Asanko GOLD Expansion DFS Confirms Robust Organic Growth Plan and Strong Cash Generation
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PRESS RELEASE
ASANKO GOLD EXPANSION DFS CONFIRMS ROBUST
ORGANIC GROWTH PLAN AND STRONG CASH GENERATION
Vancouver, British Columbia, June 5, 2017 – Asanko Gold Inc. (“Asanko” or the “Company”) (TSX, NYSE
MKT: AKG) is pleased to announce the Definitive Feasibility Study (“DFS”) results of a staged expansion at
the Asanko Gold Mine (the “AGM”), located in Ghana, West Africa, which confirms the AGM is a large scale,
long life quality ass et with a viable and robust two stage organic growth plan and strong cash generation
capability.
The Expansion DFS is comprised of two growth projects, Project 5 Million and Project 10 Million.
Project 5 Million:
Designed on modular basis allowing plant upgrade and development of Esaase as discrete packages
Processing plant upgrade to 5Mtpa
- US$22 million capital cost
- Approved and under construction
- Completion in Q4 2017
Development of large scale Esaase deposit
- Includes construction of overland conveyor linking Esaase to processing facility
- Capital cost of US$120 million
- Capital leverages the Company’s ability to further grow production at any time in the future
Averages 230,000oz/pa over 20 year mine life at an AISC3 of US$968/oz
Robust business on standalone basis with a long life
- Over US$80 million average annual projected pre-tax cash flow from operations at steady state
- 13% after -tax incremental IRR, NPV of US$658 million at 5% discount rate and a gold price of
US$1,250/oz
Project 10 Million:
Modular expansion with full flexibility on timing of project execution
- Construction of additional 5Mtpa CIL plant to double processing capacity to 10Mtpa
- Capital cost of combined growth projects, P5M & P10M, of US$350 million
Averages 450,000oz/pa at steady state for eight years at an AISC3 of US$890/oz
US$185 million average annual projected pre-tax cash flow from operations at steady state
20% after -tax incremental IRR, NPV of US$811 million at 5% discount rate and a gold price of
US$1,250/oz
Timing dependent on ability to predominantly fund from internal cash flow, supported by debt
financing and market conditions
Commenting on the announcement, Peter Breese, President and CEO, said “Our growth plan has been
designed to be fully flexible so that it can be advanced in modular components, according to cash flow
generation, balance sheet strength, financing opportunities and market conditions.
Our first expansion module, the plant upgrade to 5Mtpa, is a great low cost capital efficient project which is
fully funded, delivering a 40% increase in throughput. We expect to see some volumetric increases in Q3
2017, ahead of full commissioning in Q4 2017.
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The Board is reviewing the optimal timing for the development of Esaase and the conveyor, as wel l as
Project 10 Million, and the respective investment decisions will be dependent on the Company’s cash
position and financing opportunities. This review will enable us to prudently bolster our liquidity position to
over US$100 million by Q2 2018 without overextending the balance sheet or diluting shareholders, thereby
securing our growth pipeline to ultimately deliver a production profile of over 450,000oz a year, making the
Asanko Gold Mine one of the largest mines in Africa.”
Summary
The Expansion DFS is comprised of two discret e growth projects, Project 5 Million and Project 10 Million
and is based on the optimal NPV on a capital unconstrained basis for the AGM which assumes the
sequential development of each project. However there is complete flexibility on the timing of the
development of Esaase and the conveyor, as well as the Project 10 Million plant expansion. A construction
decision to proceed will be at the Board’s discretion and dependent on an optimized balance sheet,
financing opportunities as well as favourable market conditions.
Project 5 Million
Project 5 Million comprises t wo modules, t he upgrade of the existing carbon -in-leach (“CIL”) processing
plant from a design of 3 million tonnes per annum (“Mtpa”) to 5Mtpa , and the development of the large
Esaase pit, which includes the construction of an overland conveyor from Esaase to the processing facility.
Production averages 230,000oz/pa over a 20 year life of mine (“LoM”) at an AISC3 of US$968/oz.
The plant upgrade to 5Mtpa has been approved and is currently progressing ahead of the original schedule.
Some volumetric increases are expected in Q3 2017, with commissioning of the full 5Mtpa plant due in Q4
2017.
Based on Front End Engineering Design (“FEED”), the final capital cost estimates are US$22 million for the
plant upgrade, US$78 million for the conveyor and US$32 million for the development of the Esaase
deposit and associated infrastructure, with a total project capital cost of approximately US$150 million.
