West Africa Has Long Had A Wealth Of Gold Resources – Companies Are Now Looking To Countries Like Liberia For Their Great Potential

With a favorable geology, a growing body of knowledge and straightforward permitting processes, West Africa has been an attractive destination for gold miners, experiencing significant economic growth over the last 20 years. Exploration company Pasofino Gold EFRGF has taken a vested interest in the region.

Ancient rock formations and greenstone belts that are known to host gold mineralization can be found in the region, similar in age and formation to those found in other major gold mining regions such as South Africa, Australia and Canada.

The growth of mining in the region has led governments to implement standards and policies to ensure gold is mined responsibly and local communities are supported. According to the United States Agency for International Development (USAID), "West Africa is ripe for doing business." For investors, one of the least explored countries in West Africa is Liberia, which Pasofino Gold refers to as "the last untapped gold frontier in West Africa" due to its underexplored potential and favorable economic environment. Liberia is among the smaller economies in the region that has the potential for significant growth.

Founded in the early 19th century, the Republic of Liberia has a business-friendly government and currently receives one of the highest levels of direct foreign investment in West Africa. According to the World Bank, net investment inflows represented 24% of Liberia's 2022 GDP. This is significant for investors eyeing opportunities in Liberia.

Factors Driving Economic Growth In Liberia

The World Bank reports that Liberia's GDP is expected to grow by 5.5% through the remainder of 2024 and by nearly 6% in 2025 and 2026. Mining plays a significant role in Liberia's GDP.

Research conducted by Africa Mining iQ shows that most of the mineral wealth in the region remains undeveloped. For investors, this means that, "Liberia's importance in the global mineral economy will increase in the future."

Of importance is that Liberia has large areas that are considered to belong to the Archaean and Birimian geological terranes. The Birimian geological region is one of the most important gold-producing geological regions in the world.

Adding to the attraction for mining companies is the fact that the Liberian government is pro-mining.

The Liberian Government Works With Businesses To Improve Communities

Mining contributes about 10% to Liberia's GDP, so it is a very important industry for the country. Mining is a government priority and industry regulations are intended to incentivize exports. This is partly because exports help finance the country's food imports.

This governmental framework of complimenting economic and social considerations helps set the foundation for solid investment opportunities in Liberia. Mining companies work closely with local governments and communities to ensure that their operations minimize the environmental impact on the region and on local artisanal and small-scale mining communities, whose livelihoods would otherwise be vulnerable to large-scale mining operations.

An example of this relationship is seen in the feasibility studies of Pasofino Gold, a Canada-based mining company that owns the Dugbe Gold Project, located about 50 miles from the port of Greenville in Liberia.

As part of their Mineral Development Agreement (MDA) with the government, Pasofino has conducted environmental and social impact assessments that provide for training, infrastructure development, and social services provision for local communities. Such considerations are the result of a comprehensive and ongoing engagement process that includes key government agencies.

While Pasofino owns the Dugbe Gold Project, the government of Liberia will be issued a 10% carried interest in the mine when it becomes fully operational.

Arrangements like these help the Liberian government recoup the investments it makes to develop the public infrastructure and services that enhance the feasibility of a mining venture. They also demonstrate the cooperative landscape created by the government to encourage foreign investment in the mining sector.

Cooperation like this helps Liberia attract investment that is vital to the region's economic growth. For Pasofino Gold, it helps support the feasibility of its mining operations, which appear to be significant.

When Pasofino completed its feasibility study of the Dugbe gold project, it used a gold price of $1,700 per ounce and the net present value (pre-tax) of the mine's output was estimated to be worth approximately $690 million.

Today, gold trades at closer to $2,400 per ounce, potentially boosting the value of the Dugbe mine's output to almost $1.8 billion, according to the company.

The Long-term Prospects For Pasofino Gold In Liberia

Pasofino's MDA with the Liberian government – established with an initial 25-year term – can be extended as necessary to optimize output from the Dugbe mine.

With such prospects, Pasofino continues to develop its assets in the region and ensure it is fully equipped to capitalize. 

Recently, it added Emre Kayışoğlu to its Board of Directors. Kayışoğlu is the CEO of ESAN Eczacıbaşı, one of Pasofino's strategic investors, and brings a demonstrated history of success in the mining & metals industry and a proven expertise in driving business growth, fostering international partnerships, and delivering exceptional results.

Well financed by its joint venture partner and majority shareholder in its Dugbe gold project, Hummingbird Resources PLC HUMRF, Pasofino is poised to optimize its definitive feasibility study this year. More importantly, for the future, it has identified several other opportunities to help it maximize the value of the Dugbe mine and to reduce the project's overall capital expense profile. These should produce long-term benefits for both Pasofino and the people of Liberia.

Featured photo by Zlaťáky.cz on Unsplash.

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