Faranah, located near the Niger River in central Guinea, is a place transformed. Five months ago there was nothing to suggest it was a staging post for a 600km railway linking Simandou – a giant $20bn iron ore project in the country’s south-eastern region – with port facilities at Morebaya in the west. “When I went down to the National Park there was no sign where the railway came through,” says Andrew Pardey, CEO of Predictive Discovery. “Now it’s been cleared, the viaducts are in, you can see where the tunnels are coming through. It’s progressing at a rapid rate.”
Simandou – the world’s largest mining project – has helped settle investors amid political foment in Guinea that is not atypical of West Africa. Pardey acknowledges, however, that country politics are complex: “Everyone is trying to say I’ve got more influence or power,” he says in an interview. But Guinea’s transitional government, installed in July 2022 following a military coup a year earlier, is process driven. It can be frustrating but necessary, he says.
Pardey has reason to be positive on Guinea: General Mamady Doumbouya’s government has said it wants a new major gold mine to follow Simandou, which it approved to market yee-hawing earlier this year. “There’s only one gold resource of substance – and that’s us,” says Pardey of Bankan, a prospect in Guinea’s Siguiri Basin in the north.
A prefeasibility study has Bankan operating for 11 years, producing 292,000 ounces annually for the first seven. Total life-of-mine costs (AISC) are estimated to be $1,130/oz. Pardey says this makes Bankan a ‘tier one’ asset, the Blue Riband in mining. But he admits it’s a subjective view; the top mines in Africa are mining 500,000 oz/year or more. Critical to Bankan is further resource delineation.
Meanwhile, Bankan’s development has one major risk, which is whether it will get an exploitation permit. The Bankan deposit is in a prohibited zone in Guinea’s Upper Niger National Park. Independent studies commissioned by Predictive Discovery say there are no critical flora or fauna in the area. There has also been high-level government participation in preparing the environmental study. But the permitting is still a risk.
Pardey insists government participation will see regulations relaxed. There’s also comfort the government has been flexible in the past on bauxite mines and Simandou itself, which is located near a heritage site. “I feel confident that we’ll be granted that exploitation licence relatively quickly,” he says.
Pardey has worked in Guinea for 10 years in a career that has seen him criss-cross the region. Previously CEO of Egyptian gold miner Centamin, he joined Predictive Discovery’s board in mid-2021 in a non-executive role before becoming the firm’s CEO in 2022.
The market has been circumspect about the company but Pardey thinks a rerate will follow once the exploitation permit is stamped. It would then be easier to fund the project, predominantly through debt financing. There have been early-stage discussions with financiers, he says.
It’s also likely that given the paucity of significant gold resources globally, Bankan will attract potential buyers. Pardey says he’s “in no way” preparing the mine for a quick sale but clearly the final decision is with shareholders, which include brand names such as BlackRock (15%), Capital (9.6%) and Van Eck (4.1%).
In the meantime, Predictive Discovery is driving resource expansion hard: more than half of some A$50m in a recent capital raise is going into exploration. Going deeper underground already adds a year of additional mining, about 360,000 oz of gold. Pardey says it would be a failure if the firm did not capture the region’s full resource value were “something to happen” on the M&A front.
“You don’t want someone suddenly saying: ‘Look, we’ve taken this over, we just modelled this, we’ve got an extra two million oz and we paid nothing for this mine,” he says. “It’s all about maximising the value for the shareholders and the stakeholders.”