PERTH (miningweekly.com) – Dual-listed gold developer PMI Gold Corporation has introduced a number of initiatives to cut back on costs while reviewing the economics of its Obotan gold project, in Ghana.

The ASX- and TSX-listed PMI said on Monday that, until a suitable financing package was secured for the development of the Obotan project, the company would look to maintain its cash balance by cutting back director and executive salaries, reducing the number of exploration staff in Ghana, reducing overheads and reducing its exploration expenditure.

Meanwhile, the gold developer was also exploring ways to reduce the capital cost of the Obotan project, while strengthening the project’s margins and optimising returns.

“We have identified several key opportunities to reduce capital and operating expenses at Obotan, which we believe will go a long way to offsetting the impacts of a lower gold price,” said PMI CEO Collin Ellison.

“It is now well known that construction costs and other contracting expenses have fallen since commodity prices came off. This is particularly the case in West Africa, where the project developments have slowed dramatically.”

Ellison noted that a review of the pricing of all major contracts incorporated under the project’s feasibility study was now under way, and PMI was also looking at the potential of deferring some or all of the pre-stripping requirements in the early stages of Obotan’s development by defining alternative sources of oxide ore feed within a 5 km to 10 km radius of the mill.

A 2012 feasibility study showed that the Obotan project could be developed into a 220 000 oz/y operation with a C1 cash cost of $626/oz, based on a gold price of $1 300/oz.

“Obotan already has the significant advantage of being a low-cost, high margin producer, as shown by the 2012 feasibility study, and we are confident that this multipronged strategy will protect our margins and ensure that we are able to secure finance on attractive terms,” Ellison said.

He noted that, importantly, none of the changes suggested would impact PMI’s ability to move ahead with the development of the Obotan project, at the appropriate time.

Meanwhile, the company was reviewing its range of project financing alternatives for the Obotan project, while it awaited final approval of the environmental-impact study (EIS).

The EIS approval was expected in the second half of the year and was the final remaining regulatory approval required.