- World's No. 3 gold producer needs partner for project
- Ghanaian government needs to finalize tax regime, mine laws
AngloGold Ashanti Ltd., the world’s third-biggest producer of the precious metal, wants to find a solution for its aging Obuasi mine in Ghana by the second half of this year, Chief Executive Officer Srinivasan Venkatakrishnan said.
AngloGold cut workers and placed Obuasi on limited operations last year as costs spiraled to more than $1,500 an ounce. The mine needs investment to access its 5.29 million ounces of gold situated in high-grade ore yielding 6.7 grams a ton.
‘‘You can’t keep it indefinitely but you can take within a reasonable time, a year, year-plus if needed,” Venkatakrishnan said in an interview in Cape Town Monday, referring to the limited operations. “But our objective is to try and get a solution by the second half of this year.”
Randgold Resources Ltd. in December rejected a proposal to redevelop the mine with AngloGold, saying it doesn’t meet the company’s investment criteria. The two producers agreed in September to explore a joint venture to rebuild the operation, which needs investment to become fully mechanized.
“We thought we could do it a little differently but there are endemic issues at Obuasi,” Bristow said in an interview. “We couldn’t make it work.”
Randgold wanted a 20 percent annual rate of return with a gold price at $1,000 an ounce, while the current Obuasi plan was giving the companies high single-digit percentage returns, Bristow said.
Returns can be boosted once the government agrees to a tax regime and mining laws, Venkatakrishnan said. The company will continue to “optimize” the mine plan to boost returns, he said.
AngloGold will continue to look for a joint venture partner as it doesn’t currently have the capacity to manage the project itself, Venkatakrishnan said.
“It’s the capital costs, it’s managing the risk-and-reward relationship, he said. “We’ve been open with the government about that.”