1 PRESS RELEASE ASANKO GOLD EXPANSION DFS CONFIRMS ROBUST ORGANIC GROWTH PLAN AND STRONG CASH GENERATION Vancouver, British Columbia, June 5, 2017 – Asanko Gold Inc. (“Asanko” or the “Company”) (TSX, NYSE MKT: AKG) is pleased to announce the Definitive Feasibility Study (“DFS”) results of a staged expansion at the Asanko Gold Mine (the “AGM”), located in Ghana, West Africa, which confirms the AGM is a large scale, long life quality asset with a viable and robust two stage organic growth plan and strong cash generation capability. The Expansion DFS is comprised of two growth projects, Project 5 Million and Project 10 Million. Project 5 Million: • Designed on modular basis allowing plant upgrade and development of Esaase as discrete packages • Processing plant upgrade to 5Mtpa - US$22 million capital cost - Approved and under construction - Completion in Q4 2017 • Development of large scale Esaase deposit - Includes construction of overland conveyor linking Esaase to processing facility - Capital cost of US$120 million - Capital leverages the Company’s ability to further grow production at any time in the future • Averages 230,000oz/pa over 20 year mine life at an AISC 3 of US$968/oz • Robust business on standalone basis with a long life - Over US$80 million average annual projected pre-tax cash flow from operations at steady state - 13% after-tax incremental IRR, NPV of US$658 million at 5% discount rate and a gold price of US$1,250/oz Project 10 Million: • Modular expansion with full flexibility on timing of project execution - Construction of additional 5Mtpa CIL plant to double processing capacity to 10Mtpa - Capital cost of combined growth projects, P5M & P10M, of US$350 million • Averages 450,000oz/pa at steady state for eight years at an AISC 3 of US$890/oz • US$185 million average annual projected pre-tax cash flow from operations at steady state • 20% after-tax incremental IRR, NPV of US$811 million at 5% discount rate and a gold price of US$1,250/oz • Timing dependent on ability to predominantly fund from internal cash flow, supported by debt financing and market conditions Commenting on the announcement, Peter Breese, President and CEO, said “Our growth plan has been designed to be fully flexible so that it can be advanced in modular components, according to cash flow generation, balance sheet strength, financing opportunities and market conditions. Our first expansion module, the plant upgrade to 5Mtpa, is a great low cost capital efficient project which is fully funded, delivering a 40% increase in throughput. We expect to see some volumetric increases in Q3 2017, ahead of full commissioning in Q4 2017.
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20170605 NR Expansion DFS Complete Press Release FINAL€¦ · CJM Consulting Pty Ltd. (“CJM”) of Johannesburg, South Africa) is the Qualified Person for the sign off of the Esaase
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- OverUS$80millionaverageannualprojectedpre-taxcashflowfromoperationsatsteadystate- 13% after-tax incremental IRR, NPV of US$658 million at 5% discount rate and a gold price of
• Averages450,000oz/paatsteadystateforeightyearsatanAISC3ofUS$890/oz• US$185millionaverageannualprojectedpre-taxcashflowfromoperationsatsteadystate• 20% after-tax incremental IRR, NPV of US$811 million at 5% discount rate and a gold price of
andmarketconditionsCommenting on the announcement, Peter Breese, President and CEO, said “Our growth plan has beendesigned to be fully flexible so that it can be advanced inmodular components, according to cash flowgeneration,balancesheetstrength,financingopportunitiesandmarketconditions.Ourfirstexpansionmodule,theplantupgradeto5Mtpa,isagreatlowcostcapitalefficientprojectwhichisfullyfunded,deliveringa40%increaseinthroughput.WeexpecttoseesomevolumetricincreasesinQ32017,aheadoffullcommissioninginQ42017.
