LOW ORE HITS OBUASI MINE

Accra, Nov. 28, Ghanadot.com - The Management of AngloGold Ashanti (AGA) says it is facing severe production cost challenges operating its Obuasi mine quoting current low ore grades as a dampener to making the mine break even, a decision which already has 556 workers heading home this year.

The company said it was keen on starting its Obuasi Deeps Project that would take ore production leves beyond 50 to 80 feet where grades have been listed to be about 16 grammes per tonne.

"We can make good grades below the 50 feet level. Then Obuasi would start living again" Mr Lazare said.

The mine, which is 110 years old also indicated that it still has the potential of making a tremendous turn around if it is able to reveres the about 100 dollars an ounce lose it was making from the Obuasi production.

Mr Robbie L. Lazare, Executive Officer Africa Underground Region told Ghanadot.com that if the Obuasi mine, which used to contribute the biggest share of the Group's production but is now putting in the least, could break even, "we will easily continue with most of our programmes, sustain feasibility studies and the leaching programme among other major forward moving decisions.

He was addressing a roadshow in Accra attended by chiefs from the Adansi Traditional Area, government representatives, industry and business operators, the financial media and financial experts. The event chaired by Ms Joyce Aryee, Chief Executive of Ghana Chamber of Mines was meant to bring them abreast with trends at Obuasi and how to initiate the Obuasi Deeps Project.

He declined claims that the Obuasi mine could be closing shop, but confirmed that 1,154 workers are heading home as 556 have already received their letters as part of the first phase of a labour restructuring programme due to the unprofitability of the mine from high operating costs.

Obuasi's ores reputed to be eight grammes per tonne, " but needs to move up to 16 grammes per tonne from the programmed Obuasi Deeps Project set to take off next year."

Mr Lazare said Obuasi needs to mine at about a depth of 4,000 kilometres instead of the present 1,500 kilometres if it is to survive.

AGA says it is spending 200 million dollars on developing the Obuasi Deeps Project and would require 1 billion dollars to make that significant turnaround to put Obuasi back on the AGA top list.

AngloGold Ashanti reported a third quarter financial performance in line with that of the second quarter, with adjusted headline earnings sticking at 141 million dollars or 0.51 cents per share.

Production was still at 1.4 million ounces of gold, with total cash costs up 2 per cent to 311 dollars per ounce due to lower grades, the annual South African wage increase and higher power costs in Ghana and South Africa.

AngloGold made for the quarter was 584 dollars per ounce, 6 per cent below the average spot price. This, though low is reported to be well within the company's forecas\t range of 5 per cent to 10 per cent below spot, as it continues to deliver into the hedge book as fully as possible.

At the end of the third quarter, the hedge delta was 296 tonnes or 9.5 million ounces, marking a reduction of 635,000 ounces as compared to the previous quarter's reported hedge delta.

On the way forward for the Obuasi mine, Mr Lazare said the mine was undergoing re-egineering while ensuring an effective management that woould turn things around for the mine.

He announced the soon to arrive 100 megawatt 35 million dollar power generating set to arrest the dibiltating energy crisis that is negatively impacting on production targets.

The generating set woud be installed at Tema.

He said negotiations are underway with government and the Volta River Authority on an agreeable pricing mechanism.

Ms Aryee, said the Obuasi mine should be supported to regain its former glory, saying it still has potential.

She indicated that a lot of investment would be required to make the move and hoped that the financial sector at both home and abroad would lend a hand.

Commenting on galamsey operations, Ms Aryee Ms Aryee said government should ensure that they work in dignity and safety, arguing that it was wrong for them to take over people's conscessions.

She called for ways at managing dislocations and right sizing measures, how to work out a legal small scale mining industry and how the Adansi and Upper Denkyira people to take advantage of outsourcing opportunities and skill partnering could be worked out.

Nana Bawuah Kotokuo, Chief of Sansu, which houses one of Obuasi's major plants expressed disgust that several discussions on how the mine could support the community had not succeeded and they (the chiefs) were constantly called for talks.

He cautioned Anglogold Ashanti to stop negotiating with WACAM on behalf of the people of Adansi and Upper Denkyira, saying, "we are capable of thinking for ourselves."


 

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