JOHANNESBURG (miningweekly.com) – London-listed gold mining company Randgold Resources and AngloGold Ashanti have concluded an investment agreement aimed at the formation of a joint venture (JV) to redevelop and operate AngloGold Ashanti’s Obuasi gold mine in Ghana.
Randgold, headed by CEO Dr Mark Bristow, has agreed to lead and fund a development plan designed to rebuild Obuasi as a viable long-life mining business with an attractive cost structure and returns.
“Obuasi is a world-class resource. We now have to see if we can convert it into a world-class mine," Bristow told a media conference call from Ghana in which Creamer Media's Mining Weekly Online participated.
Randgold has a long history of cooperation with AngloGold Ashanti going back to the development of Randgold's company-making Morila gold mine in Mali, where the two were equal partners.
The two companies joined similar forces with the development of Kibali in the Democratic Republic of Congo and said in a media release on Wednesday that they looked forward to working with one another again on charting a new course towards a viable future for Obuasi.
Obuasi is expected to be remodelled to survive on a gold price of $1 000/oz, Randgold's yardstick, with the capital cost of Obuasi's revival targeted at under $1-billion.
Located in the Ashanti region of Ghana 320 km north-west of the capital Accra, Obuasi is a high-grade deposit with reserves of 24.53-million tonnes at 6.70 g/t for 5.29-million ounces.
In 2012, AngloGold initiated a programme to modernise the mine, principally by starting to develop a ramp access aimed at ultimately running from surface to high-grade blocks of ore underground.
The ramp is designed to supplement current vertical hoisting infrastructure and to help to debottleneck the underground operation by allowing for greater ease in transporting people and materials underground, and transporting ore to surface.
This is seen as a necessary step ahead of the envisaged transformation of the mine into a modern, mechanised operation.
At the end of 2014, the Johannesburg- and New York-listed AngloGold 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, which is expected to take some four months to complete.
If the development plan meets both parties’ investment criteria, and assuming all other conditions are satisfied, Randgold and AngloGold will form a new JV company that will make them be jointly responsible for funding Obuasi's revival.
Randgold will operate the mine with both companies appointing an equal number of directors to the JV's board, with board and shareholder decisions requiring the approval of both parties.
AngloGold has in the last three years effected a range of improvements to modernise Obuasi and progressed a feasibility study as the critical next step toward breathing new life into Obuasi, which has been both State and private sector owned over more than a century of mining.
“Our partnership with Randgold has proved successful for well over a decade," AngloGold Ashanti CEO Srinivasan Venkatakrishnan (Venkat) told journalists in Ghana and South Africa during the conference call.
By pooling the expertise and the capital of both companies, the ability to turn Obuasi in to a star performer was greatly enhanced, Venkat added.
Randgold is expected to deliver the new development plan to both parties’ boards by January 31.
The JV needs South African Reserve Bank (SARB) approval, the consent of lending banks, the completion by Randgold of due diligence to Anglogold's satisfaction and the receipt of any applicable anti-trust approvals.
SARB approval is required within 45 days of the date of the agreement and AngloGold's financing consent within 60 days.
The formation of the JV is also conditional on the receipt of the approvals necessary for the implementation of the development plan from the government of Ghana on terms acceptable to the parties, including agreement of a revised stability agreement and a development agreement reflecting the agreed development plan.
Also required is their ratification by the Parliament of Ghana, and the issue of all necessary environmental licences and permits for the project, which are planned to be satisfied by March 31.
Subject to the transaction completing, Randgold and AngloGold will each fund their pro rata share of the agreed costs.
The Iduapriem mine, and certain other noncore assets, will be retained under the sole ownership of AngloGold.
Edited by: Creamer Media Reporter
EMAIL THIS ARTICLE SAVE THIS ARTICLE
To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here
