AngloGold signs $375m Obuasi mining deal
In the first major development for the mine, AngloGold signs a five-year underground mining deal with Australia’s African Underground Mining Services and Ghana’s Rocksure International
AngloGold Ashanti awarded the sought-after mining contract at its $400m-$500m Obuasi mine restart project in Ghana to an Australian contractor in a joint venture with a local company.
AngloGold acquired Obuasi when it bought Ashanti Goldfields in 2004, but the mine has not lived up to its potential despite numerous management interventions.
The underground mine was idled in 2014 to develop a new operating plan. Efforts to bring in a partner in the form of Randgold Resources to share the cost and risk failed and AngloGold has subsequently opted to embark on the project alone.
In the first major development for the mine, AngloGold said on Monday it had signed a $375m, five-year underground mining deal with Australia’s African Underground Mining Services and Ghana’s Rocksure International, the junior partner in the joint-venture company that will mine Obuasi.
The $375m is an operating cost number rather than the capital to be spent on redeveloping the underground mine and refurbishing the processing plant. That price tag is as high as $500m.
The 70-30 owned Underground Mining Alliance shared between African Underground Mining Services and Rocksure International respectively will be provided with all the equipment it needs by AngloGold and work should start in the first quarter of 2019.
Obuasi is one of the most closely watched assets in the AngloGold suite, being a perennial underperformer and one which is now the key investment project in the company as the Kibali joint-venture gold mine with Randgold in the Democratic Republic of Congo is completed.
Developing Obuasi on time and budget will be the first order of business for Kelvin Dushnisky who replaced stalwart Srinivasan Venkatakrishnan as the CEO of the world’s third-largest gold producer a few months ago.
“We’ve worked closely with the government of Ghana to progress the redevelopment of Obuasi gold mine into a modern, productive operation, making it a key asset in our portfolio for the long term,” said Graham Ehm, AngloGold’s executive vice-president in charge of group planning and technical.
An SA company hoping for work from Obuasi is Master Drilling, which specialises in raise-bore drilling, and worked at the Kibali project. AngloGold has yet to award drilling contracts.