Yes, a good contract win for LYL @mikebrisy - This contract win announcement is another example of LYL not doing the actual on-the-ground in-country construction (EPCM) in my opinion. I say "in my opinion" because I could be wrong, however my research (Google) says that "an EPCM contractor is responsible for the design, engineering, procurement, and construction management of the project. This includes planning the construction elements, costs, and logistics, and managing the construction team. The EPCM contractor may or may not perform the actual construction work."

LYL have reported winning many "EPCM" contracts over the years, but have in the past couple of years started reporting winning "EP & PM" as well as "EP & CM" contracts which appear to suggest that they are doing the Project Management and/or Construction Management as well as the Engineering and Procurement, but not the actual construction work. In this case, with the Koné Gold Project in Côte d’Ivoire expected to cost Montage Gold around US$835 million in initial project capital costs and Lycopodium's contract scope worth just A$56.7 million, I believe that Montage are going to be paying other in-country construction companies for the construction but that Lycopodium are going to manage that construction.

The announcement states, "Lycopodium’s scope, valued at A$56.7 million, includes the engineering, design, procurement, construction management and commissioning of the 11.0 Mtpa carbon-in-leach process plant and process related infrastructure, including plant workshops, plant offices, event ponds and associated plant water infrastructure. The plant design includes crushing, screening, high pressure grinding rolls (HPGR), grinding and classification, pre-leach and tailings thickening, carbon in leach (CIL) circuit, carbon recovery and acid wash, carbon elution, electrowinning trains and smelting."

I would expect that if that included doing the actual hands-on construction work it would be worth considerably more than A$56.7 million, and it makes far more sense that they are managing the construction rather than doing it all themselves. I expect that this "construction management" or "project management" model is what we should expect a lot more of from LYL as they grow bigger, because (a) it reduces employee safety risk for Lycopodium (far less boots on the ground) and (b) it reduces the risk of LYL spreading themselves too thin and/or having recruiting issues (not finding enough skilled people to enable them to deliver these projects on time and on budget).

Here is an example of LYL being awarded another EP & CM contract in Côte d’Ivoire in 2022: https://www.lycopodium.com/wp-content/uploads/2022/11/Award-of-Lafigue-Project-EPCM-Contract_-Announcement.pdf [10-Nov-2022]

The combined value of the EP & CM services under that contract was approximately A$40 million - again too low IMO for LYL to have performed the actual hands-on construction themselves.

Source: https://www.lycopodium.com/case-studies/lafigue-project/

Further Reading:

https://www.pwc.com.au/legal/assets/investing-in-infrastructure/iif-8-epcm-contracts-feb16-3.pdf

https://constructionlawmadeeasy.com/construction-law/chapter-2/epc-and-epcm/

https://int-es.com/news/what-does-epcm-stand-for/

In terms of Côte d’Ivoire being one of the safer countries in West Africa to operate within, I would say they certainly have been, in terms of stable government who have been supportive of international companies operating there as long as those companies follow the rules and do the right thing. I note that Perseus Mining (PRU), the ASX's best performing West Africa only gold miner, has one gold mine in Ghana and two in Côte d’Ivoire (Sissingué and Yaouré) and Perseus have very good relations with the governments of both countries.

Thanks for highlighting the upcoming election @mikebrisy and the risks that might represent - something to watch. As is the rise of Russian involvement in the region, formerly by the Wagner Group, whose former boss, Yevgeny Prigozhin, died when the plane he was travelling in mysteriously exploded halfway between Moscow and St Petersburg, Prigozhin’s hometown, killing Prigozhin and some of his top lieutenants at the time, two months after Prigozhin rebelled against Putin, engaging in a daylong mutiny against Russia’s military, leading his mercenaries from Ukraine toward Moscow. Russian President Vladimir Putin decried the act as “treason” at the time and vowed punishment for those involved.

Anyway, with Wagner's former leadership now mostly deceased, the Wagner Group in Africa was merged into a new "Africa Corps" under the direct control of Russia's Ministry of Defense. Previously Wagner Group has been active in the Central African Republic (CAR), Sudan, Libya, Mali, Burkina Faso, Niger and Mozambique, among other African countries. They have provided protection and direct assistance to forces that have successfully overthrown the ruling governments of some of those countries; Three West African states with close links to Wagner - Mali, Niger and Burkina Faso - have all experienced military takeovers in recent years. They have since announced their withdrawal from the regional bloc Ecowas, and the creation of their own "Alliance of Sahel States".

