Industry Trend Analysis - Ghana Gold Receives Welcome Production Boost - FEB 2017

BMI View: Ghana's gold sector has started the year strongly following the start of gold production in a new mine, rising gold prices and a favourable investment environment. We expect the steady growth rate of the country's gold output to continue from 2017-202 1 .

Ghana's mining sector will receive a welcome boost following the announcement in January 2017 by Golden Star Resources Ltd . that commercial production has begun at the Wassa Underground Gold Mine. Golden Star Resources' Wassa mine - which is comprised of a main pit and an underground pit - has proven Mineral Reserves of 1.5 million ounces (moz) at an average high grade of 2.27 g/t Au. It is estimated that this year's production at the entire mine will amount to 145-160,000 oz, of which 60,000 oz will come from the newly producing underground mine Looking forward, Golden Star also expects another of its projects, Prestea Underground Gold Mine, to start production in mid-2017 which will contribute to its estimate of 60,000-86,000 oz growth in total gold production this year. This will account for about 2% of the country's total annual production of 3.72moz forecast for 2017, a significant amount considering the small number of mines that have come online in recent years.

In the longer term, the country's mining sector will also benefit from rising gold prices, which have rebounded following the initial drop after the election of Trump. We forecast the precious metal to steadily increase from an average of USD 1,300/oz in 2017 to USD 1,500/oz in 2020 largely due to rising inflation pressures. This trend will help to sustain Ghana's gold production growth of between 1% and 2.5 % annually from 2017-2020, due to recent cost cuts across the sector.

Gold Prices Sustain Gold Production
Global Gold Price (USD/oz) & Ghana Gold Production (moz)
e/f = BMI estimate/forecast. Source: BMI, USGS

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