Table 1 – Summary of Project 5 Million Production Metrics on a Standalone Basis
2017 2018 2019 2020 2021 LoM
Total
Total Tonnes Mined ‘000t 29,801 41,558 37,845 38,317 38,716 679,247
Ore Tonnes ‘000t 4,709 5,228 5,295 5,322 5,198 100,796
Waste Tonnes ‘000t 25,092 36,330 32,550 32,995 33,518 578,451
Strip Ratio W:O 5.32 6.95 6.15 6.20 6.45 5.74
Ave. Mining Grade g/t 1.86 1.67 1.64 1.61 1.84 1.57
Tonnes Processed ‘000t 3,950 5,012 5,000 5,000 5,000 *102,745
Ave. Feed Grade g/t 2.03 1.78 1.60 1.55 1.83 1.57
Gold Production ‘000oz 242 268 240 233 276 4,849
*difference in tonnes due to stockpile inventory in 2017
Note: Asanko’s 2017 production guidance is 230 – 240,000 ounces
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Table 2 – Summary of Project 5 Million Project Economics on a Standalone Basis
Total Tonnes Mined ‘000t 679.2
Total Tonnes Processed ‘000t 102.7
Total Gold Production ‘000oz 4,849
Life of Mine Years 20
Operating Cash Cost2 US$/oz 837
Total Cash Cost2 US$/oz 903
AISC3 US$/oz 968*
Project Capex US$ million 150
NPV5% US$ million 658
Incremental NPV US$ million 176
Incremental IRR % 13
Note: Based on US$1,250/oz gold price
*Corporate G&A not included in the economic assessment
Gold Price Sensitivity (Project 5M)
The NPV 5% at various gold prices is shown below. A US$100/oz movement in the gold price results in a
movement of approximately US$199 million in NPV.
Price US$ Gold/oz NPV5% (US$m)
Downside Case - 1,150 459
Study Basis - 1,250 658
Upside Case - 1,350 857
Funding
Project 5 Million is expected to be funded from cash reserves and cash flow from operations. The plant
upgrade to 5Mtpa will be funded from cash on hand. The Board will consider the optimal timing of the
development of Esaase and the conveyor, based on the Company’s balance sheet, cash position and market
conditions.
As provided in the original agreement, Asanko has the option to extend the first principal repayment of the
Red Kite facility by an additional year to July 2019. If the Company elects to exercise this option, it would
accumulate an additional US$46 million in cash in 2018 to contribute to the development of the conveyor.
Gold Price Sensitivity (Project 10M)
The NPV5% of the free cash flows at various gold prices is shown below. A US$100/oz movement in the gold
price results in a movement of approximately US$226 million in NPV.
Price US$ Gold/oz NPV5% (US$m)
Downside Case - 1,150 585
Study Basis -1,250 811
Upside Case - 1,350 1,037
A NI 43 -101 compliant technical report will be filed on SEDAR on or before July 18, 2017 and will also be
available on the Company’s website: www.asanko.com.
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Expansion DFS Presentation, Conference Call and Webcast Details on Monday, June 5 at 8am EDT
Management will be hosting a presentation in Toronto and accompanying conference call and webcast
today at 8am EDT, details below.
Toronto Presentation
Belgravia Room, Omni King Edward Hotel
To attend, please arrive by 7.45am and RSVP to [email protected]
Conference Call & Webcast Details at 8.00am EDT:
US/Canada Toll Free: 1 888 225 8011
UK Toll Free: 0800 496 1093
International: +1 303 223 4384
Webcast:
Please click on the link: https://cc.callinfo.com/r/183fpsaijbtsj&eom
Replay
A recorded playback will be available approximately two hours after the call until July 4, 2017:
US/Canada Toll Free: 1 800 558 5253
International: +1 416 626 4100
Passcode: 21852384
Enquiries:
For further information please visit: www.asanko.com, email: [email protected] or contact:
Alex Buck - Manager, Investor and Media Relations
Toll-Free (N.America): 1-855-246-7341
Telephone: +44-7932-740-452
Email: [email protected]
Ryan Walchuck – VP Corporate Development and Investor Relations
Telephone: +1-778-986-2000
Email: [email protected]
About Asanko Gold Inc.
Asanko’s vision is to become a mid -tier gold mining company that maximizes value for all its stakeholders.
The Company’s flagship project is the multi-million ounce Asanko Gold Mine located in Ghana, West Africa.
