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AngloGold Reaches Accord with Ghana Over Obuasi Investment Framework
AngloGold Ashanti Limited
(Incorporated in the Republic of South Africa)
Reg. No. 1944/017354/06
ISIN: ZAE000043485 – JSE share code: ANG
CUSIP: 035128206 – NYSE share code: AU
(“AngloGold Ashanti” or the “Company”)
20 February 2018
NEWS RELEASE
AngloGold Reaches Accord with Ghana Over Obuasi Investment Framework
(JOHANNESBURG – PRESS RELEASE) - AngloGold Ashanti is pleased to announce that it
has signed the regulatory and fiscal agreements with the Government of Ghana that will
provide the framework for the redevelopment of the Obuasi Gold Mine into a modern,
productive mining operation.
The Government of Ghana and AngloGold Ashanti have put in place several agreements
including a Development Agreement, Tax Concession Agreement, Security Agreement and a
Reclamation Security Agreement. The Environment Impact Assessment process has been
completed and the permits are expected shortly.
Two documents – the Tax Concession Agreement (TCA) and the Development Agreement
(DA) – must now both be ratified by Ghana’s Parliament to be made effective.
Obuasi Gold Mine has been in limited operating phase since 2014, and the Government’s
support will go a long way to enabling it to restart as a modern, productive, long-life high
margin operation. This will benefit the local, regional and national economies of Ghana
through taxes, job creation, communal development expenditure and local procurement
opportunities.
“Redevelopment of the Obuasi mine will establish Obuasi as a world class operation
rejuvenating the proud gold mining history of the Ashanti region in Ghana,” AngloGold
Ashanti Chief Executive Officer, Srinivasan Venkatakrishnan, said. “Obuasi now has the
mine and labour plan, geological understanding and social model to match its world-class,
high-grade ore body. The project metrics show a high-return, long-life project that not only
brings ounces to account quickly and profitably, but also offers attractive returns on our
investment.”
AngloGold Ashanti has conducted a feasibility study into the redevelopment of the Obuasi
Gold Mine. The study tested the viability of redeveloping the high-grade Obuasi ore body,
which has 5.8Moz of Ore Reserves and 34Moz in Mineral Resource, to create a safe, long-
life mining operation that is productive and profitable. The outcomes of the TCA and DA
have been applied to the feasibility study.
The redevelopment will establish Obuasi as a mechanised underground mining operation. The
approach to redeveloping the Obuasi mine is a fundamental departure from how the mine was
operated in the past. The redevelopment makes use of automation and controls for improved
operational efficiencies and consistency in performance.
The project implementation will be undertaken in two distinct phases, with stage one
comprising project establishment, mine rehabilitation and development, plant and
infrastructure refurbishment to enable production at a rate of 2,000t per day for the first
operating year. This is expected to take roughly 18 months, with the first gold pour expected
in the third quarter of 2019.
The second phase includes refurbishment of the underground materials handling system,
shafts and ventilation; and construction of the primary crusher, the SAG/Ball circuit, carbon
regeneration, a new gold room and tailings storage facility. This expected to take a further 12
months and enable the operation to climb to 4,000t per day. The operation is then expected
to ramp up to 5,000t per day, over the following three years.
Mine production for the first 10 years will be focussed on the upper ore bodies and is
expected to average 350,000oz to 450,000oz at an average head grade of 8.1g/t. In the
second 10 years, production averages 400,000oz to 450,000oz. Total cash costs are
expected to average between $590/oz to $680/oz, while All-in Sustaining Costs are
expected to be between $750/oz to $850/oz.
The project delivers internal rates of return of between 16% and 23% at real gold prices of
between $1,100/oz and $1,240/oz, and is highly leveraged to the gold price.
Initial project capital expenditure anticipated over the first two and half years is expected to be
between $450m to $500m, excluding pre-production capital of $64. After the completion of
phase two, extended project capital expenditure of $94m is expected to continue through to
year six, covering the development of the Obuasi Deeps Decline to the lower level of the mine,
refurbishment of the KMS shaft, installation of new underground pump stations and
construction of the flotation tailings storage facility.
It envisages a smaller but skilled workforce that can operate in a mechanised/automated
operation with a strong sense of accountability. The operation is expected to create between
2000 to 2,500 jobs. Additional roles will be required during the construction phase of the
project.
The footprint of the mine has been significantly simplified. The lease area has been reduced
from 475Km2 to 201Km2. The operational footprint has been simplified and is concentrated in
a fenced location in the south, allowing for tighter security, access control and the demarcation
of the mine from the neighbouring community.
“We would like to thank His Excellency President Nana Akufo-Addo and his team, and in
particular the Honourable Minister of Lands and Natural Resources, John-Peter Amewu, for
the professional manner in which this negotiation was undertaken,” Venkat said.
Notes to Editors
AngloGold Ashanti has a 100% interest in Obuasi, which is located in the Ashanti region of
Ghana, 200 kilometres north west of Accra. The Obuasi mine was acquired by AngloGold in
the merger with Ashanti Goldfields in 2004. The falling gold price in 2013 overtook
restructuring efforts to improve the profitability of the operation.
The Obuasi Mine has embarked on a fundamental restructuring programme since 2014. This
became necessary because the mine had been operating at significant losses for a prolonged
period. Underground production was suspended at the end of 2014, and the entire workforce
was retrenched.
The mine entered a Limited Operating Phase (LOP), through an Amendment of Programme
of Mining Operations (APMO) which was approved by the Government of Ghana. The focus
during the LOP was the clean-up and processing of tailings at Diewuoso, continued
construction of the Obuasi Deeps Decline, the maintenance of surface and underground
infrastructure, water treatment and meeting environmental obligations and social
commitments. In parallel, a feasibility study for the redevelopment of the Obuasi Mine was
conducted.
The feasibility study underwent several iterations and optimisation to define the best
configuration of project design, capital and operating cost and cash flow for the
redevelopment.
Ends
Johannesburg
20 February 2018
JSE Sponsor: Deutsche Securities (SA) Proprietary Limited
CONTACTS
Media
Chris Nthite +27 11 637 6388/+27 83 301 2481
cnthite@anglogoldashanti.com
Stewart Bailey +27 81 032 2563 / +27 11 637 6031
sbailey@anglogoldashanti.com
General inquiries media@anglogoldashanti.com
Investors
Stewart Bailey +27 81 032 2563 / +27 11 637 6031
sbailey@anglogoldashanti.com
Sabrina Brockman +1 646 880 4526/ +1 646 379 2555
sbrockman@anglogoldashanti.com
Fundisa Mgidi +27 11 6376763 / +27 82 821 5322
fmgidi@anglogoldashanti.com
Certain statements contained in this document, other than statements of historical fact, including, without limitation, those concerning the
economic outlook for the gold mining industry, expectations regarding gold prices, production, cash costs, all-in sustaining costs, all-in costs,
cost savings and other operating results, productivity improvements, growth prospects and outlook of AngloGold Ashanti’s operations,
individually or in the aggregate, including the achievement of project milestones, commencement and completion of commercial operations
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Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes
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For a discussion of such risk factors, refer to AngloGold Ashanti’s annual report on Form 20-F for the year ended 31 December 2016, which
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Incorporated in the Republic of South Africa Reg No: 1944/017354/06
ISIN. ZAE000043485 – JSE share code: ANG CUSIP: 035128206 – NYSE share code: AU
Website: www.anglogoldashanti.com
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