Southern Ashanti Gold Project, Ghana

Key Data

The Southern Ashanti Gold Project (SAGP) is located 280km west of Accra, the capital city of Ghana, Africa. The project can be accessed through 80km of sealed roads from Takoradi city and Tarkwa mining centre.

Adamus Resources owns 90% of the project, while the Government of Ghana owns the remaining 10%. Adamus also acquired the Salman, Anwia and Anwia South concessions in 2003, 2004 and 2006, respectively.

Prior to Adamus, the deposit was explored by companies including BHP Billiton, Resolute Mining, Semafo, Samax and Ashanti Goldfields. Except for the Salman-Akongo pit chain that was mined in the 1890s, no other deposit has been mined.

Feasibility study

"Drilling at the project site was successfully completed in 2008."

A feasibility study of the mine began in 2006. The study was conducted by Adamus in coordination with Lycopodium Engineering, Knight Piesold Consulting, SGS Environment and Mining Solutions Consultancy.

The study revealed an expected annual gold production of 100,000oz during the first five and a half years of the mine life, treating the Anwia and Salman deposits over six and a half years.

Progress

Drilling at the project site was successfully completed in 2008. Adamus was granted mining licences in April 2008. It also received an Environmental Protection Agency permit in December.

"Adamus Resources owns 90% of the project, while the Government of Ghana owns the remaining 10%."

In August 2009, Adamus, with lead partner Helmsec Global, issued 115 million shares at 35 cents per share and raised A$40.25m to progress the SAGP in Ghana.

Construction work at the site commenced in October 2009. This included relocating the Salman village, constructing the processing plant and laying a power supply route from the Ghanaian National electricity grid.

About 60% of the site cleaning work for the relocation has been completed.

The site is being surveyed and the company is negotiating compensation for cash crops. After site clearance, construction work is expected to commence in the first quarter of 2010.

A 3.5MW Outotec semi-autogenous grinding mill was the first asset acquired at the site. The mill is expected to be reconstructed in 45-50 weeks time.

A route has been finalised to supply power to the site from Essiama. The power line is expected to be laid by the third quarter of 2010.

EPC contract

In October 2009, Adamus awarded the engineering, procurement and construction management contract for its processing plant to Lycopodium Engineering's subsidiary Lycopodium Minerals. Production is expected to commence in 2011.

Geology and reserves

The SAGP has a contiguous block of Adamus tenements covering 665km2 located at the southern end of the Ashanti gold belt with estimated gold resources crossing 100Moz. The tenements of this project lie 40km south of Bogosu and Prestea deposits. The main deposits of SAGP are the Salman and Anwia.

The SAGP’s total measured and indicated mineral resources are 30.2MT at a grade of 1.78/t, containing 1.75Moz of gold. The inferred resources are 6.98MT at a grade of 1.62/t, containing 0.36Moz of gold. The proven and probable reserves are 16.54MT at a grade of 2.01g/t, containing 1.07Moz of gold.

The cut off grades are expected to be 0.8g/t Au.

Costs

The feasibility study has estimated that it will cost $354 to produce an ounce of gold. The estimated total capital cost of the project will be $80m-$95m.

Mining and processing

The processing operations at the plant will include crushing, milling, gravity recovery, pre-leach thickening and a six-stage CIL circuit.

Future developments

The plant and the mill are expected to be completed by end of 2010. Gold production at the plant is expected to commence in early 2011.

Drilling at the project site was successfully completed in 2008.

The Southern Ashanti Gold Project is located 280km west of Accra, Ghana.

The estimated capital cost of the project will be $80m-$95m.