Burkina Faso Offers A Reassuring Factor For Mining Investment: Increasing Equity Holdings Is An Option, Not A Mandatory Acquisition, And It Helps Stabilize Foreign Investment Confidence.

At a mining conference in Australia, the Director-General of the Mining Registry, Mamadou Sanion, explained that the Mining Act introduced in July last year stipulated that in addition to the 15% free rights that the state could obtain, it also allowed the state to acquire at least 30% paid rights in mining projects. The paid portion was linked to the exploration and feasibility study costs, rather than the market valuation of the mines. The regulation also granted the government and local investors the right to further acquire equity under commercial terms. Sanion said: "As for the West African Resources Company (WAF), the government sent a letter requesting that it open up to a maximum of 35% of the equity for participation." "Currently, this is only a request, not mandatory." Sanion emphasized that this measure is aimed at enhancing confidence in the industry, rather than preventing foreign capital from entering. He argued that state participation would enhance confidence, rather than drive away capital. "We believe that if the state participates in the company's operations, there will be more confidence remaining in this country and more investment," he said. The stock of West African Resources Company has been suspended since last Thursday. The company previously announced that it would resume trading on Monday. Investors' unease reflects their broader concerns about resource nationalism in the region, where governments are revising mining regulations to obtain more local benefits. Neighboring Burkina Faso, including Mali, has shaken investors' confidence due to the new regulations and political instability. The General Manager of the Sustainable Development Department of WAF, Mire Lopez, declined to make more comments, merely suggesting that interested parties refer to the company's announcements. "We are having conversations with the government and are expecting the issues to be resolved," she said at the mining conference. Burkina Faso is the fourth-largest gold producer in Africa, and the country has transferred a large amount of assets to the newly established state-owned mining company - Burkina Mining Participation Company (SOPAMIB). In June, five gold mines and exploration licenses held by Endeavour Mining and Lilium were transferred to SOPAMIB. Previously, the Boungou and Wahgnion gold mines were nationalized in August 2024, with an acquisition price of approximately $80 million, far below their valuation of about $300 million. The Kiaka gold mine under West African Resources Company produced gold for the first time in June. The mine is now in production and is expected to produce an average of 234,000 ounces of gold per year over the next 20 years, generating approximately $795.6 million in revenue at current prices. Last week, WAF confirmed that it had aligned the equity structure of its Sanbrado, Kiaka and Toega projects with the new regulations, increasing the government's free equity share in each project to 15%. The company also disclosed that Burkina Faso has implemented mandatory dividend distribution regulations. In August, WAF's subsidiary Somisa (owning the Sanbrado project) announced a preferred dividend of $98.35 million to the government, equivalent to 15% of the retained earnings as of 2024. WAF expects that Somisa, Kiaka SA and Toega SA will all be required to distribute 15% of their profits, and WAF has the right to remit the remaining portion back. The World Bank's Africa Region Department also disclosed last week that the Burkina Faso government has implemented a mandatory non-discretionary dividend regulation. The mining reform reflects the growing influence of 37-year-old military leader Ibrahim Traore, who seized power and assumed the presidency in 2022. Traore advocated for strengthening the state's control over resources and portrayed his rule as a pan-Africanist, anti-Western revival movement. His supporters praised him as a defender of sovereignty. In April this year, after a purported failed attempt at a coup, thousands of people gathered in Ouagadougou. The demonstrations spread to London, Kingston and Montego Bay, where the expatriate communities called him the "Black Liberator". Meanwhile, Orezone Gold, the company operating the Bombore mine, suspended transactions after receiving a government request message regarding the Kiaca mine. After weekend negotiations, Orezone confirmed on Tuesday that the authorities had no intention of acquiring shares in the Bombore mine and stated that the situation at Kiaca was "exceptional and does not represent any broader intention".