Asanko and Gold Fields Form JV

The Asanko gold mine in Ghana is expected to produce 253,000 oz/y starting in 2019.
Asanko Gold and Gold Fields Ltd. are forming a joint venture that will give each company a 50% stake in Asanko’s 90% interest in the Asanko gold mine (AGM) in Ghana. The government of Ghana will continue to hold a free-carried 10% interest in the operation.

The AGM is a multideposit mining complex, with two main deposits, Nkran and Esaase, and nine known satellite deposits. Asanko will remain the manager and operator. A joint-venture management committee, comprising representatives from Asanko and Gold Fields, will be formed to oversee operations, with material decisions, including budgets and capital expenditures, requiring unanimous approval. A technical subcommittee will be formed to provide technical advisory services to the management committee.

Gold Fields will make an upfront payment of $165 million to Asanko on closing of the transaction and a deferred payment of $20 million. Asanko will use the proceeds primarily to repay its outstanding debt of $164 million owed to RK Mine Finance Trust I (Red Kite). In a separate transaction, Gold Fields has purchased a 9.9% equity interest in Asanko for a purchase price of $17.6 million.

Gold Fields has two gold mines in Ghana — Tarkwa and Damang — located about 100 kilometers (km) south of the AGM. Tarkwa produced 566,000 ounces (oz) at all-in sustaining costs of $940/oz in 2017. Damang produced 144,000 oz at all-in sustaining costs of $1,027/oz. The AGM produced 205,000 oz of gold in 2017 and is forecast to produce 200,000 to 220,00 oz in 2018. Based on assumed completion of an ongoing expansion project, Asanko expects AGM production to average 253,000 oz/y for the five-year period from 2019 to 2023 at all-in sustaining costs of $860/oz. Mine life is forecast at a minimum of 15 years. The 540-km2 land package held by Asanko remains relatively unexplored.

“This transaction presents a unique opportunity for Asanko to de-risk its future production targets whilst at the same time eliminating corporate debt,” said Asanko President and CEO Peter Breese. “With a healthy balance sheet and robust operational cash flows, together with a strong technical endorsement, our life-ofmine plan is assured.

“The AGM is now operating well within our business targets, with mining efficiencies and the process plant delivering ahead of plan. With this new investment and the freeing up of our balance sheet, we will now move forward with the development of our large-scale Esaase deposit, with a view to commencing production in 2019, with an interim trucking operation until the 27-km overland conveyor to the processing plant is fully operational in late 2020. We look forward to working in partnership with Gold Fields and sharing mining and exploration expertise to create added value for all our stakeholders.”

Gold Fields CEO Nicholas Holland said, “West Africa is an important part of our business, and we look forward to a long partnership with Asanko in Ghana. We view the AGM as a high-quality asset and a great addition to our existing portfolio of open-pit gold operations in the country.”

As featured in Womp 2018 Vol 05 -