ANGLOGOLD Ashanti is to spend up to $500m over the next few years reopening its Obuasi Mine which will effectively replace the production the group sold during the intense restructuring of its South African assets.
This follows Anglo’s signing of the regulatory and fiscal agreements with the Government of Ghana that will provide the framework for the redevelopment of the Obuasi Gold Mine into a modern, productive mining operation.
AngloGold first flagged the possibility of re-openning Obuasi in August pending negotiations with the Ghanaian government. At that point, AngloGold Ashanti group planning and technical executive, Graham Ehm, was pointing towards production of 400,000 oz/year as a target.
According to Ehm, the investment proposition of the reopening will be a six year pay-back and free cash flow after four. “The buy-in of the Ghanaian government has also been essential. Given the economic and technical work done on the project as well as the steadying of regulatory and political conditions undertaken, there was less appetite for a partner. The mine had been over-run by illegal miners previously”.
The Government of Ghana and AngloGold Ashanti have put in place several agreements including a Development Agreement, Tax Concession Agreement, Security Agreement and a Reclamation Security Agreement.
The mine would be re-opened in two phases, involve mechanisation and less labour, and involve capital spending over a two-and-half-year period. The first phase would include project establishment, mine rehabilitation and development, plant and infrastructure refurbishment with the first gold pour scheduled for the third quarter of 2019. The second phase, which would include underground workings such as materials handling and ventilation would take a further 12 months.
AngloGold Ashanti Chief Executive Officer. Srinivasan Venkatakrishnan says “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.”
In additiion, “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,” Venkatakrishnan concludes.