AngloGold Ashanti Ltd. outlined a framework agreement with the government of Ghana for redeveloping the Obuasi gold mine into a modern operation.
The deal covers development, tax concession, security and reclamation security, and environmental permits are expected shortly. Some changes need to be approved by the country's Parliament, the company said Feb. 20.
A feasibility study into the redevelopment pegged internal rates of return of between 16% and 23% at real gold prices of between US$1,100/oz and US$1,240/oz.
Initial project CapEx over the first 2.5 years is expected between US$450 million and US$500 million to complete two phases of the project, after which an extended project CapEx of US$94 million will be required through to year six.
The Obuasi ore body hosts 5.8 million ounces of ore reserves and 34 million ounces of mineral resources.
Mine production for the first 10 years will focus on the upper ore bodies and is expected to average 350,000 to 450,000 ounces at an average head grade of 8.1 g/t of gold. Output in the next 10 years will average 400,000 to 450,000 ounces at total average cash costs between US$590/oz and US$680/oz, while all-in sustaining costs are expected between US$750/oz and US$850/oz.
The first stage of the project, expected to take 18 months, will enable production at a rate of 2,000 tonnes per day for the first operating year.
The second phase will take the production rate to 4,000 tpd over a further 12 months, with a ramp-up to 5,000 tpd over the following three years.
First gold pour from the Obuasi project is expected in the third quarter of 2019.
Meanwhile, AngloGold intends to undertake a feasibility study at its Gramalote project in Colombia after estimating a maiden ore reserve of 1.8 million contained gold ounces.
The gold is contained in 63.7 million tonnes of ore at 0.86 g/t of gold, according to the Feb. 20 release.
The company expects total production of 4.22 million gold ounces from the Gramalote project over the life of the mine at a rate of between 300,000 and 450,000 ounces for the first eight years.
The feasibility study will include an optimization of all metrics, including capital and costs, the company said.
The company intends to employ open pit mining. No capital has yet been committed to the development.
AngloGold owns 51% of Gramalote, and B2Gold Corp. owns the remainder.