Savannah Gold Ltd., a London-based private exploration company, was established in 2006 to focus on the exploration and evaluation of a number of gold licences held in north-west Nigeria. Jaco Maritz asked Laurence Robb, managing director of Savannah Gold, about the company's plans and Nigeria's mining industry in general.
Please give us a brief overview of Savannah Gold and its plans in Nigeria.
Savannah Gold is a small, privately funded exploration company that holds 12 exploration licences in north-west Nigeria. Its founders recognised that Nigeria offered considerable potential for gold exploration. Nigeria's potential for gold mining has been largely overlooked for the past 50 years or more. Following the modernisation of Nigerian mineral laws and the privatisation of state-held mineral assets, Savannah Gold was created to take advantage of the obvious opportunities on offer in Nigeria. Savannah Gold's immediate goals are to evaluate existing and known gold occurrences, as well as to discover new, viable gold deposits, thereby augmenting the value of the company.
The Nigerian government has been very proactive over the past five years in creating a positive and investor-friendly environment, not only for gold exploration but for the development of all solid minerals in the country.
When do you think will Savannah Gold start with actual mining activities?
Much of Savannah Gold's activities at the present time can be classified as 'greenfields' exploration. It is hoped that 2010 will see the initial phases of drilling carried out on its top priority targets. If successful, this drilling campaign will lead to pre-feasibility and feasibility work being undertaken over the next two to four years.
Why do you think has Nigeria received relatively little investment in the solid minerals sector thus far?
There are probably several reasons for this. Foremost among these is the fact that major mining companies seldom get into an entirely new terrain at an early stage. It is usually the juniors that take the risks early on. Another problem has been the Mining Cadastre Office (MCO) in Abuja. The MCO was effectively closed for more than 12 months while the licence 'revalidation' programme was being implemented. While revalidation was probably a good thing, the long duration of the process has had a negative impact on investment over the past year or so.
What are the main risks involved in investing in Nigeria’s mining sector?
For gold specifically there is a geological risk involved as we still have a very poor and rudimentary knowledge of the nature and occurrence of Nigeria's gold deposits. Sovereign risk and security of tenure are less likely to pose significant risks as Nigeria has a well-developed and mature infrastructure in place related to its petroleum industry.
What effect are Nigeria's power supply problems having on mining in the country? Is it possible to run a profitable mining operation in spite of the electricity challenges?
At the moment the intermittent electricity supply is a big problem in Nigeria. Even our small exploration office cannot function without a stand-by generator that on some days might be running for 30% of the time. This problem will of course impact on future mining-related developments and the government is of course well aware of the problem. The only solution in the short term would be to negotiate a special supply dispensation but I am not aware at this stage whether this is feasible.
Can you please give us some examples of issues one has to deal with when investing in Nigeria’s mining sector?
Although the Nigerian Geological Survey Agency has made considerable progress in making geological and geophysical information available to investors, the quality and availability of information is still a major drawback to exploration progress. Examples include the lack of availability of topographic maps, most of which are old and outdated; incomplete geological mapping; and the non-availability of the recently flown airborne radiometric maps.
Great strides have been made in the fight against corruption in Nigeria, particularly at governmental level, but it is still an issue that has to be dealt with in many other areas of Nigerian life.
How does one go about obtaining exploration and mining licences in Nigeria?
The new Nigerian mining laws recognise the establishment of an independent MCO through which all exploration and mining licences are applied for and issued. Thus far, the MCO remains outside direct ministerial influence, indicating that the Nigerian government has recognised the importance of due process in the application and allocation of licences.
Would you say it is difficult to get financing for mining projects in Nigeria?
Yes. We have found that some investors are reluctant to put money into Nigeria simply because of its reputation as a source of computer scams and because of its corrupt past. This reputation is, however, largely unfounded. In addition, the country does not have a history and a record of recent exploration and mining investor activity outside the petroleum sector, which makes it uncharted territory for many investors. However, many investors have recognised the opportunities Nigeria has to offer (in sectors such as petroleum, telecommunications, agriculture, etc) and this has resulted in a substantial inflow of funds into the country. With its impressive growth rate over the past few years, we feel that this trend is likely to continue.
What is your message to foreign mining companies interested in Nigeria?
It is still early days in the development of Nigeria's solid minerals sector. This is therefore exactly the time that the junior and mid-tier explorers and developers should be knocking on the door. The principal commodities of interest are gold, iron ore, manganese, tin, tungsten, tantalum, niobium, barium, uranium, industrial and agricultural minerals, and the fossil fuels (coal, lignite, tar sands).
