HomeGoldNewmont to double - Ghana output also plans further West African expansion

Newmont to double – Ghana output also plans further West African expansion

Newmont Mining Corporation – the world’s second largest gold producer – is planning to double its production in Ghana to over 1Moz by 2013, and is exploring the possibility of establishing new mining operations in at least three other West African countries.

Company director of corporate and external affairs for Africa, Chris Anderson discussed the details in an exclusive interview with Mining Review Africa.

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The Ahafo Plant at night

Founded in 1921, headquartered near Denver, Colorado, and listed on the New York Stock Exchange, Newmont has significant assets or operations in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand and Mexico. As of December 2008 the company had proven and probable gold reserves of 85 Moz, and an aggregate land position of approximately 100 600 squ km. It produced a total of 5.2 Moz last year.

In Africa, Newmont took ownership of gold leases in Ghana through the acquisition of Normandy Mining in 2002. Its African operations involve the Ahafo mine and Akyem project in Ghana. They comprise about 20% of the company’s core assets worldwide. This is in the form of a major gold district defining 17.1 Moz of gold.

The Ahafo mine is 100%owned by Newmont, and is located300 km north-west of Accra. After two years of production, Ahafo produced its one millionth ounce of gold in 2008. Last year the mine produced 521 000 oz, and the company guidance for 2009 production is between 500 000 and 525 000 oz at a cost of between US$425 and US$450/oz.

“Our current proven and probable reserve for Ahafo, as at the end of 2008, is 9.3Moz,” said Anderson, “and our estimated life of mine is around 17 years, but we are certainly looking to extend that to more than 20 years. And our average annual production over life of mine will be around 500 000 oz,” he added.

“We are doing a lot of near mine exploration in the Ahafo area, and we are pretty confident of extending our life there,” Anderson continued. “We are actively mining open pits at present, and our lease contains several other deposits within its 50km length.”

AKYEM WILL ALSO PRODUCE 500 000 OZ PA
The Akyem project – also 100%-owned by Newmont – is located in the eastern region of Ghana, 180 km north-west of Accra.

“The board has not made a final decision on this project,” he said. “However, we are committed to the project, and are currently doing optimisation studies. Our executive team is actively discussing it,” he added.

“We are working with the government of Ghana to obtain the necessary mining lease, following the environmental permit we received earlier this year. We are currently also evaluating development alternatives that focus on leveraging our existing infrastructure and personnel. During 2009, we will complete an infill drilling programme at Akyem to confirm the resource, with over 15 000m of drilling completed to date,” Anderson went on.

“We will be looking at an output of around 500 000 oz pa at Akyem, so I believe the plant and mill will be very similar to Ahafo with a throughput of 7.5 Mt. The workforce would also be similar to Ahafo – about 3 000 workers and contractors,” he explained.

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Exploratory drilling at Akyem

Consultation and work with the local communities will take some 18 months due to the need to resettle some local residents. “Then construction will take about two years with a slight overlap, so the project should be ready for commissioning and production towards the end of 2013,” Anderson revealed.

“The cost of setting up such a mine and plant will be similar to Ahafo, which cost around US$740 million (R5.9 billion) – probably a little more at about US$800 million (R6.4 billion),” he estimated.

He pointed out that this was in a greenfields area of Ghana which had never seen any gold mining, and had very limited infrastructure. “We have to deal with power and water issues. Also we have had to put in a lot of time and effort – not just into resettlement – but into community development as well,” Anderson said.

“We started off with an estimated mine life of about eight years, but with additional drilling we have pushed it out to between 10 and 12 years,” he added.

ACTIVE EXPLORATION IN WEST AFRICA
Looking at the future, Anderson confirmed that Newmont was busy with very active new mine exploration in the Ahafo area, regional exploration elsewhere in Ghana, as well exploration in various neighbouring countries.

“Firstly in Ghana, one of our pits at Ahafo has shown good potential for underground mining, and we are having an active look at that. We are also exploring in the Akyem area, and I understand that there is potential for underground development there as well, and that it could lead to a significant change in life of mine,” he revealed.

“But we are by no means tied to Ghana, and we are happy to look at opportunities elsewhere – certainly in West Africa,” Anderson insisted.

“We see Ghana as our business base, and would keep Ghana as our regional headquarters for Africa. Our experience in Ghana over the years has proved very good,” he explained. “It’s a friendly business environment, they understand mining, particularly gold mining, and we found both the previous government and the current government good to work with. So whatever we do in West Africa would be based out of Ghana,” Anderson reiterated.

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Newmont hires local women and
trains them to drive the haul
trucks

“We have a reasonably-sized exploration division here in Ghana, which is looking at some interesting prospects in other parts of West Africa as well. We have set up a small office in Abidjan in Cote d’Ivoire with an exploration focus there, and looking at opportunities in Burkina Faso and Mali as well,” Anderson revealed.

“It’s far too early to provide any detailed news on findings resulting from this exploration, but the fact of the matter is that we are continuing with the programme, so it can’t be all bad news. And if gold prices remain high, I am sure we will continue our exploration efforts in West Africa,” he said.

“Speaking generally, I believe gold prices are going to keep doing well,” Anderson predicted. “Although we have some copper and iron ore interests, right now we are really focused on gold. It’s done very well for us in recent years – so we are pretty upbeat on it,“ Anderson declared.

“You know Newmont inherited these properties in Ghana by buying the Australian company Normandy Mining. We had intended to sell them immediately, because we had no recent experience in Africa, and we felt we should leave it to people like AngloGold Ashanti and Gold Fields,” he pointed out. “But once our geologists starting looking at Ahafo and Akyem properly, it became way too attractive to pass up. They turned 180 degrees and said let’s go and build a business out of Ghana, and see how we go,” Anderson concluded. “And that is what we have done!”

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