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11.08.2022 Feature Article

How will Chirano become the next Ghanaian champion?

How will Chirano become the next Ghanaian champion?
11.08.2022 LISTEN

On 10 August, Asante Gold Corporation announced that it had completed the acquisition of the Chirano gold mine. The company purchased Chirano from its counterpart Kinross Gold Corporation for $225 million in cash and shares. Discussions with Kinross had begun in early April, but were extended due to a gradual disengagement of the authorities. In addition, the Ghanaian government continues to retain a 10% stake in Chirano.

Asante Gold, the worthy successor to Kinross

Although a junior, Asante Gold is not a new player in Ghana: the company is anchored in the Ghanaian mining landscape. Asante has several assets in the country and extensive knowledge of the mining sector. Its last acquisition, before Chirano, was the Bibiani mine, purchased in August 2021. 10 months later, Asante announced the first gold pour at the Bibiani mine. On 29 June, Asante Gold made its debut on the main market of the Ghana Stock Exchange. This listing has increased the company's Ghanaian footprint, as it allows local investors to position themselves to participate in the development of Asante's gold portfolio in Ghana. In addition, with strong Ghanaian leadership, the company could not be in a better position to understand the country's issues and the challenges of local communities. The Chirano mine is Asante's seventh Ghanaian asset and is expected to propel Asante to mid-market status in the near future, according to Dave Anthony, president and CEO. The acquisition of the Chirano mine is expected to position Asante as a leading producer in Ghana and West Africa. The CEO also announced that the Bibiani and Chirano assets are now combined into one ownership, covering a district-wide gold field of over 53 km in length, with past production of over 8 million ounces of gold.

Asante Gold Corporation supported by Kinross Gold Corporation

The acquisition of Chirano is a real bargain for Asante. Unlike Bibiani, which required work before full production could begin, the Chirano mine is in perfect condition and the transition of ownership will not interrupt the ongoing production. The gold mine has a sound track-record of production: in the first half of 2022, it delivered 68,538 ounces of gold. In addition, the proximity of the Chirano and Bibiani gold mines offers Asante the opportunity to reduce operational costs and maximize scalability by sharing infrastructure. Another major strength of this acquisition for Asante, is to re-employ the personnel already trained by Kinross, thus benefiting from their technical expertise. Finally, Asante will temporarily benefit from the advice and experience of Kinross, which has agreed to hold its Asante shares (9.9%) for a minimum of 12 months after the closing of the transaction.

Ghanaian government to support the mine

The success of the Chirano mine would be in line with President Akufo-Addo's "Ghana Beyond Aid" program, a strategy to ensure Ghana's economic independence from foreign intervention. Although Asante Gold has all the elements to become a local champion, its success relies on government support, especially in this period of ownership transition. Moreover, Chirano’s success-story represents a golden opportunity for the government. A strong investment from the State, in the midst of economic turmoil, would generate significant economic benefits. It would also offer hope for local solutions at a time when international aid seems to be the only available and credible option. The success of Chirano would be a testament to the resilience and determination of the Ghanaian state, but also to its visionary side, as the government promised to contribute to the purchase of Chirano at the outset of the negotiations between Kinross and Asante.

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