Newmont's Ahafo Mine pays $2.29m as Q3 royalties

Accra, Nov. 11, GNA - Newmont Ghana Gold Limited (NGGL) has paid 2.29 million dollars to the Government as royalties against 113,000 ounces of gold sold from its Ahafo mine between July and September this year.

The amount represents a 45 percent increase over royalties paid by the company for the same period last year, when it sold 78,000 ounces. Dr. Chris Anderson, Director Corporate and External Affairs, Africa, told the Ghana News Agency the company was extremely pleased to be providing Ghana with an increasing revenue stream from the Ahafo royalties.

He, however, expressed concern that less than 10 percent of this revenue got to the people directly affected by the company's operation. "We'll like these people to benefit more from the royalty revenue, irrespective of the social investments and alternative livelihood projects we undertake directly in the communities."

All mining firms operating in Ghana are required to pay at least three percent of proceeds from the metal as royalty. The government takes 80 percent of the royalty while 20 percent goes into a mining development fund that is shared between the District Assembly of the operational area, the traditional council and the custodians of the local stool. Dr Anderson held that the people's share of the royalty revenue should be enhanced to enable them undertake additional development programmes in their areas as part of the nation-building process. "We feel we are doing our bit in terms of meeting our social responsibilities, the same way, we feel a little bit more of the royalty revenue should go back to the communities for total development in those areas," he added.

Dr Anderson said Newmont was recovering from losses it incurred in the past year as a result of high cost of operation, when it had to run on diesel generators during the power crisis that hit the nation between August 2006 and September 2007.

For example, he said, milling costs increased about four times due to the cost of diesel generated electricity during the power rationing, following a request by the Volta River Authority on bulk users to cut consumption by 50 percent.

"Our main task is to get our operational cost down and we're pretty getting back on track," he said.

He added that costs applicable to sales during the first nine months of 2007 were $391 per ounce, primarily due to better than expected power availability from the national grid, which resulted in lower power generation costs than originally expected. Based on the results of the first nine months of 2007 and the potential opportunity for continued power supply from the national grid during the fourth quarter of 2007, the Company has reduced its costs applicable to sales outlook for the year from between 460 dollars and 500 dollars per ounce to between 400 dollars and 430 dollars per ounce. Dr Anderson said while taking steps to lower cost, the Company might be paying significantly more for power again, as a result of recent increases approved by the public utility regulating commission. On other operations, he said the Newmont management would take a major decision on its Akyem project by April next year. The company is also in the middle of feasibility studies and a vigorous community education programme ahead of mining ore from some eight small pits in the northern half of the Ahafo concession. 13 Nov. 07