Review of operations: Ghana (PDF - 409 KB)

Review of operations

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Ghana

AngloGold Ashanti’s operations in Ghana are the Obuasi, Iduapriem and Bibiani mines, which together produced 680,000 ounces of attributable gold in 2005, at a total cash cost of $339 per ounce.

Obuasi

Description: The Obuasi mine is located in the Ashanti region of Ghana. It is primarily an underground operation, although some surface mining still takes place. Ore is processed by two main treatment plants: the sulphide plant (for underground ore) and the tailings plant (for tailings reclamation operations). A third plant, the oxide plant, is used to batch treat remnant open-cast ore and stockpiles, of which there are adequate tonnages to keep the plant operational until 2008.

Geology: The gold deposits at Obuasi are part of a prominent gold belt of Proterozoic (Birimian) volcanosedimentary and igneous formations which extend for a distance of approximately 300 kilometres in a northeast/ south-west trend in south-western Ghana. Obuasi mineralisation is shear-zone related and there are three main structural trends hosting gold mineralisation: the Obuasi trend, the Gyabunsu trend and the Binsere trend.

Two main ore types are mined:

• quartz veins, consisting mainly of quartz with free gold in association with lesser amounts of various metal sulphides such as iron, zinc, lead and copper. The gold particles are generally finegrained and are occasionally visible to the naked eye. This ore type is generally non-refractory;
• sulphide ore which is characterised by the inclusion of gold in the crystal structure of a sulphide material. The gold in these ores is finegrained and often locked in arsenopyrite. Higher gold grades tend to be associated with finer grained arsenopyrite crystals. Other prominent minerals include quartz, chlorite and sericite. Sulphide ore is generally refractory.

Operating performance

Production improved modestly during the course of the year. Initial increases came with the start of mining of the Kubi pit surface oxides and latterly as a result of some improvements in mining mix and flexibility. (In 2004, production was reported for the last eight months of the year only.)

Delayed access to high-grade areas as a result of unstable ground had a negative impact on grades, although measures were put in place to reduce dilution and more effectively identify and mine quality tonnes. Overall, however, operational performance continued to be hampered by inadequately drilled and developed reserves.

A breakdown of the motor at the semi-autogeneous mill at the main processing plant in the first quarter adversely affected tonnage throughput; this was further exacerbated by the failure of the primary crusher in the third quarter.

As a result, total production amounted to 391,000 ounces for the year, at a total cash cost of $345 per ounce, which was 13% higher than the previous year.

The gross loss, adjusted for the effect of unrealised non-hedge derivatives, was $16 million.

Capital expenditure in 2005 amounted to $78 million, mainly on infrastructural upgrades, the refrigeration project, exploration and shaft equipment.

Obuasi 2005 2004* Pay limit (oz/t)† 0.177 0.188 Pay limit (g/t) 6.06 6.43 Recovered grade (oz/t) 0.076 0.090 Recovered grade (g/t) 2.60 3.08 Gold production (000oz) 391 255 Total cash costs ($/oz) 345 305 Total production costs ($/oz) 481 426 Capital expenditure ($ million) 78 32 Total number of employees 8,295 6,747    Employees 5,852 6,029    Contractors 2,443 718 * For the eight months from May to December 2004. † Note pay limits refer to underground ore resources while recovered grade refers to the combined mill throughput which includes tailings and surface material.

Gold production (000oz) Obuasi

Total cash costs ($/oz) Obuasi

Capital expenditure ($m) Obuasi

Growth prospects

A key reason for the business combination between AngloGold and Ashanti, the development of the deeplevel ore deposits at the Obuasi mine (referred to as Obuasi Deeps), remains a major objective. Should this project proceed, it could extend the life of mine by 35 years. An investment in excess of $44 million over the next four years on further exploration and the necessary feasibility studies is required.

Depending upon the results of the feasibility study the full development of Obuasi Deeps may proceed. Initial scoping studies have indicated that the development of Obuasi Deeps will require estimated capital expenditure of around $570 million in real terms over the anticipated life of mine.

Outlook

Based on current performance, the original production target of 500,000 ounces a year is unlikely to be reached. The revised production target for 2006 is between 407,000 ounces and 423,000 ounces at a total cash cost of between $319 per ounce and $332 per ounce.

Capital expenditure in 2006 is expected to be between $88 million and $92 million, mainly on exploration, completion of the fridge plants, infrastructure upgrades and the replacement of equipment, and malaria control.

Bibiani

Description: The Bibiani mine, which is located in the western region of Ghana, 90 kilometres west of Kumasi, was restarted in 1998 as an opencast mine with a CIL plant. In addition to opencast ores, Bibiani’s resources include old tailings dumps and underground mineral potential which is presently being explored and evaluated.

Geology: The Bibiani gold deposit lies within Birimian meta-sediments and related rocks which occur in the Proterozoic Sefwi Belt of southern Ghana. Gold and gold-bearing sulphide mineralisation occurs in quartz-filled shear zones and in altered rocks adjacent to those shears. The full strike of the Bibiani structure is at least 4 kilometres. For metallurgical classification there are three main ore types at Bibiani: primary, transition and oxide. Further lithological classification gives four ore types: quartz (generally high grade), stockwork (medium-high grade), phyllites and porphyry (both low grade).

