Tag Archives: Burkina Faso

Endeavour looks to consolidate West Africa gold sector with SEMAFO acquisition

Endeavour Mining is to acquire fellow West Africa-focused gold producer SEMAFO in a friendly, all-share deal that, Endeavour says, will create a top 15 global gold producer and the largest yellow metal miner in West Africa.

The deal, which both sets of Board of Directors have unanimously approved, values SEMAFO at C$1 billion ($694 million) and comes with a 27.2% premium based on the 20-day volume weighted average price of both companies for the period ended March 20, 2020. It would see existing Endeavour and SEMAFO shareholders hold around 70% and 30%, respectively, of the combined company on a “fully-diluted in-the-money basis”.

Such a transaction comes less than six months since SEMAFO suspended operations at its Boungou open-pit mine, in Burkina Faso, following a deadly attack on a public road in the Est region. This led to a seven-week suspension of the mine in 2019. This incident followed on the heels of a pit wall failure at its Mana mine, also in Burkina Faso, in August, that led to a 10-week suspension.

Endeavour, meanwhile, had its hopes of merging with fellow Africa gold producer, Centamin, dashed earlier this year after Endeavour President & CEO, Sebastien de Montessus, said the quality of information received during the accelerated due diligence process had been insufficient to allow the company to be confident in proceeding with a “firm offer” for Centamin.

On a pro-forma basis, a combined Endeavour and SEMAFO would have more than 1 Moz of gold production in 2020 (based on current company guidance), placing it among the top 15 gold producers globally, while all-in sustaining costs (AISC) would be below $900/oz, placing it within the bottom third of the industry cost curve, the companies said.

Assets would include the Ity, Houndé, Agbaou and Karma mines from Endeavour (which produced 651,000 oz at an AISC of $818/oz in 2019) and the Boungou and Mana mines from SEMAFO (which produced 340,900 oz at an AISC of $724/oz in 2019).

Endeavour-SEMAFO would also have 10.5 Moz of reserves and 20.7 Moz of measure and indicated resources (inclusive of reserves), plus an additional 6.3 Moz of inferred resources.

It would be strategically positioned as the largest gold producer in both Cote d’Ivoire and Burkina Faso, which account for two-thirds of the highly prospective West African Birimian Greenstone Belt, they said.

It would also consolidate the Houndé belt in Burkina Faso to create a “world-class mining district with two mines, exploration upside and strong future development potential”, they said.

Endeavour said influential investor La Mancha will continue to be a highly supportive cornerstone shareholder, committing to invest $100 million, although decreasing its overall stake from around 31% in Endeavour to about 25% in the combined entity (calculated on a pro-forma basis using current share prices), to “provide for a larger free float and greater stock liquidity”.

These M&A discussions have been going on for some time, according to Endeavour.

In early 2019, both companies engaged in a mutual dialogue in order to evaluate the merits of a business combination. The dialogue included extensive mutual due diligence as well as discussion of potential terms of a transaction, with a final proposal in May 2019. At that time, it was not possible to agree on terms which appropriately shared the risks and rewards of a combination.

In early 2020, discussions between Endeavour and SEMAFO recommenced. Endeavour’s management team completed on-site due diligence at SEMAFO’s operations in Burkina Faso during February 2020, including a comprehensive assessment of security, operations and exploration.

Both companies also re-opened data rooms for mutual confirmatory due diligence, including visits and, following collaborative discussions, confirmed their shared strategic vision and desire to complete a combination subject to negotiation of agreeable terms, they said. Negotiations proceeded, culminating in agreement on the terms of the transaction announced today.

For Endeavour, pursuant to the rules of the TSX, the transaction will require approval by a simple majority of the votes cast by its shareholders. In addition, shareholders of Endeavour will be asked to approve the issuance of Endeavour ordinary shares to La Mancha. For SEMAFO, meanwhile, the transaction will require the approval of 66.6% of votes cast by its shareholders.