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TheBoardisreviewingtheoptimaltimingforthedevelopmentofEsaaseandtheconveyor,aswellasProject10Million,andtherespectiveinvestmentdecisionswillbedependentontheCompany’scashpositionandfinancingopportunities.ThisreviewwillenableustoprudentlybolsterourliquiditypositiontooverUS$100millionbyQ22018withoutoverextendingthebalancesheetordilutingshareholders,therebysecuringourgrowthpipelinetoultimatelydeliveraproductionprofileofover450,000ozayear,makingtheAsankoGoldMineoneofthelargestminesinAfrica.”SummaryTheExpansionDFSiscomprisedoftwodiscretegrowthprojects,Project5MillionandProject10MillionandisbasedontheoptimalNPVonacapitalunconstrainedbasis fortheAGMwhichassumesthesequentialdevelopmentofeachproject.However there is complete flexibilityon the timingof thedevelopmentofEsaaseandtheconveyor,aswellastheProject10Millionplantexpansion.AconstructiondecisiontoproceedwillbeattheBoard’sdiscretionanddependentonanoptimizedbalancesheet,financingopportunitiesaswellasfavourablemarketconditions.Project5MillionProject5Millioncomprisestwomodules,theupgradeoftheexistingcarbon-in-leach(“CIL”)processingplantfromadesignof3milliontonnesperannum(“Mtpa”)to5Mtpa,andthedevelopmentofthelargeEsaasepit, which includes the construction of an overland conveyor from Esaase to the processing facility.Productionaverages230,000oz/paovera20yearlifeofmine(“LoM”)atanAISC3ofUS$968/oz.Theplantupgradeto5Mtpahasbeenapprovedandiscurrentlyprogressingaheadoftheoriginalschedule.SomevolumetricincreasesareexpectedinQ32017,withcommissioningofthefull5MtpaplantdueinQ42017.BasedonFrontEndEngineeringDesign(“FEED”),thefinalcapitalcostestimatesareUS$22millionfortheplantupgrade,US$78millionfortheconveyorandUS$32millionforthedevelopmentoftheEsaasedepositandassociatedinfrastructure,withatotalprojectcapitalcostofapproximatelyUS$150million.Table1–SummaryofProject5MillionProductionMetricsonaStandaloneBasis
IncrementalIRR % 13Note:BasedonUS$1,250/ozgoldprice*CorporateG&AnotincludedintheeconomicassessmentGoldPriceSensitivity(Project5M)TheNPV5%at various goldprices is shownbelow. AUS$100/ozmovement in thegoldprice results in amovementofapproximatelyUS$199millioninNPV.
AboutAsankoGoldInc.Asanko’svisionistobecomeamid-tiergoldminingcompanythatmaximizesvalueforallitsstakeholders.TheCompany’sflagshipprojectisthemulti-millionounceAsankoGoldMinelocatedinGhana,WestAfrica.Asanko ismanagedbyhighlyskilledandsuccessful technical,operationalandfinancialprofessionals.TheCompany is strongly committed to the highest standards for environmental management, socialresponsibility,andhealthandsafetyforitsemployeesandneighbouringcommunities.Notes:1Non-GAAPPerformanceMeasuresTheCompanyhasincludedcertainnon-GAAPperformancemeasuresinthispressrelease, includingworkingcapital,adjustednetincome(loss),adjustednetincome(loss)pershare,operatingcashcosts,totalcashcosts,all-insustainingcostsperounceofgoldproducedandall-insustainingmargin.Thesenon-GAAPperformancemeasuresdonothaveanystandardizedmeaning.Accordingly,theseperformancemeasuresareintendedtoprovideadditionalinformationandshouldnotbeconsideredinisolationorasasubstituteformeasuresofperformancepreparedinaccordancewithGAAP.
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2OperatingCashCostsperounceandTotalCashCostsperounceOperatingcashcostsarereflectiveofthecostofproduction,adjustedforshare-basedpaymentsandby-productrevenueforeachounceofgoldsold.Totalcashcostsincludeproductionroyaltiesof5%.3All-inSustainingCostsPerGoldOunceTheCompanyhas adopted the reportingof “all-in sustaining costsper goldounce” (“AISC”) asper theWorldGoldCouncil’s guidance. AISC include total cash costs, corporate overhead expenses, sustaining capital