentral Region collapsed trapping andkilling more than 70 workers. Unmarked,abandoned workings litter the landscape ofthe main gold belts and rarely a week goesby in Ghana without the local media report-ing on another incidence of a fatal shaftcollapse or of villagers slipping into anddrowning in old pits.

As Bradbury, whose Obuasi concessionhas suffered large scale incursions into theunderground workings in the past, said,“Illegal mining occurs without any account-ability for the future liabilities that areinevitably created...Illegal mining used tobe tolerated by governments on the basisthat it was being conducted by people whoclaimed to have no other livelihood.However, predominantly in Ghana it is nowbeing undertaken by sophisticated opera-tors and it is effectively organized crime.”

Ghana is capitalizing on a century ofmining expertise to become a regional huband a key destination of investment in itsown right. “Although it is not a global leader,Ghana is catching up,” said the head of theregion’s largest investment banking team,Standard Chartered Bank’s Kweku Bedu-Addo (managing director of origination andclient coverage for West Africa).

“There has been a great increase in for-eign investment and I see this trend con-tinuing as we start to pump oil at the endof 2010. There has been huge investmentin the telecoms and transportation sectors.This will make it much easier for investorsto create new businesses here. With thepossibilities the oil and gas and mining

sectors have brought, it is very easy to seethat Ghana is at the forefront of WestAfrican economies,” said Bedu-Addo.

Unlike in younger emerging markets,Ghana has the momentum and the expert-ise to build a service industry to service notonly its own steadily growing domesticmarket, but also the emergent regionalmarket. Value adding is about skills, andGhana has a head start in this field. Withthe commitment of international playersand support from local institutions, theservice sector can carry on growing at arapid place. While Ghana cannot expect tobecome a major exporter of hardware in theforeseeable future, it can become anexporter of expertise. As Orica’s FrancisDecker, a Ghanaian who has worked acrossthe continent, said, “Wherever you go inthe African mining world, you are likely tofind Ghanaians in middle and senior man-agement roles.”

Sanjay Narain, co-founder of rapidlyexpanding camp and mine services com-pany, All Terrain Services (ATS), echoesthat sentiment. “Ghana is going to increas-ingly be the training ground for ATS. We arelooking to hand over management to localstaff. Currently nearly 50% of our senior

management are Ghanaian and we willincrease that proportion.”

ATS is a Ghanaian success story, havingbeen founded in the country, but driving a50% growth rate between 2003 and 2008by winning contracts from as far afield asthe DRC and Liberia.

Ghana’s key mines are the object ofsubstantial investment programs and stillhave long predicted lifetimes. A group ofyoung companies are using Ghana as thelaunch pad to move from explorer to pro-ducer status, having emerged from anextremely active prospecting sector. It isclear Ghana’s gold production will continueto grow substantially in the near and medi-um term and that the country is viewed asan attractive destination for mining capital.To ensure the country continues to enjoyand develop this status, the governmentneeds to achieve reasonable and transpar-ent resolutions to issues such as the royal-ty increase and the administration of per-mits. A failure to do so runs the risk ofdamaging investor confidence in the com-petitive worlds of exploration and miningcapital. For its part, the industry has to con-tinue to strive to ensure that their neighborsbenefit from and understand mining.




West Africa Hosts Untapped Mineral WealthProspectors and miners flock to four countries surrounding Ghana

Ghana might host the region’s oldestmines, the largest proven reserves and themost developed service sector, but explor-ers and early stage miners are rushing tosecure positions in fast emerging neighbor-ing countries. This special report preparedfor E&MJ by GBR profiles the mining envi-ronment in four West African countries:Burkina Faso, Niger, Liberia and Guinea.

Burkina Faso: Darling of AfricaBetween West African’s premium gold coun-tries, Mali and Ghana, lies the “land of hon-est people,” as Burkina Faso is sometimesknown. Home to 15.2 million people,stretching across 274,200 km2, BurkinaFaso hosts some of the richest untapped geo-logical wealth on the African continent. Butdue to a history of political instability, mili-tary coups, extreme drought and unfavorableinvestment legislation, it is not surprisingthat, until recently, both majors and juniorsalike have steered clear of the country.

Times have changed; today BurkinaFaso is perceived by many explorers to be

the “Darling of West Africa.” More than 20years of stability, large investments ininfrastructure and the inception of a newmining act in 2003 have succeeded inbringing the nation to the cusp of expo-nential growth. “In the space of two and ahalf years, six mines have gone into pro-duction and there are several projects likeours with 1.1 million oz,” said PaulAnderson, vice president of exploration,Riverstone Resources, which controls sixexploration projects in the country.

