Mark Bristow, CEO, Randgold Resources: Interview

Interview: Mark Bristow

How competitive is Cote d’Ivoire’s investment environment for mining companies?

MARK BRISTOW: The revision of Cote d’Ivoire’s mining code was devised with the purpose of attracting foreign investment into a country that had suffered from a decade of unrest. In this context, some major improvements were achieved, including the introduction of sliding scale royalties on gold and other commodities production, and a five-year tax holiday which facilitates return on investment for operators. If we look at mining codes across the world, states are entitled to, on average, 50% to 60% of revenues once mining companies recover their invested capital. After the 10-year mark in Cote d’Ivoire, revenues are split 50/50, thus making the code one of the most attractive in the world. The code also provides operators with the stability necessary to ensure their long-term investments by guaranteeing the fiscal regime for the entire lifespan of the project. Additionally, the code introduced a higher scale of investment into the community, allowing us to reinvest part of our revenues in the local communities.

Despite these improvements, challenges remain as authorities continue to slowly process applications and grant permits. Deadlines to receive a response at the different levels are rarely respected, which stuns our operations, especially in the exploration stage. Moreover, permits are sometimes granted to companies that do not have the capacity or expertise necessary to undertake mining activities, preventing those more suited to take over certain permits. The new mining cadastre system – put in place by the Ministry of Mining and Industry – is a step forward in this regard. By providing more transparency in the process of granting licences and reducing the cases of land overlaps, we are hopeful that we will see the entire process move faster, resulting in a more secure environment for investment.

Another element making Cote d’Ivoire an attractive destination is the quality of its infrastructure. The country boasts the most-developed road and energy network in West Africa. Affordable power is paramount to the development of the industry and often determines whether a project is financially feasible or not.

What mining potential does the country hold?

BRISTOW: I have a record of saying that Cote d’ Ivoire has a very prospective geology. The challenge, or opportunity, stems from it not being a traditional mining country. The territory has seldom been explored, so developing an interesting portfolio of prospects requires fundamental research and large investments in the basic understanding of its geology. Nevertheless, we have progressed since 2013 and have reached some interesting conclusions on our permits. The Boundiali permit, located at the heart of the Fonondara corridor, shows significant abnormalities on a 50-km stretch, making it one of the most interesting addresses in West Africa. The Mankono permit also shows significant potential, with over 1m oz defined. The challenge now will be finding a location with a significant continuity in order to define a package of mineralisation that meets our criteria of 3m oz of gold, with an interest rate of return of 20% at a long-term gold cost of $1000 per oz. The geology in Cote d’Ivoire offers the same potential as Ghana, Mali, or east Senegal, yet it is still underexploited, providing great opportunity for international mining companies.

What are the major challenges facing the sector?

BRISTOW: The main challenge faced by the industry today concerns illegal mining predominantly in the north. To clarify, we are not speaking of small-scale mining, but large-scale operations that destroy the value of ore bodies, completely deteriorating the potential of our permits. In Senegal and Mali we have begun working with small-scale miners by providing them with training and even reserving corridors to help them exploit the land. However, as long as illegal mining continues, such projects will not be able to be replicated in Cote d’Ivoire.