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AngloGold Ashanti to value Obuasi Mine

By: Fred Yaw Sarpong, Daily Express

AngloGold Ashanti Ghana has started a feasibility study at the Obuasi Gold Mine at Obuasi in the Ashanti Region in order to know the current state and value of the mining site.

The feasibility is to establish business case for the mine given resource they have, given the current market situation, and the modernization they want to do and as well as the capital requirement for future operation.

AngloGold Ashanti has previously announced its intention to place the Obuasi mine on limited operations while comprehensive feasibility study is completed next year.

The study is to convert Obuasi mine into a new highly productive mechanised operation that can properly develop the high-grade reserve of about 7 million ounce of gold and resource of about 20 million ounce of gold.

The feasibility study which is expected to be completed by the end of March next year is to identify the true value of the Obuasi mine and come out with a recommendations as to whether the mine site is viable for continues operation or not.

Mr David Noko, Executive Vice President in charge of sustainability at AngloGold Ashanti Limited said at a stakeholders meeting held in Accra that the reason why they are restructuring Obuasi mine is that the infrastructures at the mine site are overage and there is need to replace them.

‘The Obuasi mine is unproductive area for now and some of the equipment’s at the site are making production ineffective,’ said Mr Noko adding that any mining operation which is over 100 years requires a redesign.

Daily Express gathered that currently Obuasi mine covers an area of about 400 square meters and the feasibility study is expected to reduce the area. ‘The area needs to be reducing so that we can manage it properly,’ said Mr Noko.

According to him they were spending a lot of resources to manage the Obuasi mine and they were not generating much from the site. The current gold price is around US$1,200 per ounce on the international market. However, Mr Noko said it currently costing them US$1,300 to produce an ounce of gold.

‘These are some of the reason why we have taken the decision to do retrenchment on the site. Because we are not making profit from the site,’ he added.

He believes that the 117-year old Obuasi mine had to properly address high costs, poor mining feasibility, low tonnages and deteriorating infrastructure in order to ensure its long-term sustainable contribution to the local, regional and national economy.

He stated that although AngloGold Ashanti Ghana has over the past decade contributed over US$577 million in corporate taxes, royalties, dividend, customs duties and employees taxes to the economy; out of this US$324 million is from Obuasi mine and the remainder coming from Iduapriem operation.

‘But the sharply lower gold price and worsening operational challenges required the current holistic intervention to improve the prospects of the Obuasi mine’s long-term sustainability,’ said Mr Noko.

Since 2012 a total number of 3,100 workers at the Obuasi mine have been relieved from their posts as part of the on-going restructuring in the company. These 3,100 employees have received their severance packages in line with an agreement reached with the Ghana Mine Workers Union (GMWU).

Currently, there are about 1.300 full time employees and 1,100 third-party contractors at Obuasi mine.

Mr Fred Atta Kumah, the Managing Director for Obuasi mine a total of US$250 million is been spent as severance package for the workers who will be affected.

He told Daily Express that on average a worker expected to get US$50,000 package per person depending on the number of years the person has spent at the Obuasi mine.

‘But majority of the people are earning higher amount because the average spent on the mine site per a worker is 20 years,’ said Mr Kumah.


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