Can Capital Injection Make Challenged Gold Projects in Ghana Economically Viable? – A Case Study

Damang Gold Mine (DGM) in Ghana uses open pit mining technology to mine its gold deposit. It has an estimated mineable gold reserve of about 32 Mt exploitable for 8 years. As the gold price kept falling from 2013 and operating cost kept rising, the mine down sized its operations. But the operations became challenging due to poor performance of ageing mining equipment and processing plant, and the need for a new tailings dam. As the gold price stabilises, it could be gainful to invest capital to resolve the challenges and increase production. This study aims at investigating whether DGM would be economically viable if the intended investment is made assuming the gold price falls to US$32.15/g. The study estimates the required capital and annual operating cost to be US$89.49 M and US$100.84 M respectively.  A cash flow analysis is carried out assuming no price escalation, discount rate of 20$82 723 720.28 and Internal Rate of Return of 41.13%, indicating profitability. Sensitivity analysis reveals that the project will continue to be profitable until the revenue falls below 24%, assuming all other economic parameters remain constant. The project will also continue to be profitable until the operating cost increases beyond 30%, assuming all other economic parameters remain constant. Risk analysis on the project indicates the project has 70% chances of success. DGM could invest the capital to mine its gold reserves because the mine will make profit provided cost is controlled and production level maintained to generate needed revenue. Keywords: Net Present Value, Internal Rate of Return, Sensitivity Analysis, Risk Analysi

A Geoeconomic Planning and Evaluation Model for Artisanal Small-Scale Gold Mining in Ghana

Following calls for comprehensive National Action Plans (NAPs) that outline training programmes for the handling of mercury and strategies for reducing emissions from artisanal and small-scale gold mining (ASGM) under the Minamata Convention, other follow-up calls intensified the need for the formalisation or regulation of ASGM in the sector. Aside from the precarious emission of mercury and hazards to the environment, the ASGM sector resorts to unsafe methods for exploiting minerals due to inadequate funding. It is not surprising that anti-mining groups constantly advocate against mining in general as a result of the harm unprofessional ASGM operators expose man and the environment to. In this light, several studies have been conducted to propose safe techniques of exploiting minerals by ASGM operators and the need for governments to regulate the sector through legal instruments. Unfortunately, the problems of ASGM seem to linger on. Notwithstanding, much attention has not been given to the formulation of procedures for accurate resource estimation and subsequent feasibility studies of ASGM, which could probably be a major cause of ASGM challenges. This study proposes Inverse Distance Weighting (IDW)  technique for estimating the concentration of alluvium gold. The IDW method was successfully applied to the alluvial deposit of the Mpeasem Gold Project, and practical results were obtained for economic evaluations. The total volume of alluvial gold deposits was 3.4 Mm3 at an average grade of 0.46 g/m3. Economic evaluation yielded a net present value (NPV) and internal rate of return (IRR) of USD 2.8 M and 48%, respectively. The results indicate that reasonable data from outcrop sampling, pitting and trenching, and detailed cost estimates can present a more compelling case for funding. This way, the funding inadequacies which contribute to the use of shortcuts and unsafe tools, materials, and methods can be minimised