Gold has been mined and traded in West Africa for hundreds of years. In Sierra Leone, most of the gold that is mined is exported out of the country as gold dust or unrefined bars. Licensed gold buyers and exporters generally purchase gold at rates that are below the published daily world gold price to compensate for the purity (fineness) of the gold and the transaction, transport and tax costs that need to be paid, plus a modest operating profit.
At present the only way that a gold miner or gold dealer can improve the price that they get for their gold is by selling it to gold smugglers instead of licensed gold exporters. Gold smugglers are often prepared to pay slightly more than a licensed exporter because their intention is to transport the gold out of the country without paying the Government any export tax or licensing fees.
The development of a gold refinery in Sierra Leone would provide gold miners with alternative to selling their production to licensed gold dealers and exporters. They would have the option of selling directly to the gold refinery or making use of the services offered by the refinery while retaining ownership of their gold. Investors from outside Sierra Leone would be offered a secure transportation service to the destination of their choice or an option for the secure storage of gold in Sierra Leone. Worldwide, exporting refined gold generally presents fewer challenges than the transportation of unrefined gold
Our intention is to apply for a license from the Government of Sierra Leone to refine gold and manufacture investment bullion bars and coins. The gold refinery would also provide an assay service and secure storage facility.
We seek to build and operate a factory to that would provide “gold assaying and refining services to produce, process manufacture and trade certified bankable investment gold products such as gold coins and bars to a purity of 99.99%”.
The development of a modern gold assaying and refining factory in Sierra Leone would add value locally, it would also ensure that gold producers have a willing buyer close at hand that would be willing to pay a fair price for their production. The aim would be to operate the refinery as a private /public partnership in co-operation with the Central Bank. The refinery would provide services to the Government of Sierra Leone, Mining Companies and to Companies and Individuals that wish to export gold or use it for the manufacture of jewellery.
The refinery would also be able to offer services for the assaying and re-processing of scrap or imported gold. The operation of a professional assay laboratory and gold refinery would improve confidence and improve the reputation of the gold mining and gold exporting businesses in Sierra Leone. The refinery would seek to become an internationally recognized and accredited business as soon as possible.
Individuals, families, small alluvial gold mining companies and co-operatives produce much of the gold that is presently mined in the country. Alluvial diamond mining companies and those mining other minerals often produce gold as a by-product. There are also some companies developing plans to mine gold from underground and surface mines. The statistics for gold production across the country vary considerably. The highest official volume of annual gold exports was approximately three and a half metric tons that was exported in 1941 the lowest annual gold export was a few kilograms in 1961, the year that Sierra Leone gained its independence.
In uncertain times, holding gold can provide financial stability for investors, individuals and governments. The acquisition of gold is one of the many strategies employed by Central Banks that buy the metal to add to their portfolio of assets. Gold is held as a store of value that underpins the value of currency reserves.
Banks and businesses that need gold in countries that do not have mineable gold reserves have to purchase gold through international markets. Sierra Leone is fortunate to have recoverable reserves of gold suitable for development by investors prepared to fund mining and processing operations. Mining and refining Sierra Leone’s gold rather than simply exporting it untreated, would add value and bring additional benefits to the people and the government: improved income, more jobs, economic growth and tax revenue.
Prior to the use of paper money payments and debts were settled using coins made of gold, silver, copper and bronze. The modern financial system based on paper money was founded in the 17th Century. The first model of a ‘Central Bank’ was based in Amsterdam. The development of paper money started in Sweden based on the principles of the Dutch bank this resulted in the creation of the first national bank in Sweden. The creation of the Bank of England in 1694 became the model for most Central Banks around the world.
The arguments for and against the use of gold to underwrite the value of a currency are many. In recent years the investment status of gold has been raised. It is now regarded as a lower risk Tier 1 asset. This change in status is one of the reasons for the volumes of gold presently being bought by Central Banks and investors all over the world. Gold is once again being bought as a hedge against the instability of paper currencies and financial shocks: such as those that caused by financial crisis in 2008.
The Basel 3 Guidelines require banks to achieve a level of capital adequacy and liquidity by 2019. The easiest and fastest way to achieve liquidity is through the acquisition of gold. What does this mean for Sierra Leone? The Bank of Sierra Leone should consider developing an active gold buying program to accumulate a volume of gold that can be used to support the value of the currency (Leone) from financial shocks.
A gold refinery built and operated by Global Consultancy Africa would work closely with the Bank of Sierra Leone to ensure that the aims and objectives of the refinery, the Bank of Sierra Leone and the Government of Sierra Leone are met.