Gold mining company AngloGold Ashanti has signed the regulatory and fiscal agreements with the government of Ghana that will provide the framework for the redevelopment of the Obuasi gold mine, in Ghana, into a modern, productive mining operation, the company announced in a press release last month.

The government of Ghana and AngloGold Ashanti have put in place several agreements, including a Development Agreement (DA), Tax Concession Agreement (TCA), Security Agreement and a Reclamation Security Agreement.

The environmental- impact assessment process for the Obuasi gold mine has been completed and the permits are expected shortly.

Two documents – the TCA and the DA – must now be ratified by Ghana’s Parliament to be made effective.

The Obuasi gold mine, located in the Ashanti region, 200 km north-west of Accra, has been in a limited operating phase since 2014, and government’s support will go a long way to enabling it to restart as a modern, productive, long-life, high margin operation. This will benefit the local, regional and national economies of Ghana through taxes, job creation, communal development expenditure and local procurement opportunities.

“Redevelopment of the Obuasi mine will establish Obuasi as a world-class operation rejuvenating the proud gold mining history of the Ashanti region in Ghana,” AngloGold Ashanti CEO Srinivasan Venkatakrishnan said.

“Obuasi now has the mine and labour plan, geological understanding and social model to match its world-class, high-grade orebody. The project metrics show a high-return, long-life project that not only brings ounces to account quickly and profitably, but also offers attractive returns on our investment,” he stated.

AngloGold Ashanti has conducted a feasibility study into the redevelopment of the Obuasi gold mine, which tested the viability of redeveloping the high-grade Obuasi orebody. The orebody currently has 5.8-million ounces of ore reserves and 34-million ounces in mineral resources, to create a safe, long-life mining operation that is productive and profitable. The outcomes of the TCA and DA have been applied to the feasibility study.

Obuasi Redevelopment

The redevelopment will set up Obuasi as a mechanised, underground mining operation. According to AngloGold Ashanti, the approach to redeveloping the mine is a fundamental departure from how the mine was operated in the past, as the redevelopment makes use of automation and controls for improved operational efficiencies and consistency in performance.

The project implementation will be undertaken in two distinct phases, with stage one comprising project establishment, mine rehabilitation and development, plant and infrastructure refurbishment to enable production at a rate of 2 000 t/d for the first operating year. This is expected to take roughly 18 months, with the first gold pour expected in the third quarter of 2019.

The second phase includes the refurbishment of the underground materials handling system, shafts and ventilation, construction of the primary crusher, the semi- autogenous grinding/ball circuit, carbon regeneration, a new gold room and tailings storage facility. This expected to take a further 12 months and will enable the operation to climb to 4 000 t/d. The operation is expected to ramp up to 5 000 t/d over the following three years.

Mine production for the first ten years will be focused on the upper orebodies and is expected to average 350 000 oz to 450 000 oz at an average head grade of 8.1 g/t. In the second ten years, production is expected to average 400 000 oz to 450 000 oz. Total cash costs are expected to average between $590/oz to $680/oz, while all-in sustaining costs are expected to be between $750/oz to $850/oz.

The project delivers internal rates of return of between 16% and 23% at real gold prices of between $1 100/oz and $1 240/oz, and is highly leveraged to the gold price, according to the gold miner.

Initial project capital expenditure (capex) anticipated over the first two-and-a-half years is expected to be between $450-million to $500-million, excluding preproduction capital of $64-million. After the completion of phase two, extended project capex of $94-million is expected to continue through to year six, covering the development of the Obuasi Deeps Decline to the lower level of the mine, refurbishment of the KMS shaft, installation of new underground pumpstations and construction of the flotation tailings storage facility.

“We would like to thank His Excellency President Nana Akufo-Addo and his team, and in particular the Honourable Minister of Lands and Natural Resources John-Peter Amewu, for the professional manner in which this negotiation was undertaken,” Venkatakrishnan said.