AngloGold's Obuasi surges ahead

CAPE TOWN (miningweekly.com) – AngloGold Ashanti CEO Kelvin Dushnisky is upbeat about its Obuasi redevelopment project, in Ghana, with plans on track to ramp up production over the next year.

AngloGold Ashanti (Ghana), a wholly owned subsidiary of AngloGold Ashanti, poured its first gold in December. Last week an event was held in Ghana to commemorate the first pour.

The company has redeveloped the mine into a modern, mechanised mining operation after a hiatus of about five years.

“We have agreements in place with the government of Ghana and strong support from the local communities, so you can see why we are excited about bringing Obuasi back into production. Our investment of around $500-million will achieve 400 000-plus ounces in annual production over at least 20 years,” Dushnisky told the Investing in African Mining Indaba, which has drawn nearly 7 000 participants to Cape Town this week.

Obuasi is AngloGold's largest current investment. Dushnisky said the company is on track to mine at a rate of 2 000 t/d in the first half of this year and step up the pace to roughly double that figure by the end of the year.

About 3 500 people have been employed directly by the company and through contractors during the construction period. Dushnisky said 96% of employees are from Ghana, with three-quarters of them from the local Obuasi region.

He said skills transfer had also been very important, as was investing in local skills and participation across the value chain. 

Ghanaian President Nana Addo Dankwa Akufo-Addo this week said he was very pleased at the mine’s return to production and said the coming back on stream of the Obuasi mine signalled to the rest of the world “new beginnings for Obuasi, which will help in spurring on the development of our country”.

Dushnisky said the Ghanaian President had reinforced Ghana’s strong support for the project.

“Eighty per cent of every dollar spent and invested in the project to date has been spent in-country with Ghanaian firms,” Dushnisky told delegates to the Investing in African Mining Indaba.

He said youth apprenticeship programmes were under way in Ghana to develop welders, auto mechanics and heavy-duty equipment operators, among other trades and professions.

“These are not only our future employees, but they're also the entrepreneurs of tomorrow,” said Dushnisky.

Overall, he said AngloGold Ashanti was strongly focused on expanding margins. This had been achieved even with the gold price "at significantly lower levels" than it currently is today.

“We remain firm in our commitment to disciplined capital allocation and cost management.”

He said converting earnings into cash had at times been challenging in recent years.

“We're actively working to improve on this by creating a more efficient cash repatriation process from certain of our jurisdictions,” said Dushinsky. He said the company was also reducing maintenance costs, particularly in Ghana and South Africa.

The lion’s share of AngloGold’s investments and expansion is on the African continent.  

Dushinsky said the company had a clear capital allocation framework which underpinned its long-term strategy.  

“It starts with ensuring we have a robust pipeline of options.”

He said it was important to consistently invest in exploration. Over the past 15 years, AngloGold’s geologists have discovered about 49-million ounces of gold outside of South Africa, averaging around 3.3-million ounces a year.

“We hope to add to that record again this year.” He said this was partly the result of very efficient drilling.