Cluff Gold brought two gold mines to production during 2008 and is now poised to develop a third, much larger prospect. Chairman Algy Cluff talks to Gay Sutton about the rocky road to success.
When entrepreneur Algy Cluff migrated from the oil industry to gold mining in 1980, the price of gold was bumping along the bottom, the majority of Africa had yet to be discovered as a global mining destination and all the major mining corporations were exclusively locked into South Africa—unwelcome across the rest of Africa for their association with apartheid. And knowing Africa well, it seemed an enticing prospect. “We could have had the whole of Africa at that time, because there was very little competition,” Cluff comments. “But that situation changed very quickly.”
Switching from oil to gold mining may have appeared a risky move, particularly as financing was hard to come by and Cluff’s first venture into exploration was in the newly independent Zimbabwe. However, it has proved both intuitively and intellectually sound, as well as highly productive.
Zimbabwe was Cluff Resources’ first project. “We were the first to invest in Zimbabwe after its independence,” Cluff explains. “We found some excellent unemployed geologists because everyone had pulled out of the country, and the Rhodesian Geological Department records were in extremely good shape. So much of our initial exploration was done in the library and not on the ground.” This quickly resulted in the acquisition of three productive interests in the newly formed nation.
A fourth mine quickly followed—the Ayanafuri mine in Ghana. And by 1995 the company was producing a highly respectable 150,000 ounces of gold per annum. “Then our nemesis was that we made the biggest gold discovery since the Second World War in Africa—what is now called the Geita mine in Tanzania.”
Geita could have been the discovery of a lifetime, but it ended up bringing about the demise of the company. Attracted by the yet unquantified gold find, Ashanti Goldfields made a bid for the company. “We had a shareholder in Hong Kong with a 29 per cent shareholding in the company. They lost their nerve and sold out,” Cluff says. “And without their support we couldn’t really fight off the bid.” Ashanti Goldfields acquired Cluff Resources in 1996, and went on to exploit the Geita find.
Undeterred, Cluff turned his attention to forming a new company that very same year: Cluff Mining. This business then become Ridge Mining and was finally acquired by Aquarius Platinum in July last year.
It was in November 2003, however, that Cluff formally created his current business, Cluff Gold. “We are focusing our efforts purely in West Africa—a favoured destination for the mining industry. Not only does it have the geology, but it also has excellent mining investment codes and tax regimes, rapidly improving infrastructure and accessibility, and governments that not only need foreign investment, but more importantly, want it,” he explains. “They can put together a skilled workforce, and are operating within the framework of English, French or Spanish law. And that’s not the case in China or Kurdistan.”
Cluff Gold currently employs some 600 staff. And while its chief operating officer is a New Zealander, everyone else—geologists, engineers, managers and workforce—are all African. And Cluff has nothing but good to say of the quality of the local workforce. “There are some outstanding Africans leaving universities now, trained in a whole range of disciplines including geology and engineering. And we’re seeing a new class of entrepreneurs emerge too—they’re tough and resilient.”
The company brought two gold mines to full production in 2008, both of them using open pit mining and heap leach processing methods. The first, the Angovia project, is located at Mount Yaoure in Cote d’Ivoire, and began producing gold in March 2008.
Although previously mined, the Angovia project has measured and indicated resources equating to 195,000 ounces of gold in the oxide form and a further 260,000 ounces of gold in the sulphide form, with an additional 61,000 ounces of gold in inferred resources in both forms combined. Benefiting from a well developed infrastructure, the site also draws on a hydroelectric dam some six kilometres away for its power.
The second producing mine is Kalsaka, located in Burkina Faso. With significantly larger measured and indicated resource equating to 640,000 ounces of gold, and a further 160,000 ounces in inferred resources, the mine began pouring gold in November 2008, and is projected to achieve annualised gold production in the region of 70,000 ounces.
Both of these operations currently produce gold purely from gold oxide. “However, we want to extend the life of those mines, and we believe there are much larger sulphide resources below the oxide,” Cluff explains. “We are therefore exploring to determine whether that’s the case or not.”
Exploration at the two sites is an ongoing process. The majority of Cluff Gold’s effort and resources, however, are being directed to a relatively new and promising discovery in Sierra Leone. “The Baomahun Gold Project in Sierra Leone is our flagship project, and we’ve proved up to two and a half million ounces of resource so far.”
During 2009, contractors completed some 7,000 metres of core drilling; however, with only 25 per cent of the mineralised area drilled, exploration of the site continues. In parallel with this, feasibility studies are in progress. Once documentation is completed next year, Cluff will begin raising the US$200 million funding required to bring the mine into production. “We could be in production by the first quarter of 2012,” he says.
Baomahun will be a more sophisticated operation than either Angovia or Kalsaka, being a combination of open pit and underground mine. Once in operation, the company’s workforce is likely to double, and the mine is projected to produce some 160,000 ounces of gold a year. “This would result in us producing over 250,000 ounces of gold a year—which would make us quite a large company.”
With two producing mines and one under development, Cluff is cautious about over stretching and growing too fast. “We’re not looking for new prospects outside the countries we’re currently operating in. We want to build up our cash flow,” he says, “and continue exploration on our current sites to extend our resources and the life of our current mines.” www.cluffgold.com
