New waves of production and investment in Ghana's gold mines improve sector outlook


The launch of gold production at several new mining sites and a recovery in gold prices appear to be offsetting a trend towards decline in Ghana’s gold production and revenue, while ongoing exploration backed by greenfield investments is signalling further untapped potential in the country’s gold mining. These developments, along with the government’s efforts to tackle sector challenges, are producing confidence about the outlook for gold mining.

Offsetting Tendency

Ghana’s gold production has declined in recent years thanks to falling bullion prices, ageing mines and higher operational costs induced by higher utility tariffs and a substantial number of taxes. According to the Ghana Chamber of Mines (GCM), total output fell from 3.1m oz of gold in 2014 to 2.8m oz of gold in 2015.

However, the start of gold production in new sites, including Asanko Gold’s Nkran pit and Golden Star Resources Wassa underground mine, is expected to reverse the production slowdown. Indeed, as per GCM data, Ghana’s gold output already displayed a year-on-year increase of 38.6% during the first half of 2016, going from 1.4m to 1.9m oz of gold, that is, the equivalent of $1.75bn to $2.4bn in revenue.

While gold mining in Ghana, as in other countries, suffered from the downturn in gold prices experienced in 2012, today the outlook seems more encouraging, with prices stabilising in global markets. “With the recovery of gold prices earlier in the year, surviving companies and newcomers are starting to again show interest in investing, signing stability agreements and initiating production in new sites,” Eric Asubonteng, general manager and managing director at AngloGold Ashanti Ghana, told OBG.

Greenfield Investment

In September 2016 Cardinal Resources, an Australian gold mining company, completed a $21.75m share placement aimed at financing its greenfield investment in Namdini, a gold deposit discovered in 2015 in the Bolgatanga region in Ghana. At the time of writing, the company had concluded the first phase of drilling and was expected to present an initial Joint Ore Reserves Committee resource estimate before end-2016.

New Production

Canada-based Asanko Gold began commercial production at Nkran in the Ashanti Region on April 1, 2016. The company has launched the first phase of this $295m flagship gold-mining project, producing 53,986 oz of gold during the third quarter of 2016. Company figures estimate that phase one will generate 190,000 oz of gold annually over the course of the project’s 12-year lifespan.

Company forecasts estimate that phase two of the project could increase this figure up to about 410,000 oz per year, which would place the site in the top 10 in the African continent.

In the meantime, another Canadian company, Golden Star Resources, has started pre-commercial production at its Wassa underground mine in south-western Ghana, and is expected to initiate commercial production in 2017. Wassa underground is anticipated to produce 20,000-25,000 oz of pre-commercial gold in 2016. Combined with other Golden Star operations, this should amount to an annual production of 120,000-135,000 oz of gold.

Toni Aubynn, CEO at the Minerals Commission, is also upbeat about the sector’s future. He pointed out the successful completion of Asanko Gold’s Nkran project ahead of schedule and within budget. “Other companies are actively looking into underground production, including – inter alia – Newmont and Golden Star, while Gold Fields has just signed a stability agreement,” Aubynn told OBG. “This might increase the appetite of the mining giants for underground prospecting. Chirano is already mining underground and we expect Golden Star’s Prestea and Wassa underground, as well as the Newmont Subika underground projects, which are to be brought into account some time in 2017.”


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The Report: Ghana 2017

Mining chapter from The Report: Ghana 2017