Feasibility study of small scale gold mining in Ghana - a stepwise

Abstract

Feasibility study has been limited to large scale mining, over the years. Small Scale Gold Miners in Ghana generally do not conduct feasibility study before they embark on mining and as a result they are not properly guided on the viability of intended projects. This thesis outlines a stepwise approach for conducting a feasibility study of Small Scale Gold Mining in Ghana. It reviews relevant literature, and for each of an alluvial and hard rock ore deposits, using data from Mpeasem Gold Project, demonstrates how reserves could be estimated, and economic analysis conducted to ascertain the mining projects viability. The Inverse Distance Weighting (IDW) method was deployed through the use of Surpac software to estimate the ore reserves of the alluvial deposit while the Cross Sectional method was used to calculated average grade for the hard rock ore deposit. Environmental aspects, their potential impact and mitigation measures were tabulated as preliminary environmental report. The economic risks of the alluvial deposit were evaluated using the Monte Carlo Simulation method. The alluvial gold deposit was 3.4 Mm3 at an average grade of 0.46 g/m3 in reserves and yielded an NPV and IRR of USD 2.8 M and 48% respectively for the base case, with an effective probability of success of 10% (17% and 56%). The hard rock ore gold deposit was 1.9 Mt at an average grade of 2.54 g/t in reserves and yielded an NPV and IRR of USD 7.5 M and 29% respectively for the base case, with an effective probability of success of 14% (25% and 54%). Though both alluvial and hard rock deposits are viable under the base case scenarios, their respective probability of success is very slim. The projects are not robust to simultaneous changes in cost, revenue and other economic parameters and therefore careful consideration for cost control through competitive bidding in the purchase of equipment and award of contracts is key.