By Gavin du Venage
West Africa is fast becoming the global hotspot for exploration, as the last frontier for new mineral deposits of dazzling richness.
This is the view of the Junior Exploration Indaba, a Johannesburg-based conference, which is the sister event to the Jo’burg Indaba on which E&MJ reported last month.
As established mining jurisdictions such as Canada and Australia mature, explorers are venturing back to Africa to find undiscovered mineral deposits.
“Africa is still that sort of place you can find a rich mine,” William Witham, CEO of the Australia-Africa Minerals and Energy Group, said via a Zoom call. “Australia doesn’t deliver that sort of excitement any longer. It’s lower grades that have been picked over.”
Francophone Africa is particularly enticing. Recently, Australia-based Mali Lithium paid $60 million to buy Morilla Gold from Canadian firm Barrick. Senegal and Guinea are also drawing the attention of major mining companies. While gold was still the focus of interest, other minerals such as iron ore are also drawing in companies.
The vast Simandou iron deposit in Guinea, which had some of the world’s largest companies such as Rio Tinto circling, is now heading for development.
The outliers to West Africa are Nigeria and Ghana, both of whom risk losing exploration investment. Unfriendly legislation and, in the case of Nigeria, poor infrastructure and security troubles, make these less than ideal for exploration, Witham said.
“It’s really up to countries such as Ghana and Nigeria to look at what these others are doing, because money is not going into these two countries at the moment.”
Nigeria at least is aware of these concerns and moving to address them, Abdulrazaq Garba, the director general of the Nigerian Geological Survey Agency, said. The country has begun publishing research data to assist explorers, and initial surveys show large resources of gold, silver, lead, nickel and lithium, to name but a few.
“We are doing a lot of exploration in Nigeria,” Garba said. “Government is encouraging a national exploration project. So, Nigeria is clearly open for business.”
Gold meanwhile, remains the favorite for junior explorers. Analysts predict that the price of gold, which has hung on to the average price of $1,800 for much of this year, will only go higher from here. This makes discovering fresh deposits a bankable option, said Bert Monro, CEO of U.K.-listed Cora Gold.
“I see a good gold boom happening in West Africa, particularly the Francophone countries such as Mali, Guinea and Senegal,” Monro said. “When the gold price is north of $1,800/oz, there’ll be a lot more projects coming up in West Africa.”
Mali and Senegal have most of the attention from explorers, and will continue do so as these countries have created a good mining ecosystem.
“They are good countries to be operating in, they have good infrastructure and good mining laws,” Monro said.
However, just because African countries are well endowed with minerals, it does not mean explorers will show up regardless of risk. Some countries such as South Africa and Tanzania, to name just a couple, are generally avoided by explorers because of the perception that they are too high risk.
Paul Miller, director of AmaranthCX, said too often African countries ignored the need to be competitive.
“Not only must African countries compete against each other, they also compete against world-class mining destinations like Canada and Australia,” Miller said. “Both these countries together attract more exploration investment that all 54 African countries combined.”
He noted it is unfortunate that governments tend to focus on existing mines, and try to squeeze as much revenue from them by tinkering with taxes and royalties. Already established mines have little choice other than to bend to the evolving rules, but juniors and other potential investors will simply go elsewhere.
The duty of the government is to drive down the country pay limit, Miller said. This is the exact opposite of what is happening in South Africa, Zambia and Tanzania. These countries have a continually shifting legal landscape that deters fresh investment.
Even with its abundant infrastructure, South Africa is failing to attract fresh exploration, because it has become a tough place to make long-term decisions. Mines can work around the lack of electricity and roads. They cannot, however, plan for sudden shifts in legislation, Miller added.
“Existing mines have no choice — they own a hole in the ground. But new mines, these won’t be built because the government makes the cost too high.”
Perhaps few destinations demonstrate the risk-reward dichotomy of African mining more than the Democratic Republic of Congo. After decades of brutal civil war, the country has now been stable for almost 20 years. Yet, it remains the wild west of mining, said Louis Watum, president of the country’s Chamber of Mines.
“There’s a lack of infrastructure and power supply,” Watum said. “There’s also poor governance. This makes the cost of mining extremely high.”
A result of this is that those companies working in the country only focus on the highest grade deposits. They know that building a mine will including laying on their own power, providing their own security, and flying in everything needed to keep their operations going. This means it does not pay to pursue mineral deposits that are not of the highest grade.
“The cost of mining means you focus on high value extraction, and this is a pity because it leaves a lot of value in the ground.”
Of all the central and southern African countries, Botswana remains the favorite. The country has recently overhauled its mining legislation, a process normally fraught with tension for mining companies. However, Botswana Chamber of Mines CEO Charles Siwawa told the Indaba that the new law was crafted with mines very much part of the process.
“Government is willing to bend over backward to accommodate the industry, which is very encouraging,” Siwawa said.
As such, it appears Botswana is on the cusp of a new wave of investment as exploration reveals new deposits, particularly along the western side the country. Up to now, most mining and exploration has focused on the east, Siwawa added.
“Copper is the main focus. Not as exciting as the Congo or Zambia, but interesting nonetheless. It is also the site of one of the greatest iron ore discoveries in the region — the value of the deposit is at least $2 billion.”