Asanko is managed by highly skilled and successful technical, operational and financial professionals. The
Company is strongly committed to the highest standards for environmental management, soc ial
responsibility, and health and safety for its employees and neighbouring communities.
Notes:
1 Non-GAAP Performance Measures
The Company has included certain non -GAAP performance measures in this press release, including working capital,
adjusted net income (loss), adjusted net income (loss) per share, operating cash costs, total cash costs, all -in
sustaining costs per ounce of gold produced and all -in sustaining margin. These non -GAAP performance measures do
not have any standardized meaning. Accordingly, these performance measures are intended to provide additional
information and should not be considered in isolation or as a substitute for measures of performance prepared in
accordance with GAAP.
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2 Operating Cash Costs per ounce and Total Cash Costs per ounce
Operating cash costs are reflective of the cost of production, adjusted for share -based payments and by-product
revenue for each ounce of gold sold. Total cash costs include production royalties of 5%.
3 All-in Sustaining Costs Per Gold Ounce
The Company has adopted the reporting of “all -in sustaining costs per gold ounce” (“AISC”) as per the World Gold
Council’s guidance. AISC include total cash costs, corporate overhead expenses, sustaining capital expenditure,
capitalized stripping costs and reclamation cost accretion for each ounce of gold sold. Corporate overhead expenses
not included in economic assessment.
4A ‘Mineral Reserve’ is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated
by at least a Preliminary Feasibility Study. It includes diluting materials and allowances for losses that may occur when
the material is mined. DRA is of the opinion that the classification of Mineral Reserves as reported herein meets the
definitions of Proven and Probable Mineral Reserves as stated by the CIM Definition Standards (2005). Measured and
Indicated Mineral Resources that are not Mine ral Reserves have not demonstrated economic viability. Inferred
Mineral Resources are excluded from the Mineral Reserve Estimate.
Qualified Persons Statement
Malcolm Titley (CSA Global Principal Geologist; AIG), is the Qualified Person for the sign off of the Nkran, Akwasiso and
Dynamite Hill Mineral Resource Estimate s. Charles J. Muller, (B.Sc. Geology (Hons), PR.Sci.Nat., MGSSA, a Director of
CJM Consulting Pty Ltd. (“CJM”) of Johannesburg, South Africa) is the Qualified Person for the sign off of the Es aase
Main, Esaase B and D zones, Abore, Adubiaso, Adubiaso Extension, Asuadai and Nkran Extension Mineral Resource
Estimates. The M ineral Reserve Estim ates are reported in accordance with Canadian National Instrument 43 -101
requirements and the South Afric an Code of Reporting of Exploration Results (SAMREC), which is consistent with the
CIM Estimation Best Practice Guidelines in Canada. Mr Titley and Mr. Muller have reviewed and approved the
technical content of this news release. Phil Bentley, Asanko Exe cutive: Geology and Resources (Pr.Sci.Nat.; FSAGS) is
the Asanko Qualified Person under NI 43 -101 guidelines who assumes technical responsibility for Geological and
Mineral Resource contents of this news release.
The Mineral Reserve Statements were all prepared by Thomas Obiri -Yeboah, B.Sc. Mining Engineering (Hons), PR.Eng,
a Senior Mining Engineer of DRA Mining (Pty) Ltd. (“DRA”) of Johannesburg, South Africa. The Mineral Reserves are
reported in accordance with Canadian Na tional Instrument 43 -101 requirements, which is consistent with the CIM
Estimation Best Practice Guidelines in Canada. Frederik Fourie, Asanko Senior Mine Engineer ( Pr.Eng.) is the Asanko
Qualified Person under NI 43 -101 who assumes responsibility for the Mineral Reserve contents of this news release.
Mr. Obiri-Yeboah has reviewed and approved the technical content of this news release .
The information in this news release that relates to the metallurgy and processing is based on information compiled
by Mr Glenn Bezuidenhout, who is a Metallurgist and a Fellow of the South African Institute of Mining and Metallurgy.
Mr Bezuidenhout is a Director of DRA Mineral Projects. Mr Bezuidenhout has sufficient experience which is relevant to
the style of mineralizat ion and type of deposit under consideration and to the activity which he is undertaking to
qualify and is a "Qualified Person" under National Instrument 43 -101 – “Standards of Disclosure for Mineral Projects”.
Mr Bezuidenhout has reviewed and approved the technical content of this news release.
