Randgold Resources has told AngloGold Ashanti that it will terminate the conditional investment agreement for the redevelopment of the Obuasi mine as it didn’t meet its investment criteria.
“After undertaking a due diligence exercise into the mine and the redevelopment opportunity the mine affords, and following the work undertaken on the revised development plan, Randgold has determined that the development plan will not satisfy Randgold’s internal investment requirements,” the company said in a statement.
“Accordingly, Randgold has decided to terminate the investment agreement entered into with AngloGold Ashanti, with immediate effect.”
The decision comes after the two companies failed in their efforts to improve the project’s returns and to secure all necessary consents from the Government of Ghana that would have allowed for a feasibility decision on the redevelopment of the mine in early 2016.
AngloGold Ashanti CEO Srinivasan Venkatakrishnan said the identified improvements were not sufficient to commit a substantial investment under the prevailing market conditions.
“We have made concerted effort to unlock a new opportunity or Obuasi, and the work we have done lays a good foundation for the operation in the long term,” Mr Venkatakrishnan said.
“But in the current environment, we believe it is prudent to conserve our resources and to revisit this opportunity when the market conditions approve.”
The Minister of Lands and Natural resources of Ghana has approved the continuation of Obuasi’s limited operating phase during the first quarter 2016.
AngloGold said limited operations will be undertaken at reduced cost compared to 2015, including maintaining the operation, security, environmental management, optimising the feasibility study, as well as ongoing sustainability work.
AngloGold’s Obuasi gold mine is located in the Ashanti region of Ghana, 320 kilometres of the capital Accra. It is a large, high-grade deposit with proven and probable ore reserves of 24.53 metric tonnes at 6.7g/t for 5.29Moz.