South Africa’s Gold Fields will invest $1.4bn to extend the life of its Damang operations in Ghana by eight years, the mining company said on Monday 24 October. The investment will sustain activity at the mine until 2024 while creating 1,850 jobs.
Gold Fields expects to produce 1.56m ounces of gold during the lifespan of the mine, adding to the 4m ounces of gold the company has already produced at its Damang mine since 1997.
Output at the mine in southwest Ghana has been in decline since 2013 due to a fall in the quality of ore being extracted, leading to the company to consider closing the Damang mine. However, a 2015 review of the mine indicated that higher grades of ore were still available at the mine and the Johannesburg-headquartered company decided to boost its investment, Gold Fields said in a statement on Monday.
“Given the importance of the region to the Group and taking into account the benefits of the Development Agreement, Gold Fields has taken the decision to continue operations at Damang through the Reinvestment Plan,” it said. “The Group will also retain the optionality to expand the operation should the gold price strengthen sustainably to above US$1,400 per ounce.”
Gold prices have surged from $1,074 per ounce on 4 January 2016 to a peak of $1,350 per ounce on 9 June this year, according to the World Gold Council. Gold was trading at around $1,265 per ounce on Monday.
Gold Fields, meanwhile, has signed an agreement with Ghana’s government in March linking royalty payments to the bullion price and lowering the corporate tax rate to 32.5% from 35%.
Overall, Gold Fields – which also operates mines in Australia, Peru and South Africa – reported that its global output fell by 4% year-on-year to 537,000 ounces in July to September this year. The company expected its output to reach 2.1m to 2.15m ounces this year.