A new mine for old.

When Mali's second biggest gold mine, Syama Gold Mine, was closed down by its owners and operator, Randgold Resources of South Africa, last year, the whole village of Syama and its surrounding communities, which depended directly and indirectly on it for their livelihood, fell into a state of mourning.

According to eye witnesses, the entire community, made up largely of subsistence farmers and livestock herders, openly weeped and wailed.

Randgold, the South African gold exploration and mining company, which had bought the mine from Australia's BHP Corporation in the mid-1999s, spent $60m on rehabilitation but actually produced gold for only three years. Randgold closed down the open-pit operation because of the high cost of the operation and plummeting gold prices which made mining uneconomic in July 2000. The locals thought their world had come to an end.

But, thanks to the perseverance and determination of the Malian government, a new gold operation, far bigger than Syama has been put on stream in the village of Yatela. The government is credited to have gone the extra mile in providing the needed environment for the construction of the project.

World's low cost mine

The new mine, Yatela Gold Mine, is a joint venture between AngloGold of South Africa, the world's number one gold producer, and IAMgold Corporation of Canada, a Toronto Stock Exchange-listed junior exploration company. It poured its First gold with a total mass of 22.8 kilograms on Wednesday, 9 May 2001.

Whilst the two partners have equal shareholding of 40% each, the remaining 20% is owned by the Malian government on free carried basis.

The mine was fully constructed at a total cost of $73m, which was $2m below the budgeted cost, and construction was completed ahead of schedule. Yatela, which promises to be one of the world's low-cost gold mines, is projected to treat about 2.4m tonnes of ore annually, producing 1.4m ounces of gold over a period of six years at an average grade of 3.6 grams per tonne at an average cash cost of about $175 per ounce.

Like at the Siguiri Mine in neighbouring Guinea (in which Ashanti Goldfields holds an 80% stake), the gold from Yatela will be recovered from the ore using heap-leach technology on site at Yatela. Elution and smelting will be carried our at the neighbouring Sadiola Mine, located some 25 km away, on a toll basis, resulting in significant cost savings at Yatela mine.

"The fact that it is an open pit operation, and the fact also that labour is relatively not a major cost driver here, means that we can produce gold in Yatela comfortably below $180 per ounce", says Musa Diakite, a mining engineer in the office of the Ministry of Mines in the Malian capital, Bamako.

Anglogold geologists who have been working with their IAMgold counterparts in the exploration of the Yatela concession since the early 1990s, confirmed that the mine's total reserves as at January 2001 stood at 12.3m tonnes at 3.6 grams per tonne of gold, whilst total resources amounted to 37.6m tonnes at 2.1 grammes per tonne, making it one of the richest gold mineralised zones in the Sahel region.

"These are the reserves and resources delineated as at now. Our geologists are still working and digging to find more in order to increase the life-span and maybe increase the scale of the operation," said Peter Turner, Chief Project Officer of Anglogold International Projects. "It's too early to talk about new findings but we are sure that we will hit something bigger beneath the surface", he added.

The government of Mali is more than happy that Yatela has replaced Syama as a major source of employment, technology and foreign exchange to the country. It currently employs more than 200 Malians and 15 expatriates, and indications are that more local hands will be needed as Anglogold and IAMgold intensify exploration at and around the concession.

"Experience shows that mining enterprises are major sources of development in the rural sector, a major source of technological inflow, a major source of employment and new skills and a major source of foreign exchange," says Abodoulaye Fofana of the Mines Ministry. "These are the benefits the government and ordinary Malians are patiently waiting for. In short, we are using foreign capital and technology as a vehicle for development for the benefit of our people," he adds.

Already several kilometres of roads have been paved for the first time in the area by the miners. Scores of modern houses are being constructed for the employees and the physical infrastructure of the local state-run elementary school is being reconstructed by the company. The mining company will also pay huge royalties and local taxes, most of which will go directly to support the local economy.

Todd Bruce, President & Chief Executive of IAMgold, whose company was the original concession holder, is also happy that the mine has finally come on stream after earlier frustrations and difficulties. He said: "Once again, IAMgold's strategy of combining a good deposit with a world-class operating partner such as Anglogold, has enabled the company to successfully convert ounces into cash-flow and earnings in the shortest possible time."

But Yetala is not the first mine to be set up jointly by Anglogold and its IAMgold partners. Just 25 km away, the two own and operate the rich Sadiola Gold Mine in Mali, which gained the prestigious kudos as the lowest priced gold producer in Africa last year. Gold production totalled 611,442 ounces at a total average cost of $123/oz.