Russia Exploits Western Vacuum in Africa’s Sahel Region

April 22, 2024 - by Aja Melville

Key nations Russia is focusing on in the Sahel region. Image - Forecast International

https://dsm.forecastinternational.com/2024/04/22/russia-exploits-western-vacuum-in-africas-sahel-region/

Tension flared following a visit by a  U.S. delegation to Niger in March, prompting Niger’s military junta to swiftly terminate a pivotal military agreement with the U.S. This decision follows Niger’s prior cessation of two military contracts with the European Union, intended to quell extremist violence in the Sahel region. Niger’s rejection of democratic ties coincides starkly with its embrace of Russian military assistance, an ongoing trend since the July 2023 military coup. This drastic shift away from traditional allies like the U.S. and France toward Russia and China echoes actions by other North African states, namely Mali and Burkina Faso. As yet another major player in the Sahel succumbs to military rule and Russian influence, Niger’s actions signal a profound geopolitical transformation, potentially reshaping the balance of power and stability in West Africa.

Six Coups, Three Reasons

The Sahel region has witnessed six successful coups since 2020, with Gabon’s military takeover in August 2023 following similar events in Mali (2020, 2021), Burkina Faso (Jan. 2022, Sept. 2022), Guinea (2021), and Niger (July 2023). In each case, economic stagnation, ongoing violent attacks, and distrust in civilian leadership were cited as primary reasons for the military’s intervention. Anti-French sentiments also played a unifying role across these incidents.

In the case of Niger, the coup of July 2023, and the subsequent expulsion of French troops in December 2023, brought an end to nearly a decade of democratic advances and drew widespread international condemnation. While the European Union and the Economic Community of West African States (ECOWAS) openly criticized the coup, neighboring countries like Burkina Faso, Guinea, and Mali—each having distanced themselves from France—expressed support for Niger’s military regime. Burkina Faso and Mali escalated tensions further by declaring that any foreign military intervention would be considered an act of war.

Decades of support and intervention from the former colonial power yielded little result in economic or political advancement nor in curbing extremist violence in these regions; the issues were further exacerbated post-COVID-19 as France wrestled with its own financial and security struggles, paving the way for new geopolitical partnerships.

Russian and Chinese Engagement

Unlike the United States and France, which often attach political and moral stipulations to their military aid, Russia has adopted a strategy of non-interference in domestic affairs, providing food, security and weapons without the familiar Western preconditions. Similarly, China, the region’s largest foreign investor, offers fast cash and promises of infrastructure in exchange for future resource rights – a tempting proposition for unstable regimes looking to centralize power.

Russia has strategically capitalized on failed peacekeeping missions and military withdrawals by Western powers, stepping in to offer diplomatic support, security assistance, and anti-terror aid to countries like Mali and Burkina Faso, and now, Niger. These new alliances and access to resources have proven particularly useful as Russia faces scrutiny for its invasion of Ukraine in February 2022.

In Mali, following a military coup in late 2021, Russian military advisors and the Wagner Group—now rebranded as the African Corps—deployed L-39 jets, Sukhoi-25 fighters, and Mi-24P helicopter gunships, alongside a contingent of 400 mercenaries aimed at combating jihadist insurgencies to the region. Despite these reinforcements, the security situation in Mali has worsened. The Armed Conflict Location & Event Data Project reports that over 2,000 civilians have been killed since December 2021, a significant increase from the previous year. Notably, a substantial portion of these recent fatalities have been linked to operations involving the Wagner Group.

Burkina Faso has experienced similar security issues coinciding with Russian support. Since January 2024, a shipment of Russian arms and a team of 100 paramilitary fighters have arrived, with an additional 200 troops expected soon. However, despite these reinforcements, violence continues to escalate dramatically. Currently, over 2.1 million people are displaced due to ongoing conflict, and nearly a quarter of the country’s schools are inoperative. The African Center for Strategic Studies forecasts that militant Islamist groups will be responsible for approximately 8,600 deaths in Burkina Faso this year, marking a staggering 137-percent increase from the previous year’s 3,627 fatalities. The ongoing violence underscores the complex and evolving geopolitical dynamics in the Sahel, highlighting the mixed results of foreign military interventions in the region.

