Gold Fields and AngloGold Ashanti have agreed to the key terms for a proposed joint venture (JV) in Ghana between Gold Fields’ Tarkwa and AngloGold Ashanti’s neighboring Iduapriem mines.

The Tarkwa mine is held by Gold Fields Ghana, in which Gold Fields currently owns a 90% share and the Government of Ghana (GoG) holds 10%. The Iduapriem mine is currently 100% owned by AngloGold Ashanti. Both mines are located near the town of Tarkwa in the country’s Western Region.

The proposed JV would create the largest gold mine in Africa and one of the largest in the world. It would be supported by a substantial mineral endowment and an initial life spanning almost two decades. Operational synergies could be achieved by optimizing mining of the combined ore bodies and consolidating the infrastructure of the immediately adjacent mines.

The two companies said they have commenced with preliminary, high-level and constructive engagements with senior government officials in Ghana and will continue engaging with the GoG, relevant regulators and other key stakeholders, with a view to implementing the proposed JV as soon as practically possible. The parties have also agreed to mutual exclusivity during this engagement.

“[This] is something that Gold Fields and AngloGold Ashanti have discussed many times before over the years,” said Alberto Calderon, CEO AngloGold Ashanti. “The ability to optimize mining and the use of shared infrastructure across the combined operation will result in significant flexibility in mine planning, materially enhancing the economics of the mine and ensuring quality and scale of operation that will be world-class.”

The proposed JV will be an incorporated joint venture, constituted within Gold Fields Ghana and operated by Gold Fields. AngloGold Ashanti will contribute its 100% interest in Iduapriem to Gold Fields Ghana in return for a shareholding in that company. Excluding the interest to be held by the GoG, Gold Fields will have an interest of 66.7%, and AngloGold Ashanti will have an interest of 33.3%, in the proposed JV.

“This combination puts together two parts of the same world-class ore body, allowing us to share skills and infrastructure to significantly enhance every aspect of this mining operation, from exploration and planning to mining and processing,” Calderon said.

With a mine life 18 years, the combined operations would have an estimated average annual production of almost 900,000 oz over the first five years and average annual production in excess of 600,000 oz over the estimated life of the operation. All-in-sustaining costs would be less than $1,000/oz over the first five years and less than $1,200/oz over the estimated life of the operation.