Construction is under way at
Situated 90 km southwest of Mwanza, the open-pit mine will exploit several shallow gold deposits hosted by a series of folded and sheared banded iron formations (BIFs) interbedded with andesite and other volcanic rocks.
Ashanti will be the first company to bring modern mining methods to the Geita district, though the area has a long gold-mining history. Discovered in the 1930s by the Saragura Development Co., the Geita deposit saw continual underground production from 1938 to 1966, when mining took place on nine levels spaced at vertical intervals of 45-50 metres. It was relatively easy to develop adits in the upper levels, as the BIF host rock, being resistant to weathering, has formed prominent ridges.
The Geita deposit consists of two 20-metre-wide, parallel zones of mineralization dipping 50 northwest. The body has been drilled over a strike length of 2.3 km, and the main Geita pit area was drilled to a depth of 350 metres. Oxidation typically extends to 50-60 metres.
The Geita mineralization dies out to the southwest, creating a 500-metre gap between Geita and the Lone Cone deposit. Prior to its closure in 1953, Lone Cone yielded 76,000 tonnes grading 7.3 grams gold, and a block of 76,000 tonnes grading 7.9 grams gold was left unmined.
Northeast of the Geita deposit, the Northeast Extension zone was discovered in 1953. Most of the mining in the 1950s and 1960s occurred here, where grades were higher than at Geita or Lone Cone. The area between Geita and the Northeast Extension, named the Geita Gap, received little attention, perhaps owing to a ferricrete cover that prevented trenching.
The entire Geita operation finally closed in 1966, partly as a result of management troubles and nationalization policies. Within three decades, the Geita mill had processed 5.5 million tonnes of ore, from which nearly a million ounces of gold were extracted.
Left behind were 1.5 million tonnes of tailings grading between 0.7 and 0.95 gram gold per tonne; recoveries, however, are only 30-40%.
Today, Geita’s lower levels are flooded, though most of levels 1 through 4 are accessible and have been resampled at 1-metre intervals.
Following the 1966 closure, the Geita area saw only artisanal-style gold mining until the mid-1990s, when London-based Cluff Resources acquired the Geita East, Geita West and Geita Hill licences.
These properties soon fell into Ashanti’s hands when it acquired Cluff in early 1996 for US$120-million in a deal that also brought in Cluff’s Ayanfuri mine in Ghana and its Freda-Rebecca mine in Zimbabwe.
During the next three years, there was a string of exploration successes in the Geita area, first with Ashanti’s discovery of the Nyankanga gold deposit 500 metres southwest of Lone Cone, and then with Samax Gold’s discovery of the Kukuluma and Matandani gold deposits in an area 8 km northeast of the Geita deposit.
The Nyankanga orebody is slightly different than the others in that it is dominated by diorites rather than BIF. Dipping 30 northwest, Nyankanga has been drilled over a 1.2-km strike length and remains open at depth.
The Kukuluma orebody is on a separate ridge system than Geita and is hosted by a folded and sheared sequence of interbedded BIF, chert, tuffs and mudstones with quartz porphyry at depth. Two mineralized zones strike northwest, with the western zone being sub-vertical and the eastern zone dipping at least 65 east. Drilling over an 800-metre strike length and to 200 metres depth has intersected mineralization up to 50 metres wide. Oxidation extends to 100 metres depth.
Toward the south, the Kukuluma zone is faulted, but it then reappears in a highly prospective zone named Area 3 West, where a large gold-in-soil anomaly has been outlined.
Toward the north, Kukuluma extends into the Matandani deposit. The latter is also hosted by interbedded BIF, chert and acid tuffs but has more abundant mudstones and siltstones than Kukuluma. Matandani’s eastern and western shear zones have been drilled over 800 and 500 metres, respectively, and gold mineralization is up to 45 metres wide in both bodies.
Along strike, the main Matandani zone dies out to the north, but the southern extension is open and is being drilled.
“There still remains excellent potential for underground mining at a later date, since all these deposits remain open at depth,” Ashanti Exploration Manager Hugh Stewart told The Northern Miner during a tour of the Geita project.
Under Ashanti’s original development plan for Geita, annual gold production was projected at 250,000 oz., with a capital expenditure of US$95 million. The figures were based on a 4-million-oz. gold resource and an annual production rate of 2 million tonnes. The first gold pour was scheduled for early 2000.
