Name and Location
Asanko gold mine, Ghana.

Client
Asanko Gold acquired the Obotan project during a C$183-million takeover of PMI Gold Corp in February 2014.

Project Description
The Asanko mine was created by combining the Obotan and Esaase projects into one project, which will be developed over two phases.

The Asanko mine has 7.5-million ounces of measured and indicated resources, including 4.8-million ounces of proven and probable reserves.

Phase 1 is based on PMI Gold's definitive feasibility study (DFS) for the Obotan project, published in September 2012, and will be a low-cost, long-life mine producing 190 000 oz/y of gold at steady state.

The project is targeting an estimated 2.33-million ounces of gold production over an 11.5-year life-of-mine (LoM) using an openpit contractor mining operation and a three-million-tonne-a-year carbon-in-leach processing plant. The primary source of feed material for the carbon-in-leach plant is the Nkran pit, with satellite pits at Adubiaso, Abore and Asuadai, and the recently discovered Dynamite Hill deposit providing supplemental feed.

Phase 2 anticipates the inclusion of the adjacent Esaase deposit, which is located only 25 km from the plant site. A scoping study is under way to evaluate the optimum ore transport method and the scope of the plant expansion. The study is scheduled for publication in the second quarter of 2015. Phase 1 has incorporated sufficient plant terracing, with plant layout and infrastructure having been designed to cater for the potential of Phase 2.

Net Present Value/Internal Rate of Return
Not stated.

Value
The Obotan DFS has estimated capital costs of $296.6-million.

Since acquiring PMI Gold earlier this year, Asanko Gold has updated the capital cost estimate to a higher level of accuracy, suitable for use as a project control budget estimate (CBE). The CBE estimates a capital cost for Phase 1 of $295-million, including contingency for estimating inaccuracy and owner's contingency. The capital estimate is generally considered accurate to +/- 5%.

The CBE was designed on a modular basis to cater for the possible inclusion of Phase 2 on the same site.

Duration
Phase 1 construction started in the third quarter of 2014, with first gold targeted in the first quarter of 2016 and steady-state production of 200 000 oz/y of gold expected in the second quarter of 2016.

Latest Developments
Asanko is in discussions with independent power producer Genser Energy Ghana, which it says has failed to meet the deadline for providing temporary power to the company's mine project.

Under the terms of a June power purchase agreement, Genser had committed to delivering temporary power to the project by November 1 and building a permanent 19.2 MW liquid fuel power plant next to the Asanko gold mine site, in Ghana, as well as supply 17 MW of nominal power to Phase 1 on a fixed-price, life-of-mine contract.

Meanwhile, the 30-km-long, 161 kV power line connecting the project site to the national power grid at the Asawinso substation was completed this month, along with the 161/11 kV substation at the site. The line is now energised and ready to deliver power to the project site for commissioning. The company plans to receive electricity from the State power authority at rates materially in line with the definitive project plan.

As a backup measure, Asanko is installing 20 MW of diesel generator capacity at the site as a 100% redundant standby supply of power. The backup power will be fully operational by early December.

With construction of the mine project three-quarters complete, Asanko expects hot commissioning of the plant to start in December.

“We are ready to start hot commissioning the entire processing plant during December. With the gravity and [carbon-in-leach] circuits ready to run in tandem, we expect to produce first gold during January and ramp up to steady-state production in the second quarter of 2016,” president and CEO Peter Breese has said.

Full mining operations started in January, with the focus to prestrip the main Nkran pit. This operation has advanced in line with plans, with the company having started to mine a combination of peripherals and early extensions of the main Nkran ore zones.

Asanko expects to have about 250 000 t of ore on stockpile by the end of November. Mining operations achieved long-term, steady-state production levels in August 2015.

The company still holds a funding buffer of about $40-million, boosting the company’s confidence that it will reach commercial production and generate positive cash flows in the second quarter of next year.

Key Contracts and Suppliers
DRA (engineering, procurement and construction management contractor) and Knight Piesold (tailings storage facility design contractor).

On Budget and on Time?
First gold production is scheduled for January – more than a month ahead of schedule and within the $295-million capital budget.

Contact Details for Project Information
Asanko Gold investor relations manager Alex Buck, tel +44 7932 740 452 or email alex.buck@asanko.com.
DRA, tel  +27 11 202 8600 or email info@DRAglobal.com.
Knight Piesold, tel +27 11 806 7111 or fax +27 11 806 7100.