SYDNEY (Commodity Online): Which is the new destination for Australia’s gold mining companies? Even though the Aussie mines are spreading overseas with an intension to cash in on the new gold rush, there new favourite location is West Africa.

Till now, local investors have traditionally liked to keep their investment dollars in First World countries, far away from the civil wars, poverty and political corruption in West Africa. But things are changing fast. So, is the investors’ mind.

West Africa covers 16 countries of some 5 million square kilometres — Benin, Burkina Faso, Cape Verde, Ivory Coast, the Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone and Togo.

But when it comes to gold, the focus in West Africa is on the countries that are home to large tracts of greenstone belts, the same sort of rocks that host most of the gold mined in Western Australia.

These nations include Ghana, Mali, Guinea, Ivory Coast, Burkina Faso, Senegal, Mauritania and Niger. ASX-listed companies are well represented in all of them. And they also have aggressive development and expansion plans for the region.

Analysts view West Africa as an emerging giant in global gold supply. Current annual gold production from the region is about 5.9 million ounces (7.16 million ounces in Australia for the 2009 June year, according to Surbiton Associates), with output forecast to surge by 43 per cent to 8 million ounces in the next three years.

Sovereign risk in West Africa is not as big an issue as it once was. With 14 of the 16 countries in the region having democratically elected governments, the number of conflicts there is at a 10-year low. Ghana and Senegal have been shining examples.

Current Australian producers in West Africa are Lihir at Bonikro in Ivory Coast (160,000 ounces annually), Mineral Deposits Ltd at Sabodala in Senegal (160,000 ounces) and Resolute Mining at the restarted Syama mine in Mali (planned annual rate of 250,000 ounces).

In the next couple of years, gold producers with their home base in Australia will be producing more gold from mines overseas than they do here.

While the concentration of ownership of Australian mines in the hands of non-ASX-listed gold groups such as Canada’s Barrick and South Africa’s Gold Fields partly explains the historical shift, the main factor is the explosion in new overseas mine developments by Australian gold producers.

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