Africa-focused gold producer Rangold Resources (LON:RSS) said Wednesday it has concluded a joint venture agreement to redevelop AngloGold Ashanti’s (NYSE:AU) (JSE:ANG) Obuasi gold mine in Ghana.
The companies will work on rebuilding Obuasi as “a viable long-life mining business with an attractive cost structure and returns.”
Randgold said it would lead and fund the development plan to rebuild the mine, which is a large, high-grade deposit with proven and probable ore reserves of 24.53 metric tonnes at 6.70 grams per tonne, making for 5.29 million ounces of gold.
From the press release:
Obuasi, located in the Ashanti region of Ghana 320 kilometres northwest of the capital Accra, is a large, high-grade deposit with proven and probable ore reserves (as reported by AngloGold Ashanti in their 2014 Annual Report) of 24.53Mt at 6.70g/t for 5.29Moz, part of a substantial mineral resource base. In 2012, AngloGold Ashanti initiated a programme to modernise the mine, principally by starting to develop a ramp access that will ultimately run from surface to high-grade blocks of ore underground. The ramp will supplement current vertical hoisting infrastructure and help debottleneck the underground operation by allowing for greater ease in transporting people and materials underground, and transporting ore to surface. This is a necessary step ahead of the envisaged transformation of the mine into a modern, mechanised operation.
At the end of 2014, AngloGold Ashanti converted Obuasi to limited operations, ceasing underground production, retrenching the workforce, but continuing to process tailings and starting a feasibility study on the redevelopment of the mine. Development of the decline ramp has continued over this period.
The development plan will build on this feasibility study with the intention of establishing a more focused, efficient, mechanised high-grade operation, and is expected to take about four months to complete. If the development plan meets both parties’ investment criteria, and assuming all other conditions are satisfied, Randgold and AngloGold Ashanti will form a new joint venture company.
Randgold chief executive Mark Bristow said it is a known fact that Obuasi is a world-class resource. “We now have to see if we can convert it into a world-class mine. We have a long history of cooperation with AngloGold Ashanti and we look forward to working with them again on charting a new course towards a viable future for Obuasi,” he said in the joint statement.
“AngloGold Ashanti has since 2012 effected a range of improvements to modernize Obuasi and – in line with its strategy – has progressed a feasibility study as the critical next step toward breathing new life into this important mine,” added AngloGold chief Srinivasan Venkatakrishnan said.
Shares in Randgold were up 3.2% at 3,741.00 pence Wednesday afternoon, while AngloGold was trading almost 6% higher at $7.96 in New York at 11:36 am ET.