The government has revoked Resolute Mining’s lease for the Bibiani gold mine and ordered the mining firm to cease all operations at the mining site.

The mining firm said it received a letter from the Ghanaian Minerals Commission. That, the Minister of Lands and Natural Resources had advised the termination of the mining lease, without disclosing reasons nor engaging the miner in any dialogue over the decision.

The Mining Company indicated that the action is so sudden and unexpected. And that it would pursue clarification for terminating the mining lease from the Minister’s office.

Following this event, the Mining Company has indicated that it is seeking legal advice to know the next action to take.

In a press statement, the company said: “As a result of this notice Resolute is currently seeking legal advice on the validity of the notice. Its rights of appeal and potential recourse while considering the impact of the notice on the sale agreement with Chifeng Jilong Gold Mining Company Ltd for the sale of the Bibiani Gold Mine.”

The Bibiani gold project Ownership

The Bibiani mine is owned by Mensin Gold Bibiani (MGBL), a wholly owned subsidiary of Resolute Mining. The government owns the right to a 10% free carried interest in the gold mine.

In December 2020, Resolute Mining Company Ltd. Agreed to sell the gold mine to China’s Chifeng Jilong Gold Mining; A fully-owned subsidiary of Chifeng in a deal worth $105m.

The Bibiani gold project is an underground mine located in the Western Region of Ghana. The mineral concessions of the deposit are located approximately 80km south-west of Kumasi, the capital city of the Ashanti Region.

Resolute records share drop

Following this event, the company has recorded a drop in stock of 24.7 percent on the London Stock Exchange. This drop in shares is the lowest the company has recorded since the 1990s. The company has a total market capitalization of $420 million.

The company obtained the Bibiani mine in 2004 but placed the mine on care and maintenance not long afterwards. This was to allow for the exploration activities to develop mine into a large scale operation.

A feasibility study of the project was completed in June 2016. And the second phase of resource drilling started in December 2016.

An updated feasibility study in 2018 estimated that the project could produce some 100,000 ounces per year over a ten-year mine life, at a total capital cost of around $115 million.

In 2019, the government approved and released a new environment authority permit for the recommissioning of the Bibiani gold mine. The permit was to be valid until June 2021.

In 2020, Resolute Mining launched a review of the mine. This was to determine whether to keep it or sell it to a company “in better place” to keep the gold mine running.

The project is currently estimated to host some 21.7 million tonnes, grading 3.6 g/t gold for 2.5 million ounces of gold.