Obuasi mine’s greatest challenges

Over-age equipment, illegal mining, poor security and inadequate power supply are major challenges impeding AngloGold Ashanti’s (AGA) Obuasi mine operations, Peter Anderton, Senior Vice President of the mining giant, has said.

“These challenges are worrying and are our greatest challenges in the operation of the Obuasi mine,” he told participants at the company’s town-hall meeting held in Obuasi and attended by social and business partners, members of the diplomatic community, banks and financial institutions, chiefs and people in the host communities as well as government representatives.

Once the biggest gold mine in the country and the leading employer in the industry, Obuasi is a high-cost producer and have never produced beyond 400,000 ounces since the merger between the former AngloGold of South Africa and Ashanti Goldfields Company of Ghana.

Outlining “strategic” plans to revamp the Obuasi mine, Mr. Anderton said AngloGold plans to invest approximately US$200million next year in the mine, which he reckons is still worth more than 20 years of mine-life with 9 million ounces of gold reserves.

“Our core responsibilities for 2012 will comprise modernising and expanding the underground processes with new equipment targetted at significantly improving safety, expanding development of ore reserves and speeding up ore extraction -- as well as improving recoveries to increase gold production, which is currently just over 300,000 ounces,” he said.

“AGA has strong, experienced and knowledgeable leadership; therefore even though transforming the underground mine will not be easy, with support from the stakeholders including the chiefs, government and the communities, Obuasi will be revived in the next three to five years.”

Mr. Anderton revealed that a high-level special taskforce, ‘The Obuasi Taskforce’ formed last year with a core mandate to fast-track the transformation of the Obuasi mine, has started yielding tangible results.

The taskforce has the responsibility to raise additional corporate funding and external resources to support and define the long-term turnaround strategy for the mine.

The taskforce is also looking to ensure that the work done falls in line with the long-term strategy for Obuasi, and that the outcome will provide sustainable results for Anglogold’s Ghanaian stakeholders.

Speaking on the company’s Iduapriem mine, he said: “The Ajopa pit is in its final stage of optimisation and forms part of the 2012 business-plan. The conceptual stage for Iduapriem’s expansion option has been completed and will be proceeding to pre-feasibility.”

Commenting on its global performance, Mr. Anderton indicated that AngloGold Ashanti posted record full-year adjusted headline earnings of US$1.3billion and boosted its dividend to further improve cash returns to shareholders.

“With record earnings of US$1.3billion and stronger cash flows than we’ve ever seen, we’ve laid an exceptionally strong foundation on which to grow the business. Our focus is on pushing our projects through the pipeline and ensuring continued stronger returns for shareholders.

“Anglogold Ashanti eliminated the industry’s last remaining major hedge book in late 2010, improving cash flow and profits by increasing exposure to the rising gold price.

“Bullion remains well underpinned by strong demand from emerging markets like China and India, central banks diversifying reserves, and investors seeking a haven from global economic turmoil. Amid rising prices, the company is implementing a new operating model to improve productivity across 20 mines and a portfolio of growth projects.”

He added: “The Continental Africa region’s strong performances came from Geita in Tanzania which produced 494,000 ounces, and from Obuasi which managed a four percent increase in production and cash contributed to the group.

“Full-year 2012 production is estimated to be 4.3million ounces at a total cash cost of US$780-805 ounces. Capital expenditure for 2012 is forecast at US$1.1billion on growth projects and US$1.1billion to US$1.2billion on projects to sustain the business, which includes implementation of an enterprise resource planning system across the group. Exploration and feasibility studies will cost about US$380million.”

Kwesi Enyan, Managing Director of the Obuasi Mine, said efforts are being made to tackle the company’s social and environmental problems head-on.

“The 116 housing units and all other infrastructural facilities completed at the New Dokyiwa site will be handed over to the landlords as part of the relief package for re-settlers this year.

“AGA is consistently demonstrating itself to be a responsible corporate citizen in the country and around the world. AGA will engage to an even greater extent to ensure that all its stakeholders are fully aware of the real positive contributions to the communities and the country,” Mr. Enyan said.