Reclaiming attention to a prolific border
Mali’s topography shares a common mineralization zone with Senegal that stretches along the border between the two states. This structural gold corridor is referred to as the Senegal-Mali-Shear-Zone (SMSZ), and it is scattered with world-class mines, including Sabodala and Massawa, Fekola, Luolo-Gounkoto, Sadiola and Yatela on both sides of its border. Their analogous geologies means that the two competing neighbours are judged by investors based on their perceived sovereign risk. The stark contrast between Senegal’s reputed stability and its neighbour’s instability plays to the advantage of Senegal. “I personally include Senegal in what I would call the Africa Alley formed of Namibia, Botswana, Ghana and Senegal, a league of countries that offer relatively high geopolitical and regulatory stability,” said Mike Brown, CEO of Chesser Resources.
However, Senegal did not always enjoy this reputation. Prior to 2000, Senegal was still under the grips of post-French Independence socialism. Due to the political situation and the inability of early exploration techniques in detecting anomalies, Senegal saw little exploration. Modern exploration did not begin until the first mining code was introduced in 2003. In recent years, the industry has paid more consideration to Senegal. Resolute Mining, for example, has been expanding its foothold in Senegal through the takeover of Toro Gold last year, which adds to Resolute’s greenfield Mako gold mine in eastern Senegal. Another recent transaction was the acquisition of the Massawa mine by Teranga Gold.
New exploration targets validate Senegal's gold mineralization across continuous trends. Chesser Resources, for instance, is developing Diamba Sud, a project only 7 km to the east of Barrick’s Luolo-Guonkoto and which shares comparable alterations to its neighbouring mines; drilling to date has confirm high-grades with 55 m at 4.3 g/mt, and 48 m at 6.7 g/mt. Just to the west, Oriole Resources identified five geochemical targets at its Senala project (former Dalafin licence) – two of these, the Saroudia and the Madina Bafé targets, sit west of IAMGOLD’s 2.5 million-ounce Boto gold project, and Faré in the north has standalone, open-pit potential.
Senegal has been going through a profound economic transformation, accelerated since 2014 through the government’s Plan Sénégal Emergent (PSE), a US$20 billion investment pushed by President Macky Sall to catapult economic development. Since 2014, when the PSE was introduced, there have been more than 137 miles of multi-lane roads built. Last year, the country inaugurated the opening of Senegambia Bridge connecting Senegal to Gambia. Dakar is also growing as a hub for technologies and start-ups, being one of the first African cities to offer free internet access.
Mining is a big part of Senegal’s growth strategy and a key point of reform. The New Mining Code of 2016 increased social, environmental and fiscal obligations for mining titleholders, including requiring contributions to a local development fund. Also, Senegal has invested heavily in offshore gas projects, which should eventually make energy cheaper for miners.
Senegal has jumped more than 40 positions in terms of its ease of doing business score since 2013, based on World Bank data, although it is still a low ranking of 123rd out of 190 economies, ahead of Nigeria, Guinea, Mali, and Burkina Faso. Judging from Senegal’s response to the pandemic, Senegal was ranked second best, after New Zealand, based on Foreign Policy “Covid-19 Global Response Index.”
Image courtesy of Roxgold