African Underground Mining Services Minimag 2020

AFRICAN UNDERGROUND MINING SERVICES

AFRICAN UNDERGROUND MINING SERVICES

Resilient AUMS Remains Contractor of Choice in Africa PRODUCTION: Karl Pietersen

Combine much more difficult to extract resources with a global pandemic that cripples business and you do not have a nice environment for a successful mining operation. But AUMS, the African operating arm of Barminco and Perenti, continues to buck the trend, delivering results through utilisation of world-class best practice. www.enterprise-africa.net / 3

INDUSTRY FOCUS: MINING

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As mining, both surface and underground, continues to become more uneconomical, all over the world, those in the industry are looking for experienced partners who can utilise technology effectively. Now more than ever it is vital to apply efficiencies to ensure returns are viable.

In August 2020, the price of gold hit a record high – more than $2000 per ounce – but those in the industry are concerned this could be ‘peak gold’ – where miners extract the maximum amount possible in a year. If we have reached peak gold, the future would see declining production each year as new deposits become rare and existing mines become very difficult to operate.

According to Mining Technology, 2020 realised a 1% reduction in gold production in Burkina Faso and Mali, a 3% decline in the DRC, a 2% fall in Ghana, and a 5% drop in South Africa.

The gold example is typical of many other resources. Mining the

Roxgold Yaramoko

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minerals required in many of our everyday products and processes is important, but doing so in a safe, sustainable and profitable way is becoming challenging.

The traditional mining powerhouse nations of the world – South Africa, Russia, Australia, Canada, China, Uzbekistan etc – have become home to the biggest and most powerful mining businesses, and they have helped to develop mining practices that are as efficient as possible. But many are looking to new areas to unearth some of the world’s last decent reserves. West Africa is high on the list with rich stocks of gold, rutile, bauxite, uranium and more.

Even during the Covid-19 global pandemic (the driver of high gold prices), West Africa has seen little slowdown. Borders remained open between most nations with essential supplies moving between Ghana, Mauritania, Mali, Sierra Leone and Senegal. Mines have been forced to

take extra precautions such as keeping out unnecessary personnel and making use of new safety measures and PPE, but production has continued.

African Underground Mining Services (AUMS), the leader in the region when it comes to mechanised underground hard rock mining, has benefitted from renewed global attention in the area.

A JV between Australia’s Barminco and Ausdrill - both Perenti Group companies - AUMS has been operating in Africa for more than 15 years. The skills from both companies are utilised to ensure global standards and leave a lasting legacy on the communities in which it operates.

“To date AUMS and AMS has trained over 20,000 operators in Africa,” the company says.

With offices in Ghana, Mali, Burkina Faso and Tanzania, AUMS is well-positioned across the continent and has developed many positive relationships with international mining houses operating in Africa.

AFRICAN UNDERGROUND MINING SERVICES

YARAMOKO In 2018, AUMS picked up a $160 million from Roxgold – a leading Canadian gold miner – to complete rollover and extension services at the Yaramoko operation, as well as to start works for the Bagassi South mining contract in Burkina Faso.

Located 200km south-west of Ouagadougou in Burkina Faso, the Yaramoko gold mine project began in May 2016. In 2018, expansion and underground mining in Zone 55 began, creating 300 jobs, with AUMS providing development and production activities, diamond drilling and associated services. At the time, AUMS Chief Operating Officer Blair Sessions said: “We are delighted to have secured this work and look forward to extending our important, highly valued relationship with Roxgold on their flagship project.”

Bagassi South is located just 1.8 km south of Zone 55 and therefore shares facilities and management.

AUMS will have assisted Roxgold

// WE LOOK FORWARD TO CONTINUING TO CREATE ENDURING VALUE AND CERTAINTY FOR OUR CLIENT, EMPLOYEES, SHAREHOLDERS AND THE PEOPLE OF YARAMOKO AND BURKINA FASO ALIKE // in producing approximately 480,000 oz of gold from Yaramoko – more than the anticipated feasibility study production levels. Currently, expansion plans are in the pipeline with the hope of adding at least a decade to the mine.

In September, AUMS received a contract extension from Roxgold to assist further with mine expansion.

