Newmont Africa has announced plans to build a new underground mine and expand processing capacity at its Ahafo operations by more than 50 percent.

According to the Regional Senior Vice President – Africa operations, Alwyn Pretorius, the expansion will extend sustainable and profitable production at Ahafo.

“We have secured the required environmental permits and resources to self-fund a new underground mine and mill expansion at Ahafo. The Subika Underground mine will produce 1.8 million ounces of gold over 11 years with ore grades of 4.7grams per tonne and also create a platform to support longer-term growth. The Mill expansion project will increase mill capacity by more than 50 percent to nearly 10 million tonnes per year by adding a crusher, grinding mill and leach tanks to the circuit,” Mr. Pretorius said.

The projects have been optimized to improve internal rates of return to more than 20 percent at a $1,200 gold price. In the first five years of full production, from 2020 through 2024, the projects will add incremental gold production of 200,000 to 300,000 ounces of gold per year, for total annual production of between 550,000 and 650,000 ounces at Ahafo and lower cost applicable to sales (CAS) by $150 to $250 per ounce compared to 2016 for total CAS of $650 to $750 per ounce. All-in sustaining cost (AISC) is expected to reduce by $250 to $350 per ounce compared to 2016 for total average AISC of $800 to $900 per ounce.

“The Subika Underground resource has been studied for 11 years and execution and technical risks are well understood. We expect to reach first production at the mine in the second half of 2017 and commercial production in the second half of 2018. We have held extensive consultations with our communities and stakeholders and will work towards meeting local hiring commitments,” Mr. Pretorius added.

Development capital of between $300 million and $380 million will be funded through free cash flow and available cash balances. Newmont will uphold local hiring and procurement commitments and existing bargaining agreements through construction and operation.

Commercial production at Ahafo began in 2006 and the operation achieved five million ounces of gold production in October 2016. Mr. Pretorius says construction of the two projects will not disrupt operations or the company’s ability to meet cost and production targets.

“We are excited about these projects and will advance them to create value for our shareholders, communities and all stakeholders,” he added.