A market of more than 100 million inhabitants, where only one-third of those over 25 have a bank or mobile finance account (compared to an average ... of 58.5% in sub-Saharan Africa and 79.5% in neighbouring Kenya). An economy where one public institution, Commercial Bank of Ethiopia (CBE), alone manages 55% of outstanding credit. A banking industry so inefficient that its costs absorb 56% of its revenues, but where the return on assets is four times higher than that of Moroccan banks…
The company is currently working on an updated resource estimate to be published at the end of the fourth quarter. The current estimate of 1.4 million ounces is likely to increase to about 2 million, Alexander says. “There’s a huge opportunity for us to explore,” he says. “It’s a world-class opportunity.”
The Enchi project, 100% owned by Newcore, extends over 216 square kilometres in the southwest of the country near the border with Côte d’Ivoire. 50 kilometres to the north lies the Chirano mine, owned by Asante Gold, which produced about 155,000 ounces of gold in 2021. Enchi is situated on the same regional structure as Chirano and, Newcore says, has comparable geology.
With the help of airborne geophysics, the company has identified 25 targets across the project, of which nine have so far been drilled and only four of which are included in the current resource estimate. The company’s preliminary economic assessment (PEA) sees a 42% after-tax internal rate of return at the site, assuming a gold price of $1,650 per ounce.
Newcore, which changed its name from Pinecrest Resources 2020, trades on the TSX Venture Exchange in Canada and over-the-counter in the US. Management and the board own 24% of the stock, with institutional holders including Franklin Templeton, Ruffer and Earth Resource Investment.
Enchi is the company’s only holding. While Newcore is open to considering other projects, the focus for now is on making the most of it.
The company has not yet decided whether to focus on production or further exploration at the site. “We want to maintain as much flexibility as possible,” Alexander says.
Ghana’s gold prospects
Newcore will need to raise finance at some point, with the construction of the mine to cost an estimated $97m. The company, which raised $5m in July, has enough cash for the next year, Alexander says. Logistics at the project will be helped by the existence of a paved road which runs through the project to the town of Enchi. Diesel, solar and natural gas are being considered as potential energy sources.
Ghana overtook South Africa as the continent’s largest gold producer in 2019. The country lost the top spot in 2021 as production dropped by 30% after a withholding tax of 3%, which has since been halved, was imposed on small-scale operations. According to the Ghana Chamber of Mines, the tax prompted small producers to export their gold via non-official channels.
Alexander expects that Ghana’s production will increase in coming years, pointing to investments by Newmont, AngloGold Ashanti and Gold Fields. Newmont is investing about $800m to expand the Ahafo North project.
- Announced major projects alone are enough to achieve a 15% increase in output, and further major investments are likely to materialise, Alexander says. “I haven’t heard of that kind of investment going into South Africa.”
- Ghana is an “absolute tier-one jurisdiction” for miners and the government is “hugely motivated to see projects moving forward,” he says.
Newcore is confident that only the surface has been scratched at Enchi and for Ghana’s gold mining potential as a whole.
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