Burkina Faso: Western African Resources gets its hands on the Toega gold mine

At its highest level for nearly a decade, the current price of gold is giving wings to Australian operator West African Resources, which, after launching its flagship Sanbrado project, has just announced the purchase of the Toega gold deposit for $45 million.

Located 14 km from the Sanbrado site and brought into production in March, the Toega gold project was previously owned by Canada’s B2Gold and its Cypriot partner GAMS Mining. Under the terms of the agreement, unveiled in an April 29 press release by West African Resources, an initial cash payment of $10 million will be made, followed by a further $10 million – payable in shares or cash – after the feasibility study is completed. The remaining $25 million will be paid in the form of a 3% net smelter royalty on net smelter revenues once the mine becomes operational. The agreement also specifies that B2Gold and GAMS will continue to receive a 0.5% royalty on future smelter revenues, up to a maximum of 1.5 million ounces.


However, the main winner of the deal is expected to be Western African Resources, with CEO Richard Hyde explaining in the note that « Toega is expected to increase the production profile and mine life of the Sanbrado mine…with the aim of integrating Toega ore into the Sanbrado mine plan…. In fact, by acquiring the Nakomgo exploration permit – where the Toega deposit is located – the Australian gold operator is seeking to implement synergies between the two mining assets, which will lead to a significant reduction in production costs, which currently stand at around $800 per ounce. With an ounce of gold trading at more than $1,700, the calculation is quickly done…


This windfall should also benefit the Burkinabe state since the Sanbrado site alone was expected, according to estimates by Western African Resources and before it was merged with the Toega mine, to generate between $350 and $400 million in revenue over a ten-year period. This estimate will de facto be revised upwards in the wake of the solid growth of Burkina Faso’s gold industry (from 35 tonnes mined in 2015 to 52.66 tonnes in 2018, excluding artisanal production)

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