Canadian gold production company Dynacor Gold Mines has signed a letter of intent (LoI) with mining equipment provider KN Equipments and wealth fund the Sovereign Wealth Fund of Senegal for Strategic Investments (FONSIS) to begin the process of strategically expanding Dynacor’s business globally by forming a jointly owned company to operate in Senegal.
The new company would start by building an upgradeable ore-processing plant in Senegal. The initial plan is for a 100 t/d to 150 t/d facility with the design to double capacity to 300 t/d. Dynacor will operate the plant and own the majority of the company with 51% ownership. KN Equipments and FONSIS will own the balance at 25% and 24% respectively.
Subject to a seven-month due diligence period, which is to be completed before the end of this year, the terms of the LoI mean that Dynacor will provide the technical and legal teams to conduct a complete accounting of potential production sites, the total number of artisanal and small-scale mining (ASM) and all other pertinent data concerning the feasibility of this project.
The final decision to move ahead on the project will be on or before December 31 this year.
The budget to build the plant is about $10-million. The new company is to invest $4-million, of which Dynacor’s total share would amount to 51%, or $2.04-million, together with KN Equipments and FONSIS investing an additional $1.96-million. The balance of the $10-million is to be financed by local Senegalese banks.
“The new company would bring a logical combination of Dynacor’s ore processing leadership and over 20 years of experience together with KN Equipments’ presence in Senegal, a long-standing history of manufacturing milling processing equipment and the financial strength of FONSIS,” enthuses Dynacor president and CEO Jean Martineau.
He highlights this decision as part of the company’s strategy to become an internationally recognised ore-processing business servicing the ASM industry worldwide. He also states that the company sees the new low-risk project as an opportunity to enhance Dynacor’s growth and leadership role on a global scale.
“FONSIS plays an important role as it backs t he strategy of the Senegalese Ministry of Mines and Geology. This project will help formalise gold mining activities for small- and medium-size legal mines,” notes FONSIS executive VP Mamadou Mbaye.
“We look forward to partnering with Dynacor and FONSIS to expertly enhance the Senegal ASM industry by offering top-end service and superior value to Senegalese miners and their communities. As we have more than three years of providing manufacturing and mining maintenance service in Senegal, our company is quite well versed in the country’s ASM space and its demand for the new company and the value it will deliver,” comments KN Equipments president Robert Nieminen.
He notes that, “Dynacor, the world’s undisputed ASM ore-processing leader with a sterling track record, FONSIS, a sovereign fund with financial backing from the Republic of Senegal combined with our 60 years of experience in design and manufacturing of mill processing equipment will enable a smooth, speedy development path to opening the highly anticipated plant”.
Managing Community Relations
In November 2017, Dynacor visited Senegal to meet with the Senegalese government. The productive meetings encouraged Dynacor to follow up with a second visit in February 2018 and a technical team from Dynacor was sent to Senegal to evaluate the gold potential and ASM situation. During the site visit, the collection of many grab samples from several ASMs operating in the area was a vital step the technical team completed.
The local ASM community engaged with the team members and showed an interest in realising the financial and environmental benefits of making use of the Dynacor value-added ore-purchasing and processing advantage.
As the new company would be the sole professional ore-processing facility in the country, Dynacor sees strong demand for its reputable and knowledgeable service.
Independent analysis of the samples from international certification agency Bureau Veritas’ assay laboratory located in Abidjan, Côte d’Ivoire, confirmed Dynacor’s positive results at its Veta Dorada facility, in Peru.
The promising grades and metallurgical recovery rates, together with the supporting Senegalese government and involvement of the local ASM community, encouraged Dynacor to move forward on the LoI and the full due diligence programme.