ENDEAVOUR Mining said it was committed to West Africa despite signing a joint venture to look for gold in Kazakhstan, and mining code uncertainty in the region.
The JV with East Star Resources, a London-listed exploration firm, will see Endeavour invest up to $25m ahead of a feasibility study in “tier one” gold deposits in central and northern Kazakhstan. The agreement represents the first time Endeavour has looked outside of Africa for growth having only previously mined in Mali, Senegal, Côte d’Ivoire and Burkina Faso.
“We still see good potential in West Africa,” said Ian Cockerill, CEO of Endeavour in a third quarter presentation on Thursday. “We’ve just got to go and look for it. So we are certainly not walking away from West Africa. Far from it,” he added.
“The reason why we’re expanding and taking sort of baby steps outside of West Africa is we’re actually looking longer term,” Cockerill said. “We’re looking for the mines that we will develop in the 2030s.”
Cockerill’s comments come as a number of African nations look to re-write mining codes which provide them with a greater share of mineral deposits, either through equity or taxes including royalties.
Recent speculation is that Senegal is planning an imminent change to its mining code. Citing President Bassirou Diomaye Faye, Bloomberg News said the country will likely adopt a new mining law as early as the year-end.
“I think there’s a huge difference between an aspiration and an ability to deliver,” said Cockerill when the comments attributed to the president were put to him. “Every country around the world is looking at ways of grabbing extra tax dollars,” he said.
“If you’re asking me is there going to be a change by the end of the year, I would say that’s not going to happen,” he said.
“If you are asking me what is the trajectory [of mining code changes], I think it’s fair to say, like in all countries, [it] is likely to be higher, but over the longer term, on a timeline which I’m afraid at this stage I can’t actually define.”
Endeavour was not currently in negotiation with Senegal, he said.
On November 11, Senegal’s ruling party said it was dissolving the coalition that brought President Bassirou Diomaye Faye to power in a move that heightens political uncertainty as the West African nation tries to resolve a debt crisis.
Endeavour operates the Sabodala-Massawa mine in Senegal where there is a mining convention that extends to 2040. There is no convention for Assafou, a promising prospect in Côte d’Ivoire that Endeavour wants to develop.
The country is in negotiations with its Chamber of Mines on changes to how foreign investment is treated. “The state’s primary focus appears to be, amongst other things, on the royalty rate,” said Guy Young, CFO of Endeavour.
Regarding Ity mine, also in Côte d’Ivoire, Young said there was a stabilisation clause the firm would “rely on to avoid any near-term increasing royalty”. He added, however, that Ity’s mining convention is due for renewal.
“We would hope to be signing a convention relatively soon,” he said.
“But there is no doubt there is ongoing and upward pressure from all of the states, including Côte d’Ivoire, particularly in terms of that royalty rate.”
Jurisdictional risk is a major question among mining company shareholders, especially in gold. Barrick Mining recently parted ways with its founding CEO Mark Bristow amid rumours there is dissatisfaction with its exposure to places like Mali, where there is a dispute over the Loulo-Gounkoto mine.
