Burkina Faso, the gold reserve-rich country in West Africa, says its output of the metal will surge 60 percent to 20 metric tons in 2010 as it seeks to lure foreign mining companies including Newmont Mining Corp. and Vale SA.
Revenue from gold mining taxes will rise to $150 million in five years from $30 million last year, Abdoulaye Abdoulkader Cisse, the mining and energy minister, said in an interview in London, where he briefed bankers on the country’s reserves.
Burkina Faso, with six gold mines now, will add five over five years, Cisse said. Cluff Gold Plc and Iamgold Corp., which operate in the country, are in talks over new licenses, Cisse said. Newmont is studying whether to apply, he said. The state is also in “early stage discussions” with Vale, the biggest iron-ore producer, on a manganese deposit in the southeast.
“The country is very prospective from a geological point of view,” Charles Kernot, an analyst at Evolution Securities in London, said by phone. “Almost it’s a clean sheet as far as companies are concerned and that could increase the chance of finding things where other people haven’t looked.”
Douglas Chikohora, technical director at Cluff Gold, said the company operates in the country and is always looking for potential licenses there. Newmont, Vale and Iamgold officials couldn’t immediately be reached for comment.
The government plans to make changes in September to the mining code drawn up in 2003, and may increase royalty rates paid by resource companies, Cisse said June 28.
“We won’t change the corporate tax, which is 20 percent currently,” he said. “We’ll probably increase the royalty rate to a maximum 5 percent from 3 percent.”
The government also plans to cut the time it takes to begin feasibility work after getting licenses to six months from 18 months as some companies get the approvals and then speculate on their value without starting production, Cisse said.
In December, 800 companies sought exploration licenses, double the amount the government had forecast as the country’s mining industry attracts more interest from abroad, he said. More than 30 companies received permits, Cisse said.
“Clearly there’s an intention to encourage more companies to come into the country and invest in development and exploration of additional mines,” Kernot said.