JOHANNESBURG (miningweekly.com) – Gold Fields CEO Nick Holland said on Monday that proposed changes to the tax regime in Ghana were a “big concern” and that it could jeopardise the group’s expansion plans in that country.

Gold Fields has a $1-billion project pipeline in Ghana, where its Damang and Tarkwa mines are located, contributing about 20% to the group’s yearly production of 3.5-million ounces of gold.

The Ghana government plans to raise the corporate mining tax to 35%, up from 25% and introduce a 10% windfall tax.

"The tax situation is a big concern to us, and frankly unless we are going to see some flexibility on the tax situation, I don't think we will be building the project in the form that was described today, if at all," Holland said at an investor seminar in Johannesburg in response to a question about an expansion at Damang.

He added that the company had been engaging the Ghana government, with initial talks being “positive”.

Gold Fields is planning to expand production at the Damang gold mine to 500 000 oz/y as part of a plan to boost group output to five-million ounces a year by 2015. Exploration at Damang has resulted in the company believing it has the potential to host a significantly larger gold reserve of five-million ounces.

Having spent about $752-million on its global exploration activities, many of which took place on existing mines nearing the end of operations, the miner said it would achieve its production target by ramping up output at its existing mines and bringing on stream a number of new growth projects across the globe.

In South Africa, Gold Fields would boost its production at South Deep to 750 000 oz/, targeting two-million ounces a year by 2015.

New projects, which are currently in the development phase include completing a scoping study for its 200 000 oz/y Mali-based Yanfolila project, completing a scoping study for a potential 52-million ounce gold reserve at its Far Southeast project in the Philippines, completing a feasibility study for its significant gold resource find of about 7.6-million ounces at Chucapaca, in Peru, finalising a scoping study at the its 12-million ounce two-platinum-group-element-and-gold Arctic Platinum project in Finland and undertaking exploration in Canada, Argentina, Chile and Mali.

Gold Fields VP for growth and international projects Tommy McKeith noted that many of the producing assets and projects under development hold significant potential for further increases to the resource reserves, as additional exploration is undertaken.

“The company’s growth strategy comprises initiatives focusing on reserve replacement and also near-mine exploration, resulting in extending the life-of-mine at a number of our projects by significant margins,” McKeith said.

However, a decline in the discovery rate of viable new gold projects was making it difficult to replace production, let alone increase reserves with quality resources.

“The result is that one now finds increasing competition for fewer resources, while it costs more to find less,” McKeith said.

This situation was further compounded by a significant demand-driven capital cost inflation, driven by the global resources boom, while severe skills shortages in the industry resulted in slow project progress and caused delays in providing drilling, assaying and engineering consultation services.

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