AngloGold Ashanti will reopen Ghana's huge Obuasi mine
Dual-listed gold miner AngloGold Ashanti and the Government of Ghana have signed the regulatory and fiscal agreements that will provide the framework for the redevelopment of the Obuasi gold mine in Ghana.
Production was suspended at the mine in 2014 as it was operating at a loss, but this new announcement promises a “modern, productive operation”.
The new agreement will mean a smaller but skilled workforce – around 2,000 to 2,500 new jobs – that can operate in a mechanised/automated operation with a strong sense of accountability. Additional jobs will be created during the construction phase of the project.
The two parties have put in place several agreements including a Development Agreement, Tax Concession Agreement, Security Agreement and a Reclamation Security Agreement. The Environment Impact Assessment process has been completed and the permits are expected shortly.
Two documents – the Tax Concession Agreement (TCA) and the Development Agreement(DA) – must now both be ratified by Ghana’s Parliament to be made effective.
AngloGold Ashanti’s Obuasi gold mine is located in the Ashanti region of Ghana, 200 km north-west of Accra. It was acquired by AngloGold following a merger with Ashanti Goldfields in 2004.
Falling gold prices in 2013 overtook hit restructuring efforts and in 2014 underground production was suspended rather than operate at a loss.
The entire workforce was retrenched and the mine subsequently entered a limited operating phase (LOP) focused on the clean-up and processing of tailings at Diewuoso, continued construction of the Obuasi Deeps Decline, the maintenance of surface and underground infrastructure, water treatment and meeting environmental obligations and social commitments.
AngloGold Ashanti believes that the 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,” says AngloGoldAshanti CEO Srinivasan Venkatakrishnan (Venkat).
“Obuasi now has the mine and labour plan, geological understanding and social model to match its world-class, high-grade ore body. 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,” Venkat adds.
AngloGold Ashanti has conducted a feasibility study into the redevelopment of the Obuasi gold mine.
The study tested the viability of redeveloping the high-grade Obuasi ore body,which has 5.8 Moz of ore reserves and 34 Moz in mineral resource, 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.
The redevelopment will establish Obuasi as a mechanised underground mining operation. The approach to redeveloping the Obuasi mine is a fundamental departure from how the mine was operated in the past. The redevelopment makes use of automation and controls for improved operational efficiencies and consistency in performance.
Obuasi development plan
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 tpd (tonnes per day) 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 refurbishment of the underground materials handling system, shafts and ventilation; and construction of the primary crusher, the SAG/Ball circuit, carbon regeneration, a new gold room and tailings storage facility. This expected to take a further 12 months and enable the operation to climb to 4,000 tpd.
The operation is then expected to ramp up to 5,000 tpd, over the following three years.
LOM plan and project economics
Mine production for the first 10 years will be focused on the upper ore bodies 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 10 years, production averages 400,000 oz to 450,000 oz.
Total cash costs are expected to average between US$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 per cent and 23 per centat real gold prices of between $1,100/oz and $1,240/oz, and is highly leveraged to the gold price.
Initial project capital expenditure anticipated over the first two and half years is expected to be between $450 million to $500m, excluding pre-production capital of $64m.
After the completion of phase two, extended project capital expenditure 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 pump stations and construction of the flotation tailings storage facility.
It envisages a smaller but skilled workforce that can operate in a mechanised/automated operation with a strong sense of accountability. The operation is expected to create between 2,000 to 2,500 jobs. Additional roles will be required during the construction phase of the project.
The footprint of the mine has been significantly simplified. The lease area has been reduced from 475 sq km to 201 sq km. The operational footprint has been simplified and is concentrated in a fenced location in the south, allowing for tighter security, access control and the demarcation of the mine from the neighbouring community.
“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,” says Venkat.