expenditure,capitalizedstrippingcostsandreclamationcostaccretionforeachounceofgoldsold.Corporateoverheadexpensesnotincludedineconomicassessment.4A‘MineralReserve’istheeconomicallymineablepartofaMeasuredorIndicatedMineralResourcedemonstratedbyatleastaPreliminaryFeasibilityStudy.Itincludesdilutingmaterialsandallowancesforlossesthatmayoccurwhenthematerial is mined. DRA is of the opinion that the classification ofMineral Reserves as reported hereinmeets thedefinitionsofProvenandProbableMineralReservesasstatedbytheCIMDefinitionStandards(2005).MeasuredandIndicatedMineralResourcesthatarenotMineralReserveshavenotdemonstratedeconomicviability.InferredMineralResourcesareexcludedfromtheMineralReserveEstimate.QualifiedPersonsStatementMalcolmTitley(CSAGlobalPrincipalGeologist;AIG),istheQualifiedPersonforthesignoffoftheNkran,AkwasisoandDynamiteHillMineralResourceEstimates.CharlesJ.Muller,(B.Sc.Geology(Hons),PR.Sci.Nat.,MGSSA,aDirectorofCJMConsultingPtyLtd.(“CJM”)ofJohannesburg,SouthAfrica) istheQualifiedPersonforthesignoffoftheEsaaseMain,EsaaseBandD zones,Abore,Adubiaso,AdubiasoExtension,AsuadaiandNkranExtensionMineralResourceEstimates. The Mineral Reserve Estimates are reported in accordance with Canadian National Instrument 43-101requirementsandtheSouthAfricanCodeofReportingofExplorationResults(SAMREC),whichisconsistentwiththeCIMEstimationBestPracticeGuidelinesinCanada.MrTitleyandMr.Mullerhavereviewedandapprovedthetechnicalcontentofthisnewsrelease.PhilBentley,AsankoExecutive:GeologyandResources(Pr.Sci.Nat.;FSAGS)istheAsankoQualifiedPersonunderNI43-101guidelineswhoassumestechnicalresponsibilityforGeologicalandMineralResourcecontentsofthisnewsrelease.TheMineralReserveStatementswereallpreparedbyThomasObiri-Yeboah,B.Sc.MiningEngineering(Hons),PR.Eng,aSeniorMiningEngineerofDRAMining(Pty)Ltd.(“DRA”)ofJohannesburg,SouthAfrica.TheMineralReservesarereported in accordancewith CanadianNational Instrument 43-101 requirements,which is consistentwith the CIMEstimationBestPracticeGuidelinesinCanada.FrederikFourie,AsankoSeniorMineEngineer(Pr.Eng.)istheAsankoQualifiedPersonunderNI43-101whoassumesresponsibilityfortheMineralReservecontentsofthisnewsrelease.Mr.Obiri-Yeboahhasreviewedandapprovedthetechnicalcontentofthisnewsrelease. TheinformationinthisnewsreleasethatrelatestothemetallurgyandprocessingisbasedoninformationcompiledbyMrGlennBezuidenhout,whoisaMetallurgistandaFellowoftheSouthAfricanInstituteofMiningandMetallurgy.MrBezuidenhoutisaDirectorofDRAMineralProjects.MrBezuidenhouthassufficientexperiencewhichisrelevanttothestyleofmineralizationandtypeofdepositunderconsiderationandtotheactivitywhichheisundertakingtoqualifyand is a "QualifiedPerson"underNational Instrument43-101– “StandardsofDisclosure forMineral Projects”.MrBezuidenhouthasreviewedandapprovedthetechnicalcontentofthisnewsrelease.TheinformationinthisnewsreleasethatrelatestotheeconomicassessmentisbasedonfinancialmodelscompiledbyMrGodknowsNjowa,VenmynDeloitte.MrNjowahas acquired thequalificationsofMaster inMining Engineeringspecializing in mineral project evaluation, Bachelor of Science honours in Mining Engineering and ProfessionalAccountingQualificationswiththeCharteredInstituteofSecretariesandAdministratorsandhas13years’experienceinmineralprojectevaluation.InadditionMrNjowaisaregisteredProfessionalEngineerregisteredwithEngineeringCouncilofSouthAfricaandamemberofboththeSouthAfricanInstituteofMiningandMetallurgyandtheAustralianInstituteofMiningandMetallurgy.MrNjowahassufficientexperiencetopreparethefinancialsectionsasdisclosedinthisnewsrelease.Theeconomicassessmentisbasedontechnicalandcostinformationsigned-offbyAsanko’stechnicalconsultantsandincludeseconomicinputs(includingbutnotlimitedtotaxationrates,governmentroyalties,commoditypricesandforeignexchangerates)providedbyAsanko.Mr.NjowahasnotconductedatechnicalduediligenceoftheeconomicandtechnicalassumptionsreceivedfromAsankoanditsadvisors.MrNjowaconsentstotheinclusionofsuchfinancialinformationinthisreleaseintheformandcontextinwhichitappears.
