FG Gold – Business Focus

Africa’s wealth of mineral resources is well known, but all too often, Africans are not the ones to benefit from it. With the Baomachun Gold Mine in Sierra Leone, the gold development firm FG Gold is looking to change all that.

“Baomachun will focus on African content, it is African-owned, African-led, recruiting the majority of our recruits from Sierra Leone, and the rest coming from Africa,” says Nicola Asgill Head of Corporate Development, Sustainability & Investor Relations at FG Gold. “Our largest financiers are the Africa Finance Corporation and Afreximbank. It is time that Africans start leading the development story of its own assets.”

FG Gold was established in 2021, and the Baomachun Gold Mine is its first asset. Positioned directly in the middle of Sierra Leone, once it is operational it will be the largest gold mine in the country, if not the largest mine outright. According to initial feasibility studies it boasts a resource of 6 million ounces, with a grade of 2 grams a ton. From the outset FG Gold is predicting a 12 and-a-half year life of mine, producing 150,000 ounces a year for that duration.

“That’s just a fraction of the potential of the asset,” Asgill tells us. “Our licence covers 125 square kilometres, and so far, we have only explored about a square kilometre of that. We still have additional drilling to pursue.”

 

A Mine for the People

Talking with Asgill, it is clear that she is excited about this mine not just for the wealth it can unlock, but for what it means for Sierra Leone as a whole.

“Baomachun is a landmark flagship asset not just for FG Gold, but for the country,” she tells us. “It is the premier gold mine in the country, and one of the largest gold assets under development across Africa. But what sets us apart is the way FG Gold operates. We put local communities at the centre of everything we do in a true partnership model.”

Baomachun Gold Mine is the first mine to commit 1% of its profits to a community development fund. Where most mines wait until they hit production to begin launching community projects, FG Gold has already started, building new schools and community centres, upgrading the Baomachun clinic, as well as training and upskilling the local community, particularly miners.

90% of FG Gold’s employees are local nationals.

“Our goal is the complete transformation of local communities,” Asgill says. “It does not matter what financial returns we make, it will not be a success if our communities and country don’t realise social and economic benefits from it.”

Part of the reason that this is possible is that instead of the traditional forms of borrowing most mines use to fund themselves, FG Gold has established Baomachun as the first project financed mine in the country.

 

A Unique Funding Model

“We have employed some innovative and creative structures to get us on track,” Asgill points out. “Under the typical model, you’d see sponsors who’d do a listing in Australia, Canada, or the US and go to the market repeatedly to raise money. This approach dilutes the ownership, moving the project’s centre of gravity away from the location of the mine. It leads to less accountability, and makes the project less African. That route hasn’t benefited Africa or its people. Instead, we used a project finance model that requires strong partners with the necessary technical knowledge. Additionally, the Sierra Leonean Government has been a valuable partner.”

Project financing comes with its own risks. It is complex to put together, and uses the cashflow of the asset itself to pay back financiers, meaning it is typically viewed as risky.

“To be honest, our whole mantra of ‘African focused, African led’ is not something financiers are used to,” Asgill shares. “Our country has been affected by wars, Ebola, the economic crash. Many would be hesitant to put money into that. During our roadshow we met one hundred financiers and found four who were willing to go on this journey with us. Even there, it required creativity, structuring and intentional use of capital to derisk the project over time.”

But as Asgill points out, “It is not enough to be African owned and African led, we have to strive for excellence as well. That is what we do. We are partners with leading firms. We are trying to build a world-class gold mine that is a beacon for other gold mines. In ownership model, finance and safety. We have 75 million accident-free hours, an incredible track record. That excellence permeates through our entire culture. We do everything, and do it well. We have seen the mistakes of the past, so we take those lessons and implement them into how we perform.”

To raise the financing the Baomachun project needed required a lot of different moving parts to come together over the space of four years, and a lot of dedication was required to put those jigsaw pieces together.

“It has taken a myriad of players, and hundreds of documents to come together,” Asgill says.

The payoff will be worth it. Once operational, Baomachun will account for 10% of Sierra Leone’s GDP.

 

Developing Local Talent

But for the people of Sierra Leone, the first and most obvious benefit of the mine will be the jobs that it brings.

“We prioritise local expertise and recruitment. We start within our communities, looking nationally only after looking locally,” Asgill says. “Currently 92% of our workforce are Sierra Leoneans. Eventually, we would like that number to be 100%.”

Of course, finding people with the relevant skills, qualifications and expertise can be a challenge when you are the first in your field.

“We have faced challenges finding some of the technical knowledge we need within the national populace. So, we do a lot of training and knowledge transfer,” Asgill tells us. “Within the community itself we have given people access to training programs while employing 300 to 400 artisanal workers. We earmark $1 million of contracts to go specifically to the local community. Locals have been instrumental in constructing fences and block moulding.”

 

For the Future

But the training FG Gold provides is not just about making the local community more useful to the mine.

“Beyond our direct job training we do restoration, training farmers on better farming methods, showing mining communities how to be farming communities as well,” says Asgill.

Even now, FG Gold is engaged in the first steps of a long journey, one that will see plenty of benefits for the communities around the Baomachun Mine, and Sierra Leone as a whole.

“We want to be beneficial to our communities and indigenous Sierra Leoneans. Obviously, I want us to move towards being 100% owned by Sierra Leoneans,” Asgill points out. “But ultimately, we want a complete transformation of communities, power, water, education, and health.”

And when that mine has extracted all the gold that it can?

“We have to leave these communities and the sacred land that has been loaned to us better than we found it,” Asgill insists. “We have a responsibility to restore the land that we have, to properly rehabilitate it. Eventually we will look to expanding into other assets, but it is early days yet. This site has incredible amounts of potential. We need to maximise that before we look outward.”