Business & Finance
- Super User
- Category: Business & Finance
- Tuesday, 27 October 2015 03:19
Fresh trouble hits Goldfields' Damang Mine...
With a decline in gold prices and escalating production costs, the Damang Mine of lead gold miner, Gold Fields Ghana Limited (GFGL), is behind its targets prompting concerns about its financial viability.
The mine is currently lagging behind its 2015 production targets by 10 per cent due to a combination of factors that range from the current economic challenges and the slump in gold prices, to lack of funds by the shareholders – the Ghana government and GFGL – to invest in the 8,111-hectare mine.
With cost of production and gold prices moving in opposite directions, Gold Fields, which owns 90 per cent of the mine, said attempts to raise and inject someUS$100 million into the mine had hit a snag, raising fears that the company's one of two operations in West Africa could be put on care and maintenance soon.
Gold Fields' West African operations, headquartered in Ghana, comprise of the Tarkwa and Damang mines, both in the Western Region
The company's Executive Vice-President (EVP), Mr Alfred Baku, told the GRAPHIC BUSINESS in Accra that although the Tarkwa operations were well on track to meeting its 2015 targets, Damang was lagging behind schedule by 10 per cent, which could have a direct impact on the entire group operations.
He explained that Damang, which is the smaller of the two operations, was currently "in dire need of capital to actually reinvest and expose the ore."
That capital, he said, was estimated at "close to US$100 million."
Mr Baku said that if the money did not come immediately, the mine could be put on care and maintenance which is used to refer to the temporary closure of a mine that is awaiting recommencement of production at a later date.
"Damang has come to a point that we believe if we don't get the US$100 million investment, it is really going to see us put it on care and maintenance," he explained.
The Damang Mine had previously faced severe operational challenges in 2013 and the years before, which saw it post losses in preceding years.
The mine's operations, however, rebounded in 2014, due to a restructuring programme that cost some staff their jobs but brought down Damang's entire cost of production.
As a result of the measures, gold production at the mine rose by 16 per cent to 177,800 ounces in 2014, while cost of production went down by 25 per cent.
The trend continued into this year where gold production increased by six per cent in the second quarter after rising from 39,000 ounces in the first quarter to 41,500 ounces in the second quarter.
Gold Fields had attributed the development in the first six months of this year to the processing of higher tonnes at the mine.