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Forward-LookingandotherCautionaryInformationThis release includes certain statements thatmay be deemed "forward-looking statements". All statements in thisrelease,other thanstatementsofhistorical facts, thataddressestimated resourcequantities,gradesandcontainedmetals,possiblefuturemining,explorationanddevelopmentactivities,areforward-lookingstatements.AlthoughtheCompanybelievestheforward-lookingstatementsarebasedonreasonableassumptions,suchstatementsshouldnotbeinanywayconstruedasguaranteesoffutureperformanceandactualresultsordevelopmentsmaydiffermateriallyfromthoseintheforward-lookingstatements.Factorsthatcouldcauseactualresultstodiffermateriallyfromthoseinforward-looking statements include market prices for metals, the conclusions of detailed feasibility and technicalanalyses,thetimelyrenewalofkeypermits,lowerthanexpectedgradesandquantitiesofresources,miningratesandrecoveryratesandthelackofavailabilityofnecessarycapital,whichmaynotbeavailabletotheCompanyontermsacceptabletoitoratall.TheCompanyissubjecttothespecificrisksinherentintheminingbusinessaswellasgeneraleconomicandbusinessconditions.FormoreinformationontheCompany,InvestorsshouldreviewtheCompany'sAnnualForm40-F filingwith theUnited States Securities Commission and its home jurisdiction filings that are available atwww.sedar.com.NeitherTorontoStockExchangenortheInvestmentIndustryRegulatoryOrganizationofCanadaacceptsresponsibilityfortheadequacyoraccuracyofthisrelease.CautionaryNotetoUSInvestorsRegardingMineralReportingStandards:Asankohasprepareditsdisclosure inaccordancewiththerequirementsofsecurities lawsineffect inCanada,whichdifferfromtherequirementsofUSsecuritieslaws.TermsrelatingtomineralresourcesinthispressreleasearedefinedinaccordancewithNationalInstrument43-101-StandardsofDisclosureforMineralProjectsundertheguidelinessetout in the Canadian Institute of Mining, Metallurgy, and Petroleum Standards on Mineral Resources and MineralReserves.TheSecuritiesandExchangeCommission(the“SEC”)permitsminingcompanies,intheirfilingswiththeSEC,todiscloseonlythosemineraldepositsthatacompanycaneconomicallyandlegallyextractorproduce.Asankousescertainterms,suchas,“measuredmineralresources”,“indicatedmineralresources”,“inferredmineralresources”and“probablemineralreserves”,thattheSECdoesnotrecognize(thesetermsmaybeusedinthispressreleaseandareincluded in the public filings of Asanko which have been filed with securities commissions or similar authorities inCanada).
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SummaryoftheExpansionDefinitiveFeasibilityStudyfortheAsankoGoldMine,Ghana,WestAfricaIntroductionTheCompanyengagedDRAMineralProjects(“DRA”)tomanagetheExpansionDefinitiveFeasibilityStudy(“DFS”)oftheAsankoGoldMine(“AGM”)inGhana,WestAfrica.DRAweretheEPCMcontractorsfortheconstruction of the existing CIL processing plant and associated infrastructure, which was successfullyconstructedandramped-upaheadofscheduleandunderbudget.TheExpansionDFSiscomprisedoftwodiscretegrowthprojects,Project5MillionandProject10Million.Project5Millionconsistsoftwomodules,theupgradeoftheexistingcarbon-in-leach(“CIL”)processingplantfromadesignof3milliontonnesperannum(“Mtpa”)to5MtpaandthedevelopmentoftheEsaasepitandtheoverlandconveyor.Project10Millionistheconstructionofasecondreplica5MtpaCILplanttodoubleprocessingcapacitytoatotalof10Mtpa,withacommensurateincreaseinminingoperations.
TheAGMMineralResourceEstimate(“MRE”)wasupdatedatDecember31,2016(seenewsreleaseFebruary24, 2017) to reflect depletion from the first two years ofmining operations, the application of updatedconstrainingparameters forresourcemodelling in linewithbestpractices,andthe inclusionof thethreedepositsdiscoveredin2016;Akwasiso,NkranExtensionandAdubiasoExtension,aswellastwoadditionalpitsatEsaase.PreviousMREsontheAGMorebodieswereunconstrained.BasedonCSAGlobal’srecommendations,Asankohasadopteda0.5g/tcut-offandappliedUS$2,000/ozgoldpriceasaconstrainttoallitsMRE.TheMineralReservesareestimatedwithinthepitshellataforwardlookingUS$1,300/ozgoldprice.InApril 2017, theMRE forAkwasisowas updated to incorporate the results of a successful infill drillingprogramthatincreasedresourcesby79%.TheMRE forNkran,AkwasisoandDynamiteHill hasbeen compiledby independentexpertsCSAGlobal,(“CSA”),aleadingmineralresourceconsultinggroup.TheMREforEsaaseMainhasbeencompiledbyCJMConsulting(“CJM”)andauditedbyCSA.TheMREfortheremainingsatellitedepositsisbasedonthe2014CJMestimation.89%oftheAGMMREhasbeencompiledand/orauditedbyCSA.Table1:AsankoGoldMineGlobalMineralResourceEstimate(asatApril25,2017)
