West Africa's Birimian Trend - The Next Carlin / Cortez ???
By Reginald W. Ogden
Sep 24 2007 3:53PM
www.kitco.com
The distribution of gold and precious metals throughout the world is more widely disseminated by continent, country and region than most base metal deposits.
Until recently, however, the modern technical and geological exploration for gold has been concentrated in modern Western based capitalist democracies.
Since the break up of the Soviet Empire, and the resulting disillusion with socialist and statist dictatorships in previously colonial countries, many of these countries have embraced democracy and the rule of law. Coupled with the globalization of finance and trade, it has led to a change in the outlook of the risk / reward ratio for exploration in developing countries.
Due to the historic uneven distribution of financing for gold and gold centered exploration and development, it has been customary to divide the world into sectors based on exploration, development, financing and production rather than on distinct geologically based regions and trends.
This type of categorization causes countries like the U.S.A. and Canada to be compared to whole continents, such as South America and Africa. In the case of Africa, this causes the declining production of South Africa to obscure and offset the rapidly expanding exploration and funding of production throughout West Africa.
The Birimian trend is a distinct geological trend and currently the base for the fastest growing gold production and exploration area in the world.
A brief glance over the last ten years at the development in West African gold mining shows a marked similarity to the development of the Carlin belt in Nevada, with West Africa poised to follow the rapid escalation in production that occurred in the Carlin belt in the early 1990s.
In my book, The Ultimate Gold Stock Trader, it was pointed out that until recently almost all of the exploration for gold and precious metals in the Free World had been concentrated in the English speaking world. The former British colonies, the U.S.A., Canada, Australia and South Africa had seen the bulk of exploration and development spending. Unless one believes that God favoured English speaking people in handing out mineral resources, a rational person would contend that similar geologic potential exists in the non-English speaking regions for gold exploration as well. This is in sharp contrast to oil and gas exploration, where resources and exploration rights are increasingly becoming the preserve of State controlled entities.
In recent years, gold and precious metals production for the English speaking world, despite numerous tax benefits and subsidies, has been in decline as most of the slow rabbits have been caught. In these countries, most of the new developments are of large, low-grade gold and/or copper/gold projects previously identified but placed on hold due to lower prices for both base and precious metals. These properties have only recently been deemed to be economic. Such projects can be described as “shelf properties”; taken down and dusted off, rather than new or initial discoveries.
New grassroots discoveries are being made but mostly in non-English speaking countries. The fastest growing area for discovery, development and production is West Africa.
While there has been a large increase in production from Russia, these projects are mostly “shelf properties” as the old Soviet empire lacked the technology, exploration expertise, capital and development know-how of Western capitalized mining companies to place them into commercial production. Most of the Soviet empire’s gold production came from placer properties in Siberia using gulag based criminal and political prisoner labour.
There is a large amount of latitude in defining gold structure trends. In the case of the Carlin and Cortez trends in Nevada, they are extremely concentrated over a narrow geological region, whereas the Carpathian that runs through Eastern Europe and the Wittwatersrand in South Africa cover extensive geographical areas. In West Africa, most producers are based in the Birimian trend, which passes through several countries.
To place West African gold exploration and development into historical perspective, one can draw an analogy to the development of the Carlin and Cortez belts in Nevada. If Nevada were a separate country it would rank within the top five countries in the world for gold production. To date, approximately one-third of its known resources of two-hundred million ounces have been mined, with well over forty gold mines along the Carlin trend, which can be compared to twenty-five mines in production within the Birimian belt.
Although there are over forty mines currently producing along the Carlin and Cortez trends, a large percentage of the total production comes from a few large, deep mines. With the exception of the one-hundred year old Ashanti mine in Ghana and the Loulu mine in Mali, very little deep exploration has occurred to date due to the proficiency and ease of discovery of open pit mines on the Birimian trend. It is just a question of time before exploration follows “the yellow brick road” to depth. While the overall Carlin trend is forty-five miles long by three miles wide, most of the deposits lie within the heart of the trend in an area eighteen miles long by two miles wide. Some of the open pits along the trend are located adjoining each other.
Between 1961 and 1963, Newmont had identified over three million ounces in the trend. Newmont’s first mine at Carlin began production in 1965. Four to five years after Newmont began exploring the area it began mining open pit resources. It was not until 1994 that it began underground mining. By 2005, it had thirteen open pit and four underground mines. Placer Mining, in the late 1990s and early 2000s, made discoveries in the Cortez-Piedmont pipeline area – an adjunct to the Carlin trend. It is now known as the Battle Mountain-Eureka-Cortez trend and by 2005 it had identified fifty million ounces of gold resources. The structurally controlled disseminated gold was divided into two basic geological structures. The low-grade, leachable deposits occurred in the upper plate and the multi-million ounce, more metallurgically complex higher grade deposits, occurred in the lower plate.
The development of Nevada into a world-class mining area can be divided into three basic eras based on both technology and the development and understanding of Nevada’s geological structures:
The 1880s to the 1960s, when only outcrops were tested.
The mid 1960s to the 1980s, when as a result mainly of the work of “Mr. Carlin” – Ralph T. Roberts at the USGS – led to an increased understanding of Nevada geology, which in turn led to the design of exploration programs that initially concentrated on the upper plate, lower grade leachable targets.
The era of concentration on deep exploration targets below known surface deposits and beneath geological heavy overburden, with the emphasis on stratigraphic and structural intersections.
