Asanko Begins Construction of Phase 1 of Ghana-based Gold Mine

Asanko Begins Construction of Phase 1 of Ghana-based Gold Mine

With gold output of 85 metric tons (MT), Ghana was both the world's 10th-largest producer of the metal last year and Africa's second-biggest producer.

Given those impressive statistics, investors might be surprised to learn that the country's gold industry is not exactly thriving. Case in point: after producing an impressive 100 MT of gold in 2011, up from 82 MT in 2010, Ghana put out 87 MT in 2012 and, as mentioned, 85 MT last year.

The reason for the decline is tied to last year's dramatic gold price drop. Ghana is home to many artisanal miners who eke out a living mining gold from small plots and then selling it to local buyers. However, as the BBC reported at the end of last year, lower gold prices have made it difficult for such miners to continue their work.

Kwaku Boham, one such miner, told the news outlet, "[t]hese days all the prices fall down. These days this job is not good, it's not like the olden days."

A government crackdown on illegal mining also hasn't helped. "The gangs that used to bring the [gold-containing] soil from the bush, these days they don't bring it because the government has cracked down on them. So, the amount of gold we get now is not enough," said Boham. He added, "[t]he future for us is uncertain."

Asanko starts construction

Though artisanal miners are struggling, mining companies are still enjoying success in Ghana. Indeed, this past month both Perseus Mining (TSX:PRU,ASX:PRU) and Golden Star Resources (TSX:GSC) have released encouraging news about their work in the country.

Most recently, Asanko Gold (TSX:AKG,NYSEMKT:AKG) announced that the main construction work has started on Phase 1 of its Asanko gold mine. This first phase is based on the construction of the Obotan gold project, while the second and last phase, for which a scoping study is currently underway, anticipates the inclusion of the Esaase deposit, which is adjacent to Obotan.