It is anticipated that both shareholder meetings and the closing of the transaction will take place in the June quarter of 2020.

West African moves into new phase at Sanbrado following gold pour

West African Resources says it has poured first gold at its Sanbrado gold project, in Burkina Faso, just over a week since confirming construction activities had been completed on all areas of the process plant and tailings storage facility.

The inaugural pour occurred on March 18, with gold bars weighing 23.9 kg (768 troy ounces) poured in the first smelt on site.

Since processing started up, 75,000 t of ore at 1.5 g/t Au has been processed, with indicative metallurgical recoveries of over 90%, West African said.

The process plant has also exceeded nameplate capacity for the past seven days of production, the company noted.

Open-pit ore stockpiles are also building with 250,000 t at 1.5 g/t Au on the run of mine pad, the company noted, adding that first underground development ore had been mined and stockpiled, ready to process.

West African Executive Chairman, Richard Hyde, said: “This is a major milestone for West African Resources and marks the beginning of a new phase in the WAF story. To successfully transition from an exploration company to a gold producer is without doubt a great achievement for all involved.

“I would like to thank WAF’s owners’ team and all consultants, contractors and other stakeholders for their hard work and support over the last four years to bring Sanbrado from discovery into production.”

West African a month away from first gold pour at Sanbrado

West African Resources says it has processed the first ore at its Sanbrado gold project in Burkina Faso, putting it on course to produce its inaugural gold product within the next month.

Construction activities have now been completed on all areas of the process plant and tailings storage facility, according to the company.

All four heavy fuel oil generators have been commissioned in the power station and are now operational, while the desorption and gold room circuits are undergoing commissioning in preparation for a maiden gold pour within the next four weeks.

Open-pit mining contractor, African Mining Services, a subsidiary of the Perenti Group, has ramped up mining activities to include both the M5 and M1 South pits, with day and night shifts starting in the past week, West African said.

Currently, over 360,000 t of oxide ore is stockpiled on the run of mine pad at an average grade of 1.5 g/t Au.

Underground development continues to progress on-schedule with mining contractor Byrnecut Offshore, a subsidiary of the Byrnecut Group, having completed the primary ventilation raisebore. The ventilation fan is also currently being installed. First development ore remains on track for late March and first stoping ore is forecast for the September quarter, the company said.

West African Executive Chairman, Richard Hyde, said: “This is a major milestone for West African Resources and testament to the quality of our team and contractors. Commissioning activities will continue over the next four weeks with the first gold pour on track for early Q2 (June quarter) 2020.”

An updated feasibility study on Sanbrado from 2019 envisaged an initial 10-year mine life, including 6.5 years of underground mining, with probable reserves of 1.7 Moz (21.6 Mt at 2.4 g/t gold). The project was expected to have average annual production over the first five years of 217,000 oz gold with all-in sustaining costs of less than $600/oz.

IAMGOLD optimises Essakane CIL and heap leach gold future

IAMGOLD has announced positive results from a feasibility study examining a potential increase in carbon-in-leach production followed by a heap leach operation at its Essakane gold mine in Burkina Faso.

The results support an increase in current hard-rock carbon-in-leach (CIL) plant capacity and outlines an economically viable heap leach facility at the end of CIL operations, the miner said.

The study considered an indicated resource base of 4.878 Moz grading 0.98 g/t Au, inclusive of reserves on the Essakane Mining Concession. Within this was proven and probable reserves of 3.985 Moz grading 0.96 g/t Au.

It evaluated a mine life of 12 years (2020-2031), with mill throughput of 11.7 Mt/y, up from the current design capacity of 10.8 Mt/y. This would be followed by heap leach throughput of 8.5 Mt/y from 2027-2031.

This resulted in average annual production of 433,000 oz during CIL operations, representing a 4% increase above CIL output from the previous study, including peak year production exceeding 530,000 oz using CIL and annual production of 73,000 oz/y of HL production at the end of CIL production.

