According to the Lease Letter from the Ministry of Lands and Natural Resources, once the Company, Takoradi Gold Ghana Limited (TGGL) 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 the thirteenth day of January, 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).
In an exclusive interview with Skyy News, the Chief Executive Officer of Takoradi Gold Ghana Limited (TGGL), David Anthony Nicol-Sey revealed that their operations will yield about five hundred and thirty-five million dollars ($535 million) in corporate taxes to the State, over a period of ten years. Additionally, he mentioned that his company will, over the same period, pay in a total of about thirty-nine million dollars in mineral royalties.
“Our projection is to treat about five hundred (500) tonnes of materials a day, for ten (10) years. Per our feasibility studies, this will translate in us paying three (3) million dollars of mineral royalties per annum, as well as fifty-three million, five hundred thousand dollars in corporate taxes every year. This will translate into thirty-nine million dollars in royalties, and five hundred and thirty-five million dollars over a ten year period,” he narrated to this reporter.
He stated that their expectation as a company is to meet the government’s expectation of them in terms of bringing development to the Kutukrom area through their mining activities.
“Our expectation is what the government of Ghana is expecting from us. We have defined certain resources, and the resource we’ve identified is over 600, 000 ounces, and based on the feasibility, these are the things that the government is going to get. This is in addition to the development that will be brought to the area because of the mining that is being brought there.
“More so, I’m from the WR, and I’m delighted to be bringing this to the Region I hail from which will see us contributing directly, and enormously towards the development of the economy of my home region,” he stated with a delightful tone.
Mr. David Nicol-Sey revealed that plans are already in motion to developing the mine infrastructure needed for the effective running of the mine. He says currently, they have renovated an underground mine, and are building a tailings treatment plant that can house tailings for over fifty years.
“We are building the mine infrastructure now. We have completed building the underground mine, and are currently developing a tailings treatment dam which can house tailings for 50 to 70 years. We are building an explosives magazine too. We are also dealing with water resources in terms of our water certificates and other things,” he stated.
According to the ‘Scoping Report’ by the company, sighted by Skyy News, of the three blocks, prospecting records indicates 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 management of TGGL is therefore in the process of establishing an underground gold mine project on the 4.40 sq. km Bonzer block. 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. According to them, 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.
“It is anticipated that other mine footprint including the tailings storage facility, water storage facility and processing plant among others will be sited on the Bonzer block,” stated the Report.
Skyy News checks on the proposed site reveals that the Bonzer block is located 20.0 km south of Prestea, and it is accessed by an unpaved road. The major town in the vicinity is Kutukrom which is about 6.0 km south of the Bonzer Block whilst Bonteboni is the closest community that shares boundary with the northern portion of 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.
According to the ‘Feasibility Study Report’ of the company which has been sighted by Skyy News, the Takoradi Gold Ghana Limited (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. The company, TGGL says 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 Report further states that the chosen mining methods will ensure relatively low operating costs, and efficient medium mechanized processes, allowing for increased production rates.
The company further revealed in its Report that the top-down mining methods adopted will allow for predictable capital development and production schedules. In addition, mining is repeatable from level to level, which will allow for a stable production profile. On the impacts of the method adopted on the workforce, the Report stated that the methods are considered to be relatively safe as there is limited exposure of the workforce to open stopes or open holes.
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, according to our sources, has a capacity to process 165,000 tonnes per annum of ore to a final particle size of 55μm, with the plant operating at 500 tonnes per day at a 92% availability.
‘Investability’ of the Project
From the analysis, the project has a Net Present Value (NPV) of US$41,034,236 Internal Rate of Return (IRR) of 54% 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. From all the report analysis sighted by Skyy News, the project is thus profitable and worth investing in the venture.
Ghana is now Africa’s largest gold producer, with a gold output of 4.8 million ounces in 2018, surpassing South Africa’s 4.2 million ounces in the same period. In 2018, the Africa Report published that Deutsche Bank argued that gold prices could rise from its current price of $1,500 per ounce to $1,800. The publication further reported Yann Alix, Head of global mining at Ashurst in London as saying that if the current uncertainty in global markets continues, then gold is “likely to remain a safe bet.”
In Ghana, the Bank of Ghana (Ghana Central Bank), indicates that the minerals sector continues to be the leading export earner and improved upon its share in gross merchandise exports from 32.2 percent in 2015 to 45.5 percent in 2016, whereas cocoa and crude oil contributed 22.3 percent and 12.5 percent respectively. This indicates that the proceeds from mineral exports were twice that of cocoa and more than three times that of crude oil in 2016.
In addition to the mining sector’s contribution to the reduction in the depreciation as against other currencies in 2016, the 41 percent increase in mineral exports was the primary reason for the balance of payments surplus achieved for that year. In a report in January 2017, the Bank of Ghana’s Monetary Policy Committee stated: ‘For the first time since 2011, the provisional balance of payments in 2016 recorded a surplus. This largely reflected an improvement in the trade balance driven by a rise in gold export receipts and a fall in oil import prices’.
The mining sector is also crucial for attracting foreign investment. Total investments in the sector during the past 10 years exceeded US$10 billion, coming from companies engaged in gold production, exploration and support services.
The Court case
In 2015, TGGL sued the Minerals Commission for refusing to renew its prospecting license after meeting all the requirements set forth by the Commission. After operating in Ghana since 1992, the company was informed in 2013 that its application for renewal for its Kutukrom concession which was made in 2011 will not be renewed, after the company and paid a processing fee of $500, a consideration fee of $20,000 and annual ground rent to the Administrator of stool lands.
Then, the Commission asserted that the Company had not upgraded its activities in the area after 21 years of exploration. It further cited the slow pace of work as indicative of the fact that TGGL lacked the financial and technical capacity to embark on detailed mineral exploration.
The Tarkwa High Court presided over by Justice K.A. Ofori-Atta, subsequently ruled in 2017 that the Minerals Commission erred in its judgment, and caused that the License of the Takoradi Gold Company Limited is renewed.
By: Samuel Kojo Brace/Skyy News/Takoradi