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JOHANNESBURG, Sept 16 (Reuters) – Africa’s biggest gold producer AngloGold Ashanti (Xetra: AOD.DE – news) said on Wednesday it has signed a deal with Randgold Resources to jointly redevelop its aging Obuasi mine in Ghana.
Randgold said the joint venture would not spend more than $ 1 billion on the redevelopment.
AngloGold stopped production in November and cut jobs at Obuasi, which holds about 5 million ounces of gold reserves but has not made a profit in a decade.
AngloGold’s Chief Executive, Srinivasan Venkatakrishnan, said on a conference call that it was difficult for a single company to bear the cost of redeveloping a mine in a low price environment.
The price of spot gold has fallen almost 20 percent from its 2014 peaks, to just above $ 1,000 an ounce, forcing companies to sell mines, cut spending and shed jobs.
“When capital is constrained for mining, sharing the cost of capital is perhaps the most prudent way to go,” Venkat said.
AngloGold jointly owns two mines with Randgold in Mali and Democratic Republic of Congo (DRC).
Randgold’s Chief Executive, Mark Bristow, said a team from their Kibali mine in DRC would arrive in Ghana on Thursday to begin work on Obuasi. (Reporting by Zandi Shabalala; Editing by Joe Brock and Susan Fenton)