Name and Location
Asanko gold mine, Ghana.

Client
Asanko Gold acquired the Obotan project during a C$183-million takeover of PMI Gold Corp in February 2014.

Project Description
The Asanko mine was created by combining the Obotan and Esaase projects into one project, which will be developed over two phases.

The Asanko mine has 7.5-million ounces of measured and indicated resources, including 4.8-million ounces of proven and probable reserves.

Phase 1 is based on PMI Gold's definitive feasibility study (DFS) for the Obotan project, published in September 2012, and will be a low-cost, long-life mine producing 190 000 oz/y of gold at steady state.

The project is targeting an estimated 2.33-million ounces of gold production over an 11.5-year life-of-mine (LoM) using an openpit contractor mining operation and a three-million-tonne-a-year carbon-in-leach processing plant. The primary source of feed material for the carbon-in-leach plant is the Nkran pit, with satellite pits at Adubiaso, Abore and Asuadai, and the recently discovered Dynamite Hill deposit providing supplemental feed.

Phase 2 anticipates the inclusion of the adjacent Esaase deposit, which is located only 25 km from the plant site. A scoping study is under way to evaluate the optimum ore transport method and the scope of the plant expansion. The study is scheduled for publication in the second quarter of 2015. Phase 1 has incorporated sufficient plant terracing, with plant layout and infrastructure having been designed to cater for the potential of Phase 2.

Net Present Value/Internal Rate of Return
Not stated.

Value
The Obotan DFS has estimated capital costs of $296.6-million.

Since acquiring PMI Gold earlier this year, Asanko Gold has updated the capital cost estimate to a higher level of accuracy suitable for use as a project control budget estimate (CBE). The CBE estimates a capital cost for Phase 1 of $295-million, including contingency for estimating inaccuracy and owner's contingency. The capital estimate is generally considered accurate to +/- 5%.

The CBE was designed on a modular basis to cater for the possible inclusion of Phase 2 on the same site.

Duration
Phase 1 construction started in the third quarter of 2014, with first gold targeted in the first quarter of 2016 and steady-state production of 200 000 oz/y of gold expected in the second quarter of 2016.

Latest Developments
Asanko Gold is nearing completion of the first phase of its cornerstone Asanko gold mine, where it expects to produce on average 190 000 oz/y of gold from next year.

The project continues to advance, an estimated 75% of the overall project complete and about 2 400 employees and contractors on site, as at the end of August.

Concrete civils, steel erection, mechanical and plate work are nearing completion, with piping, and electrical and instrumentation well under way.

“The current level of activity and energy at the project site is tremendous and we have achieved some significant milestones since our last update, including the installation of the primary crusher and the mill shells. The completion and handover of 88 new houses as part of the partial village relocation is a major achievement and . . . was done in close collaboration with and support from the local community.

The focus is now shifting to the commissioning plan to ensure the successful start-up and ramp-up of Phase 1 operations,” president and CEO Peter Breese has stated.

Procurement is complete and the project continues to track within budget, with $180-million spent and a further $110-million committed. Asanko has advised that it is fully funded until the project becomes cash-flow positive, with about $182-million in cash on-hand as at August 31, and a $20-million cost-overrun facility for total available funding of about $202-million.

The remaining $162-million includes $139-million for the project, $18-million for working capital and $5-million for corporate costs until commercial production is achieved, which is expected in the second quarter of 2016. The company continues to maintain a funding buffer of $40-million.

Meanwhile, prestripping of the Nkran pit, the main mineral resource for Phase 1, continues to advance according to schedule. The contractor reached hard rock in August, when drill and blast operations started. Mining operations were running at planned production levels of 80 000 t/d to 90 000 t/d, which was in line with the long-term, steady-state LoM plan.

The mining contractor had mined 12-million tonnes from the pit as at the end of August, representing more than 60% of the planned prestrip. About 53 000 t of ore at a grade of 1.62 g/t had been mined during the prestrip and placed on the run-of-mine pad. This ore was previously categorised in the inferred category that was not included in the mine plan.

Before starting milling operations, Asanko plans to have more than 400 000 t of ore at reserve grade on the stockpiles, which is more than a month’s production requirements.

Pit dewatering also continues to advance ahead of the mining operations, with 4.6-million cubic metres of the expected six-million cubic metres of water now pumped from the Nkran pit (about 77%). The pit is expected to be empty in November. Pit dewatering boreholes are being drilled and will be operational as required during the fourth quarter.

Further, significant equipment, such as the crusher, semiautogenous grinding and ball mill, have been placed, while the tailings storage facility is 95% complete.

The mine is expected to have an operational dedicated power supply in November.

Key Contracts and Suppliers
DRA (engineering, procurement and construction management contractor) and Knight Piesold (tailings storage facility design contractor).

On Budget and on Time?
The operation is currently within budget and on track to pour its first gold early in the first quarter of 2016.

Contact Details for Project Information
Asanko Gold investor relations manager Alex Buck, tel +44 7932 740 452 or email alex.buck@asanko.com.
DRA, tel  +27 11 202 8600 or email info@DRAglobal.com.
Knight Piesold, tel +27 11 806 7111 or fax +27 11 806 7100.