Modern Mining September 2020

gold mining

Yves Koudou, audit manager at BDO Francophone West Africa.

Jeff Quartermaine, MD and CEO of Perseus Mining.

Perseus Mining MD and CEO Jeff Quartermaine, whose company has invested in Côte d’Ivoire and Ghana, agrees with Koudou and MacRae regarding the region’s mining resources, particularly gold. “In Ghana, this mineral endowment has supported a formal gold mining industry for over a hundred years. Prior to that, the indigenous inhabitants throughout the entire region mined material quantities of gold through arti- sanal mining activities.” He says that, in Côte d’Ivoire, the history of formal mining is consider- ably shorter than in Ghana, leaving the

have the significant investment required to develop mines.” She says governments in the region have in place incentives to attract investment as new mines mean job creation, the upskilling of the local workforce and significant contributions to the state treasuries from royalties and taxes. “Mining companies negotiate mining conven- tions which are usually beneficial, especially in the early years, with regards to tax rates. Crucially, these rates are generally fixed for the life of the mine to ensure fiscal stability and certainty. It is these ben- efits, alongside largely low cash costs and, therefore, likely higher return on investment coupled with sta- bility, that makes West Africa an attractive investment destination.” This, she says, contrasts the “investment deter- rent factors” in South Africa, such as the escalating costs at the country’s underground mines, regulatory uncertainty over the changes to the mining charter and socio-political uncertainty. Koudou agrees: “The mining codes of West African countries provide many tax exemptions for mining companies. For example, in Côte d’Ivoire, mining companies are exempt from income tax for a period of five years following first production.” MacRae, however, points out that operating in West Africa does have its challenges: “It can be a tough environment in which to operate, especially with the increase in attacks by Islamic militants over the years, notably in Mali and Burkina Faso. There is also political instability in the region, none as recent as the coup d’état in Mali in August, which overthrew the elected president.

Jill MacRae, BDO South Africa’s audit associate director.

country largely underexplored in relative terms and providing significant potential for future discoveries. “Since gaining independence from colonial rule around the middle of last century, both Ghana and Côte d’Ivoire have established robust democracies,” he says. “Although there have been brief periods of instability in their histories, both countries have established independent political and judicial sys- tems based on the rule of law, which have resulted in relative political stability. This is important for Perseus in terms of being able to attract both debt and equity capital needed to finance our developments.” He finds the fiscal regimes in Ghana and Côte d’Ivoire comparable to those of most other min- ing jurisdictions throughout the world and that they provide an opportunity for all stakeholders to share equitably in the material benefits that mining generates. “Both Ghana and Côte d’Ivoire have relatively sound physical infrastructure in the form of ports, roads, power systems and water storage, as well as education systems that generate a well-educated supply of indigenous human resources.” SRK Consulting partner and principal consultant Marcin Wertz refers to near-surface mineralisation

September 2020  MODERN MINING  29