MACIG Connect Series
Roxgold has undergone major political crises in Burkina Faso before emerging as a leading gold producer with its Yaramoko mine.
Can you provide a brief history of Roxgold and the evolution of your flagship project in Burkina Faso?
The exploration permit for the Yaramoko project was emitted in 2004, and the previous owners of the permit, Riverstone Resources, had already done a significant amount of work on the ground when Roxgold acquired the tenement in 2011. Upon conducting our own intensive drilling operations, we literally struck gold with drill hole 55, where we came across a significantly high-grade vein. This is why our principal deposit and the surrounding area is now known as Zone 55. In 2014, we completed our definitive feasibility study and initiated the permitting process.
Regretfully, when I landed in Ouagadougou to lead the project in November 2014, Burkina Faso was in chaos. President Compaoré had just fled the country after a popular uprising and there was no government. To make things worse, we realized that the mining permit extended to us was not valid due to a typo, which named another company in the document. Things got even more complicated when two out of our three financiers pulled out because of the higher political risk.
When the transitional government was appointed, they did not know Roxgold, and we had to start our mining application process over again. Although it was a very difficult time in Burkina Faso, we successfully weathered the storm. We promptly created a relationship with the new government, negotiated with the population around our concession, and initiated a peaceful compensation process.
After obtaining our mining permit in January 2015, we finalized the compensation of landowners around Zone 55 in March and in July 2015, the mining convention was signed. Construction then started with funds from our supportive shareholders supplemented with $75 million loan finance from French banks, BNP Paribas and Société Générale. The IFC also joined the bandwagon, injecting a further $15 million into our project. The capital project cost was estimated at $111 million but we successfully completed the mine within budget and in less time than planned.
With setbacks in timing, government procedure, financing, and in-country conflict, how did Roxgold manage to complete the project so efficiently?
Although Roxgold faced a significant amount of challenges, including the side effects of a military putsch in September 2015, our accomplishments can be attributed to the savvy recruitment processes we used to build the right team and the thoughtful selection of our business partners. We also managed our communication and actions to get the required support from the Government and the blessing of the communities. Building good relationships with the communities and ensuring peace is critically important for any mining venture and we continue to give priority to local recruitment. We also chose to get involved at an early stage in community capacity-building and social investment. This resulted in resounding and unanimous support from traditional leaders who in turn influenced their people in our favour.
Burkina Faso is a land of opportunity for profitable business if one can manage his project intelligently, bringing different cultures to work together without a clash while maintaining a communicative relationship with the local people. Roxgold’s motto might be “Best in Class” but our tag word is “Respect”. We are respectful of the Government, of communities, of the environment and of the law of the country where we make a living. It is very important to understand and respect the culture of the different ethnic groups within the country where you operate, and Roxgold has built up a very strong CR (Community Relations) team to maintain permanent communication and create synergies between the population and our company.
Can you elaborate on Roxgold’s exploration strategy now that you have expanded your budget?
We have been producing more than anticipated. We are presently pouring over 10,000 ounces (oz) of gold per month. Our Feasibility Study had assumed a gold recovery rate of 96.9% but our processing team has been able to exceed this figure, even attaining 99% recovery in August. When we requested our mining permit, we had conservatively calculated for 10 years, but with our present performance and ongoing exploration, it is highly probable that we shall extend production to 20 years or more!
We are presently drilling in the 6 exploration permits which we now own after the recent acquisition of the Houko tenement situated next to the Yaramoko exploration permit. We have three other permits in the North East of Burkina Faso, and one in the South West. Existing data and signs of mineralization give us confidence that our existing portfolio of permits shall give birth to other productive mines.
Is Roxgold looking to expand operations beyond Burkina Faso?
I know that our CEO has plans to develop our company presence in other countries but, for the time being, we’ve got a firm footing in Burkina Faso and we feel we belong here. Roxgold has invested significantly in Burkina Faso, and the country will remain our primary focus for the near future. With three companies in Burkina Faso and a team of about 500 dedicated people, we believe we are well poised to grow. There is still a substantial amount of work to do in Burkina Faso. There’s more gold to find and new deposits to unearth. And we feel the Burkinabè people and Government really like us.
What problems is Roxgold proactively working to solve as to ensure successful production levels?
The administrative, financial and technical aspects are well within control. Security, however, could be an issue, but Roxgold is quite safe given our geographic location within the country. Security is paramount for us and we employ about 100 experienced security personnel. Though it is a big concern for the region, we are not as vulnerable as companies operating in the Sahel belt, north of Burkina Faso.
What is your vision for how Roxgold will grow in the coming year?
Roxgold wants to maintain productivity and production at this present rate. We also aim to keep the same health and safety results for the future. We have worked more than 1 million hours without LTI and we intend to keep the same level of safety awareness in our own team and subcontractors. Yet, despite present successes, we refuse to be over-optimistic, and we are continuously working on compliance and refining our procedures and policies. Our goal is to see all of our exploration permits giving birth to great mines where we harm neither people nor nature.
Do you have a final message for the international mining community and investors looking at Roxgold?
We’ve got a great mine and great dreams for the future. Though other gold mining companies in Burkina Faso are struggling with specific problems, Roxgold is in a class of its own and our only true commonality is being in the same country of operation as others.
For instance, the Yaramoko mine is currently the only underground gold mine in Burkina Faso. The benefits include a negligible environmental impact. We’ve also got the highest gold concentration mill grade feed in the country. Besides, our resources are being continually ascertained and we are confident in our assets moving forward. Roxgold is indeed a “Best in Class” investment!