Security Implications

Before the July 2023 coup in Niger, the U.S. maintained a significant presence with over 1,000 troops and two drone bases: Air Base 101 in Niamey and Air Base 201 near Agadez, utilized for counterterrorism operations against al-Qaeda and the Islamic State in West Africa.

Following the military coup, France was forced to expel its troops, mirroring actions taken in neighboring Burkina Faso and Mali. The French president agreed to withdraw 1,500 troops from Niger by the year’s end, following complete withdrawal from Mali in August 2022 and the cessation of military cooperation with Burkina Faso in February, despite escalating attacks from Islamist insurgents in those countries.

This geopolitical vacuum has provided Russia and China opportunities to extend their influence by offering rapid support to the new regimes without the stringent conditions typically imposed by Western powers. However, their involvement fails to address the underlying issues critical to long-term stability, including armed group proliferation, government corruption, and persistent poverty. This oversight suggests that merely replacing Western influence with Eastern may not rectify the core problems plaguing the Sahel.

The transition from Western to Eastern alliances in the Sahel poses significant questions about the future of regional security and the management of local resources. Moreover, it remains uncertain whether this shift will mitigate the extremist violence that has destabilized the region for years. As the West seemingly retreats, adopting a more passive role, it watches as the Sahel navigates this new geopolitical reality, potentially ushering in a period of continued unrest and strategic realignment.

--- end of excerpt ---

Source: https://dsm.forecastinternational.com/2024/04/22/russia-exploits-western-vacuum-in-africas-sahel-region/

Also:

Wagner in Africa: How the Russian mercenary group has rebranded

20 February 2024, by Joe Inwood & Jake Tacchi, BBC Newsnight & BBC Eye Investigations

https://www.bbc.com/news/world-africa-68322230

Russia is offering governments in Africa a "regime survival package" in exchange for access to strategically important natural resources, a major new report has found.

Internal Russian government documents, seen by the BBC, also detail how it is working to change mining laws in West Africa, with the ambition of dislodging Western companies from an area of strategic importance.

This is part of the process of the Russian government taking over the businesses of the Wagner mercenary group, broken up after a failed coup in June 2023.

The multibillion dollar operations are now mostly being run as the Russian "Expeditionary Corps", managed by the man accused of being behind the attempt to murder Sergei Skripal using the Novichok nerve agent on the streets of the UK - a charge Russia has denied.

"This is the Russian state coming out of the shadows in its Africa policy," says Jack Watling, land warfare specialist at the Royal United Services Institute (Rusi) and one of the report's authors.

Back in June 2023, Yevgeny Prigozhin was probably the most feared and famous mercenary in the world. His Wagner Group was in control of billions of dollars' worth of companies and projects, while his fighters were central to Russia's invasion of Ukraine.

Then, he decided to march on Moscow, ostensibly calling for the removal of the defence minister and head of the general staff, but in reality threatening President Vladimir Putin in a way no-one had before.

Within weeks he had died in a highly suspicious plane crash, along with much of the Wagner leadership. There was widespread speculation at the time about what would happen to the Wagner Group. Now, we have the answer.

According to Dr Watling, "there was a meeting in the Kremlin fairly shortly after Prigozhin's mutiny, in which it was decided that Wagner's Africa operations would fall directly under the control of Russian military intelligence, the GRU".

Control was to be handed to Gen Andrey Averyanov, head of Unit 29155, a secretive operation specialising in targeting killings and destabilising foreign governments.

But it seems Gen Averyanov's new business was not destabilising governments, but rather securing their future, as long as they paid by signing away their mineral rights.

In early September, accompanied by deputy Defence Minister Yunus-Bek Yevkurov, Gen Averyanov began a tour of former Wagner operations in Africa.

They started in Libya, meeting warlord Gen Khalifa Haftar. Their next stop was Burkina Faso where they were greeted by 35-year-old coup leader Ibrahim Traoré.

After that, they landed in the Central African Republic, possibly the most well-established Wagner operation on the continent, before heading to Mali to meet the leaders of the junta there.

