First it took the vision and now it is about following through.
Asanko Gold (TSX: AKG) showed that it is making good on its promise to find synergies and build a single mine in Ghana that joins the former Obotan and Esaase projects into one gold mine, renamed the Asanko Gold mine.
Proof of progress the company has been making comes by way of the receipt of its environmental invoice and water use permits for the Esaase deposit.
The Ghanaian authorities issued the permits, which is a crucial step towards receiving the final environmental permit. To get there Asanko will have to finalize the environmental impact statement with the comments that came out of the invoice and then submit that back to the country’s Environmental Protection Agency.
While Asanko didn’t offer details on what those comments were, it said that none of them were onerous, which is welcome news for investors and the management team as the company moves towards becoming a mid-tier producer.
It will get going on the first development phase at its flagship mine after it reaches a development decision in the third quarter of this year. With the latest invoice in hand, it can apply for a temporary mining permit to start excavating earlier.
Three water use permits were issued, which allow the company to abstract boreholes for domestic, construction and operations purposes for an initial three year period.
The clearance of this permitting hurdle is a sweet reward after acquiring its neighbor PMI Gold last year and consolidating the ground.
The plan is to build a single milling facility in two phases. Phase 1 is expected to start construction this year, following a development decision in the third quarter.
The plant will be built at Obotan near the site’s Nkran deposit. Phase 1 is made up of a 3 million tonne per year carbon in leach (CIL) processing circuit that will be fed ore from Obotan. More specifically the ore will come from satellite deposits around Nkran, with Nkran ore coming in 2016.
Phase 2 will see the expansion to a 5 million tonne per year facility that is designed to handle material from Esaase.
“We believe the company can be in production within about 2 years through Phase 1 development,” Haywood Securities Analyst Geordie Mark wrote in a research note. “A protracted development schedule to build phase 2 for production in the first quarter of 2019 is deemed prudent as additional development capital can be funded through cash flow.”
Taken as a whole the Asanko Gold mine currently has global resources that reach 10.43 million oz. of gold. Obotan has 4.51 million oz. with an average grade of 2.11 grams gold, while Esaase has 5.92 million oz. of gold with an average grade of 1.44 grams gold.
Mark expects that a future mine will average 320,000 oz. of gold over a 14 year mine life and will cost US$580 million to build with average annual cash costs coming in at US$729 per oz.
He has Asanko rated as a ‘buy’ with a $3.75 price target.
In Toronto on April 1 the company’s stock was flat at $2.30 on 127,000 shares traded.
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