“Burkina Faso has been stable for 25years and the country is very under explored.The mineral endowment is a lot more thanyou see right now. If you look at what’s beendiscovered in Mali and Ghana, it is just amatter of time before something similar isdiscovered in Burkina,” said ColinMcAleenan, president and CEO, ChannelResources. “The promise is there, and theycertainly need the investment.”

Channel Resources was one of the firstCanadian companies to explore in thecountry. “Between 1993 and 2001 we dida lot of basic grassroots exploration…Riverstone Resources and Orezone Gold areworking on properties that were once partof Channel’s portfolio,” said McAleenan.

After a difficult period, the companyregained ownership of the Tanlouka goldproject and, although still at a relativelyearly stage, Channel has identified drill tar-

Avocet Mining plc has determined its Inata project will produce at least 120,000 oz of gold annually over an initial seven-year mine life. (Photo Courtesy of Avocet Mining)




gets with excellentpotential for a new dis-covery. “We’re going inwith an RC rig and willdrill approximately2,500 m in five maintarget areas. Based onthis, we believe there ispotential here to discov-er a significant depositdeserving of a Phase IIdrilling program,” saidMcAleenan.

One of the newercompanies to enter thecountry is Canada’sleading mid-tier goldcompany Iamgold. Itplans to spend $14million on explorationduring 2010. “A yearago Iamgold made the Essakane deal with Orezone which, withouta doubt, has been the best deal done by this company,” said PeterJones, president and CEO, Iamgold. “It is difficult to say what thelifetime of the mine will be, but at present we have 3.8 million ozof proven and probable reserves and found a resource base of 6million oz and climbing. The asset has a very large land packageattached and there is a lot more exploration potential on the site.”

The mine is ahead of schedule and on budget. “We are lookingat production per year in the high 300s (during the initial years ofproduction) with an average life of mine production of 315,000oz/y.” said Jones.

Ron Little, president and CEO, Orezone, despite losing theEssakane asset to Iamgold, is confident in his plans to expand anddevelop the company’s other gold assets in Burkina Faso.“Bomboré, Sega and Bondi collectively have 3.7 million oz. Wemade a very significant discovery with Essakane, but had to makethe decision to sell during the economic downturn. Nevertheless,it is very possible we can repeat this finding,” said Little.

Another recent acquisition was Avocet’s purchase of the Inatamine from Wega in 2009. The company was looking for the oppor-tunity to grow its production base. “We like exploration and hold alarge amount of exploration land, but we wanted to increase out-put in the near term and deliver a demonstrable return to ourshareholders,” said Mike Norris, executive vice president andfinancial director, Avocet. “Developing a mine from scratch takesat least two years.”

Avocet’s Inata mine is one of only five gold mines contributingto Burkina’s production, the others include High River Gold’sTaparko-Boroum complex, Semafo’s Mana mine, Etruscan’s Yougamine, and Cluff Gold’s Kalsaka mine.

Cluff Gold, dual-listed on AIM and TSX, saw its first pour at theKalsaka gold mine in October 2008. Algy Cluff, chairman, CluffGold, said, “We will maintain our active growth strategy of devel-oping our assets into increased gold production. Right nowKalsaka has an annualized production of 60,000 oz and has sig-nificant potential to increase beyond this.”

Also in early stages of development are Volta Resources andGoldrush Resources. Volta Resources already has a portfolio of 26properties in Burkina Faso, Ghana and Mali. Kevin Bullock, pres-

Peter C. Jones, CEO, Iamgold.




ident and CEO, Volta Resources, has anaggressive development plan for its flag-ship property Kiaka, which it acquired fromRandgold. “We had the intention to buy aproject that we could progress fast with, sowe acquired Kiaka in November 2010 andwithin two days we had a drill on site,” saidBullock. “Randgold had identified some2.65 million oz of reserves. We have drilled17,000 m of RC and core drilling. What weare finding is that we are able to identifyand interpret higher grade zoning withinthe overall package and this changes thedynamics of a potential mining operationcompletely.”

The company has secured IFC (part ofthe World Bank Group) investment. “Theirinvestment is a big rubber stamp for Voltaand I think it has helped us with our recentrounds of financing,” said Bullock.