Over the past seventeen years, fifty-percent of the non-oil mineral exploration in the world has been aimed at gold. Given that the average gold mine has life of eight years, versus thirty years for a base-metal copper mine, a large number of discoveries need to be made in order to replace expiring mines. In one of its recent surveys, the USGS listed the one-hundred most prospective mining projects in the world based on publicly available data. Sixty-seven of these projects were primarily gold and gold associated precious metals properties; with nine being in the U.S.A. (five in Nevada), twenty-five in Canada and seventeen in Africa (excluding South Africa).
A reassessment of political risk occurred when countries such as Mali and Senegal modernized their mining codes in order to encourage foreign investment. Existing and old mining camps that have been heavily explored with modern geophysics and geochemistry make it difficult to make major discoveries. Even when fully allowing for political and currency risk, there is a growing realization by mining companies that the highest risk/reward ratio exists in developing countries. The ongoing struggle to replace resources has made exploration in developing countries the norm, rather than exception.
Although, over the past ten years, many junior and independent mining exploration companies have explored Nevada, their overall success ratio does not compare with the much smaller number of juniors and independents that have ventured into West Africa. Companies such as Axmin, Nevsun, Orezone, Etruscan, Oromin Explorations, Randgold, IamGold and Mineral Deposits Limited have all enjoyed enormous success in West Africa. Etruscan has been in West Africa for twelve years and is probably the largest land owner, with claims of over ten-thousand square kilometres spread over five West African countries. Many of these companies, such as Oromin and Etruscan, have discovered multiple zones, with multiple open-pit potential, without having to go to great depths.
As major and multinational companies have consolidated, they have cut the exploration budgets of the companies they have acquired. At the same time, many juniors and independents have been able to raise large financings, which have enabled them to do extensive, systematic regional grid exploration programs. In the case of Oromin, this led to outlining thirty to thirty-five major geological targets with multiple open-pit potential.
The focus of their exploration program became the prioritization of targets. Such large scale regional surveys and multi-zone exploratory drilling, was once the exclusive preserve of government agencies and multinational corporations.
West Africa is the fastest growing gold producing region in the world, with historical producers like Ghana being joined over the past ten years by the rapidly growing Mali. Liberia, Guinea, Sierra Leone and Senegal are about to join in as well. With similar geology throughout the prolific and regionally extensive Birimian trend, the potential for new discoveries is clear. The success of Mali, with good geology, modernization of the mining code, combined with government support, has created a model for the rest of West Africa to copy. Mali, which modernized its mining code in 1991, has since placed six major mines into production and production has tripled over the past decade, thereby threatening the premier position of Ghana in West African gold production.
West Africa has favourable geology that can be compared to the Canadian Shield but with the added advantage of being flat, providing easy access, as well as causing heavy oxidation of near surface material. Throughout West Africa, exploration for gold is concentrated in the Birimian greenstone belt that stretches from Ghana through Senegal. In Mali and Senegal, gold mineralization occurs in close proximity to the crustal scale fault zones of secondary fault structures associated with felsic intrusions. Ghana, Mali, Senegal and Burkina Faso all share similar geology.
Many of the mines discovered in Mali, currently the fastest growing gold producer in West Africa, are large enough and the tax incentives generous enough that even majors, such as Anglo-Gold, are prepared to carry partial interests, especially if they are the operator. The synergy of junior exploration companies joining with majors to place new discoveries into production has been an extremely successful formula for speeding up and assuring the successful development and operation of new mines in the region.
Since gold production in West Africa is concentrated in the Birimian greenstone belt, we can legitimately regard it as a valid geological trend, as well as an identifiable political region and allows us to make valid comparisons with Nevada. Although it stretches over a much larger area than the Carlin / Cortez belts, it shares many of its characteristics, such as multiple open pit zones in close proximity to each other and unrealized exploration and development potential at depth. To date, the only major underground mine in the newly developing areas of Mali, Senegal and Burkina Faso is the world-class Loulu mine.
The current stage of development in West Africa, if we exclude the Ashanti mine of Ghana (which has produced for over one-hundred years), is akin to the first and second stages of development in the Carlin belt. At this stage, surface deposits are located by prospecting, geochemistry and trenching and then drilled. As one Etruscan official put it, “Some mines have been discovered by walking over them”. Although some mining camps are the result of dusting off “shelf properties” from colonial times, the most prolific structures have in many cases, such as on Oromin’s and Etruscan’s properties, been discovered only recently by modern exploration techniques and sophisticated structural analysis of the geology.
In terms of overall physical gold production, West Africa, in 2007, lies at a similar stage to the Carlin belt in the early 1990s when deep, larger structures were discovered and placed into production, which caused a rapid escalation in annual production. In the case of West Africa, increases in gold production, in the short term, will be due to a large increase in new discoveries with open pit deposits, to be followed in later years by underground development. Such developments will be trigged by generous tax incentives, political stability and highly prospective geology.
Although there is a lot truth in the old prospector’s maxim, “That gold is where you find it” – there are areas and regions of the world where Socialist dictatorships, onerous tax regimes and foreign control regulations have prevented and deterred explorers from making gold discoveries. Fortunately, most of these areas are now open to modern exploration, offsetting the steady decline of older mining camps in the English speaking world. West Africa’s Birimian trend is a prime example of this significant and current trend.
Reginald W. Ogden
Canaccord Capital Corp. |
