African Gold Transactions

Richard PearsonDirectorJohn Pearson & Associates (Pty) Ltd

Gold in Africa

Gold in Africa

The global average annual production of gold over the past five years is approximately 2,400 metric tons (MT). African countries account for 20% of that volume (480MT). The continent’s largest producer is South Africa, averaging close to 250MT per annum, slightly over half of the continent’s production and about 10% of global production. In fact, it is the only African country featuring among the top 10 gold producers in the world. The other key gold-producing African countries are Ghana, Mali, Tanzania and Guinea. In total, there are at least 34 African countries producing gold.

Gold in Africa

Gold Production - Africa

Gold Producing Countries and

CompaniesCountry Mine Name Average weight per shipment

Botswana Mupane 150Kg

Burkina Taparko 220Kg

Inata

Bissa

DRCNamoya

220Kg

Twangiza

Kibali

GuineaSiguiri

250Kg

Kineiro

Lefa

Country Mine Name Average weight per shipment

GhanaTarkwa

600Kg

Abosso

Iduapriem

Obuasi

Wassa

Bogoso

South Ashanti

Edikan

Prestea

Chirano

Country Mine Name Average weight per shipment

Ivory CoastTongon

500Kg

Bonikro

KenyaKarebe

100Kg

Kilimapesa

MaliMorila/Sadiola/Yatela

400Kg

Loulo

Tabakoto

Kalana

Syama

Country Mine Name Average weight per shipment

NamibiaNavachab

120Kg

TanzaniaGeita

350Kg

North Mara

Bulyanhulu

Tuluwaka

Shanta

ZambiaKansanshi

120Kg

ZimbabweCaledonia

100Kg

Illegal Mining / Artisanal Mining

• An artisanal miner or small-scale miner is, in effect, a subsistence miner.

They are not officially employed by a mining company, but rather work

independently, mining or panning for gold using their own resources.

• In most cases they operate in areas demarcated for formal mining

operations.

Country

Average

weight per

shipment Shipped via Note

Burkina 30kg-90kg Ministry of Mines & Customs

DRC

40kg-

120kg CEEC Frank Dodd Act/OECD

Ghana

15kg-

150kg PMMC Many shipments finding there way into neighbouring countries

Guinea

15kg-

150kg BCRG

Ivory Coast 30kg-80kg Central Bank

Kenya 10kg Customs & Central Bank Often ex DRC - Frank Dodd/OECD

Mali

20kg-

100kg Ministry of Mines Ministry of Mines

Tanzania 15kg Tansort/TRA Often ex DRC - Frank Dodd/OECD

Uganda

15kg-

100kg Reserve Bank/Customs Often ex DRC - Frank Dodd/OECD

Zambia 30kg Customs Often ex Angola or DRC - Frank Dodd/OECD

Zim

10kg-

120kg Fidelity Printers Finding there way into Mozambique

• Sierra Leone – GDDO (Gold & Diamond office)

• DRC – CEEC (Kinshasa and now Bukavu)• Ghana – PMMC (All gold which has not

been collected directly from a mine)• Guinea – BCRG (Central Bank in Conakry)• Tanzania - Tansort as well as TRA

(Revenue authority)

# Frank Dodd Act is from the US andbasically means you should notexport from a country that borders the DRC, unless of course it’s comevia CEEC.

Channels to Export

Shipments

The figures presented above are average weights taken across all the mines.

The likes of Goldfields etc, would ship higher weights but the others ship generally around 100kg or so.

For the mines shipments are done generally 3 times a month for smaller mines and weekly for the larger operators.

Artisans try ship smaller shipments weekly and generally carry product across borders themselves (uninsured) into Dubai or India.

How Gold is Extracted

Miners

Miner

Artisanal Miners

Brokers

Miner

Processing

Scams

• Tanzania - Mwanza

Scams

Kenya

• Precious Metals Company with a UK listing.

• Loss involved 50kg of Gold valued at US$850,000

• Client coerced into a gold transaction without conducting any due diligence.

• Client made numerous visits to Kenya, inspected gold which was then paid for without any formal assay being undertaken.

• Client relied on integrity of seller to export product to Dubai and Hong Kong which never arrived.

• Subsequent investigation following the submission of a claim revealed this to be a bogus transaction and all relevant documentation including agreements and export papers proved to be false.

• Copies of the relevant documentation used in this gold scam will be available for discussion during the workshop period.

Scams

• Ghana – Sample swapping

• Ghana – False documentation

• Kinshasa – Misrepresentation of product

Insurance

• Lloyds Policy

• Credit Applications at Banks

• Falsified Documentation

Due Diligence to Reduce

Claims

• To Reduce Claims

– Questionnaires must be completed

– Site Visits:

• Mine Inspection / licences

• Source of Gold

• Ministry of Mines

• Assay

• Verification of Documentation

• Transit risks

Percentage of Successful Gold

Transactions

Out of 100%

97% are tainted with

fraud

Conclusion

• This presentation provides a general overview of what we have encountered as Loss Adjusters dealing with Gold related enquiries in Africa.

• Whilst there are many legitimate gold transactions coming out of Africa, Underwriters should be particularly cautious when being approached to write this type of business and should not do so under any circumstances unless a proper survey in undertaken.

• We thank you for your time and now open to floor for questions.