March 23, 2009 / 2:48 PM / 11 years ago

Burkina Faso eyes Africa's fourth gold slot

OUAGADOUGOU (Reuters) - Burkina Faso, a cotton-dependent West African economy, aims to become a regional mining centre and the continent’s No. 4 gold producer in the next three years, mining officials said.

The poor landlocked country, which sits between Ghana to the south and Mali to the north — Africa’s number two and three top gold producers respectively — has been mining gold industrially for less than two years, but wants to expand rapidly.

South Africa is the continent’s top gold producer and is ranked second in the world after China.

“We have four mines in production, we have four mines under construction, and one more that is yet to start,” Ki Seka, Director General of Mines, Geology and Quarries, told Reuters in an interview at the weekend.

“We can take the fourth position, but it’s not certain.”

The four mines operating are sitting on reserves of 117.5 tonnes of gold, while five other projects would bring more than 250 tonnes of additional reserves into production.

Gold output was 5.5 tonnes in 2008, and Seka said the same four mines would eclipse that in 2009.

High River Gold was the first company to start gold production, in October 2007, after an eight-year industrial gold mining hiatus in the country.

High River lost a year of production due to mechanical difficulties with its grinding mill, and none of the other three gold mining companies — Etruscan, Semafo and Cluff Gold — have yet been producing for a year.

Toronto-listed Iamgold last month acquired the country’s largest deposit, at Essakane in the Sahelian north of the hot country, a $350 million project.

In addition to its gold prospects, Burkina has a manganese and a zinc mine under construction, and a second manganese mine under consideration.

Manganese project Tambao, backed by Dubai-based Wadi Al Rawda, the country’s first Middle Eastern mining investors, is studying a manganese deposit.

“With all these mines developing, Burkina will become a mining country,” said Seka. “They can add value through taxes and employment, and the sector will have an important role in the economic domain.”

“LUCKY TO HAVE GOLD”

Gold revenues are a tenth of those from cotton, on which 20 per cent of the population and much of government’s budget rely.

The World Bank recently said Burkina should diversify its economy in an effort to insulate it from factors outside its control, such as the global financial crisis, which threatens the price of cotton, aid flows and remittances sent home its nationals living abroad.

Gold is among the few beneficiaries from the world credit crunch, as investors seek refuge in what they believe to be a safe store of value.

World prices have risen by 9 percent to around $950 per ounce since the start of the year, and many analysts expect prices to exceed $1,000 per ounce in the near future.

“For the mines under production there’s no problem because the price of gold is very high,” said Seka. “With the world crisis, Burkina is lucky to have gold mines.

Geologists say more gold finds are likely. To date, Burkina Faso has mapped only 40 percent of its territory.

“Each day we increase the potential,” Pascal Diendere, General Director of the Bureau of Mines and Geology of Burkina (BUMIGEB), told Reuters.

“We are still finding new zones of interest. We are trying to get to 100 percent cover, but that depends on our means.”

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