GOLD Fields has dramatically increased its mineral reserves and resources estimates at its flagship Tarkwa mine in Ghana as part of talks with the West African nation’s government over the renewal of Tarkwa’s mining lease, due to expire in April 2027.
Gold Fields CEO Mike Fraser said the revision was “really important because what we wanted to do was give a very clear indication of what was possible with this orebody”.
“We also wanted to make it clear we had a very clear plan for the future of Tarkwa that would enable us to create a whole lot more value for all our stakeholders,” he added.
Gold Fields was “a guinea pig” in that it was the first mining company attempting to comply with Ghana’s evolving lease renewal and fiscal regulations, he said.
These regulations affect Gold Fields’s attempts to extend Tarkwa’s mining lease in which mining royalty payments and the terms of tenure and ownership of mining assets were hot topics.
“What’s going on in Ghana is a narrative about whether the government and the people of Ghana getting a fair share of the resource wealth, and the value that is created, particularly as Ghana is now the largest gold producer in Africa,” Fraser said.
A bill before Parliament proposes replacing the country’s flat royalty rate with a sliding system of 5% to 12% to capture more value as prices surge. Reuters reported this month that Ghana’s finance minister had offered to cut a mining levy by two percentage points to help push through a new gold royalty.
“We have been having discussions bilaterally as well as [with] industry to say there is a real risk these royalties could be deemed uncompetitive in future. they are certainly at the higher end of what we see globally,” Fraser said.
There was also a problem with mining regulations in two areas of tenure – the term of a lease renewal – and ownership and other participation in the sector.
“I think the policy framework of how leases will be reviewed is still a little bit in flux and maybe that’s what’s causing a bit of the delay in getting this clear. What also has an impact is that we are probably one of the first ones to go through a formal lease renewal process so we might be a bit of a guinea pig in this equation at the moment.
“But we have are having very constructive and very frequent conversations and I am certainly confident that we will move forward but, given the narrative that’s going on in the country and the different views that we are hearing, it’s not without risk and so we are very pragmatic about how that is.”
Gold at stake
Tarkwa’s new minerals resources and reserves declaration published in November last year increased mineral reserves to 7.4 million ounces of gold from 4.3 million oz previously and pushed up mineral resources (inclusive of reserves) to 11.2 million oz from 8.9 million oz previously.
Fraser said this 70% increase in attributable reserves was driven by a higher reserve gold price – which Gold Fields increased to $2,000/oz (previously $1,500/oz), reflecting “a prevailing market condition – as well as the removal of “key operational restraints.”
“A key focus for the team in the near to medium term is to optimise Tarkwa’s operating costs to enhance margins and cash generation and to further increase mineable inventory.”
Asked if Gold Fields was trying to show the Ghanaian government what was at stake in the negotiations Fraser replied: “It’s not so much what is at stake as what is the upside opportunity if we could work together to create more value.
“I think it was really crucial going into the discussions to say – look – this is what is possible here if we can work together.”
AngloGold JV
Fraser added the decision made in May last year to shelve the proposed merger of Tarkwa with AngloGold Ashanti’s Iduapriem mine gave Gold Fields the opportunity to improve Tarkwa as a stand-alone operation.
“I think the revised life-of-mine plan which extends life to over 20 years by focusing on operational improvement; improving reserves and reducing operational constraints really sets us up for an even better combination when that day comes,” he said.
Combining Tarkwa with Iduapriem made strategic logic which Gold Fields would review “at the right time,” he added.
