Sahel talks spur West African Resources’ ASX return

The Australia Stock Exchange reinstated West African Resources’ (ASX: WAF) shares after the company reported progress in discussions with the Burkina Faso government, which has sought to nationalize natural resources.

WAF, which operates the Kiaka gold mine in south-central Burkina Faso, proposed “raising national participation and government revenue from the development of new and closed” mine projects in the Sahel country, the company said Tuesday. It offered that instead of acceding to the government’s request – made in August – to raise Burkina Faso’s equity interest to 35% from 15% in Kiaka. That demand forced a trading halt of WAF’s stock on the ASX.

“We appreciate the constructive engagement and continued support of the Government of Burkina Faso,” WAF executive chairman and CEO Richard Hyde said in a release. “Our discussions regarding the ownership structure of our recently constructed Kiaka Project have reflected a shared vision to develop a strong and sustainable mining industry that benefits the Burkinabé people and delivers long-term value for all stakeholders.”

Signs of change

The developments between the Burkina Faso government and West African Resources follow potential signs that government-miner relationships in the Sahel region are changing. Earlier this week, Barrick Mining (NYSE: B; TSX: ABX) announced it had reached an agreement with the Mali government to end their bitter fight over the company’s Loulo-Gounkoto gold complex. In September, GoviEx Uranium – now known as Atomic Eagle (ASX: AEU) – and the Niger government agreed to extend a pause in international arbitration over a dispute related to the Madaouela project by another six months.

Military governments in the Sahel region of West Africa, which have taken power in recent years in bids to stop Islamic terrorism, have worked to reapportion wealth from agreements with Western mining companies in the name of resource nationalism. The increased control over miners by the Mali, Niger and Burkina Faso governments has come through revised mining codes.

Talks to continue

Discussions between WAF and the government – under its mining agency Société de Participation Minière du Burkina Faso (SOPAMIB) – would continue, the company said.

Operations at WAF’s Sanbrado and Kiaka mines weren’t affected during the talks with the government, Hyde said. The company is on track to reach group production guidance of 290,000 to 360,000 oz. of gold this year. Kiaka, which poured first gold in June, is ramping up to commercial production and is expected to average 234,000 oz. annually for 20 years.

WAF’s Sanbrado and Toega mines in Burkina Faso weren’t part of the discussions with the government, the company said.

Orezone Gold’s (TSX: ORE; US-OTC: ORZCF) Bomboré mine, about 150 km southeast of Kiaka, was unaffected by the government’s nationalization push. Burkina Faso made no requests for equity interests.