Whenoptimizingthevariouspitsizesandcut-offgradeoptionsfortheNkranpit,eachpitshellwasassessedatcut-offgradeintervalsof0.05g/tfrom0.50g/tto0.85g/t.TheNPVofeachpit,basedon1Mtoretonneincrements,wasthendeterminedandcomparedatthevariouscut-offs.ThisoptimizationessentiallytradesoffheadgradereductionagainstreducedstripratiosforthebestNPV.TheabovetableshowsthatforthesameoretonnesandessentiallythesameNPV,thereductionofheadgradefrom2.03g/tdownto1.94g/tisoffsetbythereductioninstripratioandthesubsequentreductioninthecostsperonceproduced,US$812/ozdowntoUS$759/oz.InthecaseofNkran,the23MtoforeproducedthehighestNPVoptionwithintherequiredcostperproducedounce range, and then formed the basis of the subsequent design pit used for the reserves andminingschedule.Allpitswentthroughthesameoptimizationprocesswithanadditionallayerofcomplexityinthecaseofthepitscontainingsignificantquantitiesofoxides.Theevaluationalsothendeterminedtheoptimalcut-offgradebyrocktype,i.eoxidesandfreshoreswereevaluatedindependently.Project5MillionProject5Millionconsistsoftwomodules:
DevelopingtheEsaasePitTheEsaasedeposit,discoveredbyAsankoin2008,isthelargestdepositwithintheAGM.Itisagreenfielddepositthathasnotbeenpreviouslymined,evenbysmallscaleminers.Locatedapproximately27kmsfromtheprocessingfacility,Esaasewillbeover3kmstrikelengthandconsistofthreepits,South,MainandNorth,andtwosatellitepitsEsaaseBandDzones.MiningoperationsatEsaasewillinitiallymineoxideoretoopenupthedepositandthenmoveintomorecompetent fresh ore. The mining schedule will allow both oxide and fresh ore to be delivered to theprocessingfacility.Duringthefirstyearofoperations,orewillbeminedprimarilyfromtheSouthernLobeofthemainEsaasepit,resultinginafeedgradetothemillof1.4g/tgoldatathroughputrateof2Mtpaofoxide/transitionalorefeed.ThebalanceoftheorewillbeprovidedbyNkran,AkwasisoandDynamiteHill.The Esaase deposit will bemined utilizing a conventional truck and shovel surfaceminingmethod. Theprimaryminingfleetwillinitiallydeliverthe2Mtperannumorerequirementandthenstepupto5MtperannumasoresourcesfromNkranandthesatellitepitsaredepleted.Thefleetwillultimatelycomprisethree300tonneclassexcavatorsandtwenty-eight90tonnedumptrucks,supportedbyancillaryequipmenttomaintainthisminingrate.Gradecontroldrillingtogetherwithexpandedlaboratoryfacilitiesattheprocessingfacilitywillbeusedtodelineatetheorefromthewaste.Oreandwastewillbedrilledandblasted,thenloadedandhauledtoeithertherun-of-mine(“ROM”)padorthewastedumps.ROMorewillbetippedontotheROMpadstockpilesandthere-handledinitiallyintoamobilecrusher.Thepermanentprimarycrusherandsecondarycrushingstationwillbeaddedtothecircuitoncemorecompetentfreshrockisbeingminedandprocessed.ROMorewillbeprimarycrushed(-150mm)andsecondarycrushed(-90mm)atEsaaseandthentransferredtotheexpandedcentralprocessingfacilityonanindustrystandard,troughedoverlandconveyor.Wastewillbehauledtotwowastedumppositionssituatedincloseproximitytothepittoreduceoperatingcosts.Benchheightsemployedarebasedongeotechnical recommendations,miningequipmentconsiderations,gradecontroldrilling,effectivedrillandblastandoredilutionconsiderations.Oxidematerialwillbeminedwith6mbenchesatanoverall slopeangleof40.4°,while freshcompetentmaterialwillbeminedat6mbencheswitha24mstackheightandcompetentslopeanglesfortheNWwallof50.0°(geologicalhanging-wall)andfortheSEwallof56.3°(geologicalfoot-wall).Pit dewatering has been provided for the Esaase pits and is integrated with the overall storm watermanagementphilosophydevelopedfortheProject.TheaverageminingcostforEsaaseovertheLoMisestimatedatUS$3.29pertonnemined(oreandwaste).Theminingcapitalandoperatingcostestimates,miningscheduleandEsaaseMineralReserveEstimatewerepreparedbyindependentconsultantsDRA(MiningDivision)(Pty)LtdfromJohannesburg,SouthAfricaandbasedonproductivityandcostestimatesreceivedfromtheminingcontractorsexecutingthecurrentmineplanatNkran.
