This article is a sponsored feature from Mining.com.au partner Toubani Resources. It is not financial advice. Talk to a registered financial expert before making investment decisions.
A recent decision by Canadian mining giant Barrick Gold (TSX:ABX) to consider ramping up its investment in Mali could signal a stabilisation in the West African country’s mining sector.
Earlier in July, Barrick indicated it was in talks with the Mali Government to expand its exploration ground.
Investment in the country’s mining sector had been in a state of flux since November 2022 when the government issued a moratorium on the administration of all new licences, permits, and approvals while it audited mining operations and undertook a comprehensive review of the 2019 Mining Code.
The government has now adopted the Implementation Decree, which sets the framework for mining investment in the country and is the last step to finalising the new 2023 Mining Code.
The aim of the updated legislation is to increase Mali’s share of revenues generated from the mining sector by raising the ownership interest the government and local community can acquire in projects.
This, in turn, is expected to increase the sector’s contribution to gross domestic product (GDP) up to 20%.
Phil Russo, CEO of Mali-focused gold explorer Toubani Resources (ASX:TRE), views Barrick’s announcement as recognition that the major sees enormous opportunity in Mali.
“Barrick has been operating in Mali for decades. There are other large players like B2 Gold (TSX:BTO), Allied Gold (TSX:AAUC) and Resolute Mining (ASX:RSG) with significant capital programs planned, as well as numerous juniors, and we think Mali, with its updated mining code, is stabilising so that this investment can occur,” he tells Mining.com.au.
“A thriving mining sector in Mali, given how fertile the geology is there, is supportive for everyone moving forward with their projects.”
Toubani is advancing its 2.2-million-ounce Kobada Gold Project, and while the 2022 moratorium did not directly impact the company given it already had the necessary permits to continue moving the project forward, it indirectly caused a slowdown in the overall sector.
Now, with the implementation of the new legislation, Toubani sees this providing a basis for a return to regulatory stability in the country’s mining sector.
Gold is Mali’s largest economic contributor, accounting for around 9% of the country’s GDP, 70% of export revenues and 21-28% of tax revenues.
Barrick alone has contributed more than US$10 billion ($15.39 billion) over the past three decades to Mali’s economy, with over US$1 billion of that spent in the past year.
The miner’s operations currently account for between 5% and 10% of the country’s GDP annually.
Investing in Mali’s future
While others have been dialling back exploration spend in country due to the prior uncertainty, Toubani has so far invested $100 million on exploration and development of its Kobada Project.
“The project has had a significant amount of drilling, hence to reach an investment decision from here the capital outlay is more moderate compared to others,” Russo explains.
“Kobada will be Mali’s next new gold mine of scale once in production, contributing to the economy through taxes and royalties, and providing employment to the local communities.”
Russo says the best approach to bringing a new mine into production in Mali is to aim for scale.
“Kobada has that optionality, and this is how we have gone about repositioning the project – to target another level higher in production and economics,” he says.
To do this, Toubani is working to complete an update to the 2021 Definitive Feasibility Study (DFS) to assess the viability of a larger operation.
The 2021 DFS targeted an operation producing around 100,000 ounces per annum, at a mining rate of 24 million tonnes per annum (Mtpa) and processing rate of 3Mtpa. It also outlined estimated stockpiles of about 18 million tonnes over the first 10 years.
The update, however, will focus on a bulk mining approach feeding an initial oxide plant that supports a relatively lean and competitive capital expenditure for a larger throughput project.
Nearly 80% of the existing resource is near-surface oxide mineralisation, with the fresh material to come later in the mine plan.
Russo says emerging projects can still succeed under Mali’s new mining code.
“It’s the same in any West African jurisdiction – the need to get your project in a position and on a path to development, and then look to have a constructive engagement with the host government on the governing convention for the project,” he says.
“That’s what we are doing in Mali, and we are confident Kobada has all the hallmarks required to take that leap from development asset to a mine under various mining codes and in any gold cycle.”
Earlier in July, Toubani noted that the new mining code aligned Mali’s option to participate in individual projects with those of other surrounding francophone countries.
Importantly, it also allows for the grandfathering of existing mining licences such as Kobada’s.
Russo explains that the model in Africa is for host governments to take stakes in projects.
“The stakes governments take varies, not only by country, but also within countries you will find varying interest levels across projects directly,” he says.
“The discussion around the level a country wants to participate in a project isn’t determined in isolation. It’s part of the convention discussions I mentioned, where we discuss the overall economic contribution of a project in combination with an interest level a country is seeking.”
Strengthening local communities
Mining is a key contributor to the Malian community, creating jobs and significant employment opportunities, as well as injecting funding into critical services such as health and education.
The updated mining code includes new local content requirements to create jobs, support the local economy and improve the competitiveness of Malian companies.
Mining companies must gradually reduce the proportion of foreign workers from 10% in the first three years of operations to 5% in the following three years, with an eventual transition to full Malian employment.
All goods and services must also be procured from Malian subcontractors where possible.
Russo says supporting Mali’s local communities is one of Toubani’s core principles.
“Proactively engaging with our local communities is so important and we undertake a range of initiatives commensurate with our stage company,” he says.
“This includes contributions to the local hospital and schools, establishing vegetable gardens for the villages and employment at Kobada during drilling campaigns, to hosting community soccer matches for the young people.”
With the new mining code in place, Toubani will continue discussions with the government as it advances the Kobada Project towards an investment decision in 2025.
“Toubani looks forward to engaging with the State of Mali to advance Kobada, leveraging our strong relationships in country, including with our local communities as well as with the various government authorities, and will do our part to contribute to the economic growth and sustainable development of Mali’s mining industry,” Russo says.
Images: Toubani Resources
