BURKINA Faso has introduced a new royalty an gold sales which takes into account gold prices above $1,500 per ounce whereas previously it levied a flat 5% between $1,300 and $1,500 per ounce.
The West African country will now apply a 6% levy when the gold price trades between $1,500/oz and $1,700/oz increasing to 6.5% and 7% when it trades between $1,700/oz and $2,000/oz. At a gold price above $2,000/oz a levy of 7% will be maintained.
A decree putting the new levy on gold production into action was signed on October 27 and is aimed at bringing the country’s royalty system into line with neighbouring gold mining jurisdictions, the government said.
Gold output in one of Africa’s biggest producers dropped 13% to 58.2 tons in 2022, according to government data cited by Bloomberg News. At least five mines closed down amid deteriorating security followed by two coups that year.
Military leader Colonel Ibrahim Traore came to power in September 2022 after toppling the regime of fellow soldier Colonel Paul-Henri Sandaogo Damiba, who seized power in January of the same year.
“The rates are capped at 7% over $2,000 per ounce, which results in a modest $6 to $8 increase per ounce in West African Resources’ 2023 all-in sustaining cost (AISC) per ounce at current gold prices,” said Richard Hyde, chair of West African Resources.
The company added it did not expect the increase in royalties to negatively impact debt funding of its 7.7 million oz Kiaka gold project in Burkina Faso. The project’s funding uses “conservative gold price assumptions in the range of $1,700/oz over the period of the loan,” the company said.
A spokesperson for Endeavour Mining Plc, Burkina Faso’s largest gold producer, declined to comment when contacted by Bloomberg News.
Traore’s pledge to restore control over territories lost to the militants has seen attacks by armed actors continue unabated.
International partners such as the US and France have suspended aid and budgetary assistance following the coups.