Clock is ticking for AngloGold to fix Ghanaian mine
by Kevin Crowley,
2016-02-09 06:01:45.0
ANGLOGOLD Ashanti, the third-biggest producer of the precious metal, wants to find a solution for its ageing Obuasi mine in Ghana by the second half of this year, according to CEO Srinivasan Venkatakrishnan.
AngloGold cut workers and placed Obuasi on limited operations last year as costs spiralled to more than $1,500/oz. The mine needs investment to access its 5.29-million ounces of gold situated in high-grade ore yielding 6.7g a tonne.
In December, Randgold Resources rejected a proposal to redevelop the mine with AngloGold, saying it did not meet the company’s investment criteria. The two producers had agreed in September to explore a joint venture to rebuild the operation, which needs investment to become fully mechanised.
"You can’t keep it indefinitely, but you can take within a reasonable time, a year, year-plus if needed," Mr Venkatakrishnan said in an interview in Cape Town on Monday, referring to the limited operations.
"But our objective is to try and get a solution by the second half of this year."
Randgold wanted a 20% annual rate of return with a gold price at $1,000/oz, while the current plan was giving the companies high single-digit percentage returns, he said.
Returns could be boosted once the government agreed to a new tax regime and mining laws, Mr Venkatakrishnan said. The company would continue to "optimise" the mine plan to boost returns, he said.
"It’s the capital costs, it’s managing the risk-and-reward relationship," he said.
"We’ve been open with the government about that."
Bloomberg
AngloGold Ashanti CEO Srinivasan Venkatakrishnan. Picture: MARTIN RHODES
ANGLOGOLD Ashanti, the third-biggest producer of the precious metal, wants to find a solution for its ageing Obuasi mine in Ghana by the second half of this year, according to CEO Srinivasan Venkatakrishnan.
AngloGold cut workers and placed Obuasi on limited operations last year as costs spiralled to more than $1,500/oz. The mine needs investment to access its 5.29-million ounces of gold situated in high-grade ore yielding 6.7g a tonne.
In December, Randgold Resources rejected a proposal to redevelop the mine with AngloGold, saying it did not meet the company’s investment criteria. The two producers had agreed in September to explore a joint venture to rebuild the operation, which needs investment to become fully mechanised.
"You can’t keep it indefinitely, but you can take within a reasonable time, a year, year-plus if needed," Mr Venkatakrishnan said in an interview in Cape Town on Monday, referring to the limited operations.
"But our objective is to try and get a solution by the second half of this year."
Randgold wanted a 20% annual rate of return with a gold price at $1,000/oz, while the current plan was giving the companies high single-digit percentage returns, he said.
Returns could be boosted once the government agreed to a new tax regime and mining laws, Mr Venkatakrishnan said. The company would continue to "optimise" the mine plan to boost returns, he said.
"It’s the capital costs, it’s managing the risk-and-reward relationship," he said.
"We’ve been open with the government about that."
Bloomberg
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