Definitions

made purchase

Mining in Burkina Faso

Mining does not play a significant role in Burkina Faso’s economy. Production of mineral commodities is limited to cement, dolomite, gold, granite, marble, phosphate rock, pumice and related volcanic materials, and salt.

Structure of the Mineral Industry

Gryphon Minerals Ltd. of Australia, Cluff Gold plc and Randgold Resources Ltd. of the United Kingdom, and Canadian companies Channel Resources Ltd., Etruscan Resources Inc., Goldbelt Resources Ltd., Goldcrest Resources Ltd., High River Gold Mines Ltd., Orezone Resources Inc., Riverstone Resources Inc., and Semafo Inc. continued to explore for gold throughout the year. Etruscan also explored for copper.

Commodities

Gold

Cluff updated its bankable feasibility study for the Kalsaka gold project, which is located about 150 km northwest of the country’s capital, Ouagadougou. Measured resources were estimated to be 6.5 million metric tons (Mt) at a grade of 1.6 grams per metric ton (g/t) gold, and indicated resources were estimated to be 2.7 Mt at a grade of 1.2 g/t gold. Following the completion of the bankable feasibility study, the company decided to continue with the development of the project and to bring it into production. In October, Ghana-based Banlaw Africa Ltd. was appointed as the mining contractor. Cluff held a 78% interest in the project; the remaining was held by IMARB Indústria Metalúrgica of Brazil (12%) and the Government (10%).

Etruscan continued with construction work activities at its 90% owned Youga gold property, which is located about 180 km southeast of Ouagadougou. Gold reserve estimates at the Youga Mine were reported to be 6.6 Mt at an average grade of 2.7 g/t gold. Commissioning of the mine was scheduled for mid-2007, and production was expected to be about 2,700 kilograms per year (kg/yr). As of November 30, 2006, the company had invested about $21.7 million in the project, had made purchase commitments of about $7 million for equipment and services, and had made additional purchase commitments of about $10.2 million for ongoing development activities.

High River continued with the construction of the Taparko-Boroum open pit gold mine and mill facilities, which are located about 200 km northeast of Ougadougou. The mine’s first gold pour was scheduled for the second quarter of 2007. Initial production was expected to be about 3,100 kg/yr and to reach about 4,400 kg/yr by 2008. Measured and indicated resources were estimated to be about 12.6 Mt of ore at a grade of 2.77 g/t gold. The Taparko-Boroum Mine and mill would be operated by High River’s subsidiary Société des Mines de Taparko (Somita S.A.). High River held a 90% interest in the project, and the Government held the remaining 10%. In addition to Taparko-Boroum, High River held other exploration licenses in the country, including the 1,000-km2 Bissa Group permits, which are located about 80 km north of Ouagadougou. Measured and indicated resources for the Bissa Group were estimated to be about 12 Mt of ore at a grade of 1.72 g/t gold. The company invested about $2 million in exploration in 2006 and planned to invest an additional $8 million in 2007 to test identified target areas at the Bissa Group properties.

Zinc

Aim Resources Ltd. (AIM) of Australia continued with the development of the Perkoa zinc deposit, which is located about 120 km west of Ouagadougou. In December 2005, Snowden Mining Industry Consultants completed a bankable feasibility study for Perkoa. Production was expected to be about 130,000 t/yr of concentrate at a grade of 53% zinc. Overall zinc recovery to concentrate was projected to be 93%, and contained zinc production, to average 68,000 t/yr; zinc concentrates would be transported by railway to the Port of Abidjan in Côte d’Ivoire and by road to the Port of Tema in Ghana. The first shipment of zinc concentrate was expected to be delivered in 2008. In its 2006 annual report, AIM announced that it had signed letters of intent with Louis Dreyfus Commodities Metals Suisse S.A., Votorantim Metais of Brazil, and Switzerland-based Xstrata plc to finalize offtake agreements for the production of zinc concentrates from Perkoa. Xstrata planned to process Perkoa concentrates through either the San Juan de Nieva zinc smelter in Spain or the Nordenham zinc smelter in Germany. According to AIM company reports, the Government had upgraded the road that leads to the mine and had constructed a dam that would provide water for the project. As of yearend, measured and indicated mineral resources at Perkoa were estimated to be 6.72 Mt at grades of 16.4% zinc and 35.4 g/t silver at a 5% zinc cutoff grade.

In November, Goldcrest signed an earn-in agreement with Phelps Dodge Exploration Corporation of the United States whereby Phelps Dodge could earn up to a 70% interest in some of the properties for which Goldcrest held exploration permits in Burkina Faso. The agreement was contingent upon Phelps Dodge funding the projects through the completion of a bankable feasibility study. These properties included the Danyoro, the Malba, and the Souhouera copper-gold prospects.

In February 2006, Semafo awarded the engineering, procurement, and construction contract for the development of the Mana gold mine to Genviar Consulting Group Inc. According to the company’s 2006 annual report, measured resources were estimated to be about 2.1 Mt at a grade of 1.99 g/t gold and indicated resources were estimated to be 2.5 Mt at a grade of 2.03 g/t gold. Average production, which was expected to begin in late 2007, was estimated to be about 3,900 kg/yr of gold for the first 3 years and about 3,000 kg/yr for the remaining life of the mine. The company approved a $3.5 million budget for the project for 2007.

References

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