Tarkwa shines up well for Gold Fields
More than 20 000 people had to be relocated, but the site has proved to be a good choice, writes JULIE WALKER
EVEN though Gold Fields of South Africa had the choice of two sites in Ghana, and its choice of Tarkwa has subsequently entailed the removal of more than 20 000 people, the mining house remains confident that it chose wisely. JCI/Barnex has taken up the reins at Prestea, but GFSA has made strong running at Tarkwa.
GFSA is a $3-billion mining finance company. Nearly half its assets are in three South African gold mines: Driefontein, Kloof and Deelkraal. A small amount is in base metals and coal, and the other half involves the "warehousing" of GFSA's cash: investments in Liberty Life, Commercial Union, Sasol, Standard Bank, mineral rights and Tarkwa.
Since getting onto the Tarkwa site in 1993, GFSA has doubled the milling rate to almost 22 000 tons a month using only two thirds (1 447) of the previous labour complement. Only 18 of GFSA's South African staff, led by Glyn Lewis, have been seconded to Ghana.
Tarkwa has several small underground shafts and two are being mined at a depth of 800m. Tabular conglomerate reefs have been intersected at 1 600m to 1 800m below the surface, but a payable resource is yet to be delineated.
Gold production has been lifted by half to 47 650oz a year and almost $100/oz has been lopped off production costs to $314/oz. Tarkwa made an operating profit of $2.4-million in the year to June 1996 - its previous performance cannot be quantified because all costs were subsidised. The injury rate - involving the loss of only one shift or more - has been cut by three quarters to 10 a month. Perhaps most importantly, Gold Fields has proved Tarkwa's reserve to be 13-million ounces of gold - the second largest deposit uncovered this decade.
Gold Fields Ghana chairman Richard Robinson outlines the future for Tarkwa's opencast operations, which will be cash-flow positive by 2000 and could be in a taxpaying position by 2003. Production will start during 1998 at an estimated capital cost of $125-million excluding contingencies and inflation.
Gold Fields Ghana, which owns 100% of Tarkwa, is 70%-held by the GFSA group. Canada's Golden Knight is a passive investor with 17.5%, the Ghanaian government has a statutory 10% and the Ghanaian Social Security and National Insurance Trust the rest.
Robinson says the Tarkwa area has a long history of mining and has good infrastructure.
The source of the gold is the Birimian Basement to the south-east of the region.
Robinson says the deposits resemble those of the Wits Basin and Gold Fields is very comfortable mining them. Compression from the west has induced folding, but fortunately the surface topography mirrors the underground geology, assisting with waste to ore ratios. The reefs lie one above another, separated by unpayable material. The bottom reefs' grades average 2g/t to 2.5g/t.
Geological exploration of the surface deposits has defined five target areas for opencast mining. A bankable feasibility project indicates:
As luck would have it, Gold Fields' preferred starting sites were inhabited. The project has been divided into two parts. The ASP (authorised starter project) will exploit the west side of Pepe and the two Akontansi regions, while the TTP (total Tarkwa project) incorporates the whole site over 20 years. The lease is valid for 30 years and is then renewable.
Gold Fields Ghana retained a Canadian consultancy to advise it on negotiations with the estimated 22 000 villagers and farmers occupying the land required for mining. Settlement has been reached with about 96% of the people living next to the early-years mining areas.
"We gave everybody 1.5 times the government's valuation of their properties for those wishing to leave the area and will build new houses to the compensation amount for the remainder. In addition, we cover the infrastructure cost of new villages, " says Robinson.
Phase 1 of the ASP will start at a production rate of 3.6-million tons a year, rising to 7.2-million tons after 21 months. The ore will be heap-leached - much of the gold is free and a recovery of 85% is forecast.
During the first five years the weighted average cash operating cost is expected to be $203/oz (in January 1996 money terms). Over the life of the mine it will be $260/oz.
When the TTP kicks in, a 300 000 tons a month carbon-in-pulp circuit will be installed and production raised to 10.8-million tons a year by year six. The CIP plant will be doubled after another two years.
Tarkwa will employ 24 expatriates and 335 locals, excluding mining contractors, in the ASP phase, and 30 expatriates and 484 locals at TTP.
Robinson expects the project to yield 8.5-million ounces over the first 20 years.
Gold Fields Ghana is in the GFSA books at an effective cost of $27/oz of gold resource at Tarkwa. Golden Knight later secured more than two thirds of its 17.5% holding at $29/oz. Both these prices were determined prior to the completion of the bankable feasibility study. Robinson says that resource at neighbouring Teberebe was independently valued at $70/oz late in 1994.
Robinson says GFSA will continue to build its book, preferring exploration rather than acquisition. "We have done well out of exploration - acquisitions don't give the same value. Tarkwa will have a huge impact on GFSA.
"It reduces our costs per ounce, expands our reserves and production base, lifts our net asset value and provides a platform for further international expansion. It could mean as much as 20% to 40% more to the GFSA bottom line after the first six years of the project."
After taxes, the Ghanaian government will earn more than half the Tarkwa proceeds. Its cut could be $500-million over the first 20 years - not bad from what was a run-down mine only four years ago.