Golden Opportunities in Liberia: An Interview with Geoff Eyre

Interview conducted by Will SoutterNov 5 2012

In this interview, Geoff Eyre, CEO of Amlib Group, talks about their gold exploration projects in Liberia, and their contributions to the local community through their CSR programs.

Can you please provide a brief introduction to Amlib holdings and the sector it works within?

Amlib is an exploration company focused purely on Liberia. We are principally looking at gold exploration, but obviously if we found other mineral opportunities in our licensed areas then we would look to develop those as well.

A recent example of that is an iron ore resource that we identified on one of our licenses. We have just recently spun it out of the main Amlib group under a Joint Venture with a partner. Although this project will now be run and financed separately, Amlib will continue to provide exploration services to the new company, so we will have an income stream as a result of that JV.

The company was founded back in 2000, but there is a prehistory - the founding geologist, Dr Nathaniel Richardson, was involved with the US Geological Survey in Liberia back in the early 1980s. He obviously gained a lot of knowledge from his role in the survey, which gave him the opportunity to identify a lot areas that would be of interest, and I think that's what ultimately found its way into the Amlib portfolio of assets.

So we're in a very fortunate position from that point of view, effectively having had "first dibs" on the licenses that were available at the time, and from a strategic point of view that's a very positive thing.

What assets and capabilities are required to work in a place like Liberia?

We have a very effective exploration capability on the ground. We've invested in a fleet of light vehicles, we have an in-house drilling capability with five diamond-core rigs, and we have well-established field camps that we operate out of at the licensed areas.

Liberia is a very tough place to operate in, I think, and some of the new entrants into Liberia are realizing that. Obviously there a history of conflict, and the infrastructure has lagged behind the rest of West Africa as a result of that - many places are inaccessible for much of the year because of the rains.

The supplier base that you could expect to find supporting the exploration industry in many other countries around the world and in West Africa simply don't exist in Liberia - that's a supply and demand issue which is improving slowly, but the degree of autonomy and capability as an exploration company in Liberia I think is significantly higher than you might find elsewhere.

Why did Liberia stand out as an attractive place to invest?

In terms of Liberia as an attractive place to invest, I think because of Liberia's political troubles, there has been a huge lack of exploration relative to everywhere else in West Africa, and I think that provides a significant opportunity now.

It is well known that there are small-scale artisanal miners operating all over Liberia, mining visible gold; there are also a number of significant mines on structural features that run into Liberia from neighbouring countries.

The rocks are very similar to the rest of West Africa, as you might expect, so the fundamental potential of the country we think is very promising. This combined with the fact that there has been a lack of exploration there means there really is a good opportunity to find some significant resources.

You have recently started providing low meterage drilling services for third parties. How did that come about?

Historically, our drilling capability has been exclusively for in-house purposes - we acquired it from a drilling company, so they have a track record of drilling for third parties, but they haven't done any of that whilst they have been with us.

Over the last 18 months or so, we have been carrying out a fairly broad exploration campaign across our licensed areas, in 15 different locations across the 3000 km² of ground that we have. During that time, we were using the full extent of the drilling capability that we have, but now we have some surplus drilling capacity, and we are looking at making that capacity available to third parties. We have actually signed our first contract for drilling services just the other week, and we have a number of other contract negotiations ongoing.

Because we are already set up in the country, we have low mobilization costs, so we don't need to have a 10,000 or 15,000 metre contract to make a project viable. The smaller exploration companies who have recently entered the country and haven't yet developed the targets that could justify large programs could really benefit from our capabilities.

Our plan is to make our services available to them for a month or two, for 2000 or 4000 metre programs, which helps those explorers move forward without having to invest too heavily. They can then get feedback quickly on their ground. This is a good opportunity for us to use surplus capacity, and it's obviously helping the new entrants into the country advance their projects, so it works well for everybody.

How is the Cestos project progressing?

Cestos is the largest license that we have - almost 2000 km² in size. It sits on a major crustal feature called Cestos Shear Zone, which hosts a number of multi-million ounce deposits further along that structure in neighbouring countries.

From the work we've done so far, we see a number of similarities between Cestos and the Ashanti Gold Belt in Ghana. To the north of the shear zone there is Archaean greenstone, and to the south Birimean rocks, so it is a boundary between the two ages, which is a feature that is similar to the Ashanti belt.

There is a lot of artisanal activity in the area, and we've spent the last 18 months or so opening that up. We've flown airborne magnetics over the area, and carried out a target generation exercise. In the last dry season, we undertook drilling at two target areas, and received some encouraging drill results, which we're planning to go back and follow up on during the course of this next dry season. So that's a very promising piece of ground, which we see delivering value for the company over the medium term.

What other projects do you currently have in operation?

In the near term, we are working on another license called Klekle, which is just outside of Monrovia. It's only 30 minutes off a paved road, so access is quite good, and we've just completed a third phase of drilling on a very promising target there. There are a number of other structures in the area which appear to be mineralized - we've done some trenching there, and some limited drilling which we are going to follow up on. So the Klekle project is more advanced than Cestos, and we're optimistic that it's going to provide us with a reasonable resource during the next 6 months or so.