“Mining in Burkina is a new phenome-non, but geology does not respect politicalborders and I would assume there will beas many mines in Burkina as in Ghanaonce a similar amount has been spent onexploration. It is very much in the limelightat the moment and when you combine thegeology with the recent proof that minescan be built on time, on budget and oper-

ate smoothly, then it is only natural thecountry is becoming very attractive toinvestors,” said Bullock.

Burkina Faso more than doubled itsgold production in 2009. At this rate, withmost of the land secured, early entrantsinto the market are hoping Burkina Fasocan become the fourth largest gold pro-ducing country in Africa.

Niger: More Than YellowcakeNiger is a sparsely populated desert coun-try with a well established tradition of min-ing. The country has suffered a troubledpolitical history and remains desperatelypoor. In early 2010, a coup deposedPresident Tandja (democratically elected in1999, but attempting to extend his termbeyond that allowed by the constitution),bringing to power a military junta whichhas pledged to restore democracy.

Niger has long been known as a majorsource of uranium, mining of which hasbeen dominated by French state andquasi-state companies since independencein 1960. These have built Niger’s uraniumindustry to become the world’s fourthlargest. The long-term association with ura-nium and a lack of political willpower can

perhaps explain why Niger, twice the sizeof Texas, has for so long remained underthe radar of explorers. Given the countrywas known to host the Eastern extensionsof the great West African Birimian goldbelt, it was only a matter of time beforeexplorers started taking an active interest.

In 2004, Canadian juniors EtruscanResources and Semafo Inc. heralded thestart of a new era for Niger by putting intoproduction the Samira Hills gold mine. Areview of the mining code in 2006 facili-tated wider foreign participation in theindustry and has resulted in the licensingof numerous new concessions.

Samira Hills demonstrated Niger ismore than just a uranium province and hasprompted serious attention from explorers.The mine at Samira Hills is relatively small;initially it had a resource of some 600,000oz and an anticipated mine life of six years,but the owners have carried on definingresources and the concession currently isestimated to contain more than 1 millionoz of reserves and resources.

In 2009, Semafo consolidated controlof the asset, bar 20% government inter-est, and have committed to extending themine life. Costs are relatively high at$665/oz, but the mine produced 56,000oz in 2009 and the company is continuingto grow defined resources with a $6 mil-lion exploration program on the conces-sion under way.

AMI Resources is another early stagemover in Niger and has found the jurisdic-tion offers a refreshing change from somemore established mining countries in theregion. “Niger has been a breath of fresh air.They have a modern mining code and apragmatic attitude toward exploration,” saidDustin Elford, president, AMI Resources.“Niger, in terms of gold, is many yearsbehind Ghana, and creates a lot of opportu-nity for early stage juniors like us.”

AMI Resources has done a deal withGolden Star to access two contiguous con-cessions on the North Eastern extensionsof the West African gold belt—prime goldhunting country between the border withBurkina Faso and the Niger river. The con-cessions, which the company has brandedthe Sirba gold project, are adjacent toSemafo’s Samira Hill mine and total some920 km2.

AMI Resources has been able to able tobuild on previous exploration work under-taken in the area. “Barrick was here in thelate 1990s and St. Jude in 2004 and2005 when gold prices were low,” said




William Pettigrw, CFO and director, AMI Resources. “We had air-borne surveys and a number of gold targets identified before wearrived.” Building on the inherited data and its new work, the com-pany has been able to identify some significant anomalies. “Ourlatest drill program included intersections of 24 m at 3.08grams,” said Pettigrew.

Despite the long-term depression of uranium prices, commit-ments to large scale nuclear power station programs in China,India, the United States and Europe have triggered a renaissancein Niger’s uranium exploration sector. Early movers includeOrezone Gold and North Atlantic Resources, who recently formedjoint venture Brighton Energy to hold their Niger uranium assets.“We have combined our Niger concessions in the North West ofNiger with North Atlantic’s,” said Ronald Little, CEO, Orezone.“This has created a really significant and highly prospective landpackage of 5,000 km2.”

“Assembling a team to actively explore is crucial and you needa large holding to justify,” said Scott Waldie, CEO, North AtlanticResources. “That is what we created in Niger.”

For much of its post independence history, the Niger mineralsindustry has remained under the control of a select few uraniumcompanies. The early part of the millennium has witnessed thestart of a new era for Niger as the market has opened up to newparticipants. The search for uranium, back in fashion after yearsin the doldrums, is being pursued full tilt by a range of companies,not just the usual suspects. The last decade has witnesses thediversification of the mining sector in Niger and gold productioncan only be expected to grow substantially in the coming years.