The plan was scrapped, however, when, in November 1998, Ashanti acquired Samax Gold for US$137 million. With that purchase, Ashanti extended its control in the Geita District to 430 sq. km and saw global resources at the Geita project swell to 51.9 million tonnes grading 3.74 grams gold, for 6.23 million contained ounces.
“Everything accessible was extensively resampled following the Samax takeover,” said Stewart. “From that, we’ve done a lot of back-calculation and are pretty happy with the results.”
Reserves at the Geita, Lone Cone, Nyankanga, Kukuluma and Matandani deposits total 33.7 million tonnes grading 3.47 grams gold (3.76 million contained ounces), with a stripping ratio of 4.6-to-1.
By incorporating the Kukuluma and Matandani deposits into the Geita mining plan, Ashanti will be able to ramp up the production rate and thus create what will be one of the largest African gold mines outside of South Africa.
The production rate will be doubled to 4 million tonnes per year and the enlarged mine will produce 400,000 oz. gold annually over 8.5 years. The average cash cost is estimated at US$180 per oz. while the total cash cost is pegged at US$260 per oz.; the capital expenditure will rise to US$140 million and another US$20 million will be spent on a power project for the mine and nearby communities.
Ore will be processed using standard milling, with recoveries from Geita material ranging from 92% in the oxide portion to 89% in the sulphide portion. For Kukuluma ore, recovery is pegged at 91% in the oxide portion but, owing to the presence of arsenopyrite and pyrrhotite, only 70% in the sulphide portion.
In December, the enlarged project was given the green light by Ashanti’s directors, and, by February, construction had begun. Already at Geita, the engineering-procurement-construction-management contract has been awarded to Australian-based Lycopodium, a semi-autogenous-grinding and ball mill has been ordered, and major contracts for fuel, power supply and contract mining are being let out.
Ashanti is awaiting completion of an environmental impact assessment, following which the company will apply for a mining licence. Meanwhile, an entire village at the property is being moved under the supervision of the Tanzanian government.
The Samax acquisition also resulted in Ashanti’s acquiring a half-interest in the newly opened, US$47-million Golden Pride open-pit gold mine, co-owned by Australian-based Resolute. Situated 180 km south of Mwanza, Golden Pride is expected to produce 180,000 oz. annually at an operating cost of US$200 per oz. Lycopodium also served as lead contractor at Golden Pride.
Already, Ashanti has lined up funding for development at Geita. In December 1998, the company signed a US$270-million revolving credit line at an average rate just 83 basis points above the London Inter Bank Offered Rate. Chase Manhattan Bank acted as agent, and for the first time, two major Canadian financial institutions — the Bank of Nova Scotia and CIBC Wood Gundy — participated in an Ashanti financing. While proceeds mostly are serving to refinance Ashanti’s outstanding US$152-million debt, much of the balance is earmarked for Geita.
When the Geita mi
ne comes on-stream in late 2000, Ashanti’s total gold production is expected to rise to 1.9 million oz. annually at a cash cost of about US$205 per oz. The company continues to benefit from excellent gold hedging, with some 7.2 million oz. (about 4.5 years of production) sold forward at US$390 per oz. In 1999, the company will receive about US$375 per oz. for its production.
“Geita will be a robust development which is expected to meet our internal investment criteria, even at a US$300 per oz. gold price,” said Ashanti’s chief operating officer, Trevor Schultz, in a speech to delegates at the recent Investment in African Mining conference in Cape Town. “With over 100 years of mining history to its credit, Ashanti has developed the experience and expertise necessary to operate in the African environment and has positioned itself to take advantage of the considerable untapped resources and additional opportunities that the present climate offers.”
Ashanti is also eyeing adjoining ground east of Geita, where
In January, Ashanti and Tan Range signed a preliminary option agreement whereby the former can acquire a 60% interest (that is, two-thirds of Tan Range’s 90% interest) in the Tancan property by completing a bankable feasibility study by the end of 2002.
After completing the study, Ashanti must either make a production decision or pay Tan Range US$100,000 in cash. These payments will escalate by US$100,000 for every year that a production decision is delayed, to a maximum US$500,000 annually.
Tan Range has already conducted a rapid-air-blast drilling program that traced a favourable gold horizon on to its licence area, and the partners anticipate following up on this work once the deal is closed.
Ashanti will fund a minimum of US$500,000 worth of exploration this year at Tancan. However, the major can terminate the agreement any time after it has spent US$150,000.
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