West Africa’s largest gold mine, the Obotan Project, will be constructed early next year, with first production and ramp-up to full production in the first half of 2015.
The $300 million project by the Western Australian company, PMI Gold, made the announcement on the final day of the three day 2013 Paydirt Africa Down Under conference, taking place in Perth, Australia.
PMI Gold’s CEO, Mike Gloyne, said:“We are focused on developing a substantial West African gold business spanning three strategic project areas in south-west Ghana – in the heart of one of the world’s most prolific gold producing regions.
“Our strategic objective is to become a West African gold producer, initially by mining at the company’s flagship Obotan Gold Project, located within the Asankrangwa Gold Belt. That’s where we believe the main value is for our company and our shareholders.
The company was currently finalising finance for its Obotan Gold Project. “The strong economics of the Obotan Project provide a robust investment case, giving us confidence we will be able to secure project funding and make a final investment decision by the end of the year,” he said.
An independent Feasibility Study demonstrated a robust and viable project at Obotan with key highlights including a pre-tax net present value (NPV) of US$614 million, an internal rate of return (IRR) of 35% using a US$1,300/oz gold price and five per cent discount rate, and Proven and Probable Ore Reserves totalling 34.2Mt at 2.21g/t Au for 2.43Moz across four deposits.
The operation was forecast to produce on average 220 000 oz a year for the first five years. Total production is estimated at 2.26 million recovered ounces over an estimated 11.5 year mine life, with life-of-mine project revenue of US$2.9 billion and forecast life-of-mine cash operating costs of US$626/oz.
PMI Gold’s other two projects are the Kubi Gold Project and Asanko Gold Project. “PMI continues to progress key components of its “early works” development programme at Obotan. This is in conjunction with us reviewing all major contracts and re-tendering to take advantage of falling costs across the industry. Project financing and final environmental approvals are at an advanced stage.”
Gloyne said the final hurdle for the company at the moment was project financing. “We are currently going through due diligence for debt financing and looking for cost improvements across the entire projects. The aim is to get into cash flow as soon as we can.”
Paydirt 2013 Africa Down Under Conference is Australia’s largest mining conference, and kicked off on Wednesday, in Perth, Australia. A showcase for the $40 billion investment to date by Australian mining companies, explorers and suppliers, in co-developing Africa’s vast mineral wealth and its mining industry – and largest gathering in the world of Federal and African resources ministers and business heads outside of the African continent – the three day conference runs over two hotel venues in the Perth CBD.