JOHANNESBURG (miningweekly.com) – A major skills elevation programme to match a planned leap into modern, mechanised mining is envisaged at the idled Obuasi gold mine in Ghana, where global best practice is expected be the order of the day in its revival.

Joint venture (JV) aspirants AngloGold Ashanti and Randgold Resources have touched sides with government, labour and even the Ashanti king on turning Obuasi into the most modern mining operation in Africa.

Traditionally, there has been manual mining and then some mechanised mining at Obuasi, with a debate around whether the mine presents a cut-and-fill opportunity, given the refractory challenges of the resource’s wide, disseminated sulphide orebody, one of its two main orebodies, the other being a high-grade quartz-vein-hosted free-milling orebody, the traditional Ashanti-style mineralisation.

“Our view is that long-hole or medium-hole open stoping is really the most efficient and we believe we can manage it using proper backfill,” Randgold CEO Dr Mark Bristow said in response to Creamer Media’s Mining Weekly Online, which took part in a global conference call on the concluding by AngloGold Ashanti and Randgold of an investment agreement aimed at the formation of a JV that will redevelop and operate Obuasi.

All three of Randgold’s Mali mines and its new Kibali mine in the Democratic Republic of Congo (DRC) carry out backfill mining.

“As far as the view about labour intensity versus capital intensity is concerned, I think everyone in Africa has moved on. Perhaps not South Africa, but definitely the rest of Africa.

“We’re not here to keep the folk in our host countries as labourers. We want them to be world-class mining engineers and metallurgists and we’ve shown we can do that,” said Bristow.

All the senior managers at Randgold’s Mali operations are Malians.

“We have some of the finest engineers and we believe we do everyone a disservice by saying people in our host countries just want to do menial jobs.

“What we want is highly motivated, driven professionals to join us in building the most modern best-practice operation in Africa. That’s what we are going to do,” he added.

There has been a mixed performance from Obuasi, where there has been an aggregated historical impairment of $1-billion.

Credit company Moody's Douglas Rowlings commented in a release that, with the final investment decision only likely in February, it was still too early to assess the impact of the Obuasi redevelopment plan on AngloGold Ashanti's credit rating.

However, if funded in a manner that continued to support its strong credit metric and liquidity profile, Rowlings added that there could be significant upside for AngloGold Ashanti, which last year took a bold decision to idle the mine to allow it to be reconfigured.

“We looked at Obuasi very closely and concluded that typically, when your car breaks down, you need to stop the car, repair it and get it back. Trying to repair it while it’s running won’t work,” AngloGold Ashanti CEO Srinivasan Venkatakrishnan (Venkat) told journalists.

To get the best technical and financial returns from the project, the company has opted to JV with Randgold for the third time.

During this period of halted operations, social investment and skills development have continued and many of Obuasi employees working elsewhere in the AngloGold Ashanti group will return to the mine if its redevelopment at a far lower gold-price hurdle of $1 000/oz and at a targeted capital cost of under $1-billion proves successful.

Getting Obuasi right will have the benefit of also resuscitating the economy of Ghana, where government has shown that it is ready to work with the JV to achieve its objective.

“Building in Africa requires a commitment to partnership because we’re exploiting a national asset as miners and we need to make sure that this asset is profitable enough to pay rents in the form of taxes to the national treasury, provide returns for investors and also make a contribution to the people in the form of employment and skills elevation,” Bristow told Mining Weekly Online.

UBS gold analysts Kane Slutzkin and Daniel Major calculate a net present value for Obuasi of $1-billion, roughly in line with the valuation of Obuasi's 5.3-million reserve ounces at $200 per reserve ounce.

If the development plan meets both parties’ investment criteria, Randgold and AngloGold will become responsible for funding Obuasi's revival and Randgold will operate the mine.

Randgold, which unsuccessfully bid against AngloGold for Obuasi in 2003, is expected to deliver the new development plan to both parties’ boards by the end of January.

The JV needs South African Reserve Bank (SARB) approval, the consent of lending banks and Randgold's completion of due diligence to Anglogold's satisfaction.

SARB approval is required within 45 days of the date of the agreement and the JV is also conditional upon the issuing of all the necessary environmental licences and permits for the project.