The Asanko Gold Project hosts 4.8 million ounces of 2P gold reserves and can grow to over 400,000 ounces of gold per year (Photo: Diego Levy/Bloomberg)

The Asanko Gold Project hosts 4.8 million ounces of 2P gold reserves and can grow to over 400,000 ounces of gold per year (Photo: Diego Levy/Bloomberg)

Asanko Gold (AKG:TSX) continues to advance their West African gold project towards first gold production in Q1/2016 by commencing the construction of its early works program.  The Board of Directors has approved a $16 million budget with a full investment decision on the Asanko Gold project anticipated by Q3/2014.

The early works program includes: advancing detailed engineering, earth works on the 3Mtpa carbon-in-leach (CIL) plant site, re-routing of power lines, upgrading an 11km haul road from the Nkran pit to the Abore pit, building the 225 person camp-site and upgrading the communications systems.

Asanko's President and CEO Peter Breese stated: "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 first quarter 2016."

The consolidated Asanko Gold Mine hosts numerous pits(Source: Asanko Gold Inc.)

The consolidated Asanko Gold Mine hosts numerous pits(Source: Asanko Gold Inc.)

This announcement comes on the back of last week's awarding of the EPCM contract to DRA International (recently acted as EPCM contractor to Randgold's Kibali site in DRC).  This contract was awarded ahead of schedule and ahead of their formal construction decision.

Management is working to redesign PMI Gold's 2012 feasibility study to incorporate cost savings from the merger with Asanko.  Importantly, management believes that the cost estimate for the 3Mtpa CIL plant of $83.7 million remains valid and are determining the capital required for phase 2 operations which would include the second 200,000 ounces of gold production (a total of 400,000 ounces per year).

Many key catalysts upcoming, including:

  1. Updated mine plan (Q2/2014)
  2. Finalize loan documentation with Red Kite for $150 million facility (Q2/2014)
  3. Resource definition drilling of recently discovered Dynamite Hill Zone (Q2/2014)
  4. Investment decision for Phase 1 (Q3/2014)
  5. Construction (Q4/2014-Q1/2016)
  6. Commissioning and ramp-up (Q1/2016)

Read: Asanko Gold Initiates Phase 1 of AGM and Appoints Key Contractors

Also read: Asanko Gold Commences Early Works Program