Newmont Mining Corporation has announced plans to extend profitable production at its Ahafo operations in the country by building a new underground mine and expanding plant capacity by more than 50 percent.
The Subika Underground mine is expected to produce 1.8 million ounces of gold over an 11-year mine life, and features ore grades of 4.7 grams per tonne.
The mill expansion is expected to improve margins and support profitable production at Ahafo through at least 2029.
“We are building on strong performance and solid infrastructure by investing in the next generation of profitable production at Ahafo,” said Gary Goldberg, President and Chief Executive Officer.
“The Subika Underground mine will also create a platform to support even longer-term growth. Recent exploration results demonstrate considerable upside within the Subika deposit and adjacent Apensu Deeps deposit.”
The projects have been optimized to improve internal rates of return to more than 20 percent at a US$1,200 gold price. In the first five full years of production – or from 2020 through 2024 – they are forecast to add incremental gold production of between 200,000 and 300,000 ounces per year at Ahafo for total average annual production of 550,000 to 650,000 ounces.
The projects are also expected to lower unit costs during the same time frame. Costs applicable to sales (CAS) are expected to decrease by between US$150 and US$250 per ounce compared to 2016 for total average CAS of US$650 to US$750 per ounce.
All-in sustaining costs (AISC) are expected to decrease by between $250 and $350 per ounce compared to 2016 for total average AISC of US$800 to US$900 per ounce.
Newmont received its environmental permit to build and operate the Subika Underground mine in March 2017. The resource has been studied for 11 years and execution and technical risks are well understood. The Company expects to reach first production at the mine in the second half of 2017 and commercial production in the second half of 2018.
The Ahafo Mill Expansion will increase annual mill capacity by 50 percent to nearly 10 million tonnes by adding a crusher, grinding mill and leach tanks to the circuit.
The expansion supports more efficient processing of harder, lower grade ore from existing surface mines, as well as Ahafo’s stockpiles and the Subika Underground mine. Newmont expects first gold production at the mill expansion in the first half of 2019 and commercial production in the second half of 2019.
Development capital of between $300 million and $380 million will be funded through free cash flow and available cash balances. Newmont will uphold local hiring and procurement commitments and existing bargaining agreements through construction and operation.
Newmont has one of the strongest project pipelines in the gold sector. Last year, the Company built its Merian operation in Suriname on time and US$150 million below budget, and completed the first phase of its Long Canyon mine two months ahead of schedule and $50 million below budget.
Commercial production at Ahafo began in 2006 and the operation achieved five million ounces of production in October 2016. Three surface mines – Subika, Awonsu, Amoma – feed a conventional gold mill with a carbon-in-leach circuit. A fourth surface mine, Apensu, is currently being used for water storage.