As part of its near-term organic growth strategy, Canadian junior gold producer Asanko Gold is focusing on expanding production at the Asanko Gold Mine (AGM), in Ghana, with the development of the Esaase gold deposit, within the 2018/19 calendar year.
The AGM, commissioned in early 2016, comprises two main deposits: Nkran, which is the main ore source currently being mined and the large greenfield deposit Esaase, along with seven other satellite deposits and a 5-million-ton-a year carbon-in-leach (CIL) processing facility. These deposits are all located on the Asankrangwa Gold Belt, which is largely underexplored.
“We have quite a significant tenement package, which spans about 540 km2, and are in the unique position of being the only gold producer active on the Asankrangwa Belt. We are very excited about the exploration potential,” illustrates Asanko Gold corporate development and strategy executive Rob Slater.
The Esaase deposit has reserves of 62-million tonnes at 1.46 g/t, which is about 2.9-million ounces of gold, and is located approximately 27 km from the main processing facility. The deposit will be mined using the conventional truck-and-shovel surface mining method.
Development of the Esaase deposit is the second component of Asanko’s Project 5 Million (P5M) which also included the recently completed upgrade to the CIL processing plant from a design of 3-million tons a year to 5-million tons a year. This was commissioned in the fourth quarter of 2017. Since then, the plant has been consistently achieving design levels or above.
Preproduction planning at Esaase is currently under way and Asanko anticipates starting production during the first quarter of 2019. The plan is to truck ore for the first couple of years, while an overland conveyor is being built between the Esaase deposit and the central processing facility.
Asanko considered a number of transport solutions for Esaase, including road and rail but, with a mine life of over ten years, the conveyor option was the most cost-effective option owing to its low operating cost, which is approximately $0.37/t, Slater explains.
Construction of the 27-km-long conveyor belt is expected to start in the first half of 2019 and is scheduled to take 22 months. The total cost of the project is estimated at $131-million and will be funded by the AGM from internally generated cash flows. Front-end engineering and design for the conveyor, which will have a capacity of up to seven-million tonnes of ore a year, has been completed. Commissioning of the conveyor is expected in the fourth quarter of 2020.
“Bringing Esaase into production offers significant mining flexibility and will enable the AGM to expand production at competitive all-in sustaining costs. Over the next five years, we are forecasting average annual production of 253 000 oz/y at an all-in sustaining cost of $860/oz,” maintains Slater.
Joint Venture with Gold Fields
Asanko Gold and leading South African gold producer Gold Fields entered into a joint venture (JV) in March this year. Gold Fields will acquire a 50% interest in all of Asanko’s Ghanaian interests for $185-million in cash, payable in two tranches. In June, the Ghanaian government gave approval for the JV transaction.
Asanko will remain the manager and operator of AGM and will use the proceeds from the first tranche payment, $165-million, to repay its existing debt facility with Red Kite. The second tranche payment of $20-million is payable on an agreed Esaase development milestone but, in any event, no later than December 31, 2019.
“The fact that we have a strong balance sheet, a world-class partner with technical skills and depth as well as self-funded near-term organic growth creates a solid foundation for future growth,” maintains Slater.
“We see our large land package and exploration potential as the next growth opportunity,” he concludes.