[miningmx.com] – AngloGold Ashanti (AngloGold) has teamed up with Randgold Resources to redevelop the troubled Obuasi gold mine in Ghana at which AngloGold stopped underground operations and retrenched the workforce at the end of last year.
Irony is that Randgold Resources fought AngloGold for control of the former Ashanti Goldfields – which owned Obuasi – in 2004 but walked away because CEO Mark Bristow drew the line on the commitments being demanded over the future of Obuasi.
Bristow commented in November 2013 that, “the biggest driver of Randgold Resources’ fortunes has been the things we did not do. We did not take over Ashanti Goldfields because we were not prepared to pay too much for it.’
While Randgold Resources and AngloGold Ashanti will be equal partners in the joint venture it is Randgold management which will determine how the new Obuasi will be developed and will operate the mine.
Bristow said the team that developed the successful Kibali mine in the Democratic Republic of Congo is being moved to Ghana to build on the feasibility study already started by AngloGold and turn it into a development plan over the next four months.
Speaking on a conference call from Ghana on Wednesday evening Bristow made it clear Obuasi would go ahead only if the development plan meets Randgold’s stringent investment criteria regarding size, returns, potential future growth and operating costs.
He commented, “Obuasi is a world-class resource. We now have to see if we can convert it into a world-class mine.’
Unlike most of its peers which use higher prices Randgold reports its gold reserves at a price of $1,000/oz requiring its mines to be profitable at that level.
Bristow would not be pinned down on specifics at this early stage but commented he expected operating costs at the new Obuasi to be in the same range as Kibali and that the capital cost of developing the mine should be kept to below $1 billion to provide the returns on investment that Randgold required.
He also made it clear the JV with AngloGold would not be signed nor any development of Obuasi begin until mine permitting and other regulatory issues such as rehabilitation requirements were agreed with the Ghanaian government.
Key target dates are that Randgold complete the due diligence and development plan for Obuasi by the end of January and that the regulatory terms are agreed with the Ghanaian government and ratified in parliament by end-March 2016.
This is the third JV to be set up between Randgold Resources and AngloGold with the first two being Morila in 2000 followed by Kibali but relations between the two groups were initially stormy.
AngloGold demanded – and got – the right to manage Morila which led to a bust-up between Bristow and then AngloGold CEO Bobby Godsell in 2004 because Bristow maintained AngloGold was not devoting sufficient management attention to running Morila.
Randgold took over the management of Morila in 2007 after Godsell was replaced as CEO by Mark Cutifani with whom Bristow established a far better working relationship. Relationships between the two groups seem to have strengthened further since current CEO Srinivasan Venkatakrishnan took over at AngloGold.
