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Asanko Gold starts early works construction in advance of updated mine plan to ensure Ghana project remains on track

Published: 23:33 08 Apr 2014 AEST

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Asanko Gold (TSE:AKG) (NYSE MKT:AKG) has started early works construction to advance the first phase of its flagship project in Ghana, following board approval of a US$16 million budget, the company said Tuesday. 

The board approved the early works budget in advance of a full investment decision planned for the third quarter of this year. 

The early work program is designed with the target for first gold at the Asanko mine in the first quarter of 2016 in mind, and will include advanced detailed engineering to allow for construction to begin in the third quarter. 

Asanko said Tuesday that it will begin bulk earthworks on the proposed 3 million tonne per year carbon-in-leach processing plant site, and re-route the existng power line which runs across the proposed plant site. 

The company is also planning to complete road works to upgrade an existing 11km long-haul road that will be used as a site access road during construction, and will complete refurbishment of the offices and camp. 

"We have decided to advance certain key engineering and early construction items for Phase 1, ahead of completing our updated mine plan and restructuring of our project financing, to ensure the project schedule remains on track for first gold production in Q1 2016," said president and CEO Peter Breese. 

"We expect to complete both the updated mine plan and the project financing documentation this quarter in preparation for an Investment Decision in early Q3 2014."

Asanko last week made two key contractor appointments for the construction of its project, offically beginning the phase process. The company said it appointed South Africa-based DRA as the engineering, procurement, construction and management contractor, as well as Knight Peisold as the tailings storage facility design contractor. 

The company is fully funded for phase 1, with US$255 million of cash, and it is working with Red Kite to modify security provisions and loan documentation for its existing agreements, with plans to complete the revisions this quarter. 

Asanko earlier this year completed the acquisition of PMI Gold, combining PMI's Obotan project with its own Esaase deposit into a new property called the Asanko Gold Mine. The phase 1 operations are based on PMI's definitive feasibility study on Obotan from September 2012, with Asanko working to update the report in terms of capital and operating cost estimates.

The company is also working to complete the mineral resource estimates at the Nkran and Adubiaso deposits, with the updated reports to form the basis of a detailed mine plan, which is targeted for completion by the middle of this year, along with a budget estimate.

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