GHANA gave comfort to at least three gold mining firms operating in its borders by agreeing to the redevelopment of the Obuasi gold mine by AngloGold Ashanti, and also approving a joint venture between Gold Fields and Asanko Gold Mines (AGM).
“This is an important milestone that follows extensive negotiations and debate,” said AngloGold Ashanti CEO, Srinivasan Venkatakrishnan regarding the ratification of regulations and fiscal agreements covering Obuasi’s redevelopment. “Obuasi is a high-grade, long-life ore body that will provide production for at least two decades at a very competitive cost, which will benefit a truly diverse set of stakeholders,” he added.
The ratification is for the Development Agreement and a Tax Concession Agreement whilst a third permit required for the redevelopment of the mine – the environmental authorisation – was also at “… an advanced stage,” the company said.
In February, AngloGold Ashanti approved spend of up to $500m for Obuasi which will eventually ramp up to 450,000 ounces/year, effectively replacing the production the group sold during the intense restructuring of its South African assets.
The mine would be re-opened in two phases, involve mechanisation and less labour, and involve capital spending over a two-and-half-year period. The first phase would include project establishment, mine rehabilitation and development, plant and infrastructure refurbishment with the first gold pour scheduled for the third quarter of 2019. The second phase, which would include underground workings such as materials handling and ventilation would take a further 12 months.
Production in the first 10 years would average 350,000 to 400,000 oz/year and would focus on the upper ore bodies at an all-in sustaining cost (AISC) of $795 to $850/oz. Production would ease up to 450,000 oz/year for the second 10 years with $750 to $800/oz AISC.
In March, Gold Fields said it would buy a 50% stake in AGM, a subsidiary of Toronto-listed Asanko which produces about 200,000 oz of gold a year from its mine in Ghana, but which has struggled to refinance itself lately following negative investor reports.
The basics of the transaction is that Gold Fields will pay $165m for a 50% share of Asanko’s 90% stake in AGM. The balance of the mine is held on a free-carry basis by the Ghana government. A $20m deferred payment will also be made once Esaase, a development project held by AGM, meets a production milestone, probably by 2019. Gold production is from Nkran and satellite deposits Akwasiso and Dynamite Hill.
It said today that the Ghanaian Minister of Lands and Natural Resources has granted regulatory approval which was the principal condition to closing the previously announced joint venture transaction. “Completion of the transaction is now expected in early July 2018,” the company said.
