Gold Fields and AngloGold Ashanti have agreed the key terms of a proposed joint venture in Ghana, which could result in the creation of Africa’s largest gold mine.

The proposed joint venture would combine Gold Fields’ Tarkwa Mine and AngloGold Ashanti’s Iduapriem Mine, located near the town of Tarkwa in the Western Region.

The Tarkwa Mine is 90 percent owned by Gold Fields Ghana, with the Government of Ghana owning the remaining 10 percent. The Iduapriem Mine, meanwhile, is 100 percent owned by AngloGold Ashanti.

In a statement, the parties indicated that they have agreed in principle on the key terms of the proposed joint venture; and preliminary, high-level and constructive engagements have begun with senior government officials in Ghana. The parties intend to implement the proposal as soon as practically possible, subject to agreement with the Government of Ghana, conclusion of confirmatory due diligence, and securing all requisite regulatory approvals.

Martin Preece, interim Chief Executive Officer of Gold Fields, said the proposed venture combines mining operations part of the same mineral deposit. He added that optimising mining and sharing infrastructure will enhance mine planning, improve economics, and ensure world-class operations.

“…that unlocked value will underpin the proposed joint venture’s continued contribution to our host communities and Ghana for decades to come. For Gold Fields, it will also significantly enhance the overall quality of our portfolio,” Preece said.

The new entity would be an incorporated joint venture within Gold Fields Ghana, operated by Gold Fields, and would be supported by a substantial mineral endowment and an initial life spanning almost two decades.

The parties anticipate that operational synergies will be achieved by optimising mining of the combined ore bodies and consolidating the infrastructure of the immediately adjacent mines for the long-term benefit of all shareholders and stakeholders.

Excluding the interest held by the Government of Ghana, Gold Fields would have a 66.7 percent interest in the new venture and AngloGold Ashanti would have a 33.3 percent stake. It is not expected that any material additional capital injection will be required by either company to establish the joint venture, and the venture is expected to materially improve its capital intensity once operational.

The project is estimated to have a life of, at least, 18 years, with an estimated average annual production of almost 900koz over the first five years and average annual production in excess of 600koz over the estimated life of the operation. The all-in sustaining cost – in 2023 terms – is estimated to be less than US$1,000/oz over the first five years and less than US$1,200/oz over the estimated life.

The ore reserves for the joint project are expected to exceed the sum of the ore reserves for the stand-alone operations due to anticipated operational synergies and the declaration of additional mineral resources and ore reserves.

Alberto Calderon, Chief Executive Officer, AngloGold Ashanti, said the proposal will create long-term value for all stakeholders, including local host communities and Ghana, by establishing one of the world’s largest open-pit gold operations in a pre-eminent mining jurisdiction.

“This combination puts together two parts of the same world-class ore body, allowing us to share skills and infrastructure to significantly enhance every aspect of this mining operation from exploration and planning to mining and processing. By creating one of the world’s largest open-pit gold operations in a pre-eminent mining jurisdiction, we will create longer-term value not only for AngloGold Ashanti and Gold Fields, but for the combined stakeholders in our local host communities and for all of Ghana,” Calderon said.