AngloGold Ashanti close to re-opening Ghana’s Obuasi mine

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AngloGold Ashanti CEO Srinivasan Venkatakrishnan Pic: Martin Rhodes

AngloGold Ashanti is close to a decision to re-open the Obuasi mine depending on the outcome of talks with the Ghanaian government to finalise an investment development agreement and “obtain the requisite consents and approvals.”

The full plans are to be presented next quarter subject to finalising the talks with government according to AngloGold Ashanti group planning and technical executive Graham Ehm.

Speaking at the presentation of AngloGold Ashanti’s results for the six months to end-June in Johannesburg on Monday, Ehm said it would take about a year to re-establish operations at the mine with production slated to start at a rate of 200,000oz of gold annually from the second year.

This would rise to 300,000oz/year for the first 10 years and then to 400,000oz/year once the high-grade Block 11 is developed.  Ehm estimated the new Obuasi life-of-mine at more than 20 years during which it would produce more than 8m oz of gold in total. He added that, “we anticipate having everything in place before the end of the year.”

This is the latest development in a roller-coaster ride for Obuasi over the past three years during which the loss-making mine was shut down and then offered as a proposed JV to Randgold Resources which looked it over but walked away in December 2015.

Obuasi was then overrun by illegal miners from January 2016 which the then Ghanaian government inexplicably did nothing to prevent. That forced AngloGold to take legal action against the government through international arbitration.

In August 2016, AngloGold CEO Srinivasan (Venkat) Venkatakrishnan said that any move to re-open the mine would need “an iron-clad commitment from the government that this will not happen again.”

The situation at Obuasi then swung 180 degrees in AngloGold’s favour from the end of 2016 when a new “business friendly” administration took over in Ghana following elections in which it clearly indicated support for Obuasi in its election manifesto.

Asked about the estimated capital cost of re-opening the mine Venkat replied, “ we are  still doing the work in terms of capital but it will be significantly lower than what was originally contemplated which was in the order of $800m to $1 billion. We will put out exact numbers once we have completed our engagement with the government .”

He added that “all options remain open” when asked whether AngloGold intended going it alone on the re-development of the mine or whether the group might look to find a JV partner to share the cost.

Turning to the issue of illegal mining Venkat commented, “obviously, we are seeking a commitment on security. The government has already taken steps to ensure security not only at Obuasi but across all Ghanaian operations.

“There are no longer any illegals at Obuasi and the government has taken a clear view that they would rather support structured large and small-scale mining as opposed to illegal mining.”

Venkat declined to provide a number for the costs that AngloGold had incurred as a result of the illegal invasion of Obuasi and side-stepped a question on whether these could be recouped from government commenting, “all of this will be part of the discussions with government.”

20 COMMENTS

  1. The Ghanaian government does not control the area around Kumasi. This is a fact and will never change. You will never be able to keep the illegal miners out of Obuasi as the King controls all access and makes millions out of his people having access and mining gold from underground. It is madness investing any capital in such a venture, Mark saw that and walked away…so should you if you value your shareholder’s capital…

    • This is not TRUE .The 1992 Constitution changed everything..Since 2014.there is a new King at Adansi who has been working very hard to stop illegal mining .The King does not make a cent from this illegal activities..

  2. I truly believe Obuasi phased restart with ramp-up of 300Koz – 400Koz/yr over 3yrs is worth pursuing given the lack of new mines for AGA. The resources are still there at 8Moz R+R. Furthermore, the brownfields projects hardly move a needle for AGA. The key milestones, that serves as catalysts, are as follows:

    1. Get Ghananian Government consents on permits, security etc
    2. Agree a robust Fiscal regime to support returns given the capex reinvestment
    3. Phased approach with initial phase = 300Koz/yr
    4. Thereafter, ramp-up to 400koz/yr

    Randgold walked away because of what they perceived was the previous government’s inflexibility on the fiscal framework to support the mine’s recapitalisation.

    • I know that no one wants to hear the truth, but if Government send in troops to clear out the artisanal miners, it will lead to a bloodbath that will make Marikana look like a Sunday school pinic…

  3. Lets talk Frankly Gentleman,

    Where else are you going to find a 8Moz deposit complete with infrastructure? Canada? US? Australia? South Africa? NONE!

    The easy stuff has been had, so its the toughies that are left behind. So you need to adjust your risk/reward palate to have a go at this things now.

    • My friend, let me give you some free advice… Before you invest in Obuasi, please pay a visit to the mine and see for yourself whay is going on there… Other than the Army moving in and removing people by force (I am talking armed conflict where many people will die) there is no way of restarting this mine… It is either wishful thinking by Venkat (who should know better having worked there) or an advertising campaign to get some other poor sod to buy it off them…

      • Please pardon me, I cannot claim any friendship with you.

        Please read my posting again , and furthermore read AGA transcript and their media releases and fillings.

        LAW & ORDER IS THE RESPONSIBILITY OF GHANAIAN GOVERNMENT.

        I have seen worse ( Twangiza , Moto etc) were the place was literally being mined by thousands of artisanal miners. I have also seem photos of Obuasi & surrounds. Let me tell you, those people will be cleared off the area. Venkat is a very capable gent.

      • As a resident of Obuasi, i find your assertions as purely false. The mine has been run safely previously. Issues of conflict with illegal miners does not exist. And more importantly, there is a lot of goodwill from the recidents of the town for the mine coming back.
        In terms of resources, Obuasi is next to no other.

    • @Hope4obuasi, you are right sir, I will keep quiet, after all, it is not my money that will be lost. You might find that some shareholders have very limited memory and will agree to invest in this again… I find it amazing though how in Africa we are always so positive and “willing to work with investors” when we need jobs and investment (and to reopen a national asset like this) but, as soon as the money is invested, they call the investors thieves and accuse them of stealing the nation’s wealth. Mark my words, if this ever goes ahead, the following scenario will play out. The king will “allow” the mine to restart. As soon as the new high grade block has been developed and brought into production, the “illegal miners” (actually the King’s miners) will overrun the mine again and make even more money. The Government cannot stop them without violence, and they do not have the political stomach for this… Go ahead, it is after all your money dear investor. By the way my dear friend Hope4obuasi, how much money have you got invested in Anglogold Ashanti shares? Oh, that’s what I thought….

  4. Oh if they restart this mine, it will help a lot but first best arrangement and plans must be put in place to protect the mine and the investors so that both the government and the investors benefit at the end. Moreover more research must be conducted to know how rich the ore will be and also the lifespan of the mine when restart of the mine begun.

  5. The mines in Obuasi will bounce back in full force. The people are happy and anxiously waiting to see to it manifestation. Obuasi has survived as well as its various sustainable departments not forgetting the Second Best Hospital in Ashanti Region, AGAHF Hospital which has hold the foot for all cases and referrals. The Community appreciates all effort to keep Obuasi live. The workers and dependants will complement what has been left undone.

  6. I believe if all the major stakeholders in Obuasi are involved in a problem solving process where EIA and SIA tools are used effectively the closed mine can start operating successfully with no disturbances from illegal miners.Using the military to drive away illegal miners will not be appropriate.

  7. I believe if all major stakeholders in Obuasi are involved in a problem-solving process where EIA and SIA impact assessment tools are employed effectively,the closed mine can start operating successfully without any disturbance from illegal miners.

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