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OverlandConveyorAnoverlandconveyorwilltransportorefromtheEsaasepittothecentralprocessingfacility.Theconveyorroute has been designed around the optimum geotechnical considerations and the AGM’s 11 pits. Theconveyorwillbeapproximately27kmlongandwillbeconstructedwithina12meterfencedservitude.AnoverheadpowerlinewillrunalongtheconveyorprovidingpowertotheconveyorandtheEsaasesite.Therewillbeanumberofpedestrianandroadcrossingsalongtheroute.The conveyor will have a maximum capacity of 1,200 tonnes per hour of ore from Esaase and will becontrolledwithavariablespeeddrive.Dustsuppression,spillagecontrolandvibrationmonitoringhavealsobeenincorporatedintothedesigntobeenvironmentallycompliant.The constructionof the conveyor, including commissioning, is scheduled to take18months.Asankohasappointed ELB South Africa (“ELB”) as the EPCM for the conveyor. ELB recently designed, installed andsuccessfullycommissioneda26kmcoalconveyorinSouthAfrica.UpgradingtheProcessingPlantProject5Millionenvisagesupgradingtheprocessingplanttoincreasethroughputfromadesignof3Mtpa(currentlyrunningat20%abovecapacityat3.6Mtpa)to5Mtpa.OrefeedwillinitiallycomefromtheNkranpit,AkwasisoandDynamiteHilluntilEsaaseiscommissioned.TheoxideorecomingfromEsaasewillbefedontoastockpileatthemine.Atunnelfeederarrangementwillfeedtheoretothemills.Anumberofperipheralequipmentupgradestotheprocessingplantarerequired. Inthemillingareathecyclone clusterwill beupgraded.An additional gravity screen andKnelson concentrator togetherwith asecondIntensiveLeachReactor(“ILR”)willalsobeinstalledtomaintainthegravityrecovery.Anincreasedpipeline diameter from the cyclone overflow to the pre leach thickener will be installed. The thickenerunderflowpipe to theexistingCILwill be replaced toa largerdiameter toaccommodate the increase involumetric flowrate. The CIL intertank pump cell screenswill be increased from13m2 to 14.5m2 and anadditional tailings pump train and pipeline will be installed. The original pre-oxidation tank has beenconvertedintoaleachtank,maximizingresidencetimeinthecircuit.Anadditionalelectrowinningcellandassociatedpipeworkwillbeinstalledinthegoldroom.Anadditional5tonneperdayoxygenplantwillalsobeincludedaspartoftheupgrade.Allthesemodificationswillbeinstalledduringnormalplantscheduledmaintenance.Therecoveryforeachoretypehasbeendeterminedbythecurrentperformanceoftheprocessingplant,metallurgical testworkperformedatALS inPerth,Australiaandhistorical information fromthepreviousoperatorResolute.Inaddition,extensiveco-leachandblendratiotestworkwascarriedoutatALSinPerth,Australia.Table3:Project5MillionProcessPlantRecovery
Goldproduced ‘000oz 242 268 240 233 276 4,849*differenceintonnesduetostockpileinventoryin2017Note:Asanko’s2017productionguidanceis230–240,000ouncesPowerAllincomingpowerisprovidedbytheexisting161kVpowerlinefromObuasi,whichissufficientfortheplantupgrade.Powerdemandfortheplantupgradeto5Mtpathroughputincreasesbyapproximately4MW,from16MWto20MW.AspartoftheEsaaseinfrastructureupgrade,a33kVoverheadpowerlinewillbelaidalongtheservitudeoftheconveyorandwillprovidepowertotheconveyorandtheEsaasesite.Theexistingemergencyback-upgeneratorswillbecapableofsupplyingpowertostrategicdrivesintheeventofapoweroutage.PermitsMiningoperationsatEsaaseandtheoverlandconveyorarefullypermitted, followingreceiptofboththeEnvironmental Permit and the Mine Operating Permit in February 2017. All the satellite deposits havereceivedthenecessaryapprovalsandpermitstocommencemining.Noadditionalpermitsarerequiredfortheplantupgradeto5Mtpa.CapitalCostThe total capital cost for Project 5Million on a standalone basis is US$150million, based on Front EndEngineeringandDesignandaControlledBudgetEstimate. The increase in the capital cost, compared topreviousestimates,isduetoachangeinRand:Dollarexchangerateanddetaildesignonthebulkearthworksalongtheconveyorservitude.Table5:Project5MillionCapitalCosts
AISC3 968*Notes:*CorporateG&Anotincludedintheeconomicassessment-Mining unit costs are provided on a cash basis, ie. all of themining expenses planned for the year arereportedasoperatingcosts. Inpractice,theCompanyexpectstorecordsomeofthewastestrippingeachreporting period as capitalized stripping, which will be shown as sustaining capital for AISC reportingpurposes.-For2017,theCompanyhasissuedAISCguidanceofU$880-$920/oz.-LoMCorporateG&AexpenseshavebeenestimatedatUS$7.9millionperyear.AnnualCashFlowTheforecastedannualcashflows,basedonaUS$1,250/ozgoldpriceandaftertaxesandapplicableroyalties,arelaidoutinAppendix2.GoldPriceSensitivity(Project5M)TheNPV5%at various goldprices is shownbelow. AUS$100/ozmovement in the goldprice results in amovementofapproximatelyUS$199millioninNPV.
