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ADU PReVIeW

Food security

threatens

African

development The June edition of Paydirt Unlocked welcomed Black Rock Mining managing
director John de Vries, Perseus Mining managing director Jeff Quartermaine
and former Firefinch managing director Michael Anderson

frican mining has long grappled with a 70%), Black Rock Mining Ltd (more than people getting concerned about what this
Anegative sentiment from foreign inves- 45%) and Predictive Discovery Ltd (more means for the future.”
tors – whether unwarranted or not – bathed than 35%). Mahenge hosts one of the largest graph-
in a stigma of high royalty rates, difficult gov- The continent is facing renewed investor ite resources in the world with 212mt @ 7.8
ernment relations and threats of expropria- uncertainty with not only the devastating TGC alongside a 70mt @ 8.5% reserve.
tion. droughts affecting communities, but also The DFS outlined a four-stage construction
While mid-tier gold producer Perseus a failed coup earlier this year in Guinea, schedule to produce 340,000 tpa over a 26-
Mining Ltd has seen success over the past continued insecurity in Ethiopia and trade year period for a forecast NPV of $US1.16
decade in Cote d’Ivoire and Ghana, man- between Mozambique and Tanzania dam- billion.
aging director Jeff Quartermaine is now aged by terrorism. On top of securing food and fuel, de Vries
uneasy over impending food shortages, es- More recently, Rio Tinto plc halted works also showed concern over procuring infra-
pecially with the company set to expand its at its Simandou iron ore project in Guinea structure for projects following supply chain
presence into Sudan. following a disagreement with a Chinese disruptions in China from revolving pan-
“We’re quite concerned about the food partner and the local government. demic lockdowns.
security in Sudan where they get a large Quartermaine said Perseus – on track to “China is the factory of the world and
portion of their wheat from Ukraine and produce 500,000 ozpa gold this year – was when you’re struggling to get stuff out of
Russia. If that situation doesn’t resolve, better equipped to weather the storm than the factory of the world, that really starts to
there’s going to be a lot of hungry folk many of its peers. disrupt supply chains in a very subtle way,”
around and that leads to instability,” Quar- “There will be a period of uncertainty, but he said. “So, while it’s getting increasingly
termaine said at Paydirt’s Africa Unlocked with uncertainty also comes opportunity,” expensive to build a mine, it’s also getting
discussion in June. he said. “So, for companies such as our- increasingly difficult to source the mate-
“I think there’s a lot more [instability] to selves that are generating a lot of cash and rial to build a mine. You now start to look
come and it’s going to have a very profound are in a strong financial position, it may not at these [commodity] super-cycles in terms
effect on our industry and it’s probably go- be such a bad thing after all. We don’t want of price because we didn’t build enough
ing to change the perspectives of a lot of to trade on the misfortune of others but mines when we should have.”
people. No doubt there has been a squeez- I suspect that is going to be an inevitable In what was his last public appearance
ing on margins, so investors will look at that outcome of all these global tensions.” before stepping down as managing director
and say, ‘maybe I should put my money Black Rock managing director John de of Firefinch, Michael Anderson described
somewhere else’.” Vries, who is working to bring the Mahenge Mali as “not for everybody” but also pointed
Quartermaine’s comments reflect a graphite project in Tanzania towards first to other jurisdictional risks in other parts of
larger period of difficulty for miners in the production off the back of a $25 million in the world that perhaps go unnoticed.
global space as of late, attributed to skills raising in May, agreed that food security is Anderson’s departure came as Firefinch
shortages, inflation, construction wait times becoming an issue, but so was securing announced its Morila gold mine had missed
and supply chain disruptions. This is some- other resources such as fuel. production guidance by almost 4,000oz,
thing Perseus will need to navigate its way “[Food security] is beginning to be a real with the company attributing the deficit to
through having recently completed its ac- issue and maybe that induces migration difficulty in securing vital operational equip-
quisition of Sudan-focused Orca Gold and where you’ve got all sorts of flow on effect,” ment following sanctions imposed on Mali
the Block 14 project. de Vries said. “But then there’s the overlay by the Economic Community of West Afri-
While Perseus (market cap of more than of fuel, and fuel is a doozy. can States.
$2 billion at the time of print) has managed “We looked at our power station, which “The country and continent risk is part of
to maintain its share price value over the was running off of diesel power, it was 32c/ the equation, but it’s not the only part. You
past six months, even hitting a 10-year high unit 18 months ago, it’s now into the 40s. weight it up and Australia isn’t risk free ei-
in April, some of its peers in Africa have not Thankfully we’ve got access to the grid. ther. I’ve only been party to one expropria-
been as fortunate. “But if you’ve got a large business that’s tion in my career and it was in New South
Share price devaluations over the past very dependent on diesel fuel, it’s really go- Wales,” Anderson said.
six months include West African Resources ing to impact you. We’re seeing these flow- “People tar Africa with this brush of risk
Ltd (almost 13%), Firefinch Ltd (more than through effects in terms of costs and on and the like, but what’s the conversation in

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