We also have a legacy license called Kokoya, a 43-101 resource of 410,000 ounces at 2.6 grams. There was a lot of work and effort focused on that license in the past. We think that there is potential to this deposit, both down-dip and with satellite targets, but we're now quite keen to find a partner that could come in and move that license forward; either develop the exploration further or put the existing resource that we have into production on a relatively small-scale basis and conduct further on-mine exploration.

The fourth license that we have is Zwedru, which is on the border between Liberia and the Ivory Coast. We've flown airborne magnetics there, and we have some regional soils, we've done in-field soils and trenching recently on a feature where we have coincident geochem with a magnetic anomaly. The feature is over 6km long - the plan is to go back there in this next dry season and undertake a limited, short-hole drilling program to get through the overlying crust into the fresh rock underneath, and really find out what's going on there.

Amlib Group's current licenses in Liberia.

Could you explain in more detail your responsibilities under a Mineral Development Agreement (MDA)?

An MDA is a 25-year agreement between the exploration company and the government of Liberia. It sets out all of the obligations of the company - effectively becoming its own mining code specific to that license area. It sets out the fiscal regime for the company, with preferential tax rates, duty rates etc.

There is also a clause in there called a "No Less Favoured Status" clause, which basically says that if the government were to issue another license to another company subsequently that had better terms, those terms would automatically apply to us, so we would still benefit.

It's an extremely positive agreement to have, far superior to the reconnaissance licenses or the exploration licenses that exist in Liberia, so we're very fortunate to have those. All of the four licenses that I mentioned are held under these MDAs.

I think also, the surface rental figures are clearly set out in those documents, and the minimum spends on the licenses are set out. In recent times, those figures have been escalated for companies coming in and acquiring exploration licenses but our numbers are fixed permanently within the MDA, so the figures can't be adjusted upwards and we have some protection on that side of things.

What CSR initiatives have you implemented and how have they impacted on the local communities?

We take our corporate social responsibilities very seriously. It's a fundamental part of the ethos of the company, and I think its also consistent with our shareholders views on exploration activities and how they should benefit the communities near where we're operating, even at the early stages.

When we enter new areas, we usually put water wells in for communities with our drilling rigs, and we also often put in toilet facilities, so we leave some sort of legacy for the community.

In the communities where we are staying longer, where we settle in more and construct built-up camps, we typically start to pay teachers' salaries in schools in the area. We've also built two junior schools from scratch on our licenses, and we had one Amlib building that was no longer fit for our purposes refurbished and turned over to the local community to be used as a school as well.

We recently completed a project distributing books, stationery and other equipment for the schools in the areas where we operate, and we've made donations of medical equipment as well.

Out in the field, we often get involved with bridge repair, road maintenance and that sort of infrastructure work, and obviously with our activities we're putting in new access, which directly benefits the communities as well.

At a national level in Liberia, we have a close working relationship with a US-based charity called CURE International. We have recently financed the establishment of an operating theatre at the JFK medical centre in Monrovia. We put all the necessary equipment in there, and sent a doctor to Uganda for training so that he can perform hydrocephalus (also known as "water on the brain") treatment.

That operating theatre is now functional, and four pilot operations have been undertaken successfully a month or so ago. We are planning an official unveiling of that facility before the end of the year. We expect people from all over Liberia to come to that facility for treatment, particularly children with hydrocephalus who would otherwise die.

Another project with CURE International which is still in the early stages is a club foot program. CURE are coordinating that with other organizations that have an interest in club foot treatment in Libera, and we are providing the administrative support and the corporate capability to CURE's effort in Liberia to help move that program forward.

Primary school built by Amlib in 2010 in Kokoya.

What are Amlib's plans for expansion in the near future?

I think from an exploration point of view, we are looking to secure a transaction on our Kokoya resource, and that's something we're looking to do in the relatively short term. With Klekle, we are drilling at the moment on some targets that I mentioned, and we're looking to pull together a very interesting resource in the relatively near term, with significant expansion potential.

We're looking at a number of funding options at the moment. If the Klekle resource comes together in the way that we think it might, that could well provide the momentum to undertake an IPO sometime during 2013.

Obviously we're looking in parallel at other strategic and funding options as well, with a view to financing both moving forward of the Klekle project, and ongoing exploration at Cestos, where we are still very optimistic about finding a significant discovery.

How do you see the future of mining in Liberia and the rest of West Africa in the next 5 years?

I think Liberia has been very fortunate recently in terms of its stability. The President, Ellen Johnson, was re-elected again at the end of last year, so she has a further term. Liberia has been stable for quite some time now, and I think it has benefited from that stability and its close relationship with America.

Increasingly, companies are looking to deploy capital into Liberia because of the stability, and the potential that the country clearly has. With the Cestos license specifically, people have commented to me that it looks like the Ashanti Belt 20 or more years ago. I think there's tremendous development opportunities there for people to come in, so I think that's really going to be a driver for West Africa.

In terms of the other companies operating in the region, Aureus are moving forward strongly. They've completed their feasibility study and they are looking at financing their mine to the north-west at New Liberty in the very near future. Hummingbird are operating in the south-east with a relatively low grade but large resource in the Birimean rocks, so that's really going to help put Liberia on the map.

Obviously as we move forward with our projects as well, I think you'll see a significant amount of newsflow from Liberia, which I think is only going to serve to attract capital from other areas in West Africa to the benefit of Liberia.