The information in this news release that relates to the economic assessment is based on financial models compiled
by Mr Godknows Njowa, Venmyn Deloitte. Mr Njowa has acquired the qualifications of Master in Mining Engineering
specializing in mineral proje ct evaluation, Bachelor of Science honours in Mining Engineering and Professional
Accounting Qualifications with the Chartered Institute of Secretaries and Administrators and has 13 years’ experience
in mineral project evaluation. In addition Mr Njowa is a registered Professional Engineer registered with Engineering
Council of South Africa and a member of both the South African Institute of Mining and Metallurgy and the Australian
Institute of Mining and Metallurgy. Mr Njowa has sufficient experience to pre pare the financial sections as disclosed in
this news release. The economic assessment is based on technical and cost information signed -off by Asanko’s
technical consultants and includes economic inputs (including but not limited to taxation rates, govern ment royalties,
commodity prices and foreign exchange rates) provided by Asanko. Mr. Njowa has not conducted a technical due
diligence of the economic and technical assumptions received from Asanko and its advisors. Mr Njowa consents to the
inclusion of such financial information in this release in the form and context in which it appears.
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Forward-Looking and other Cautionary Information
This release includes certain statements that may be deemed "forward -looking statements". All statements in this
release, other than statements of historical facts, that address estimated resource quantities, grades and contained
metals, possible future mining, exploration and development activities, are forward -looking statements. Although the
Company believes the forwar d-looking statements are based on reasonable assumptions, such statements should not
be in any way construed as guarantees of future performance and actual results or developments may differ materially
from those in the forward -looking statements. Factors that could cause actual results to differ materially from those in
forward-looking statements include market prices for metals, the conclusions of detailed feasibility and technical
analyses, the timely renewal of key permits, lower than expected grades an d quantities of resources, mining rates and
recovery rates and the lack of availability of necessary capital, which may not be available to the Company on terms
acceptable to it or at all. The Company is subject to the specific risks inherent in the mining business as well as general
economic and business conditions. For more information on the Company, Investors should review the Company's
Annual Form 40-F filing with the United States Securities Commission and its home jurisdiction filings that are availa ble
at www.sedar.com.
Neither Toronto Stock Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility
for the adequacy or accuracy of this release.
Cautionary Note to US Investors Regarding Mineral Reporting Standards:
Asanko has prepared its disclosure in accordance with the requirements of securities laws in effect in Canada, which
differ from the requirements of US securities laws. Terms relating to mineral resources in this pres s release are defined
in accordance with National Instrument 43 -101 - Standards of Disclosure for Mineral Projects under the guidelines set
out in the Canadian Institute of Mining, Metallurgy, and Petroleum Standards on Mineral Resources and Mineral
Reserves. The Securities and Exchange Commission (the “ SEC”) permits mining companies, in their filings with the SEC,
to disclose only those mineral deposits that a company can economically and legally extract or produce. Asanko uses
certain terms, such as, “m easured mineral resources”, “indicated mineral resources”, “inferred mineral resources” and
“probable mineral reserves”, that the SEC does not recognize (these terms may be used in this press release and are
included in the public filings of Asanko which h ave been filed with securities commissions or similar authorities in
Canada).
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Summary of the Expansion Definitive Feasibility Study for the Asanko Gold
Mine, Ghana, West Africa
Introduction
The Company engaged DRA Mineral Projects (“DRA”) to manage the Expansion Definitive Feasibility Study
(“DFS”) of the Asanko Gold Mine (“AGM”) in Ghana, West Africa. DRA were the EPCM contractors for the
construction of the existing CIL processing plant and associated infrastructure, which was successfully
constructed and ramped-up ahead of schedule and under budget.
The Expansion DFS is comprised of two discrete growth projects , Project 5 Million and Project 10 Million .
Project 5 Million consists of two modules, the upgrade of the existing carbon -in-leach (“CIL”) processing
plant from a design of 3 million tonne s per annum (“Mtpa”) to 5Mtpa and the development of the Esaase
pit and the overland conveyor. Project 10 Million is the construction of a second replica 5Mtpa CIL plant to
double processing capacity to a total of 10Mtpa, with a commensurate increase in mining operations.
