Projects

Southern Ashanti Mine Gold Project, Ghana

The Southern Ashanti Gold Project (SAGP) is located 280km west of Accra, the capital city of Ghana, Africa. The project

Producer of

Gold

Location

Ghana, West Africa

Operator

Endeavour Mining

Owners

Endeavour Mining (90%) and Government of Ghana (10%)

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The Nzema Gold Project 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.

Endeavour Mining owns 90% of the project, while the Government of Ghana owns the remaining 10%. Adamus Mining, which was merged with Endeavour in 2011, 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.

The project is expected to have a life of ten years based on 2011 reserve estimates. In May 2012, Endeavour Mining discovered new oxide zones with gold mineralisation at the cleared Salman village site. The new mineralisaiton is expected to extend the life of the Nzema mine significantly.

Feasibility study

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

A feasibility study of the Nzema 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.

"Endeavour Mining 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 Nzema gold project.

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. The resettlement of the village was completed in March 2012.

A 3.5MW Outotec semi-autogenous grinding mill was the first asset acquired at the site. The mechanical installation of the mill was completed in October 2010.

A route was finalised to supply power to the site from Essiama by a 12.2km power line. The processing plant was successfully connected to the grid in December 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.

Geology and reserves

The mine 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 the project are the Salman and Anwia.

The Nzema gold mine’s total measured and indicated mineral resources are 48.3 million tons (mt) at a grade of 1.3g/t, containing 2.064 million ounce (moz) of gold. The inferred resources are 17.7mt at a grade of 1.1g/t, containing 0.652moz of gold. The proven reserves are 14.6mt at a grade of 2.0g/t, containing 0.96moz of gold.

Open pit mining

African Mining Services was awarded the open pit mining contract worth $58m for the Nzema project, in October 2010. The contract period is initially for three years.

Production

First gold was poured at the Nzema project in January 2011. The project achieved full scale commercial production in April 2011. It produced 90,026oz of gold in 2011. The production in 2012 is expected to be in the range of 92,000oz to 102,000oz.

Costs

The estimated total capital cost of the project was $80m-$95m. Endeavour Mining utilised a $57m loan facility to develop the mine.
The feasibility study estimated the production cost at $354 per ounce of gold. The actual production cost for the nine month period from April 2011 to December 2011, however, turned out to be $585 per ounce of gold.

Processing

The processing plant uses gravity flotation and carbon-in-leach methods to separate gold from the ore. It has a processing capacity of 1.6 to 2.1 million tons per annum. The processing operations at the plant include crushing, milling, gravity recovery, pre-leach thickening and a six-stage CIL circuit.

Future developments

Endeavour Mining has identified sulphide gold mineralisation at the Salman trend of the Nzema project. The mineralisation is identified below the principal oxide pits of the Salman deposit. The company has commenced preliminary economic assessment for gold production from the sulphide deposits. The study is expected to be completed by the end of 2012. The Sulphide project is expected to result in a significantly increase in the production of gold from Nzema.

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