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RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHOU #0602/01 1890807
ZNR UUUUU ZZH
R 070807Z JUL 08
FM AMEMBASSY OUAGADOUGOU
TO RUEHC/SECSTATE WASHDC 3901
INFO RUEKJCS/SECDEF WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHLMC/MILLENNIUM CHALLENGE WASHINGTON DC
RUEHZO/AFRICAN UNION COLLECTIVE
RUEHOT/AMEMBASSY OTTAWA 0277
RUEHBY/AMEMBASSY CANBERRA 0026
RHMFISS/CDR USEUCOM VAIHINGEN GE
RHMFISS/CDR USAFRICOM STUTTGART GE

UNCLAS SECTION 01 OF 03 OUAGADOUGOU 000602 
 
SIPDIS 
 
AF/W FOR EMILY PLUMB 
 
E.O. 12958: N/A 
TAGS: EMIN ECON EINV ETRD PREL UV
SUBJECT: Burkina Faso's "Mining Boom": Second Gold Mine; Zinc, 
Manganese, and Uranium Development Underway 
 
OUAGADOUGO 00000602  001.2 OF 003 
 
 
REFTELS: A) Ouagadougou 859; B) Ouagadougou 919 
 
¶1.  Key Points: 
 
-- Seven months after the October 2007 opening of a gold mine in 
Taparko, Prime Minister Tertius Zongo presided over the May opening 
in Youga of the nation's second commercial gold mine. 
 
-- During his speech, Zongo opined that the opening of the Youga 
mine was the beginning of a "mining boom" in Burkina Faso, which 
granted 245 exploration permits in 2007 for gold, manganese, zinc, 
and uranium. 
 
-- In addition to the opening of Taparko and Youga, four other mines 
are scheduled to go into production in 2008 including: Mana gold 
mine (Canada's Semafo), Inata gold mine (Canada's Goldbelt 
Resources), Perkoa zinc mine (Australia's Aim Resources), and Kiere 
manganese mine (United States' Burkina Manganese). 
 
¶2. Key Judgments: 
 
-- Located in West Africa, the world's fastest growing gold 
producing region, Burkina Faso is ideal for mineral exploitation. 
The country's flat terrain makes it accessible to mining companies 
and the arid climate oxidizes minerals near the surface.  Oxidized 
mineral deposits found close to the surface are easier to discover 
and less expensive to produce. 
 
-- With geological formations similar to its gold and mineral 
producing neighbors, Burkina Faso is considered the country with the 
greatest untested mining potential in West Africa. 
 
End Key Points and Key Judgments. 
 
---- 
Gold 
---- 
 
¶3. High River Gold Mine, a Canadian company that is owned in 
significant part by U.S. investors, brought its Taparko gold mine 
into production in October 2007 (ref A).  Located 200 km northeast 
of Ouagadougou, Taparko is the first industrial mine to open since 
the closure of the Poura gold mine in 1990.  Its opening marked the 
revival of modern industrial mining in Burkina.  Gold production for 
2008 at the Taparko gold mine is expected to total about 100,000 oz, 
with production increasing to over 140,000 oz during 2009.  High 
River also owns rights to the Bouroum satellite deposit located 
approximately 50 kilometers northwest of Taparko. High River is the 
largest holder of exploration permits in Burkina Faso covering 
approximately 15 percent of the country's greenstone belt.  (Note: A 
greenstone belt is a geologic stratum primarily formed of volcanic 
rock and is often several thousand kilometers in length.  The belts 
often contain ore deposits of gold, silver, copper, zinc and lead. 
End Note.)  The company also has substantial holdings in Bissa, 
which covers an area of approximately 1,000 square kilometers in the 
province of Sanmatenga, approximately 80 kilometers north of 
Ouagadougou. Several other mining companies have been granted mining 
permits in this area. 
 
¶4. In May 2008, Canada's Etruscan Resources opened Burkina Faso's 
second commercial gold mine at Youga in Bolgou Province with its 
first "gold pour", 180 km south-east of Ouagadougou.  Youga has an 
estimated gold reserve of 6.6 million tons at an average grade of 
2.7 grams per ton containing 580,000 ounces of gold.  The mine will 
cost approximately $71 million to develop and will produce an 
estimated 25 tons of gold in seven years.  Etruscan, through its 
wholly owned subsidiary Cayman Burkina Mines, holds a 90-percent 
interest in Burkina Mining Company (BMC), which has been granted the 
rights to exploit the Youga deposit.  The remaining 10 percent of 
BMC is held by the Government of Burkina Faso (GOBF).  Etruscan 
plans an extensive training program for the local workforce, which 
will number approximately 350 people.  In December 2003, Etruscan 
acquired the Youga mining permit and three contiguous exploration 
permits along the Youga gold belt from Ashanti Goldfields Company, 
and Echo Bay Mines.  In addition to the Youga belt, Etruscan holds 
six exploration permits in the Banfora belt in southwest Burkina 
Faso. 
 
¶5. In 2007, the GOBF granted a mining permit to Canada's Goldbelt 
Resources to operate the Inata gold mine in Soum province, in 
northern Burkina Faso.  Project commissioning is scheduled for 
December 2008.  Once opened, the mine is expected to produce 25 tons 
 
OUAGADOUGO 00000602  002.2 OF 003 
 
 
of gold in seven years and provide approximately $177.3 million to 
the Burkinabe economy. 
 
