It came three months early and weighed 6 kg.
The pour came less than a year after the beginning of construction. However, the companies still have some final commissioning to do before the open-pit operation is officially opened in early August.
Geita is expected to produce 500,000 oz. annually at cash operating costs below US$180 per oz., though, during the initial phase, cash costs will be in the vicinity of US$220 per oz. Production in 2000 is projected to be 150,000 oz.
Ashanti began stacking ore for processing in the first quarter, during construction, and the mill began to roll as soon as power was made available. The mine’s processing plant has reached design capacity, and indications are that it will exceed capacity while it is processing predominantly oxide ores.
“By pouring its first gold three months ahead of schedule and under challenging circumstances, Geita has demonstrated Ashanti’s ability to build and develop mines in remote parts of Africa,” says Ashanti’s CEO, Sam Jonah.
The “challenging circumstances” are a reference to Ashanti’s aggressive hedging portfolio, which had landed the Ghana-based company in financial difficulties. The rocketing gold price in October 1999 transformed Ashanti’s portfolio into a negative from a positive value and jeopardized construction at Geita, which had begun in the second quarter of that year.
Construction costs were budgeted at US$165 million, and, to complete the job, Ashanti sought the help of AngloGold. In April of this year, the South African major agreed to put up US$335 million in cash and financial assistance for a 50% stake in the operation. The sale is expected to close by September.
Ashanti will use the proceeds to pay off a US$100-million bridge loan it took out in order to continue construction. Notwithstanding these difficulties, construction at Geita was completed on schedule and on budget.
AngloGold’s contribution to the joint venture is the Ridge 8 (or Nyamulilima Hill) target, which contains a resource of 2 million oz. and sits within trucking distance southwest of the mine. The partners have already begun to study the benefits of expanding annual throughput at Geita to 7 million from 4 million tonnes, by 2004.
Ashanti acquired Geita in 1996, when it took over Cluff Resources, and in 1998, it doubled the size of the property by acquiring Samax Resources. Exploration has succeeded in expanding resources to 12 million oz. from less than 500,000 oz. in 1996. Proven and probable reserves at the end of 1999 stood 50 million tonnes averaging 3.5 grams gold per tonne, equivalent to 5.5 million oz.
In the meantime, Ashanti is preparing to begin exploratory drilling on the Nyamatigata target, where recent trenching returned encouraging results. A separate drill program will attempt to upgrade the underground resource at Geita to the reserve category. The resource currently stands at 10 million tonnes grading 8 grams gold, or 2.6 million oz.
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