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Sierra Leone gold sector ‘open for business’

10th March 2017

By: Robyn Wilkinson

Features Reporter

     

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The moderate rise in the average gold price to $1 248/oz in 2016 increased investor appetite for gold exploration and triggered some merger and acquisition activity in the sector, providing a positive environment for miner Sula Iron & Gold to advance its planned drilling programme at its Ferensola gold project, in northern Sierra Leone, this year.

This is according to Africa-focused mining company Madini Minerals, which holds a 16.5% stake in Sula.

Madini partner and Sula CEO Roger Murphy highlights that Sierra Leone is historically known for iron-ore and diamonds and has gained recognition more recently for its mineral sands mines and some bauxite development projects. “Although, with an increased push for investment in the gold sector by government, and several companies exploring for gold, Sierra Leone’s gold mining industry is open for business.”

The country endured 11 years of civil war, but has enjoyed peace and political stability since 2002. Sierra Leone is richly endowed with mineral resources and the government’s Agenda for Prosperity identifies the development of the minerals sector as a fundamental pillar for promoting sustainable economic growth, with the expansion of the industry expected to raise Sierra Leone to middle-income country status by 2035.

A Mines and Minerals Act was passed in 2009 and a National Minerals Agency was also established in 2012 to take responsibility for the implementation of the minerals sector policy, legislation and regulations to promote transparency, accountability and good investment in the sector.

However, the World Bank notes that, despite the remarkable strides that have been taken in the country, it still carries post-conflict baggage such as high youth unemployment, corruption and weak national cohesion. The country also continues to face the daunting challenge of enhancing transparency in managing its natural resources and fiscal policy, and problems of poor infrastructure and widespread rural and urban impoverishment still persist.

Sula, which has been active in Sierra Leone since 2012, owns and operates the 153 km2 Ferensola gold project through its wholly owned subsidiary Blue Horizon. The project is prospective for gold, iron-ore and coltan, but the focus is currently exclusively on gold, with advisory firm SRK Consulting having defined an exploration target of five-million tons to seven-million tons; grading at 4 g/t to 8 g/t gold for 0.8-million ounces to 1.5- million ounces of gold.

He notes that, while a lack of infrastructure development is often a challenge in West Africa, the company’s Dalakuru camp is well established, supplying the mine with access to exploration services, communications, diesel storage, generators, various mechanical equipment and trucks.

In addition, the camp is located 80 km from the tar road to Freetown, facilitating logistics to and from the mine. Further, the Ferensola licence is contiguous with Chinese miner Shandong’s Tonkolili iron-ore mine, with its railway link to the coast.

Significant preparatory work has been completed at the Dalakuru camp, which has supported all exploration activities at the project in the past, ahead of the arrival of the drilling crews, drill rigs and other vehicles. Sula announced last month that the rigs, supplied by South African manufacturer Equity Drilling, had arrived in Sierra Leone and would be conveyed to site as soon as they cleared customs.

Murphy explains that the $950 000 drilling programme entails 12 diamond drill holes, covering about 2 400 m of drilling over two months. However, he adds that Sula might drill more than the initial planned meterage by extending its initial rental period, owing to the company’s payment agreement with Equity Drilling. This involves Equity Drilling taking a significant portion of its payment for the drilling in Sula stock.

“This is quite an innovative approach to financing the drilling process and it will enable Sula to drill more at the same cost. It is also a vote of confidence by Equity Drilling in our company and project. Equity Drilling is a new company, but the owners have been drilling across Africa for over three decades and have a reputation for being some of the best drilling contractors in the business,” expounds Murphy.

In preparation for the drilling programme, a new bridge was built at the mine and upgrades and repair work to the local road were undertaken. Three new water sources were further secured to facilitate ease of access to water during drilling and ten new drill collar pads were established for the rigs. Dalakuru’s footprint was, moreover, expanded to accommodate the increased number of people and equipment that will be on site during the drilling campaign.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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