The $146 million contract will last from December 2021 to December 2023 and, on top of the existing work, will see AUMS on site at Yaramoko for eight years.

“The high-grade Yaramoko complex is an important project for Roxgold, Barminco and the people

of the Yaramoko community. We are very pleased to extend our contract with Roxgold to December 2023 and look forward to continuing to create enduring value and certainty for our client, employees, shareholders and the people of Yaramoko and Burkina Faso alike,” said Barminco’s Chief Executive Officer, Paul Muller.

Perenti Managing Director and Chief Executive Officer, Mark Norwell, added that Barminco and AUMS, combined, is a global leader in hard rock underground mining, with this contract extension reinforcing its sector leading position.

Continues on page 8

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INDUSTRY FOCUS: MINING

// UNDERGROUND DELIVERED STANDOUT FINANCIAL AND OPERATIONAL PERFORMANCE THROUGH THE BARMINCO AND AUMS BUSINESSES ACROSS BOTH AUSTRALIA AND AFRICA //

Continued from page 5 “Bagassi South has also had a positive impact on the company’s cost structure on a per ton basis, with an average operating cost of US$150/t processed, which is a 16% reduction compared to Q3, 2018 driven by increased throughput and strong cost control at Yaramoko,” said Roxgold CEO John Dorward, talking to Mining Review Africa about the success of the project to date.

The Houndé greenstone belt region that the Yaramoko complex calls home is volcanic and volcaniclastic rock to the west and the Diébougou granitoid domain composed predominantly of granitic rock with minor volcanic rock to the

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east, divided by the north-northeasttrending Boni shear zone. Because of this, a trusted, proven and reliable partner was essential. AUMS was quickly able to move the project along, helping in the relatively short five-year period from discovery to production at Zone 55.

AUMS is also active in Siou, Burkina Faso for Semafo; Kenyasi, Ghana for Newmont; Geita, Tanzania for Anglogold Ashanti; and Obuasi, Ghana for Anglogold Ashanti.

With the unwelcome news that peak gold could be upon us, Perenti will be keen for its divisions in Africa to continue supporting clients as best possible so that new strategies and new opportunities can be sought.

PANDEMIC SUCCESS Mark Norwell said in February that the company had achieved reasonably successful half year results, positioning it for further growth throughout the year.

“Perenti’s underground mining business, across Australia and Africa, performed exceptionally well, with earnings growing by more than one-third over the prior corresponding period as we successfully integrated Barminco into the Perenti group,” he said.

After the impact of the Covid-19 pandemic became more obvious, Norwell was quick to reassure the market that Perenti and its subsidiaries, including AUMS, was operating safely.

AFRICAN UNDERGROUND MINING SERVICES

“We are focused on protecting the wellbeing of our people and working closely with key stakeholders so that we can continue to operate safely and effectively during this unprecedented period.

“We are doing all that we can to minimise any disruption and we will continue to focus on capital management as part of our 2025 Group strategy to ensure Perenti is well positioned to deliver through all economic cycles,” he said.

In August, Norwell delivered the company’s 2020 annual results and labelled the figured ‘exceptional’, considering the circumstances.

The major highlights include delivery of record revenue – exceeding $2 billion for the first time – record

EBITDA, a significantly strengthened liquidity position, and the company now enters FY21 with more than $5 billion work in hand and almost $11 billion in contract rollovers and targeted tender opportunities.

“To report record revenue and earnings, end the year in a stronger financial position than 12 months ago, and maintain a substantial order book is impressive, but to do so in the midst of the operational and economic challenges presented by Covid-19 is exceptional.

“Underground delivered standout financial and operational performance through the Barminco and AUMS businesses across both Australia and Africa.

“We also secured almost $1 billion in contact extensions and new work across our Surface and Underground

ISGs in FY20 and successfully commenced operations in attractive mining jurisdictions of Botswana and Canada,” detailed Norwell.

For those in the AUMS business, its customers, and stakeholders around Africa, this news is much welcomed.

The mining industry is now far from its heyday and constant investment is required to delivery worthwhile returns.

Fortunately, AUMS promises to ‘create enduring value and certainty in Africa’ – something which is much needed and why the company is now recognised as the contractor of choice in Africa.

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October 2020

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