Burkina Faso’s director-general of the mining registry, Mamadou Sagnon, has moved to assure investors that the government’s request for a greater stake in West African Resources’ (WAF’s) new Kiaka gold mine is not a mandatory demand, but rather an option under the country’s revised mining framework.
Speaking on the final day of the Africa Down Under conference in Perth, Sagnon said that the government’s July 2024 Mining Code had raised the State’s free-carried interest in mining projects from 10% to 15%. The Code also allows for the government or national investors to acquire additional equity in projects on commercial terms.
“In the case of West African Resources, the government addressed a letter to solicit the opening of participation up to 35%,” Sagnon explained. “For the moment, it is a solicitation – it is not forcing.”
Sagnon stressed that the measure was intended to strengthen confidence in the sector, rather than deter foreign capital.
“We believe that if the State is in the participation of the company, there will be more confidence to stay in the country and make more investment,” he said.
His comments follow concerns among international investors about the impact of rising resource nationalism in West Africa, where several countries have recently redrafted their mining codes to secure greater local benefit.
Mirey Lopez, general manager of sustainability for WAF, directed all questions regarding the government’s request for a greater stake Kiaka to the company’s website for announcements and the most recent information regarding the issue.
“We are in dialogue with the government and we are looking forward to a resolution,” she said during her presentation at the mining conference.
WAF’s shares are currently suspended on the ASX.
The Kiaka project recently entered production and is one of Burkina Faso’s largest new gold developments, with output expected to average at about 234 000 oz/y for 20 years from 2025.
Last week, WAF confirmed that it had aligned the equity ownership of its three mining projects, Sanbrado, Kiaka and Toega, with the new Mining Code. This resulted in the government’s free carried equity interest in each of WAF’s three operations having increased to 15% and the equity interest of the company reduced to 85%.
WAF also revealed last week that the Burkina Faso government had enforced a non-discretionary dividend rule.
In August, Somisa, the WAF subsidiary that owns Sanbrado, declared a $98.35-million priority dividend to the government, equal to 15% of its retained earnings to end-2024 under OHADA accounting standards.
“In communications with the State on the above-explained priority dividend for 2024, it became apparent that payment of an annual priority dividend to the State in compliance with the text of the Mining Code has become non-discretionary,” said WAF.
The company stated that it expected that Somisa, Kiaka SA and Toega SA would each be required to make yearly 15% profit distributions going forward, with WAF entitled to repatriate its remaining share.