A November 2023 view of the core yard area at the Afema site. Credit: Turaco Gold.
New West African gold explorers are advancing projects as they aim to capitalize on high prices and growing interest from mid-tier producers, SCP Resource Finance says in a new report.
Published Friday, the report spotlights Turaco Gold (ASX: TCG) as a standout among emerging Africa-focused developers. Its flagship Afema project in southeast Côte d’Ivoire hosts a 3.6-million-oz. resource and could support a 200,000-oz.-per-year operation within three years, SCP says. Afema could grow to as many as 5 million oz., giving it a net present value of $1.59 billion, based on a gold price of $3,000 per ounce.
“Turaco has firmly established Afema as one of the next generation of West African mine builds with potential to permit and complete the definitive feasibility study by the second half of 2026,” research head Justin Chan and his colleagues wrote. “We think Afema will be a mine.”
A long-standing hotspot for gold mining, West Africa has seen more than 70 million oz. of new gold discoveries over the past 15 years — outpacing Canada, the US and Australia, according to S&P Market Intelligence data — despite significantly lower exploration spending. Key structural advantages include prolific geology, fast permitting timelines and year-round exploration access, SCP says.
Turaco’s Afema is the most advanced asset. The company already holds a mining licence and has road and grid power access within 120 km of Abidjan, Côte d’Ivoire’s economic capital.
Track record
Turaco’s executive team, led by managing director Justin Tremain, has a track record of selling West African assets to major producers. SCP estimates a 10-year mine life for Afema, producing 200,000 oz. per year at an all-in sustaining cost of $1,422 per ounce. At a $3,000 gold price, the project would generate a 67% post-tax internal rate of return, SCP calculates.
The report also highlights a clutch of early-stage explorers making high-grade discoveries across the region. They include Sanu Gold (TSXV: SANU) in Guinea and Aurum Resources (ASX: AUE), Awalé Resources (TSXV: ARIC), Many Peaks (ASX: MPK), Kobo Resources (TSXV: KRI) and African Gold (ASX: A1G) in Côte d’Ivoire. All are actively drilling in regions with established infrastructure and historical production.
Projects that can start building in the next two-and-a-half years find themselves in what SCP calls the “sweet spot,” since nearly all Africa-focused producers “will be or are actively looking for projects within this window.” What’s more, nearly all these producers have built mines recently, “thus are not afraid of a buy and build,” SCP adds.
Possible buyers
Likely acquirers of the next generation of build-ready projects include producers such as Perseus Mining (ASX, TSX: PRU), Allied Gold (TSX, NYSE: AAUC), West African Resources (ASX; WAF), Montage Gold (TSX: MAU) and Robex Resources (TSX: RBX; ASX: RXR), SCP says. Montage already owns 19.9% of Sanu, while Perseus, Allied and West African Resources are seeking near-term acquisitions to replace reserves or expand beyond politically riskier jurisdictions such as Burkina Faso, the analysts wrote.
Sanu is attracting attention after early drill intercepts at its Daina project in Guinea, including 51 metres at 3.1 grams gold per tonne near surface. In Côte d’Ivoire, Aurum and Many Peaks are targeting large-scale systems with multi-rig campaigns. Kobo’s flagship Kossou project, located just 6 km from Perseus’s Yaouré mine, is advancing towards an initial resource estimate following recent intercepts such as 20 metres at 1.9 grams gold.
Although African gold companies can be stigmatized or avoided by some investors, “we think the opportunities are too compelling to ignore,” the SCP analysts wrote. “Africa is not easy to operate in, but the silver lining is we see very few lifestyle companies in West Africa; management teams want to make a discovery and build or get acquired as soon as possible and tend to move on quickly from subscale assets.”
With gold consolidating above $3,000 per oz., risk capital available for high quality management teams and a competitive M&A environment for build-ready projects, SCP says “the window is wide open for West African gold explorers.”