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Business News of Friday, 17 January 2020

Source: 3news.com

Ghanaian mining firm gets 15-year lease after 3-year legal tussle


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Takoradi Gold Ghana Limited, a wholly Ghanaian owned large-scale gold mining firm, has been granted a 15-year mining lease, two years after the firm won a major court case against the Minerals Commission.

Takoradi Gold Ghana Limited (TGGL) had been in court for the past three years fighting for the non-renewal of its gold prospecting license by the Minerals Commission.

With the granting of the mining lease, the company becomes the latest Ghanaian gold-mining firm to be granted permission to engage in gold exploitation on a large scale.

The mining lease from the Ministry of Lands and Natural Resources read: “Once the Company, Takoradi Gold Ghana Limited has warranted that it has the wherewithal in terms of finance, technical, and human resources to undertake efficient mining operations, and has declared its willingness to engage in mining in Ghana, the Government of Ghana has granted the rights to mine in the specified area to it and maybe renewed periodically in accordance with the law”.

“The Government hereby grants to the Company mining rights to ALL that piece of land described in the schedule hereto and more particularly delineated on the map attached (hereinafter called ‘The lease Area’) for a term of FIFTEEN (15) YEARS from the date of this mining lease.

“The term may be renewed from time to time in accordance with the Minerals and Mining Act, 2006 (Act 703),” the letter stated.

The mining lease, which is in respect of a 13.85 square kilometers concession in Kutukrom, dated January 13, 2020, signifies the beginning of the development of an underground mine in the Kutukrom area of Prestea in the Prestea Huni-Valley Municipality, Western Region.

The concession is made of three distinct blocks namely: Tintinnah Block (5.35 sq. km); Bonzer Block (4.40 sq. km) and Kutukrom Block (4.18 sq. km).

An elated Chief Executive Officer of TGGL, David Anthony Nicol-Sey, in an interview with 3news.com, boasted that their operations will yield about $535 million in corporate taxes to the state, over a 10-year period.

“We are projecting to treat about 500 tonnes of materials a day, for 10 years. Per our feasibility studies, this will translate in us paying $3 million of mineral royalties per annum, as well as $53,500,000 in corporate taxes every year. This will translate into $31 million in royalties and $535 million over a ten-year period.”

Mr. Nicol-Sey said that apart from the revenue to government, their operations will also help bring development to its operational area Kutukrom.

“I am from the Western Region, and so delighted that I’ve been able to stay resolute during the trial and finally the project will take off. I will do my best to ensure that this project gives birth to several development projects at Kutukrom and other surrounding communities.”

Mine Development

Plans are afoot to develop the needed mine infrastructure. An underground mine has already undergone renovation.

A tailings treatment plant with the ability to hold tailings for 50 years is currently under construction.

The CEO revealed that they are building an explosives magazine and also dealing with water resources for the relevant certifications.

The Mine

According to the company’s scoping report of the three blocks, prospecting records indicate appreciable exploration activities on the 4.40 sq. km Bonzer block, with current resource estimates of the Bonzer block indicating a total of 1,670,000 Mt of gold-bearing rocks with an estimated cut-off grade of 0.5 g/t.

The ore is anticipated to be exploited by the Open Hole Stoping (OHS) method, with the resulting Rock of Mine (ROM) to be milled by a 500 tpd plant.

The gold will be extracted using a Carbon in Leach (CIL) processing plant. Per the ‘Scoping Report’, a tailings containment dam will be constructed for the safe and secure confinement of tailings resulting from the processing of the ROM.

According to the scoping report, other mine footprints including the tailings storage facility, water storage facility and processing plant will be sited on the Bonzer block.

The Bonzer block is drained primarily by Subri and Mankoma streams and numerous ephemeral streamlets resulting from the high rainfall pattern in the area as well as the undulating nature of the topography. The Ankobra River drains the entire catchment area.

The north-south Mankoma range runs through the Bonzer block with an estimated elevation of 90- 180m above mean sea level.

TGGL will adopt the mining method that has been used historically by Prestea underground operations since both are based on the same type of rock and ore patterns.

It will continue to use the OHS method – also referred to as cut-and-fill mining – around the periphery for pillar recovery and otherwise as appropriate.

The Feasibility Report on the Project revealed that the life of mine plan was based on providing 165,000tpa of ore to the mill from underground, adding that the mine will operate three hundred and thirty (330) days a year with a single 10-hour shift per day of mining 500 tonnes per day.

The TGGL mill has a capacity to process 165,000 tonnes per annum of ore to a final particle size of 55?m, with the plant operating at 500 tonnes per day at a 92% availability.

The project has a Net Present Value (NPV) of US$41,034,236 Internal Rate of Return (IRR) of 54 per cent, which is far higher than the applicable current interest rate if the equity funds are to be borrowed from the money market and a payback period of 2.3 years.

The court case

In 2015, Takoradi Gold Ghana Limited sued the Minerals Commission for refusing to renew its prospecting license after meeting all the requirements set forth by the Commission.

The firm, which has been operating in Ghana since 1992, was informed in 2013 that its application for renewal of its Kutukrom concession will not be renewed, even though it had paid a processing fee of $500, a consideration fee of $20,000 and an annual ground rent to the Administrator of Stool Lands.

The Minerals Commission in its argument in court had asserted that TGGL had not upgraded its activities in the operational area after 21 years of exploration.

It further argued that the slow pace of work means TGGL lacked the financial and technical capacity to embark on a detailed mineral exploration.

However, the Tarkwa High Court presided over by Justice K.A. Ofori-Atta, ruled in 2017 that the Minerals Commission erred in its judgment, and as a result of that the License of the Takoradi Gold Company Limited be renewed.

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