Operating performance

(Production in 2004 was reported for eight months only.) Opencast operations ceased in the main pit in January 2005. As planned, the mill processed a combination of opencast ore from the remaining pits and stockpiles as well as old tailings. A larger-thanexpected tonnage of opencast ore was available from both the satellite pits and the stockpiles and this was processed in preference to the old tailings. The satellite pits were depleted in December 2005 and it is expected that the stockpiles will be fully depleted in January 2006. The mill will process only old tailings from February 2006 onwards.

Production attributable to AngloGold Ashanti rose by 10% to 115,000 ounces. Total cash costs increased to $305 per ounce as overall volumes declined.

Gross loss, adjusted for the effect of non-hedge derivatives, was $10 million.

Capital expenditure of $6.8 million was spent mainly on the underground feasibility study and the old tailings reclamation project.

Bibiani 2005 2004* Pay limit (oz/t) 0.020 0.020 Pay limit (g/t) 0.70 0.70 Recovered grade (oz/t) 0.043 0.056 Recovered grade (g/t) 1.46 1.93 Gold production (000oz) 115 105 Total cash costs ($/oz) 305 251 Total production costs ($/oz) 482 369 Capital expenditure ($ million) 7 7 Total number of employees 602 871    Employees 462 479    Contractors 140 392 * For the eight months from May to December 2004.

Gold production (000oz) Bibiani

Total cash costs ($/oz) Bibiani

Capital expenditure ($m) Bibiani

Growth prospects

Old tailings reclamation is expected to increase to around 200,000 tonnes per month from the end of January 2006 and to deliver 3.9 million tonnes, at an anticipated yield grade of 0.6g/t, over 18 months.

A study is currently in progress to assess the viability of recommencing mining operations in the main pit by way of a cut back that would cater for the extraction of mineral resources to a depth of approximately 60 metres below the current pit floor.

Following the start of the evaluation of the opencast cut back, underground exploration and feasibility work was suspended in July 2005 and the underground mine was put on care and maintenance.

Outlook

Gold production in 2006 is expected to decrease to between 54,000 ounces and 56,000 ounces with the old tailings as the main treatment material. Total cash costs of between $297 per ounce and $309 per ounce are forecast. Planned capital expenditure, principally on the tailings embankment raise, will be between $0.5 million and $1.0 million.

With the ongoing rationalisation, the employee complement at Bibiani will reduce from 462 to 226 (excluding contractors).

Iduapriem

Description: Iduapriem mine is located in the western region of Ghana, some 70 kilometres north of the coastal city of Takoradi, and 10 kilometres south-west of Tarkwa. The mine comprises two adjacent properties, Iduapriem and Teberebie. AngloGold Ashanti has a 80% stake in Iduapriem, with 20% owned by the International Finance Corporation. AngloGold Ashanti has a 90% holding in the Teberebie mine, with the government of Ghana holding a 10% interest. The combined AngloGold Ashanti stake is 85%.

Geology: The Iduapriem and Teberebie gold mines are located along the southern end of the Tarkwa basin. The mineralisation is contained in the Banket Series of rocks within the Tarkwaian System of Proterozoic age. The outcropping Banket Series of rocks in the mine area form prominent, arcuate ridges extending southwards from Tarkwa, westwards through Iduapriem and northwards towards Teberebie.

Operating performance

At Iduapriem attributable gold production increased to 174,000 ounces, primarily as a result of improved plant availability and consequently increased throughput. (The 2004 attributable production was for an eight-month period only). This is despite the crushing and conveyor problems experienced in the second quarter. A mine-tomill study undertaken in the first half of the year focused on optimising the front-end crushing system to increase crusher and plant throughput. This was largely successful although some unexpected downstream problems have arisen which are currently being addressed.

Total cash costs increased to $348 per ounce due to a combination of below budget gold production and increases in contract mining costs and prices of major consumables such as fuel, cyanide and lime.

Gross loss, adjusted for the effect of unrealised non-hedge derivatives, improved to $2 million. Attributable capital expenditure was marginally higher at $4 million and was spent mainly on the mobilisation of additional equipment, exploration and development, and the implementation of social programmes in neighbouring communities.

Iduapriem 2005 2004* Pay limit (oz/t) 0.023 0.022 Pay limit (g/t) 0.72 0.76 Recovered grade (oz/t) 0.050 0.051 Recovered grade (g/t) 1.71 1.76 Gold production (000oz) – 100% 205 147 Gold production (000oz) – 85% 174 125 Total cash costs ($/oz) 348 303 Total production costs ($/oz) 451 423 Capital expenditure ($ million) – 100% 5 4 Capital expenditure ($ million) – 85% 4 3 Total number of employees 1,283 1,306    Employees 698 709    Contractors 585 597 * For the eight months from May to December 2004.

Gold production (000oz) Iduapriem (attributable)

Total cash costs ($/oz) Iduapriem

Capital expenditure ($m) Iduapriem (attributable)

Growth prospects

A scoping study will be undertaken to evaluate the economics of exploiting the considerable low-grade mineral resources of the other properties which lie in the Tarkwaian conglomerates extending below the economic limit of the pits.

Outlook

At Iduapriem, attributable gold production is expected to rise to between 185,000 ounces and 193,000 ounces in 2006, at a total cash cost of between $302 per ounce and $314 per ounce. Capital expenditure of between $14 million and $15 million will be spent mainly on tailings dam wall lifts and upgrades to the crushing plant and milling circuit.