Ghana green-lights Ahafo

The Ghanaian parliament has unanimously approved a foreign investment agreement with Newmont Mining (NEM-N) that paves the way for construction of its Ahafo gold project in the Brong Ahafo region in the western part of the country.

The agreement sets out the fixed royalty and tax rates over the lives of Newmont’s projects. It also spells out Newmont’s commitments regarding job training for local citizens, community development and environmental protection.

With the agreement in hand, Newmont plans to spend about US$350 million building the open-pit mine. The operation is expected to produce 425,000-475,000 equity ounces annually at total cash costs of US$175-US$185 per oz. over a 15-year mine life. The first gold pour is planned for the second half of 2006.

At the end of 2002, proven and probable reserves totalled 53 million tons grading 0.074 oz. gold per ton, for 3.9 million equity oz. Another 56.9 million tons of unclassified material outside that reserves grade 0.054 oz. per ton.

Newmont also owns 85% of the Akyem project in the Birim North district of eastern Ghana. There, Newmont plans to spend US$220-245 million to build an open pit mine capable of producing 350,000-400,000 equity oz. of gold annually for 13 years. Total cash costs are pegged at US$155 per oz.

Year-end 2002 proven and probable reserves at Akyem totalled 25.8 million tons grading 0.061oz. gold, representing 1.6 million equity oz. Another 61 million tonnes of mineralized material averages 0.053 oz. gold. The mine is expected to begin production in 2007.

The Akyem mine, in the Birim North district of eastern Ghana, is slated to produce 350,000-400,000 equity ounces gold annually over a mine life of 13 years. Total cash costs are pegged at US$155 per oz.; capital costs, at US$220-245 million.

Newmont acquired both projects via its takeover of Australian-based Normandy Mining in 2002. Ghanaian-based Kenbert Mines holds the remaining 15% of Akyem. Both projects are subject to the Ghanaian government’s 10% carried interest after the return of capital.