ASANKO Gold kicked off its first full quarter with Gold Fields as a joint venture partner producing best ever gold production of nearly 62,000 ounces. The company said it was on course for full-year production of 210,000 to 220,000 oz.
The company also announced that the joint venture partners had agreed to start production at Essase, its second mining development, in the first quarter of 2019. The task of site clearance had been set aside for the current quarter.
Asanko Gold announced on July 31 it had concluded a joint venture agreement with Gold Fields in which it was to be paid $165m in upfront cash. A balance of $20m is to be paid no later than December 31 by Gold Fields.
In terms of the joint venture, which was unveiled by Gold Fields on March 29, Asanko sold a 50% stake in Asanko Gold Mines (AGM), its Ghanaian subsidiary. The amount was enough to retire $164m in debt which at LIBOR of 6% was pricey debt to have shouldered.
Gold Fields also participated in the recapitalisation of Asanko Gold, subscribing for shares through a rights issue giving it a 9.9% stake for $17.6m. All in all, Gold Fields spent $202.6m for roughly 100,000 oz of gold annually on current production metrics. The transaction was part of a broader strategy by Gold Fields to replace fading production in its portfolio elsewhere, Australia specifically.
“The Asanko Gold Mine delivered a third consecutive quarter of solid production results for the year, tracking the top end of 2018 guidance with production of 61,599 ounces for the quarter and 163,329 ounces year to date,” said Peter Breese, president and CEO of Asanko in a press statement today. “The mine is well positioned to meet full year gold production guidance of 200 to 220,000 ounces,” he added.
The third quarter numbers, which will be fully disclosed when Asanko delivers its financials scheduled for November 8, also showed Asanko was safely liquid.
Revenue of some $78.2m was generated in the third quarter on the back of higher production and an average gold price received of $1,198/oz. That means unaudited cash on hand in the joint venture stands at $30.4m. Asanko also has $14m at company level – also unaudited. The $20m balance owed by Gold Fields is also due in about ten weeks.
Production for the 2017 came in at 205,047 oz which was just about within the revised guidance range for the year of between 205,000 to 225,000 oz of gold. That period proved to be a hairy time for the Asanko team which was criticised twice in reports about the sustainability of its operations.
The report depressed Asanko’s share price and limited its ability to fund its expansion plans, hence the deal with Gold Fields. Shares in Asanko were up 2% in early US trade. On a 12 month basis, the share is down 16%.
