The Burkina Faso court has dealt a significant blow to the international mining sector by nullifying a lucrative streaming aurifère contract between Canadian companies Franco-Nevada and Sandstorm Gold Royalties and an asset on Burkinabé territory.
The streaming model relies on a simple principle: a financier advances capital to a mining operator in exchange for the right to buy, during the mine’s lifetime, a share of production at a discounted price compared to market rates. Franco-Nevada and Sandstorm are prominent players in this segment, with portfolios spread across several African jurisdictions.
The judgment casts doubt on the robustness of the mining financing model
Burkina Faso’s move slogs along a sequence of political measures initiated since the arrival of transition authorities in Ouagadougou. The country, third-largest gold producer on the continent, aims to revise its extractive framework and capture a larger share of the aurifère rent.
The annulment validates Burkinabé’s sovereignty over natural resources
Magistrates have ruled that the initial conditions of the agreement were not in line with existing legislation. For Burkinabé authorities, this decision confirms a strict reading of sovereignty over natural resources. However, for mining groups listed on Toronto or New York, it opens up uncertainty about long-standing commitments.
Franco-Nevada and Sandstorm face an unprecedented challenge
Franco-Nevada, valued at several tens of billions of dollars, has built its model on accumulating royalties and streams across the world. Sandstorm, while less valuable but very present in West African mines, has also prioritized Africa’s west as a key region. The two companies must now reassess the financial and operational implications of this decision.
The judgment sends a signal to the African aurifère
Other countries such as Mali, Niger, Guinea, and Ghana are reviewing their mining regimes. The Sahel Central region, in particular, is displaying a common willingness to renegotiate terms deemed unfair. This Burkinabé ruling offers these states a judicial argument that could inspire comparable moves.
Casualty of the judgment
The contracts involving streaming typically contain clauses for international arbitration, particularly before the Centre International pour le règlement des différends relatifs aux investissements (CIRDI). Franco-Nevada and Sandstorm have options to contest the annulment, but their diplomatic trajectory recently suggests a long-term conflict. In practical terms, this ruling serves as a case study.
