There was a strong sense of déjà vu to the horrific news from the West African country of Burkina Faso on Friday night: Islamic terror attack on a hotel frequented by Westerners, many dead.
For mining investors, it was another unwelcome geopolitical jolt from the poor, landlocked and prolific gold-producing country where many Canadian companies are active. Burkina Faso has become Africa’s fourth largest producer of gold.
When the smoke had cleared, 29 people had lost their lives in the January 15 attacks on a cafe and hotel in Ouagadougou, Burkina Faso’s capital and nerve centre.
It was a worse death toll than a similar attack on November 20 in neighbouring Mali. In that assault at the Radisson Blu hotel in Bamako, Mali, 20 people were killed before commandos stormed the hotel.
The dead in Burkina Faso included six Quebeckers on a church-sponsored humanitarian trip who were enjoying a last meal together and had been scheduled to fly out that night, according to CBC News. Their work had included building and painting a school.
Al-Qaida in the Islamic Maghreb – an Islamic group active in the southern Sahara desert – claimed responsibility for the assault, and Mali and Burkina Faso rulers pledged to work together to combat Islamic jihadists.
It’s been a gruelling few years for Canadian mining companies in Burkina Faso, which had previously been considered stable – albeit a dictatorship – but has seen an uprising, coup, counter-coup attempts and now, religious instability and Islamic terror attacks.
In the short term, the timing of the attack – on a Friday night after markets had already closed – may have minimized some of the effect on publicly listed mining companies operating in Burkina.
While each company, of course, is more focused on the long game and building safe, profitable operations, geopolitical concerns and the effect on share prices are top of mind for investors.
A quick look at some of the Canadian mining companies active in Burkina Faso, and their share prices this morning:
The Quebec-based miner that operates the Mana Mine in Burkina Faso issued a press release this morning reporting that all its employees were safe and that it was increasing security at the mine site in response to the attacks. SEMAFO has three other Burkina Faso projects ranging from early-stage (Banfora) to advanced (Natougou). Shares were down about 3% to $3.83 in morning trading.
Iamgold – the largest private employer in Burkina Faso, according to the Globe and Mail – has a high level of exposure in the region, with two operating mines in Mali and a mine in northern Burkina Faso near the Mali border. Iamgold also recently had to contend with a strike at its gold mine in Suriname. Iamgold has not published 2015 production numbers yet, but its Essakane gold mine in BF produced a record 107,000 ounces in Q3 2015. Iamgold shares are down about 1% this morning and have dropped about 47% in the past year.
Roxgold is expected to begin gold production at its flagship Yaramoko high-grade underground mine in Q2 of this year. Roxgold, along with True Gold Mining, was recently picked as a “preferred emerging producer” by BMO Capital Markets. Roxgold shares were off about 4% to 73 cents in morning trading.
True Gold Mining (TGM-V)
True Gold is targeting first gold pour for March 2016 at its Karma gold mine in northern Burkina Faso, where construction was halted a year ago due to protests and rioting that caused US$6.1 million in damage. It later emerged that a primary concern was potential impacts at an important mosque located 1.18 km from the edge of one of the Karma open pits. Shares are trading 4% lower, at 25 cents.
Endeavour Mining (EDV-T)
Endeavour operates the Youga mine 180 km southeast of Ouagadougou and is developing the fully permitted Hounde open-pit gold project just south of SEMAFO’s Mana mine. Youga produced 68,407 ounces of gold in 2015 and Hounde could add an average 190,000 ounces of gold annually over a 10-year mine life. Shares of Endeavour, which also operates mines in Mali, Ivory Coast and Ghana, were up moderately in early trading.
B2Gold has the Kiaka gold project 140 km southeast of Burkina Faso’s capital, and is also active in neighbouring Mali, where it held a ground-breaking ceremony on Nov. 25 for its Fekola gold mine. Two B2Gold employees were at the Radisson Blu hotel during the November 20 terror attack, but they escaped injury and were rescued by commandos. B2Gold shares, which had declined almost 40% in the past 3 months before the attacks, was down about 4% in early trading to $1.02.
Russia-based Nordgold is a major player in Burkina Faso, operating the Bissa and Taparko gold mines. Bissa produced about 250,000 ounces and Taparko added about 112,000 oz in 2014.
Sarama Resources (SWA-V)
Thinly traded Sarama is a gold explorer with large landholdings in Burkina Faso, including an option to earn a 70% interest in the former African Barrick’s South Hounde project.
Avocet Mining (AVM-L)
London-listed Avocet Mining operates the Inata gold mine in northern Burkina Faso, which produced about 86,000 ounces in 2014.