This banner in the Central African Republic reads: Russia is Wagner, we love Russia and we love Wagner.

On a subsequent trip they also met General Salifou Modi, one of the military men who seized power in Niger last year.

Readouts of the various meetings demonstrate that the two men were reassuring Wagner's partners on the continent that the demise of Prigozhin did not mean the end of his business deals.

Reports of the meeting with Capt Traoré of Burkina Faso confirmed cooperation would continue in "the military domain, including the training of Burkinabe officer cadets and officers at all levels, including pilots in Russia".

In short, the death of Prigozhin did not mean the end for the junta's relationship with Russia. In some ways, it would become deeper still.

The three West African states with close links to Wagner - Mali, Niger and Burkina Faso - have all experienced military takeovers in recent years. They have since announced their withdrawal from the regional bloc Ecowas, and the creation of their own "Alliance of Sahel States".

Maybe the most entwined with the mercenaries was Mali, where an ongoing Islamist insurgency, combined with multiple coups, had left an essentially failed state.

Previously, security assistance had come in the form of the UN mission known as Minusma, alongside the French military's long-running counter-insurgency operation.

But there was no particular fondness for France, the former colonial power, and so when the Wagner group offered to replace their security operations with Russian backing, the offer was accepted.

"The French were tolerated, rather than welcomed," says Edwige Sorgho-Depagne, an analyst of African politics who works for Amber Advisers.

"The French mandate to help in the terror crisis in the Sahel was always regarded as limited in time. So, the fact that the French stayed for that long - over 10 years - without finding a way to end the crisis didn't help".

These flowers commemorating Yevgeny Prigozhin and Dmitry Utkin were laid at a monument to Russian mercenaries in CAR (Central African Republic).

Beyond pragmatism, there was also nostalgia. "In these countries, Russia is not a new ally. Russia was there before in the 1970s and 1980s."

"There's this dream of getting back to a better time, which is often associated with the relationship with Russia."

But for the military juntas running these countries, Russia's military presence has obvious benefits.

"Initially, these juntas were transitional leaders. They were supposed to organise elections and bring about a return to democratic institutions."

"But now Russian paramilitaries are brought in to protect the military junta, allowing them to stay as long as they want."

The junta ordered the French forces to leave and Mali is now largely dependent on Wagner for its internal security, a change that is having an immediate impact on ordinary Malians.

"What the Russians have provided is a strike force, with helicopters with advanced capabilities and a lot of firepower," says Dr Watling. "They are using pretty traditional Soviet anti-partisan methods. You see fighters who were executed, as well as civilians targeted for enabling or being associated with fighters."

There have been multiple claims that Wagner forces carried out human rights abuses on the African continent, as well as in Ukraine and Syria, where Prigozhin's organisation previously held a commanding presence.

One of the most well-documented incidents took place in the central Malian town of Moura where, according to a UN report, at least 500 people are believed to have been summarily executed by Malian troops and "armed white men", who eyewitnesses described as speaking an "unknown language".

While independent verification has not been possible, Human Rights Watch identified the unknown white attackers as Russian mercenaries.

A hundred Russian military specialists arrived in Burkina Faso, along with equipment and weapons last month, with more expected soon.

In exchange for considerable, if brutal, security assistance, Wagner required something in return.

Mali, like many African nations, is rich in natural resources - from timber and gold to uranium and lithium. Some are simply valuable, while others have strategic importance as well.

According to Dr Watling, Wagner was operating in a well-established tradition: "There is a standard Russian modus operandi, which is that you cover the operational costs with parallel business activity. In Africa, that is primarily through mining concessions."

In every country in which it operates, Wagner was reported to have secured valuable natural resources using these to not only cover costs, but also extract significant revenue. Russia has extracted $2.5bn (£2bn) worth of gold from Africa in the past two years, which is likely to have helped fund its war in Ukraine, according to the Blood Gold Report.

This month, Russian fighters - formerly Wagner mercenaries - took control of Mali's Intahaka gold mine, close to the border with Burkina Faso. The artisanal mine, the largest in northern Mali, had been disputed for many years by various armed groups active in the region.

But there is something else, with potential geopolitical significance.