Well-Endowed, Liberia Looks to Rebuild Mining SectorLiberia was once a major iron ore exporter. Iron ore exportsaccounted for more than half of the country’s total export income

and it was a major source of local employment. The iron industrywas abruptly interrupted by civil war and continual fightingbetween 1989 and 2003. Violence left the war-torn nation crip-pled and poor, even by West African standards.

However, a stable democratically elected government tookpower in 2005 which allowed the first female African president,Ellen Johnson-Sirleaf, to start piecing the country back together.One of her top priorities is to reduce the unemployment rate (whichskyrocketed to 85%) by resuscitating the nation’s mining sector,which is well-endowed in gold, diamonds and iron ore.

Today a politically stable government, a new MineralDevelopment Policy and Mining Code, and a decision in 2007 by theU.N. Security Council to lift the ban on Liberian diamond exports hasresulted in an influx of majors and juniors into the country.

ArcelorMittal, the world’s leading steel company, and BHPBilliton, the Australian mining giant, are investing $1.5 billion and$3 billion respectively in iron ore projects. Iron ore projects arelong-life assets and require significant investment in infrastruc-ture. ArcelorMittal is expected to generate about 3,500 direct jobsand about 15,000 to 20,000 indirect jobs. The company is alsocommitted to the Mining Development Agreement, which obligesthem to provide $75 million over the next 25 years to supportsocio-economic development in Liberia.

Unmatched in the nation’s industrial history, this will lead tosignificant improvements in communities where the company isoperating. BHP’s Liberian deal covers four mining leases, whichare within striking distance of the existing 250-km rail corridorthat runs from the Guinean border to the Liberian coast.

The Chinese are also involved in developing Liberia’s iron oreindustry, with China Union securing an iron ore concession at the

African Aura’s Yirisen UN pit. (Photo Courtesy of African Aura)




beginning of 2009 and promising to invest$2.6 billion, one of the largest investmentsChina has ever made in Africa.

Also poised for growth, African Aura ison track to be producing by 2012. AfricanAura Mining originated from the merger ofMono River Resources, which has a longhistory of mining activity in the country,and African Aura Resources. Dual-listed onthe TSXV and AIM, the company’s mainLiberian assets are the New Liberty golddeposit (1.4 million oz, awaiting results ofa new scoping study). “Because of thenature of the deposit [it is deeply dipping]it is going to be a trade off between openpit and underground,” said Luis Da Silva,president and CEO, African Aura.

The company’s second Liberian asset isthe Putu iron-ore project. Putu will be themain economic driving force for threecounties in eastern Liberia. There is noother active greenfield project in Africa asclose to a port as Putu. “This year [2010]will be a very different year for us,” said DeSilva. “The political risk in West Africa ismuch more acceptable to investors and theassets are at a more advanced stage.”

Another active explorer is Canadiancompany Liberty International MiningCorp., which currently holds 9,050 km2 ofdelineated territory within the Archæanand Birimian greenstone regions, which

contain 18 potential gold exploration pro-jects identified to date.

Also to be found on the Birimian isHummingbird Resources, a privately-owned company which holds the largestnumber of licenses in eastern Liberia.Daniel Betts, managing director,Hummingbird Resources, acknowledgedLiberia is not without its challenges. In theremote eastern part of the country, thecompany has had to overcome consider-able difficulties in terms of terrain andlogistics. “In this area the infrastructurehas been virtually destroyed and the inte-rior remains almost impenetrable for longperiods of the rainy season,” Betts said.“It is testimony to the hard work and ded-ication of the field teams that these chal-lenges have been overcome and so muchdata has been collected so quickly. Thecompany’s strategy is to list on the mostappropriate stock exchange in the finalquarter of 2010 to realize shareholdervalue.”

Mining has the potential to be the keyeconomic driver in the country, withLiberia’s untapped mineral wealth provid-ing significant exploration potential forworld class mineral discoveries. The mag-nitude of new investment in the past fiveyears is positioning Liberia for a brighterfuture.