Note:BasedonUS$1,250/ozgoldpriceProject10MillionProject10Millionconsistsoftheconstructionofanadditionalmilling,gravity,CILcircuittotreatanadditional5MtpaoforefromtheEsaasepit,whichwillincreasetheprocessingfacility’stotalcapacityto10Mtpa.ThesecondprocessingfacilitywillbebuiltalongsidetheexistingplantandwillleverageofftheinfrastructureandoverheadsalreadyinplaceattheAGM.TheexistingCILprocessingfacilityisindustrystandardtechnologyandhasperformedaboveexpectationsinbothrecoveryandthroughput,hencethedecisiontoreplicatethisfacilityforProject10Million.Thisplantselection represents a very low riskoptionas themajorityof theequipment is duplicatedand theplantoperatorsandmaintenancestaffareveryfamiliarwithalltheequipmentinstalled.Synergieswillberealizedthroughcommonsparesholdingandcommonreagents.Thenewprocessingcircuitwillconsistoftwo5.6MWmotorsdrivingarunofmineballmill,millingtoP80of106microns.GravityrecoverywillbemaximizedthroughprocessingthefullcycloneunderflowthroughfourKnelsonconcentrators.TherecoveredgravityconcentratewillbetreatedinanILR,whichwillbethesamedesign as Phase 1. A new pre-leach thickener and CIL circuit, with a dedicated elution and carbonregenerationcircuit,willbe installed,whichwillbe identical to theexistingplant. Ingeneral, thecurrentreagentfacilitiesaresufficienttomakeupreagentsforthesecondCILplant,additionalreagentdosingpumpswillbeprovidedtosupply reagentsas requiredto theappropriateplant.Anadditional10 tonneperdayoxygenplantwillalsobeinstalled.Thegoldroomwillbeexpandedtoincludeadditionaltwoelectrowinningcells,adryingovenandalargergoldfurnacetoaccommodatetheincreaseingoldproduction.BenefitsofaCILplantoverflotationplantThe Phase 2 Pre-Feasibility Study (see news release datedMay 14, 2015) had scoped a flotation circuitalongsidetheexistingCILprocessingfacility.FollowingthesuperiorperformanceoftheexistingCILplantandthehigherthanexpectedgoldrecovery,a2016testcampaignwascommissionedtoinvestigatetheblendingofEsaaseores intotheCILplant.Thistestcampaign includedsignificantoptimizationworkofblendsandseparatetreatmentofEsaaseoresthroughaCILandaflotationplant,usingtheoperatingprocesscostsfromtheexistingprocessingfacility.
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Thegoldrecoveryratesweresimilartoprevioustestworkresults,howeverduetothecyanideoptimizationtestwork theoperating costs for CIL reducedbyUS$1.10per tonnemilled compared to flotation. Itwasfurthernotedthatthereagentsintheflotationconcentratewereobservedtobepoisoningthecarbonintheconcentrateleachcircuit.Asaresult,theconcentrateleachcircuitrequiredadditionaltankageaswellasahigherfrequencyofelutionandregenerationofthecarbon,therebyincreasingcosts.Inaddition,theexperiencegainedfromoperatingtheexistingCILplantandtherelativefamiliarityoftheGhanaianworkforcewithCILratherthanflotation,togetherwiththehighercostoftheflotationleachcircuitledtothedecisiontosimplifytheprocessingcircuitbyreplicatingthecurrentCILflowsheetandconstructingan additional 5Mtpa CIL facility. This will save on Front End Engineering and Design and capital costs.Additionaladvantagesalsoincludesavingsonreagentsandholdingcosts,reducedinsuranceandoperatingsparesholdings.Table8:Project10MillionProcessPlantRecovery
LoMBlendRecovery 93.5IncreasingMiningOperationsto10MtpaThe increase inorefeedtothe10MtpaprocessingfacilitywillbesourcedfromtheEsaasepit,whichwillrampupproductiontoanaverageof7Mtpa,approximately2Mtpaoxide/transitionaland5Mtpafreshore.TheminingfleetwillbeincreasedtoaccommodatetheincreaseintonnagefromEsaaseandtheconveyorhasbeendesignedtoaccommodatetheadditionaltonnage.ApermanentprimaryandsecondarycrusherinstallationwillbebuiltattheEsaasesiteandcrushmaterialdownto-90mm.AstockpilewillbeconstructedatEsaasetomanageaconsistentfeedontotheconveyorbelt.PowerPowerdemandfortheadditional5MtpaCILprocessingfacilityincreasesbyapproximately20MWto36MW.As part of the power infrastructure upgrade, an additional 33MVA mine substation and a plant 11kVsubstationwillberequired.WaterManagementA detailed integrated water management model has been completed by Knight Piesold on the waterrequirements for both Project 5 Million and Project 10 Million. This model takes into account all theconsumersandsourcesofwater.Undernormalrainfallconditionstherearenowatershortfallsandmakeuprequirementsaremetfromarangeofsourcesincluding,returnwaterfromtheTSF,rainfallrunofffromthetailings and supernatant pond surface and surrounding catchments, Nkran Pit dewatering and curtaindewatering,Esaasepitdewateringandrunoff,SedimentControlStructures,SatellitePitsstandingwateranddewateringandrunoff.ThereissufficientstormwaterstoragecapacityintheTSFtoaccommodatealldesignstormeventsandrainfallsequences,withsufficientfreeboardtocomplywithGhanaianMiningRegulations,whichrequire1mfreeboardovera1in100yearrecurrenceinterval,24hourstormeventpondvolume.