IAMGOLD estimates a capital investment of $9 million for CIL optimisation, with commissioning targeted for the September quarter of 2020, while there would be a reduction and deferral of total HL capital expenditures by $40 million to $115 million (2025-2026) from the previous study (while maintaining the same HL production profile).

The miner said: “The FS concluded that increasing CIL plant capacity and postponing the HL operation to the end of life of mine defers capital and provides an extension to the life of mine.”

The optimisation of the CIL plant would indirectly result in a reduction of the anticipated HL annual throughput from 10 Mt to 8.5 Mt, with the production profile of the HL operation remaining relatively unchanged as reduced throughput is offset by an improved recovery of gold in HL from 55% to 67%.

The capital cost reduction of the HL facility was achieved by re-using existing CIL plant equipment (primary & secondary crushing circuits) at the end of CIL life and by optimising the HL pad footprint, IAMGOLD said. The latter allows for the HL infrastructure to remain within the current industrial complex of the mine, versus the PFS scenario which would have required additional land outside of the current complex, thus avoiding impact to communities and farmland, it noted.

Steve Letwin, President and CEO of IAMGOLD, said: “With our self-funding lens in place, the IAMGOLD team reviewed the CIL/HL feasibility study and produced a robust, low cost plan with optionality in the future.”

Essakane is expected to produce 380,000-390,000oz of gold this year.

Nordgold looks to the sun for Bouly, Bissa mine power

Nord Gold has entered into an exclusive agreement with Total Eren, an independent power producer (IPP) specialised in renewable energies, and Africa Energy Management Platform (AEMP), its strategic development partner, to construct a 13 MW solar photovoltaic power plant for its Bissa and Bouly gold mines in Burkina Faso.

Construction of the power plant will begin shortly, with completion expected in the December quarter of 2020, Nordgold said.

“The new Solar PV will provide Bissa and Bouly with power for both mines’ daily operational needs, thereby significantly reducing reliance on the existing thermal power plant,” the company said. “In addition to significantly enhancing the environmental sustainability of the mines, the solar plant will increase security of supply, and reduce costs at both mines.”

Under the terms of the agreement, Total Eren and AEMP will develop, finance, construct and operate a solar PV plant complemented by a battery energy storage system, reducing the mine’s fuel consumption by approximately 6.4 million litres and CO2 emission by approximately 18,000 t/y, the company said.

This type of project is not new to Total Eren. The company, in tandem with other partners, previously started up a 15 MWp solar power plant for IAMGOLD’s Essakane mine in Burkina Faso, in 2017 (pictured).

Nordgold’s Bissa gold mine was launched in January 2013 followed by, in September 2016, the Bouly mine.

The new solar PV plant will also create a number of full-time roles for local employees in addition to over a thousand currently employed at the mine sites, according to the company.

Nikolai Zelenski, Chief Executive Officer of Nordgold, said: “By building this new solar power plant, not only will we improve the efficiency of our mines by creating a more secure power supply at lower cost, but we are also helping to make our Burkina Faso mines far more sustainable, while minimising our carbon footprint.

“We already have in place a number of important environmental initiatives aimed at protecting biodiversity around our mines. The installation of a solar power plant at Bissa and Bouly, Nordgold’s key assets in terms of production, is in line with our strategy of implementing the best environmental standards across our operations”.

West African picks Ausdrill’s AUMS for Sanbrado open-pit mining

Ausdrill, through its wholly-owned subsidiary, African Mining Services (AMS), has been selected by West African Resources as the preferred open-pit mining contractor for the Sanbrado gold project, in Burkina Faso.

Sanbrado, a low-cost, high-grade operation only 90 km from the country’s capital, Ouagadougou, will be the 14th commercial gold mine in Burkina Faso in 14 years. It is forecast to have average annual production of 217,000 oz/y of gold at all-in sustaining costs of less than $600/oz in its first five years of mine life.

