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AngloGold ups ante at Obuasi

Allan Seccombe | Thu, 27 Apr 2006 16:00
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[] -- ANGLOGOLD Ashanti’s Obuasi mine in Ghana could be a 600,000 oz operation in five years if plans to boost underground production, find new surface deposits, and plant efficiencies are realised, said Robbie Lazare, CEO of Africa Underground.

“This is potentially one of the biggest ore bodies in the AngloGold Ashanti stable,” Lazare told journalists visiting the mine.

Obuasi will produce 415,000 oz of gold at a total cash cost of $327/oz this year against some 400,000 oz at $350/oz in 2005, he said.

The nine-shaft mine will build up to 450,000 oz over the next three years, with production coming from underground and possible surface operations. That level of production is not contingent of finding surface deposits, he said.

“This is a 400,000 oz mine, but what we’d like to see is a 600,000 oz mine at $300/oz for the next 30 years,” he said, stressing that reaching this level of production hinges on accessing deep-level ore, finding surface deposits and improved plant efficiencies.

Lazare said the mine had not performed to AngloGold’s expectations after it had acquired it in a merger with Ghana’s Ashanti Goldfields in 2004, but the mine should be performing to at least South African standards in the next couple of years, he later told Miningmx.

“The deal took a lot longer to put together and so there was an extra year of capital starvation. We had expectations in the company of coming in and turning it around a lot quicker,” he said. “We can get things together in the next two years, taking care of production, development and restructuring.”

AngloGold Ashanti has spent $100m on upgrading the mine and its systems since taking it over.

Two years down the line, AngloGold Ashanti is making progress at the mine where production had fallen from around 900,000 oz in the late 1990s to around 400,000 oz. Kwesi Enyan, the mine’s general manager, said the problem had stemmed from a focus on cheaper surface production rather than putting money into underground development, something AngloGold Ashanti is working hard to turn around.

Developed reserves now stand at five-months and management is pushing hard to bring this to at least 10 months of development by the end of the year. It needs three months of drilled reserves and is currently on two.

AngloGold Ashanti wants to return to a similar model practised under the former management of having a blend of underground and surface ore to supplement both the sulphide and oxide plants, Lazare said.

“We are doing a lot of drilling of surface areas,” he said. “We need to find further operations for surface mining because the oxide plant is starting to run dry.”

Obuasi will spend $45m on exploration, not including the four surface prospects, with the cash mostly being spent checking what is below 1,500 metres, the deepest point in the mine.

Obuasi plans to tackle the deeper ore in two stages, starting with the “mini-deeps” project, which will go down about another 300 metres if board approval is granted in October. The bigger project will take the mine down to 3,000 metres.
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“We’ll not see anything of significance coming from below 50 level (1,500 metres) in the next five years. We will do some limited mining below that level because nothing proves up an orebody like mining it.” Lazare said.

Drilling from surface to see what is below 50 level was to involve six holes, but two holes of $1.7m each have proved to be too time consuming and costly so drilling will now be conducted from the bottom of the mine to speed things up, he said.

Part of the turn around is a major restructuring to hack $30 per ounce out of costs. The study, which could entail the loss of jobs, will be completed by the end of this year.

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