"We are now observing the Russians attempting to strategically displace Western control of access to critical minerals and resources," says Dr Watling.

In Mali, the mining code was recently re-written to give the junta greater control over natural resources. That process has already seen an Australian lithium mine suspend trading on its shares, citing uncertainty over the implementation of the code.

While lithium and gold mines are clearly important, according to Dr Watling there is possibly an even greater strategic headache around the corner: "In Niger the Russians are endeavouring to gain a similar set of concessions that would strip French access to the uranium mines in the country."

Many Malians earn their living by mining gold.

The report details internal Russian memos focussed on trying to achieve in Niger what was done in Mali. If Russia managed to gain control of West Africa's uranium mines, Europe could be left exposed once again to what has often been called Russian "energy blackmail".

France is more dependent on nuclear power than any other country in the world, with 56 reactors producing almost two-thirds of the country's energy. About a fifth of its uranium is imported from Niger. There have previously been complaints about the terms of trade, with suggestions that the former colonial power exploits nations like Niger.

"The narrative that Russia is pushing is that Western states remain fundamentally colonial in their attitude," says Dr Watling. "It's very ironic because the Russian approach, which is to isolate these regimes, capture their elites and to extract their natural resources, is quite colonial."

In reality, the "Expeditionary Corps'' appears more as "Wagner 2.0", than a radical departure for Russian foreign policy. Prigozhin had built deep political, economic and military ties on the African continent - dismantling this complex web would have been difficult and ultimately counter-productive.

The "Expeditionary Corps" is operating in the same countries, with the same equipment and - it seems - with the same ultimate goal.

According to Dr Watling, the fundamental change lies in "the overtness with which Russia is pursuing its policy". Prigozhin's Wagner Group had always provided Russia with a level of plausible deniability in operations and influence abroad.

Following the full-scale invasion of Ukraine, many in the Western security apparatus say that Russia's mask has slipped.

"What they are looking to do is to exacerbate our crises internationally. They are trying to start fires elsewhere, and expand those that already exist, making a less safe world," Dr Watling.

"Ultimately, it weakens us in the global competition that we are currently facing. So the impact is not immediately felt, but over time, it is a serious threat."

You may also be interested in:

• Inside Wagner's African 'success story'
• What is Russia's Wagner mercenary group?
• 'France takes us for idiots' - Inside coup-hit Niger
• Why young Africans are celebrating military takeovers
• Was Prigozhin a dead man walking?

--- end of BBC News article from February 2024 ---

Source: https://www.bbc.com/news/world-africa-68322230

OK, so Côte d’Ivoire is safe for now, along with Ghana to their East and Liberia to their West, however to their north (and northwest) Côte d’Ivoire have Guinea, Mali and Burkina Faso, which all have current Russian involvement (formerly known as Wagner Group involvement), particularly Mali. And things can happen fast in West Africa sometimes. But as you mentioned Mike, this area of the world is where Lycopodium have specialised for many years, and they have managed the risks over there superbly thus far.

Interesting aside, I found what Rusty Delroy from Nero had to say this past week (see here) during his 2025 predictions on the Money of Mine podcast, about the recent detention of Barrick (ABX.tsx, GOLD.nyse) and Resolute (RSG.asx) executives and employees in Mali very interesting, including appearing to suggest that one company had delayed declaring commercial production for up to 5 years to avoid paying substantial royalties to their host country (Mali). So while not condoning holding people against their will, which has recently been done by the Malian authorities in those cases, Rusty is saying there was some justification and/or not-widely-reported background to what happened that may well have contributed to those events.

Anyway, I've waffled on enough about West African risk. Point being, I reckon Lycopodium will continue to manage the risks well, as they have done so far, and being prepared to work in these sort of countries is one of the reasons why LYL have such decent margins and never report loss-making projects/contracts, i.e. they can and do charge premium prices for their services, and they are good enough that companies are happy to pay the prices that Lycopodium charge. "Happy" might not be the right word; "companies are willing to pay" might be more accurate, but the end result is the same.

This EP & CM contract for the Koné Gold Project in Côte d’Ivoire is not massive for LYL, but it's substantial, and it just adds to their work in hand (order book). I expect further contract win announcements over the next 6 months.

Disclosure: Held (largest individual position, both here and in my real money portfolios).