The AMS scope of work includes a full suite of open pit mining services – including site preparation, drill and blast, load and haul, and maintenance works – over a five-year term, generating approximately A$235 million ($160 million) in revenue under a schedule of rates contract, Ausdrill said.

AMS anticipates it will employ some 190 personnel at the project, with the workforce to be predominantly local, and use a mix of new and existing equipment to deliver on the project.

AMS and West African Resources are in the process of finalising the contract terms, which will include the provision of an optional deferred payment arrangement for up to $10 million at a commercial interest rate, with works expected to commence in early 2020. West African Resources said mobilisation activities were expected to commence in November, ahead of open-pit mining commencement in January 2020.

Ausdrill Group Managing Director, Mark Norwell, said: “A key focus for the new Ausdrill group has been to enhance our surface operations in Africa and target substantial growth opportunities across a range of commodities in select African countries.

“Being selected as preferred contractor at the Sanbrado gold project is a significant achievement and represents the excellent progress we are making in building on the suite of quality projects on which AMS operates in the region.”

West African Resources Managing Director, Richard Hyde, said: “Sanbrado is the highest margin gold project in construction in West Africa and we are on target for approximately 300,000 oz of gold in the first 12 months of production. We look forward to partnering with AMS to bring this fully funded project into production in mid-2020.”

West Africa investments about to pay off for Capital Drilling

Capital Drilling’s push into West Africa will start paying off in the second half of the year, according to Executive Chairman, Jamie Boyton, with the contractor having sealed a number of drilling agreements in the region in the opening six months of 2019.

The company has progressively invested more resources in West Africa over the past few years, aiming to capture market share in a region where gold exploration is high.

The company recorded revenue of $54.7 million over the six-month period, a 0.4% year-on-year increase, while its average revenue per operating rig dropped to $183,000, compared with $200,000 in the first half of 2018, primarily due to new contract mobilisations. The group maintained guidance on anticipated revenues for the current financial year of $110-120 million, with revenue expected to increase in the second half of this year.

During the period, the company purchased an additional blasthole rig for the long-term contract at Centamin’s Sukari gold mine, in Egypt, as part of the group’s ongoing fleet management; made further progress in the establishment of its West Africa operations, with drilling commencing in Burkina Faso with Golden Rim Resources in May; and was awarded its first drilling contract in Nigeria with Thor Explorations Ltd, with drilling scheduled to commence in the December quarter.

The company also, in these six months, appointed Jodie North as Chief Operating Officer, increased business development resources, appointing Chris Hall to position of Business Development Manager, West Africa, maintained its ongoing rig improvement program and achieved a number of safety records at the likes of Sukari, North Mara (Tanzania), Geita (Tanzania), Tasiast (Mauritania) and Syama (Mali).

Boyton said: “The first half of the year was focused on further consolidating Capital Drilling’s presence in the highly active West African market, with a number of new contracts awarded, which will contribute to group revenues from the end of Q3 (September quarter). This strong push into this region has seen the commencement of our first drilling contract in Burkina Faso during Q2.

“Today we have also announced our expansion into Nigeria from Q4 (December quarter), a mineral rich, yet poorly explored country with significant potential, where we already operate a successful mineral analytics laboratory. Pleasingly, our major operations have also continued to achieve significant safety milestones throughout the first half.”

