The redevelopment project of the Obuasi Mine, operated by AngloGold Ashanti (Ghana) Limited, is expected to generate an annual revenue of about US$98.18million to the state from royalties and withholding taxes over the next 264 months of the mine’s life.
This is from the initial investment of US$881million out of a total investment of US$1.6billion projected for the entire 22-year life of the mine, and which is estimated to create over 2,500 jobs.
According to President Nana Akufo-Addo, government had to provide a number of fiscal incentives and guarantee stability of the project in order to help AngloGold Ashanti secure the needed investment for the project.
He said it is his expectation that all the agreements reached, including vigorous implementation of the domestic content policy, will be scrupulously honoured and performed.
He assured that everything possible will be done by government to ensure the sequence of events which led to closure of the mine some time back do not recur.
President Akufo-Addo, again, expressed optimism that reopening of the mine will bring back life to the once-vibrant Municipality of Obuasi, while helping to develop and improve the living conditions of its inhabitants.
The redevelopment project, which will be carried out in two phases, includes project establishment; mine rehabilitation and development; as well as plant and infrastructure refurbishment, to enable production at a rate of 2,000 tonnes per day for the first operating year, during the first phase.
This is anticipated to take approximately 18 months, with the first gold pour expected at the end of 2019.
The second phase will include refurbishment of the underground materials for the handling system, shafts, and ventilation among others. This is also hoped to take a further 12 months and enable the operation to climb to 4,000 tonnes per day.
Production at the mine is then expected to ramp up to 5,000 tonnes per day over the following years. “The mine production of the first 10 years will focus on the upper ore-bodies, and is expected to average 350,000 oz to 450,000 oz annually at an average head grade 8.1g/t.”
In the following 10 years, an average annual production of 400,000oz to 450,000oz is forecast. Total cash costs are expected to average between US$590/oz and US$680/oz, and all-in sustaining costs between US$750/oz and US$850/oz.
The redevelopment project – expected to fully revive the mine – is happening on the back of declining gold production at the mine since 1995, attributed to underground infrastructure issues and development and backfill constraints.
In 2014, which was the last year of full production, output totalled 243,000z. This was a level last seen in 1980.
The mine had had a negative cash flow in all but two years since 2004, disguised somewhat by successive rises in the gold price over 10 years.
The fall in the gold price since 2012 exacerbated cash flow losses, which ballooned to unsustainable levels and forced the mine to be placed on limited operations in late 2014.
AGA Ghana however applied to the Ghanaian government for approval to amend its programme of mining operations, while all employees were retrenched and paid full benefits and entitlements.
But in June 2017, the company commenced negotiations with government with the aim of delivering a long life, efficient and profitable mine that delivers value to its shareholders, as well as the other stakeholders in the host country and community.
AGA Ghana has since executed the relevant agreements with the government of Ghana, and has obtained the required approvals and permits for the redevelopment project to commence.
The Managing Director (MD) of AngloGold Ashanti, Eric Asubonteng, said launching the redevelopment project represents a new beginning of the Obuasi Mine – while it also demonstrates AGAG’s long-term commitment to its presence and operations in Ghana.
The Asantehene, Otumfuo Osei Tutu II, noted that the Obuasi Mine redevelopment project has huge implications for the country’s future.
He said: “It should be an important signal to the world that the climate for doing business has never been brighter, and should instil further confidence in our people that the promise of a stronger, more vibrant economy, providing more jobs for the people, is being realized”.
However, he cautioned that the residents should not be lured into a premature sense of security, for challenges of the past have not gone away and we should expect even more moving on.