VANCOUVER (miningweekly.com) – Canadian junior miner Asanko Gold has published a definitive feasibility study (DFS) on its eponymous Asanko gold mine, in Ghana, outlining a two-stage organic growth plan that will initially raise plant throughput to five-million tonnes a year, before stepping up throughput to ten-million tonnes a year.
The first expansion module is slated to lift plant capacity some 40% and is fully funded, the company announced on Monday.
"Our growth plan has been designed to be fully flexible so that it can be advanced in modular components, according to cash flow generation, balance sheet strength, financing opportunities and market conditions,” president and CEO Peter Breese stated.
According to the DFS, the Phase 1 expansion is designed on a modular basis allowing for the plant upgrade and development of the nearby Esaase deposit as separate packages.
The processing plant upgrade can be completed at a cost of $22-million and the project is currently under way. The upgraded plant is expected to materially increase output from the third quarter onwards, with full commissioning expected some time in the fourth quarter.
Under the Phase 1 expansion plan, Asanko will start developing the large-scale Esaase deposit, including building an overland conveyor linking Esaase to the processing facility, at a capital cost of $120-million.
Asanko expects the capital to leverage its ability to further expand production at any time in the future.
The expansion is expected to push yearly gold output to 230 000 oz over a 20-year mine life, at all-in sustaining costs of $968/oz.
Phase 1 of the project is calculated to generate, on average, more than $80-million a year in pretax cash flow from operations at a steady state.
The DFS estimates an after-tax internal rate of return (IRR) of 13%, at a 5% discount rate, to the project and a net present value (NPV) of $658-million. The DFS was based on a gold price of $1 250/oz.
Phase 2 of the expansion calls for the construction of a second five-million-tonne-a-year carbon-in-leach plant to double output to ten-million tonnes a year, for total capex comprising both expansions of $350-million.
The second expansion will lift output to 450 000 oz/y at an all-in sustaining cost of $890/oz.
Once operating at a steady state, the second expansion will generate pre-tax cash flow of $185-million. It has a 20% after-tax IRR, and an NPV of $811-million.
“The board is reviewing the optimal timing for the development of Esaase and the conveyor, as well as ‘Project 10 Million’, and the respective investment decisions will be dependent on the company's cash position and financing opportunities. This review will enable us to prudently bolster our liquidity position to over $100-million by the second quarter of 2018, without overextending the balance sheet or diluting shareholders, thereby securing our growth pipeline to, ultimately, deliver a production profile of over 450 000 oz/y, making the Asanko gold mine one of the largest mines in Africa,” Breese said.