New contracts awarded during the first six months include:

  • Compass Gold Corp (Sikasso, Mali, pictured). Awarded a 10,000m exploration drilling contract, using one reverse circulation (RC) and one diamond rig from the existing fleet. Drilling commenced in June;
  • Golden Rim Resources (Kouri, Burkina Faso) (previously announced). Awarded a 20,000m exploration drilling contract using one multi-purpose rig from the existing fleet. Drilling commenced in May;
  • Allied Gold Corp (Bonikro, Côte d’Ivoire). Awarded a five-year exploration drilling contract, using one diamond rig and one RC rig from the existing fleet. Drilling is scheduled to commence in December quarter;
  • Thor Explorations Ltd (Segilola, Nigeria). Awarded a five-year exploration and grade control contract, using one RC rig from the existing fleet. This will transition to grade control in 2020, with exploration drilling scheduled to commence in the December quarter and grade control in H1 2020;
  • Kinross Gold Corp: (Tasiast, Mauritania): MSALABs was awarded a three-year onsite laboratory services contract with Kinross at the Tasiast gold mine. Operations commenced in July 2019, and;
  • Resolute Mining Ltd (Syama, Mali). Awarded one-year extension of the long-term underground grade control drilling contract using two underground rigs from the existing fleet. Contract extended to June 2020.

Avesoro and Orkun Group enter open-pit mining contract at Youga

Avesoro Resources has made further headway on turning around operations at its Youga gold mine, in Burkina Faso, having entered into an open-pit mining contract with Orkun Group Sarl.

The mining program under the contract, secured by Avesoro’s Burkina Faso subsidaries, Burkina Mining Company SA (BMC) and Netiana Mining Company SA (NMC), is based on the excavation of between 800,000 to 900,000 bank cubic metres (bcm) of material per month, including a minimum of 120,000 t/mth of ore delivered to the run of mine (ROM) pad.

Youga, in the June quarter, saw production fall 19% quarter-on-quarter as falling grades and a stoppage in mining activities during June, which followed a transition to contractor mining, hit the operation.

Over the life of the Youga mine, the contract is based on the excavation of a minimum of 42 million bcm of material (Minimum TMM), which can be increased, at the company’s option, to 60 million bcm on the same terms. The contract price of excavation during this TMM period is $4.26/bcm (around $1.60/t) reducing to $3.75 per bcm thereafter (approximately $1.41 per tonne) for the remainder of the contract.

As part of the deal, Orkun will pay an earn-in fee of $0.51/bcm to acquire BMC’s existing heavy mining equipment fleet. The earn-in fee will be offset against the amounts invoiced by Orkun.

Upon completion of the Minimum TMM, ownership of BMC’s HME fleet will transfer to Orkun. However, Orkun assumes full responsibility for the ongoing upkeep and maintenance of the fleet from commencement of the contract, Avesoro confirmed.

“Orkun has also committed to supplement the existing HME fleet with $5 million of additional equipment at its own cost,” Avesoro said. This includes five excavators, 15 haul trucks and auxiliary equipment to ensure the contracted material movement is achieved. The first batch of this additional HME is due to arrive at Youga early in the September quarter.

BMC and NMC retain responsibility for mining geology, planning and certain other costs, Avesoro said.

Serhan Umurhan, Chief Executive Officer of Avesoro, said: “This contract will enable Avesoro to significantly reduce its future mining costs at Youga. Outsourcing the mining activity will also enable us to reduce our direct employee headcount and overall business complexity thereby reducing G&A costs.

“The responsibility for future fleet maintenance costs has also been transferred to Orkun, thereby significantly reducing the company’s 2019 funding shortfall that was announced on June 10, 2019.

“To achieve the material movement targets set out in the contract, Orkun will also supplement the existing Youga mining fleet…This should ensure a minimum of 120,000 t of ore is delivered to the ROM pad each month and that the Youga processing plant is maintained at full operating capacity.”

Avesoro enlists CSA Global for Youga gold mine turnaround

Avesoro Resources says it is expecting a “material improvement” in grade and production at its Youga gold mine, in Burkina Faso, after implementing mining and grade control recommendations from consultant CSA Global to stem an output drop that saw production fall 19% quarter-on-quarter in the three months ending June 30.

The mine’s output was affected not only by falling grades in the June quarter, but also a stoppage in mining activities during June, which followed a transition to contractor mining.