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TailingsStorageFacilityThetailingsfromNkranandEsaasepitswillreporttoacommon,expandedTailingsStorageFacility(“TSF”).TheTSFwillconsistofamulti-zoneddownstreamperimeterembankment,comprisingatotalfootprintareaof386ha(basinarea279ha)initsfinalstate.TheTSFwilloperatewiththecurrentconfigurationuntilthethroughputisincreasedto10Mtpa.Fullbasinworksinthewaterdamreservoir(includingsurfacepreparationandbasinHDPElinerconstruction)willbecompleted at this point. Tailingswill then be deposited from the eastern extents of the basin to fill theexpandedTSFbasin.Subsequently,theTSFwillberaisedasasinglecellasrequiredduringtheoperation.TheTSF stabilityanalysis indicates that factorsof safety for theTSFembankmentsdo complywith the latestGhanaMiningRegulationsandauditedbyKnightPiesold.PermitsAnupdatedEnvironmentalImpactStatement(“EIS”)willberequiredfortheexpanded10Mtpaprocessingfacility. A draft EIS is expected to be submitted to the Ghanaian Environmental Protection Agency inQ32017.VillageResettlementTheincreaseinminingratesto7MtpaatEsaaseforProject10MillionwillrequireafullresettlementoftheTetremVillage,whichcomprisesapproximately250structuresandhasbeenestimatedatUS$24million.AnewresettlementsitehasbeenidentifiedandthenewvillagewillbebasedonthedesignsofthesuccessfulNkran Partial Re-settlement as a blueprint. A moratorium has been declared and formal resettlementnegotiationwiththelocalcommunitywillcommencein2018.InYear6ofoperationsattheincreasedrate,therewillbeapartialresettlementofEsaase/Manhyia,whichcomprises115structures.CapitalCostsThecombinedcapitalcostestimateforProject10MillionisUS$350millionandhasbeencompiledtoaDFSlevelofaccuracyincorporatingacombinationofmarketpricingbasedontendersreturnedfromkeysuppliersandactualpricingfromthecurrentoperations.Table9:Project10MillionCapitalCostsDescription (US$Millions)ProcessPlant 78.5
Mining(pre-productioncosts) 6.7
Infrastructure,power&water 31.0
TSFExpansion 12.1
Resettlement 24
OwnersCosts 15.8
EPCM 17.6
SubTotal 185.8Contingency 13.9
Total 199.7Note:Rand:Dollarexchangerateof:R13.8:US$1Timing&FundingForthepurposesoftheExpansionDFS,Project10MillionhasbeenscheduledaroundtheoptimalNPVonacapitalunconstrainedbasisfortheAGM,whichassumessteadystateoperationsin2021.HoweverasProject10Millionisamodularexpansion,Asankohascompleteflexibilityonitstiming.Aconstructiondecisionwill
AISC3 890*Notes:*CorporateG&Anotincludedintheeconomicassessment-Miningunit costsareprovidedona cashbasis, ie. all of theminingexpensesplanned for the yeararereportedasoperatingcosts.Inpractice,theCompanyexpectstorecordsomeofthewastestrippingeachreporting period as capitalized stripping, which will be shown as sustaining capital for AISC reportingpurposes.AnnualCashFlowTheforecastedannualcashflows,basedonaUS$1,250/ozgoldpriceandaftertaxesandapplicableroyalties,arelaidoutinAppendix1.AnincrementalIRRof20%wascalculatedbycomparingthecashflowgeneratedbycombinedexpansionprojects,Project5MillionandProject10Million,tothecashflowthatwouldhavebeengeneratedbyjustoperatingtheAGMat3.6Mtpa.GoldPriceSensitivityArangeofprojectsensitivitieshavebeenevaluatedtoassesstheirimpactonthebasecasenumbersincludedinthefinancialmodel.Themostsignificantfinancialsensitivityidentifiedwasthegoldprice.MineralReserveswereestimatedassumingaforwardlookinggoldpriceofUS$1,300/oz.