Gold Fields finances expansion of Tarkwa

South African-based Gold Fields (GLDFY-Q) plans to inject US$60 million into its Tarkwa open-pit heap-leach mine in southern Ghana.

Gold Fields owns a 70% interest in Tarkwa and is project manager. The remaining interest is divided among Golden Knight Resources (GKR-T), with 17.5%, the Ghanaian government, with 10%, and the Social Security and Natural Insurance Trust of Ghana, with 2.5%.

A portion of the funds will go towards covering the remaining expenditures related to the now-complete first phase of development. That phase has resulted in the mine’s current annual production rate of 125,000 oz. gold from the heap-leaching of 3.6 million tonnes of ore.

Another US$25-30 million will fund a second phase of development, which is expected to double the mine’s output by mid-1999. The higher output, in turn, is expected to lower the operating costs to US$200 per oz.

All remaining funds will be used to reduce the project-related bank debt of US$75 million and facilitate discussions for improving the terms and conditions of the remainder.

Although the deal has been approved by the South African Reserve Bank, it must still be green-lit by the project’s lenders and minority partners. However, the funds are being raised internally and are expected to render the project self-financing at the expanded production rate and current gold price.

Tarkwa contains six deposits hosting combined reserves and measured resources of 286.6 million tonnes grading 1.39 grams gold per tonne. Initial production is coming from three of those deposits, which are expected to be mined at an average stripping ratio of 2.25-to-1 in the first five years.