Burkina Faso ruler threatens gold licences, but Endeavour downplays comments

Endeavour Mining (TSX: EDV; LSE: EDV; US-OTC: EDVMF) and West African Resources (ASX: WAF) say their operations in Burkina Faso are unaffected after the country’s president said some mining licences may be revoked.

President Ibrahim Traoré made the comments in a local radio interview on Saturday, the companies said in releases. The leader of the country’s military government, which has been in power since a coup in 2022, said the country could mine its own gold without foreign companies, according to Reuters.

Endeavour, West African and Orezone Gold (TSX: ORE; US-OTC: ORZCF) operate mines in the country producing hundreds of thousands of ounces of gold a year. Burkina Faso is among countries in the region including Niger and Mali that have seen juntas assume control in recent years to fight militant Islamists. They have also sought to revise mining codes to squeeze more out of foreign miners.

“Endeavour remains a trusted partner to the government of Burkina Faso and can confirm that it is not currently aware of any plans to revoke any of its mining permits,” the company said in an emailed statement on Monday.

Shares in Endeavour Mining fell 3.6% by mid-Monday in Toronto to $30.50 apiece, valuing the company at $7.5 billion. Orezone fell 14% to 74¢ each for total capitalization of $341.5 million. West African Resources closed 20% lower in Sydney at A$1.34 (C$1.23) for a market value of A$1.5 billion.

Close ties

West African Resources issued similar comments and suggested the government is targeting other enterprises. The company won best mining company this year at the second consecutive Salon International de l’Énergie, des Mines et des Carrières industry fair in the country, and says it has been engaged with officials on the country’s proposed new mining code.

“President Traore has spoken previously about taking action against miners who have not adhered to the mining code and also regulating the semi-mechanised and artisanal mining sectors,” West African said on Monday. “The government remains supportive of West African Resources’ position in Burkina Faso.”

Endeavour operates the Houndé and Mana gold mines in Burkina Faso, where the government has 10% stakes. West African Resources runs the Sanbrado mine where it expects to produce as much as 210,000 oz. this year. Orezone has raised US$105.4 million for the stage-two expansion of its Bomboré mine in the country.

Geopolitics

The West African region has seen the withdrawal of troops from the United Nations and former colonial power France. Regional leaders ordered them out, criticizing them for not being able to defeat Islamic insurgents who’ve been increasing attacks for more than a decade.

Russia and its state-backed mercenary outfit Wagner Group has filled some of the gap, notes Justin Hedges, executive chairman at London-based risk consultancy Prevail Partners.

“For the mining industry this can mean licences being revoked and handed to rival, Russia-backed businesses,” Hedges told The Northern Miner by email.

“There are few easy solutions to this. Crucially, mining businesses will need to take a long-term, strategic view of their operations,” the analyst said. “Shorter-term, there will be greater need for intelligence gathering, so that the industry can do its best not to be caught on the backfoot by capricious decisions such as this.”

Output rises

London-based Endeavour, which also operates in Côte d’Ivoire and Senegal, increased overall production by 15% in this year’s second quarter compared with a year earlier to 251,000 oz. for total first-half output of 470,000 oz. at an all-in sustaining cost of U$1,237 per ounce. The company expects Houndé to produce as much as 290,000 oz. this year

“The government remains supportive of Endeavour’s position in country as evidenced by the recent successful settlement agreement that Endeavour signed, involving the state of Burkina Faso, in respect of the divestment of the Boungou and Wahgnion mines, for which Endeavour has now received the first US$30-million payment.”

Endeavour sold its stakes in the Boungou and Wahgnion mines more than a year ago to Lilium Gold, a unit of Washington, D.C.-based Lillum Capital, in a US$300-million deal involving cash and royalties.

West African Resources led The Northern Miner’s Drill Down of top gold assays twice this year while drilling to expand its Sanbrado gold mine southeast of the capital, Ouagadougou. The company says it’s on track to produce 4 million oz. over the next decade, with annual production set to peak in 2030 at 494,000 oz. of gold.

“Operations at Sanbrado and construction at Kiaka are progressing without interruption,” West African said.