In the three-month period, total material movement was 4.44 Mt, 7% lower than the previous quarter. Waste mined also dropped 6% in this period to 4.23 Mt, while ore mined decreased 27% to 214,000 t, resulting in a waste to ore stripping ratio of 19.8:1.

Avesoro said: “During the period, mining focused predominantly on the Gassore pit adjacent to the Youga process plant, where mined grades continued to be below forecast. Following a review of both grade control and mining practices, undertaken by CSA Global, the company made the decision to bolster its on-site technical team by hiring of additional technical staff to manage mining production and grade control.”

Serhan Umurhan, CEO of Avesoro, said he was confident the company would see a “material improvement in the situation as a result”.

Due to the temporary stoppage in mining activities in June, some emergency low-grade ore stockpiles were blended into the plant feed during June, reducing overall June quarter run of mill grade to 1.59 g/t Au, a quarter-on-quarter reduction of 23%. An increase in plant throughput of 4% to 332,000 t during the period helped to offset the grade impact, however gold production fell 19% to 15,516 oz.

Avesoro’s New Liberty gold mine, in Liberia, meanwhile saw production drop 27% to 18,822 oz in the quarter.

The company put this down to a number of staff in the mining and heavy mining equipment maintenance teams resigning during April, which led to a drop in mining productivity during this month and early May. Total material movement dropped, which had a knock-on effect to mine ore grade and mill feed grade.

Despite the company only recording 34,338 oz of gold production from the two mines in the quarter – bringing first half output to 79,435 oz – Avesoro reiterated its revised production guidance of 180,000-200,000 oz of gold for 2019.

Umurhan said: “With the operational aspects of the transition to contractor mining at both Youga and New Liberty now in place, I am confident that the challenges experienced during Q2 (June quarter) have been overcome and that total material movement and gold production will increase in the second half of the year.”

Transense iTrack II mining tyre monitoring system coming to Nordgold’s Bissa

Transense Technologies’ Translogik division has won a contract, through its Ghana partner WATS (West African Tyre Services), to supply 41 iTrack II mining tyre monitoring systems for haul trucks at Nordgold’s Bissa mine in Burkina Faso.

These systems are to be supplied on a rental and service basis via WATS, a wholly-owned subsidiary of Rana Motors & Metal Works Engineering Co. Transense said: “This method allows mining companies to benefit from the productivity gains and overhead savings provided by using the system without any of the associated capital cost while providing Translogik with a recurring revenue stream.”

The iTrack II system provides fast, accurate, reliable real-time data on the condition of the tyres, combined with live tracking of vehicle location and status, according to Transense. “The company’s 24/7 control room monitors the pressures and temperatures live, and this information can, for example, be used to ensure tyres do not exceed critical heat thresholds, detect incorrect load distributions, predict suspension failures, eliminate manual tyre pressure checks and much more.”

All of these benefits increase health and safety as well as reducing maintenance and downtime, which maximises the hours a truck is working (on-road truck working hours), which directly correlates to an increase in production, according to Transense. Existing iTrack users have reported increases in tyre life of up to 30% and fuel savings of up to 3%, the company said.

Vibi Chandra, Director, Sales & Services Director, OTR Tyres, WATS, said: “The considerable advantages that Nordgold have seen at their sister mine, SOMITA (Taparko), where we installed iTrack in May 2018, have persuaded Nordgold to adopt the system at Bissa.

“As we have previously stated, West Africa is a region with dozens of mines and hundreds of haul trucks and it is our intention to introduce our new enhanced service, including iTrack, to our existing portfolio of mines as well as other mines across the region.”

Graham Storey, CEO of Transense, said: “We are very pleased to have added another Nordgold-owned mine in West Africa to our growing list of iTrack users. WATS are a well-established and highly regarded tyre service provider in West Africa and with their depth of contacts we are hopeful of an accelerated rate of adoption moving forward.”

Bissa, which was launched in January 2013, produced 195,700 oz of gold in 2017.