Investment | Turkey’s MNG Gold to Invest $45 Million in Burkina Faso Mines

Ouagadougou, Capital Markets in Africa: Turkey’s MNG Gold is spending $45 million to mine gold in Burkina Faso after obtaining two projects in Africa’s fourth-largest producer of the metal.

The Balogo pit in the south of the country will yield 100,000 ounces annually when production starts this year, Richard Zongo, MNG Gold’s country manager, said in an interview. To guarantee the profitability of the mine, which has a lifespan of only two years, the company bought the rights to another gold operation 160 kilometers (99 miles) away to use its processing plant, Zongo said in the capital, Ouagadougou.

“The grade of the deposit is very high but the project is too small to build a new plant,” Zongo said, referring to the Balogo mine. “That’s why we bought the Youga mine: we’ll just transport the ore by truck.” The Balogo deposit holds 8.8 grams (0.31 ounce) gold for every ton of ore and will be profitable at a gold price of $1,200 an ounce, he said.

Zongo said MNG Gold was in talks to obtain additional exploration permits and expects to be able to prolong the lifespan of the Youga operation, which employs about 600 people and currently has about a year left. “We’re doing intensive exploration and we know there’s huge potential in the area,” he said.

‘Mining Potential’
The landlocked West African nation has seen a gold rush in recent years, with output forecast to reach almost 49 tons of gold this year, from 2.3 tons in 2007, according to the government. Canadian companies Iamgold Corp. andSemafo Inc. are among the biggest producers. It’s the continent’s fourth-biggest gold producer, behind South Africa, Ghana and Mali.

MNG Gold is a unit of closely held MNG Holding Co., one of Turkey’s largest holding companies, owned by billionaire Mehmet Nazif Gunal, according to Forbes magazine.

The company operates two projects in Liberia and may consider exploring in neighboring Ivory Coast and Mali, according to Zongo. “We chose Burkina Faso because it’s a stable country with a lot of mining potential and an attractive mining code,” he said.

Source: Bloomberg Business News