Core drilling at Kiaka. The Kiaka project lies at the intersection of the northeast striking Tenkodogo greenstone belt and theregionally significant north striking Markoye Fault, in whose proximity some of the larger gold resources discovered in BurkinaFaso so far, have been discovered. These include Iamgold’s Essakane deposit (5.1 M oz), High River Gold’s Taparko deposit(1.7 M oz), Orezone’s Bombore deposit (2.1 M oz) and Etruscan’sYouga deposit (1.5 M oz). (Photo Courtesy of Volta Resources)




Prospectors Realize Guinea’s DiverseMineral WealthGuinea, also known as Guinea-Conakry, is a country long associat-ed with bauxite, which has traditionally been perceived as theexclusive domain of the majors. Guinea gained independence fromFrance in 1958 and plunged straight into authoritarian rule. Theelections in June 2010 were touted as the first democratic elec-tions in the country’s history (though at the time of writing in July2010, quite how democratic an election remained undetermined).Guinea is believed to host at least 30% of the world’s bauxitereserves and majors such as Rusal, Rio Tinto Alcan and Alcoa havesubstantial operations in the country.

Over recent years, however, the diverse mineral wealth of thecountry has begun to be recognized. Iron ore deposits have beenidentified and majors Rio Tinto, Vale and Aluminum Corp. of China(Chalco) are involved in developing assets. The western extreme ofthe hard rock Birimian belt, which hosts all of West Africa’s largestgold mines, terminates in the eastern region of Guinea and is thelocation of AngloGold Ashanti’s +300,000 oz/y Siguiri gold mine.The country borders well-known diamond jurisdictions of Liberiaand Sierra Leone, and Guinea’s potential to become a significantproducer of the precious gem has been long recognized. A num-ber of Canadian and British companies, such as Stellar Diamonds,are now trying to build on that potential.

Coups, political unrest and violence are regular occurrences inGuinea, but successive governments have tended to ensure theminers are left free to mine, perhaps recognizing as the sector isthe main source of tax income, the country can ill afford mineshutdowns. However, a recent series of incidents has damaged thecountry’s reputation in regard to property rights.

Rio Tinto experienced significant setbacks at its Simandou ironore project. In 2008, the government awarded blocks one and twoof the concession to maverick entrepreneur Benny Steinmetz’sBSG Resources, which subsequently sold a 51% stake to Vale for$2.5 billion. Rio Tinto maintained the blocks belonged to themaccording to the country’s mining code and specific contracts. Thedispute has become increasingly acrimonious and in June 2010Rio Tinto experienced a further set back when the governmentdeclared its intention to exercise a right to purchase a 20% stakein the remaining blocks.

There is no doubt Guinea remains one of the most challengingjurisdictions in West Africa; however the phenomenal explorationpotential is drawing a band of hardened juniors to the country.“There really is tremendous exploration potential in Guinea, butthe political situation has hindered serious work for the last fewyears in particular,” said James Gillis, a veteran explorer who ispresident of Guinea-focused juniors, Cassidy Gold Corp. and AngloAluminium Corp.

“Cassidy Gold has spent about $26 million so far on a 1 mil-lion oz resource, but then about three years ago we ran into somehorrible circumstances,” said Gillis. “Workers called a generalstrike and shut down a lot of the country, pretty much forcing thePrime Minster to accept a consensus government. There was a lotof brutality associated with this period and we had to evacuate.”

The company has returned to the country and it is looking todevelop its Kouroussa discovery. Gillis intends to develop a smallmine centered around a simple gravity processing system to gen-erate cash flow while further exploring the concession.

Gillis’ second project is Anglo Aluminium, situated on theBoke Belt. “The Boke Belt hosts the world’s highest grade baux-

ite, consisting of 40% to as much as 60% alumina, and we con-trol 536 km2 of it,” said Gillis. The company has so far estab-lished a resource with 343 million mt, averaging 42.78%, and afurther 63 million mt inferred at 43.81%.

While Guinea remains one of Africa’s poorest and most trou-bled countries, it hosts a diverse wealth of minerals. Explorationand mining companies are weighing political risk against theupside and are seeing great potential. Of comfort to the junior isthe fact that some of the world’s largest mining companies havebeen operating unhindered, by and large, in Guinea for decades.Many believe times will be less troubled ahead, and mining canplay a major role in enriching Guinea’s impoverished population.

Hummingbird Resources focusing on exploring 5,000 sq km of ground in Eastern Liberia.(Photo courtesy of Hummingbird Resources)


new ghana/west africa mining · 2018. 2. 18. · 36 e&mj † september 2010 ghana/west africa...

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