DESPITE West African Resources’ efforts to present an alternative proposal, the Burkina Faso government has proceeded to grab a bigger stake in the Kiaka gold mine, just as it reaches full production.
Burkina Faso’s determination to extract more profit from its natural resource endowments, particularly gold, echoes moves by other West African governments such as Mali and Ghana.
The government announced in August it wanted to raise its stake in the mine to 50%, after previously exercising its option to increase its free carry from 10% to 15%. West African proposed instead that the government increase its participation in and revenue from new and previously closed mining projects.
On 16 April, the government published a decree authorizing state-owned mining arm SOPAMIB to raise its stake in Kiaka to 40%, for which it will pay A$175 million.
West African said it hoped to conclude the transaction by the end of the calendar year, and would distribute the proceeds to its shareholders as a special dividend. The company’s shares, which had been suspended from trade on the Australian exchange at its own request since late last week, dropped 0.53% to A$3.42 when trade resumed.
Kiaka, which produced 65,704oz of gold in the first quarter, was expected to contribute 240,000 to 280,000oz to the company’s total forecast gold output of 430,000-490,000oz this year. West African also operates two other mines in Burkina Faso, Sanbrado and Toega. They are not affected by the government decree. The company’s goal is to be a sustainable 500,000oz/year producer by 2029.
