Asanko Begins Construction Of Gold Mine

akg-cnAsanko Gold says main construction  work has started on phase one of its flagship project, Asanko Gold Mine, in Ghana.

This first phase is based on the construction of the Obotan gold project, while the second and last phase, for which a scoping study is currently underway, anticipates the inclusion of the Esaase deposit, which is adjacent to Obotan.

Commenting, President and CEO Peter Breese said it is an “important milestone” for Asanko, an understandable description given all the work the company has done to get to this point.

Just this year, Asanko’s work at the site has included upgrading the access road, refurbishing the operations camp and upgrading site utilities.

In terms of what is going on at the moment, the company stated that it has started clearing ground for a gravity/carbon-in-leach processing plant, while “the bulk earthworks contract has been awarded and the contractor has mobilised to site.”

“In the next few months, civil works and concrete pouring should begin,” it said.

Looking longer term, project milestones include: completion of a definitive project plan, including an updated mineral resource estimate by fourth quarter; commissioning and ramp up in first quarter of 2016; and steady state production of 200,000 ounces per year by 2016 second quarter.

Though the company’s share price did not see much movement following the news, rising just $0.05, to $2.65, following its release, it brought a positive reaction from analysts at Haywood Securities.

They said in a statement that they rate Asanko a “buy” with a target price of $3.60, identifying three key points working in its favour but cautioned that Asanko is a high-risk investment as it just starting construction.

The biggest risks associated with the company are “protracted construction,” which could lead to delays in generating cash flow, and “lack of capex and opex synergy.”

Investors will have to decide for themselves whether the potential rewards outweigh the risks. In the meantime, the Haywood analysts’ comments provide some food for thought, while Asanko has identified numerous upcoming catalysts to watch for moving forward.

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