West Africa: The golden child for discoveries and emerging operations

West Africa is tainted with political turmoil but that hasn’t stopped explorers from hunting for minerals in the region
The region is the source of about half the gold produced on the African continent
M&A activity in region gains momentum with a number of ASX players moving into the area

West Africa is climbing the ranks of the global mining industry and establishing itself as one of the continent’s mining hotspots as M&A activity heats up on the back of record gold prices.

ASX companies are rushing to take advantage of the region’s resources, which have remained largely unexplored given its immense size (12.95 million square kilometres) and risk profile, which requires projects offer a higher level of return.

Over the last few decades, West Africa has been tainted with political turmoil in places like Burkina Faso and Mali, with development often curtailed before governments, locals and shareholders can reap the benefits.

But those who have ventured and succeeded have shown the enormous wealth and rich geological potential on offer.

Several intrepid Australians were among the first modern-day explorers to test the region’s prospectivity in the early 2000s when large parts opened for business after long-running civil wars in countries such as Liberia, Sierra Leone and Côte d’Ivoire.

Ampella Mining and Orbis Gold both made multi-million ounce discoveries in Burkina Faso before being acquired by larger companies, as did Gryphon Minerals where Steve Parsons of Bellevue Gold (ASX:BGL) and now FireFly Metals (ASX:FFM) originally made a name for himself.

Perseus Mining (ASX:PRU) went one better and developed its Edikan discovery in Ghana into a profitable mining operation and now stands as one of the ASX’s top gold miners.

West Africa by the numbers

West Africa is far from being a homogenous region, playing host to a wide variety of political jurisdictions, languages and cultures.

It comprises 17 nations and is the source of about half the gold produced on the continent.

Africa’s gold production rocketed from 622t in 2010 to 979t in 2022 with West Africa contributing a hefty 531t, according to the World Gold Council.

Those numbers reflect a compound annual growth rate (CAGR) of 4% – higher than the global CAGR of 2% – highlighting the region’s capability to find, build, and operate gold mines effectively.

With favourable greenstone geology similar to that which host gold deposits in Western Australia and Canada, companies and investors interested in the region see it as one where new projects can transition from discovery to production relatively quickly.

West African gold has also become known for its active M&A scene, which is showing no signs of slowing down.

M&A activity

Many of these deals have taken place in Côte d’Ivoire, a hugely prospective up-and-coming gold region with a relatively young production history.

So far this year we’ve seen the acquisition of Tietto Minerals (ASX:TIE) by China’s Zhaojin Capital, Turaco Gold’s (ASX:TCG) acquisition of the Afema gold project from multinational mining company Endeavour Mining (TSE:EDV) and Many Peaks Minerals’ (ASX:MPG) deal for an 85% interest in exploration area held under joint venture by TCG and Predictive Discovery.

The most recent acquisition in Côte d’Ivoire is Aurum Resources’ (ASX:AUE) planned purchase of Mako Gold (ASX:MKG), billed as an avenue to build a standout West African gold exploration and development business.

The merger will create a gold explorer underpinned by a strong cash balance of more than $20m to progress the flagship Napié and Boundiali projects in the north of the country.

Aurum has six company-owned drill rigs operating at Boundiali, which is on the same greenstone belt as Resolute Mining’s (ASX:RSG) 11.5Moz Syama and Perseus Mining’s (ASX:PRU) 1.4Moz Sissingue.

It’s now ordered two new diamond drill rigs to deploy following the merger.

The company is backed by former Tietto founder Dr Caigen Wang and executive director Mark Strizek, who progressed the company from IPO to gold production and eventually a $768 million takeover at the Abujar project in Côte d’Ivoire.

Speaking with Stockhead, Canaccord Genuity senior mining analyst Paul Howard said Wang and Strizek have an excellent business model using Wang’s Chinese links to acquire drill rigs from China at half the price of its competitors.

“I think Mako and the management team got the projects to a certain place and it’s now a great opportunity for fresh eyes with a new exploration model to come in and move it all forward,” he said.

“Up steps Aurum with their cheap drilling and all of a sudden, they can achieve what Mako couldn’t for far less, so I think it’s a really nice tie up there.”

Ripe for discovery

Howard said Côte d’Ivoire also offers stability from a security point of view and is a great place for discoveries.

“It is probably one of the easier countries to operate in right now. It has become the preferred jurisdiction with favourable hurdles such as 10-15% government royalties pegged to the gold price and an effective tax rate of 30%,” he said.

The combination of substantial new finds and advanced, high-potential projects underscores why West Africa is continuing to emerge in the 21st century gold rush, despite threats posed by a series of nationalistic coups across largely Francophone states.

Last month, African Gold (ASX:A1G) uncovered a wide, high-grade gold vein of an eye-whopping 65m at 5.6g/t at the Blaffo Guetto prospect at the Didievi project, along with shallow intercepts of 9m at 1.7g/t of gold from 23m and 28m at 1.1g/t from 77m.

Not one for grandiosity, A1G said the results will go towards a ‘positive’ update to Didievi’s existing 4.93Mt at 2.93g/t resource, which at a 1g/t cut off translates to 452,000oz.

Didievi has other exciting prospects that remain substantially untested, says the explorer, including the Kouassi and Akissi prospects to the north of Blaffo Guetto and the 11km-long Poku gold trend located to the south-west.

And earlier this year Many Peaks Minerals added a further 644km2 of prospective gold tenure in Côte d’Ivoire with the acquisition of the Baga gold project from Atlantic Resources, increasing its total landholding to 1919km2.

The move was on the back of securing the rights to earn up to 85% of the nearby Ferké, Oumé and Odienné projects from Turaco Gold (ASX:TCG) and Predictive Discovery (ASX:PDI), by agreeing to sole-fund exploration to the feasibility study stage.

MPK’s permits cover an under-explored region of structural complexity which are highly prospective for orogenic gold deposits.

The company sold its Queensland assets in July to focus on continued activities in Côte d’Ivoire where it sees greater size and grade potential.

“The Birimian greenstone terranes in West Africa have demonstrated potential to host world-class gold deposits, and Cote d’Ivoire has proven to be a favourable jurisdiction for development and production,” MPK executive chairman Travis Schwertfeger said.

Explorers to watch

Gavin Wendt, founding director and senior resource analyst at MineLife, also sees enormous potential in West Africa with the new movers in Cote d’Ivoire attempting to replicate the success of companies like $2bn West African Resources (ASX:WAF) in Burkina Faso.

“The company has timed its run well, commissioning its Sanbrado project in 2021, which has allowed it to ramp up and reach full production at a time of record gold prices,” he told Stockhead.

Another company Wendt says has a strong chance of repeating this story is Toubani Resources (ASX:TRE), which is based in Mali.

“Its Kobada main deposit hosts 2.2Moz of predominantly free-dig, low strip ratio oxide gold over a strike extent of 4.5km with a definitive feasibility study set for imminent release and a development decision to be made in 2025,” he said.

“There is also significant resource/production upside, including additional oxide sources from the 50km strike length of prospective shears within the project.”

At Stockhead we tell it like it is. While Mako Gold, Toubani Resources and Many Peaks Minerals are Stockhead advertisers, they did not sponsor this article.