Sabodala, Senegal — MININGREVIEW.COM — 24 March 2009 – Mineral Deposits Limited – an Australian-based company currently focusing on gold exploration and production in Senegal – is already hunting for more gold in the West African country, after pouring its first gold bars earlier this month.
Listed on the Australian Securities Exchange and the Toronto Stock Exchange, the company expects to produce 160 000 ounces of gold at its Sabodala mine this year – output which would be worth US$152 million (R1.5 billion) at current prices of around US$950 per ounce on world markets.
“Some production is hedged at US$846 per ounce”, managing director Jeffrey Williams told Reuters at the mine, which is about 800 km southeast of the Senegalese capital. “Costs of production at Sabodala are around US$450 per ounce,” Williams said.
As well as producing the precious metal, Mineral Deposits aims to expand its resource base.
“We have a big land package in the area … and we’re going to exploit that in the next three to five years, and see if we can find another Sabodala,” Williams revealed.
Mineral Deposits will pay no taxes for the first six and a quarter years — and the government is a 10% shareholder in the mine. “Every year the government is going to get a 3% royalty … and this year we think they’ll get upwards of US$4 million (R40 million), so there’s a few winners in this,” he added.
Senegal aims to increase mining investment and use income from minerals to give its strained treasury a boost.
Randgold Resources expects to start mining gold in Senegal by 2012, and world No. 1 steel producer Arcelor Mittal began a US$2.2 billion (R22 billion) iron ore project there last year.
“We’ve spent over US$220 million (R2.2 billion) here, and it’s been quite an effort at a time when the banking system around the world has basically collapsed. We have been quite aggressive about building this mine and keeping it going," Williams said.