Roxgold started life as a junior gold explorer with a joint venture earn-in agreement for the Yaramoko property, located within the gold-rich Houndé greenstone belt in Burkina Faso. The company began exploring the property in 2011 and eventually made a discovery with the 55th drill hole of the programme; hence the name 55 Zone. After taking the project through the first rounds of exploration, the 55 Zone emerged as a high grade discovery and a very coherent deposit according to Roxgold’s president and CEO John Dorward. A feasibility study for an underground mine followed in 2014 and commercial production was declared in October 2016. During the last three and a half years of production, the project has consistently delivered a high return on capital, based on double digit grades and low costs.
A premier gold jurisdiction
“We have gone from a virgin drill hole discovery to having a producing gold mine in five years. There are very few jurisdictions where you can legitimately achieve that in that amount of time,” says Dorward.
This reference is a testament to Burkina Faso’s rising status as a premier gold mining jurisdiction on the African continent. The industry has been booming in recent years, becoming Africa’s fourth largest gold producer in 2017 and Burkina Faso expects to announce another record year of gold output for 2018.
During its time in Burkina Faso, Roxgold has experienced a jurisdiction with a pro-mining and pro- foreign investment stance, along with a permitting process that is clearly established, articulated and not bound in superfluous red tape.
Recent security challenges are a genuine concern for Roxgold and the country’s mining investors, however Dorward remains steadfast in his belief that Burkina Faso is a premier gold mining jurisdiction.
Since becoming a cash generative company via gold production from 55 Zone, Roxgold has been able to pay down a significant portion of its project finance debt, while also turning to additional developments, most notably making its first acquisition in April.
“We acquired the Séguéla gold project in Cote d’Ivoire from Newcrest for $20 million and are in the process of updating the resource statement to be 43-101 compliant. We like what we’ve seen so far and definitely think it’s going to be Roxgold’s next gold mine in West Africa.”
Roxgold has already started exploration drilling at Séguéla’s Antenna deposit and has a number of satellite targets that will be drilled, with the aim of increasing resources and ultimately compiling a preliminary economic assessment and a feasibility study for Séguéla.
2018 operational performance
In 2018, the company was able to increase year-on-year gold production by 4% to 132,656 ounces, with an average head grade of 13.5 g/t from a record 307,591 tonnes of processed ore. Dorward puts this improved operational performance down to increased efficiencies at the mine and mill.
“The mill has consistently run above nameplate capacity. We did a few things in the original design, such as installing a larger motor in our SAG mill, which has helped us sustain a higher than nameplate throughput capacity.
“We have also invested a significant amount of capital upfront in underground development of the mine. Contrary to a lot of underground mines, we are well in front of where we need to be. If there is an issue in one part of the mine, there are other areas we can work in and maintain our productivity levels. I think it’s been a productivity driven story,” says Dorward.
This year, Roxgold’s gold output is set to be further boosted by the arrival of a second gold producing mine within the Yaramoko project. First ore was produced at Bagassi South in October 2018 and it’s expected to reach commercial production in Q2 2019.
The successful development of Bagassi South has been coupled with an expansion of the processing plant at Yaramoko, which was completed in December 2018 and increased capacity by nearly 50% from 750 tonnes per day (tpd) to 1,100 tpd.
“This is a significant milestone for us and a very important addition to the Yaramoko mine. Not only does it enable us to support the expansion of the processing facility, it also brings mutual mitigation to the story. Underground mining can be a challenging business and having a second deposit lowers the overall risk of the project.”
Roxgold has also identified further resource growth potential at both 55 Zone and Bagassi South, which it will look to explore in the near term. At 55 Zone, the company has drilled the shoot to a depth of over 1,000 metres and will publish an updated resource at the end of Q2. Meanwhile, Roxgold will focus on near surface infill drilling at Bagassi South in the coming months.
Roxgold has worked closely with a number of service providers in the development and operation of its facilities at Yaramoko, including African Underground Mining Services (AUMS) – a division of Australian contractor Ausdrill.
AUMS have been active in the African underground mining sphere for many years and were in fact initial investors into Roxgold, participating in equity financing for the Yaramoko mine. As a result, AUMS and Roxgold have a strong relationship and a good alignment of interests.
“They recently won a contract for Bagassi South, which was a 12–month extension of the overall Yaramoko mining contract. We saw quite a decent reduction in costs to reflect that ongoing relationship and the increased volumes. AUMS are by far our biggest contractor and are quite embedded with us in terms of the operating procedures.”
In addition, Roxgold has also used Geodrill for exploration work and drilling in Burkina Faso and now in Cote d’Ivoire as well. ATS is Roxgold’s camp and catering contractor, while various construction services have been provided by DRA and Group Five out of South Africa.
“We’ve had a number of significant contractual arrangements and by and large they’ve all been positive for us. We’ve had good interaction with our partners,” Dorward declares.
At the Yaramoko mine, Roxgold has made a concerted effort to build a workforce of primarily Burkina Faso nationals, in a show of support to the country which welcomed its arrival into the mining sector.
“We run with a very low level of expatriates and over 90% of our workforce is Burkinabé, many of whom hold senior positions within the operating team.
“There is not a very long history of underground mining in Burkina Faso, so there weren’t as many underground mining engineers in Burkina, but we are now starting to see that develop,” Dorward continues.
During the permitting process, Roxgold also committed to training and hiring locals from around the mine site, running an apprentice programme for youths from the local village. The apprentices were sent to work with one of the company’s construction contractors, gaining valuable skills of the trade. The apprentices were then hired by Roxgold to become a key part of the plant processing and maintenance team.
Dorward believes that, in addition to local procurement practices, the most important single contribution that the company has made to the local communities has come in the shape of secure full-time jobs. “We’ve brought a large number of well-paid permanent positions. They work a full week and earn significantly higher incomes than what they otherwise would.
“That flows through the community and helps households. It’s a much more vibrant community now, you see a lot more investment in terms of commercial activities, shops and small businesses being established.”
In addition to bringing lucrative employment opportunities, Roxgold has also organised several community investment programmes in the local area, including teacher training, agricultural workshops and solar electrification for medical centres.
“I think as a responsible mining company and a good neighbour, we are making a very positive contribution in the local communities.”
West African expansion
After establishing itself in Burkina Faso, Roxgold is now excited to be moving into Cote d’Ivoire with the acquisition of the Séguéla project. Dorward believes that Cote d’Ivoire has been historically underexplored despite having extensive greenstone belts that run down from Burkina Faso, Mali and Ghana.
“The terrain is very fertile for gold discoveries and there are several examples of large gold deposits in Cote d’Ivoire such as those owned by Randgold Resources [now part of Barrick Gold]. We think the property we acquired has a lot of upside.
“At Séguéla, the Antenna deposit will get larger but I think the main story will be around the large number of satellite targets that we are starting to drill. The potential is there to bring those into resource status and ultimately into production. It should be low capex, high returning operation and will sit very nicely next to Yaramoko.”
After expanding into Cote d’Ivoire, Dorward feels that the company is right at home in West Africa, with a management team that is highly experienced in the region and well-equipped to take on additional projects further down the track.
“West Africa is the most logical area for us to be looking, but good projects are hard to find so we keep an open mind as to what might be available. We stand to benefit from the skill of our team and the significant amount of cash that Yaramoko will be generating in the coming years,” he concludes.