A big thirst for gold in Burkina Faso

Gold, a lot of it and more gold. Nothing but gold. Not a month goes by in Burkina Faso without the talk of new investments in the gold-mining sector.

In February, British mining company, Cluff Gold spent more than US$29.4 million in cash and shares to acquire a new project, close to its Kalsaka Mine that reached production levels of 2 tonnes last year. In January, Canadian miner Volta Resources unlocked a R&D budget of close to US$19.5m, for this year. Volta Resources hopes to develop its Kiaka deposit, bought off South African major Randgold Resources in 2009. Reserves are estimated at 125t and activity is planned to start by the last quarter of 2014.

In December another Canadian mining company, Avion Gold, announced that it had invested US$122.6m for the development of the Vindaloo deposit in Houndé, with the objective of starting production by 2015. At the same time, the Burkinabe government launched a call for bids, for the reopening of the Poura mine. Poura was the first mining claim to be exploited from 1985, but closed in 1990 when the gold index hit a low point and the mine became unprofitable. Eight companies have shown interest, and the government is expected to announce its choice by the end of March.

In the western part of Burkina Faso, the Mana mine, operated by the Canadian mining company Societé d’exploitation minière d’Afrique de l’Ouest (SEMAFO), started production recently. It is estimated that by year end, they have extracted between 5 and 6t. Its estimated reserves are 35t and its life cycle is projected at six years. Australian Gryphon Minerals has initiated a feasibility study for its gold-bearing project in Banfora, in the far-east of the country. The list is far from exhaustive.

Cash-flow

“Today we are experiencing a real ‘gold rush’,” Minister of Mines, quarries and energy, Salif Lamoussa Kaboré reveals. “And it’s only the beginning, given that we have issued about 605 research licenses to Canadian, British and South African mining companies.” Already, there are six industrial mines (Mana, Youga, Kalsaka, Taparko, Belahouro and Essakane), two semi-industrial and over 200 minor exploitation sites. Production, which started at what is considered the country’s most promising deposit in Essakane, in the north-east, in 2010, has given new impetus to the subsidiary, operated by Canadian Iamgold. The mine has a yearly production of 10t, for a deposit estimated to 120t.

In three years, the country has become the fourth highest gold producer on the continent, behind South Africa, Ghana and Mali. Indeed, the west African country’s gold production has increased steadily in the past three years and will rise further in 2012. In 2009 the national production was 12,2t, 24t in 2010, 32,5 in 2011 and production forecast for 2012 lands at a staggering 40-42t.

Since 2009, the metal has become the number one source of cash, ahead of cotton, and the industry generates about 5000 direct jobs. Last year the mining sector generated CFA 125bn (US$256m) in tax revenue and a total turnover of CFA 750bn (US$1,5bn).

But the accelerated development of the gold-mining industry provoked strikes and protests by communities living close to the mines, in 2011. And the proposed revision of the country’s mining law should further delimit responsibilities of mining companies. Also, the country is currently trying to improve its governance, by adopting the Extractive Industries Transparency Initiative (EITI).

Also read:

When Africans take control of their mines and future
West African mining firms should increase local procurement
Mark Bristow: The gold market today
Country Profile: Burkina Faso