"Over the last six years, we have weathered the storm of the lower gold price by shifting from our typical clientele - the exploration companies - to assist producing gold miners and companies exploring for other commodities such as bauxite, manganese, tin and coltan. Now, I believe we will see a resurgence of our typical client base, the junior gold explorer."

Simon Meadows Smith

MANAGING DIRECTOR, SEMS EXPLORATION SERVICES

December 10, 2020

How has the pandemic and the change in gold prices affected SEMS Exploration in recent months?

SEMS is a locally based consultancy group with permanent employees located in most West African countries. Due to the pandemic and subsequent disruptions in travel in particular, we found that companies who normally relied on their internal teams flown from abroad are now reaching out to engage our services. Before 2013, the bulk of our clients were represented by junior gold explorers, but as funding for these companies became difficult, many lost the ability to continue their projects. Over the last six years, we have weathered the storm of the lower gold price by shifting from our typical clientele - the exploration companies - to assist producing gold miners and companies exploring for other commodities such as bauxite, manganese, tin and coltan. Now, I believe we will see a resurgence of our typical client base, the junior gold explorer.

Judging from your experience and SEMS’s work in the region, how do you assess opportunities in exploration in the following countries:

  • Ghana

Ghana is a brilliant example of how the strengthening in gold price is changing the industry in West Africa. Battling with South Africa for the top spot as the continent’s largest gold producer, Ghana is having a great run at the moment in terms of production. On the exploration side, there has been almost no news since 2013 about new projects, with the notable exceptions of Ibaera Capital and Cardinal Resources, both quite active. Ghana has suffered from a perception issue: it is seen as a well-trodden jurisdiction, surrounded by countries with easier and better opportunities. That perception is wrong; there are fabulous opportunities in Ghana, but the lack of a news flow has not encouraged investors. Consequently, we have not had much work over these years in the country, but this year the climate is changing. Many of the clients we were working with six-seven years ago are coming back with new funds and new enthusiasm. When these companies start announcing their success, new entrants will take another look at Ghana’s geology, which remains highly prospective.

  • Burkina Faso

In the last cycle, there were many companies who had successes in Burkina Faso, even though some came with almost no budgets and no track record. The companies now operating in Burkina are the producers from the previous rush; however, the companies without a cashflow (the juniors) left. I cannot think of many non-producing companies active in Burkina Faso, but the production side is going very strong and the industry is alive and well. The security and political issues will make explorers think twice about choosing Burkina Faso, so I do not believe this time the country will be on the top of the list as it was in 2009-2012.

  • Ivory Coast

While the geological potential of the Ivory Coast has indisputably always been there, other factors had to fall into place for investors to look at this country with confidence. Historically, the main issue with Ivory Coast has been the political situation, but this changed dramatically in the last eight years. If I were to pick, I would say Ivory Coast is indeed the most attractive destination for exploration, with plenty of existing opportunities for foreign companies to venture with Ivorian companies. I am confident the exploration sector will go from strength to strength and more acquisitions will take place.

  • New frontiers: Liberia, Mauritania, and others

In the last gold cycle, it was fairly easy for explorers to raise significant capital, and many took licenses in Liberia, Sierra Leone, and Mauritania, especially after striking success in Burkina Faso. When they came to these countries, they realized operating costs were much higher. Eventually, when gold prices fell, they left altogether. I am hopeful we will see a pick-up again, but I believe the approach will be more cautious this time, because there is a better understanding of the challenges involved. We also like the geological potential for gold discoveries in the Siguiri Basin of north eastern Guinea.  SEMS has worked for several clients in Guinea and we expect to see increased gold exploration activity in this region.

Equatorial Guinea is offering opportunities for mineral concessions and it has invested considerably in infrastructure, while Nigeria is very keenly looking to revamp its mining sector and to move its economy away from oil dependence.

Could you give us some examples of the technologies underscoring the work done by SEMS exploration?

SEMS Exploration wants to be at the forefront of promoting new technologies. One way we do this is through our partnership with Imdex. The exploration industry in West Africa can be conservative in terms of adopting new technologies, but we see some of these innovations as real game-changers for the sector. For instance, we make use of an in-field geo-analysis lab, which includes a portable XRF unit, a mobile crusher, a pulverizing mill, and a hydraulic press, all very compact tools enabling us to complete repeatable, multi-element XRF analysis in-country and to reliable standards, saving us both time and money.

Our other main technology drive is the use of drones.  We have several heli-drones and one large fixed wing drone for aerial topographic and orthophoto surveys.  This is a very cost-effective way of generating accurate remote data for an exploration or mining operation.

Do you have a final message for our audience?

SEMS combines local presence with global expertise. We can help both returning and new clients to reduce risks so that they can spend their money in the ground and not worry about other infrastructure concerns. We see ourselves as a pathway between investors and license holders: we speak to both camps, trying to bring them together. SEMS continues to support countries that may not be seen as traditional mining destinations, such as Nigeria and Equatorial Guinea. I am fairly confident gold prices will remain strong at least in the next few years and that we will see a return of junior companies taking greater risks in these less explored countries.

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