¶6. In 2007, the GOBF issued a mining permit for the Mana gold mine 
to Canada's Semafo Burkina.  Mining at Mana began on June 30 and the 
company anticipates commercial gold production at the rate of 
4,000t/d, producing 125,000oz per year for the first three years. 
 
¶7. In September 2007, Canada's Orezone Resources entered into an 
agreement with Gold Fields Ltd. to acquire its 60-percent interest 
in the Essakane project.  Essakane is the largest known gold deposit 
in Burkina Faso.  It will take 18 months to construct mining 
facilities there at a cost of $346 million.  Once operational, the 
mine is expected to produce an average of 292,000 oz per year. 
Orezone controls over 3,140 square kilometers of land in Burkina 
Faso, in addition to Essakane. It also has interests in Bondi, Sega, 
and Bombore. 
 
---- 
Zinc 
---- 
 
¶8. Australia's Aim Resources has begun construction on Perkoa mine, 
the first zinc mine in West Africa.  Located in Sanguie province, 
the Perkoa mine is located 35 km by road from the country's third 
largest city, Koudougou. Although Koudougou is linked by rail to 
Abidjan, Cote d'Ivoire, the concentrate will be trucked over 1,100 
km to the port of Tema in Ghana.  According to Abdoulaye Abdoulkader 
Cisse, Minister of Mines, Quarries and Energy, Perkoa has zinc 
reserves of 6.271 million tons of 53-percent zinc with an estimated 
production of 160 tons per year over a 17 year period.  Aim 
Resources' Managing Director, Marc Flory, has described the deposit 
as "one of the world's richest known zinc deposits."  With a 
projected annual cash flow of $40 million, the project will pay for 
itself within the first two years of production.  The GOBF has 
supported development of the mine by assisting with the upgrade of 
local roads and permitting water use from the recently constructed 
and government-funded Seboun Dam.  Once development is complete, the 
mine will provide much needed revenue for the GOBF and 250 jobs for 
local residents. 
 
--------- 
Manganese 
--------- 
 
¶9. Burkina Faso has several high-quality manganese deposits that, 
before the commodity boom sharply raised prices, had previously been 
considered commercially unviable because of high transport costs. 
Unlike gold, which is so valuable that it can be commercially 
transported by air, manganese must be transported by truck or rail. 
Burkina Faso's rail system is controlled by France's Bollore Group, 
a multi-national conglomerate and the largest transportation and 
logistics operator in Africa.  Because Burkina Faso's railway 
freight pricing is pegged to truck pricing, large-scale 
transportation of bulk commodities is not currently cost effective. 
Manganese is essential to iron and steel production and has no 
satisfactory substitute. Increased demand, primarily from China, has 
resulted in significant price increases during the past year, making 
manganese mining more appealing despite high transport costs. 
 
¶10. A U.S. company, Burkina Manganese, has announced its interest in 
the development of Kiere mine in Tuy Province, the Baliata and 
Tambao mines in Oudalan Province, and the Ansongo mine in southern 
Mali.  In early 2008, the company was granted a 10-year mining 
permit for the operation of the Kiere mine.  Preliminary 
exploration, conducted by French mining interests in 1948, 
identified manganese reserves of at least 600,000 tons at grades of 
44-45 percent.  The Kiere mine will begin production in June 2008; 
Burkina Manganese envisages rapid development of the deposit.  The 
Baliata mine in Oudalan Province is estimated to have 500,000 tons 
of 30-percent grade manganese, while the Tambao mine in Oudalan 
Province is estimated to have more than 19 million tons at a grade 
of 52-54 percent. 
 
¶11. According to Burkina Manganese Chairman, Lou Slaughter, Tambao 
may contain as much as 50 million tons and could become a 
world-class manganese mine.  With a potential of 50 million tons, 
competition for the Tambao mine could become intense.  Other Tambao 
contenders include Dubai's Al Wadi, Australian's Territory Mines, 
and the U.K.'s Weatherly PLC, all three of which are planning a 
partnership to develop the mine.  According to Slaughter, Indian and 
Japanese concerns have also expressed an interest in the site. 
 
OUAGADOUGO 00000602  003.2 OF 003 
 
 
Burkina Manganese recently had discussions with the Ministry of 
Mines regarding the Tambao mine, and plans to build a railway from 
Kaya to Tambao if production is high enough to justify the 
investment. 
 
------- 
Uranium 
------- 
 
¶12. In a June 23 press release, Canada's Crosscontinental Uranium 
announced the signing of a joint venture agreement with Southern 
Cross Exploration and Longreach Oil.  The group has been granted two 
uranium exploration permits and plans to conduct detailed airborne 
geophysical surveys in the Oursi Project in northeastern Burkina 
Faso.  The Oursi Project covers 500 square kilometers, and includes 
a 50-kilometer area with prospective uranium deposits.  There is 
also a known uranium mineralization occurrence located 50 kilometers 
along the west side of the Oursi formation.  The survey is expected 
to begin as soon as the necessary approvals are in place and weather 
permits.  More than 30 foreign companies have requested exploration 
permits for possible uranium reserves along Burkina Faso's 
northeastern border (ref B). 
 
JACKSON