Figure 1. Locality Map of the Asanko Gold Mine and its deposits
DFS Assumptions
For the purposes of the Expansion DFS, both Project 5 Million and Project 10 Million have been scheduled
around the optimal NPV on a capital unconstrained basis for the AGM . This assume commissioning of the
Esaase pit and overland conveyor in Q1 2019 and commissioning of Project 10 Million in Q2 2020, reaching
steady state operations in 2021. The financial outcomes for Project 5 Million, as a complete project, and for
Project 10 Million are presented on this basis.
Importantly, the timing of the development of Esaase and the conveyor as well as the modular expansion,
Project 10 Million, will be at the Board’s discretion and dependent on an optimized balance sheet, as well
as financing and market conditions. Only the plant upgrade to 5Mtpa, at a capital cost of US$22 million, has
been approved by the Board.
AGM Mineral Resources
The AGM mineral resources comprise two main pits, Nkran and Esaase and nine satellite deposits,
Akwasiso, Dynamite Hill, Adubiaso, Abore, Asu adai, Nkran Extension, Adubiaso Extension, Esaase B zone
and Esaase D zone.
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The AGM Mineral Resource Estimate (“MRE”) was updated at December 31, 2016 (see news release
February 24, 2017) to reflect depletion from the first two years of mining operations, the application of
updated constraining parameters for resource modelling in line with best practices, and the inclusion of the
three deposits discovered in 2016; Akwasiso, Nkran Extension and Adubiaso Extension, as well as two
additional pits at Esaase.
Previous MREs on the AGM orebodies were unconstrained. Based on CSA Global’s recommendations,
Asanko has adopted a 0.5g/t cut -off and applied US$2,000/oz gold price as a constraint to all its MRE. The
Mineral Reserves are estimated within the pit shell at a forward looking US$1,300/oz gold price.
In April 2017, the MRE for Akwasiso was updated to incorporate the results of a successful infill drilling
program that increased resources by 79%.
The MRE for Nkran, Akwasiso and Dynamite Hill has been compile d by independent experts CSA Global,
(“CSA”), a leading mineral resource consulting group. The MRE for Esaase Main has been compiled by CJM
Consulting (“CJM”) and audited by CSA. The MRE for the remaining satellite deposits is based on the 2014
CJM estimation. 89% of the AGM MRE has been compiled and / or audited by CSA.
Table 1: Asanko Gold Mine Global Mineral Resource Estimate (as at April 25, 2017)
Deposit
Measured Indicated Total (M&I)
Mt g/t Au Moz Mt g/t Au Moz Mt g/t Au Moz
Esaase Main 26.64 1.37 1.17 65.50 1.37 2.89 92.14 1.37 4.06
Nkran 5.58 1.67 0.30 34.71 1.68 1.87 40.29 1.68 2.17
Akwasiso - - - 6.72 1.49 0.32 6.72 1.49 0.32
Abore 2.30 1.39 0.10 4.68 1.33 0.20 6.98 1.35 0.30
Dynamite Hill - - - 3.80 1.45 0.18 3.80 1.45 0.18
Adubiaso 0.83 2.35 0.06 1.57 1.89 0.10 2.40 2.05 0.16
Esaase D zone 0.97 1.09 0.03 1.35 1.39 0.06 2.33 1.26 0.09
Esaase B zone 0.87 0.99 0.03 2.21 0.76 0.05 3.08 0.82 0.08
Asuadai - - - 1.97 1.21 0.08 1.97 1.21 0.08
Adubiaso Ext. 0.16 1.94 0.01 0.31 1.59 0.02 0.47 1.71 0.03
Nkran Ext. - - - 0.20 2.61 0.02 0.20 2.61 0.02
Total 37.35 1.42 1.70 123.0 1.46 5.79 160.40 1.45 7.49
Notes:
All pits are at a cut-off of 0.5g/t Au within a US$2,000 per ounce of gold pit shell.
Nkran includes depletion of 5.08Mt at 1.66 g/t Au for 270,471 ounces, as at December 31, 2016.
All figures are rounded to reflect appropriate levels of confidence. Apparent differences may occur due to rounding.
AGM Mineral Reserves
The AGM Mineral Reserve Estimate4 (“MRev”) was updated at December 31, 2016 and incorporates a more
conservative CSA resource model for the Nkran pit. In April 2017, following the successful Akwasiso infill
drilling program which increased reserves and grade, the Akwasiso MRev has been updated.
In addition, the MRev has been modified to reflect new cut -off grades following an NPV optimization
exercise that was complet ed for each pit. This optimization process seeks to determine the best outcome
balance between the highest NPV, the maximum ounces produced and the lowest cost per ounce produced