Ghana Reconsiders Major Gold Mine Renewal: Tarkwa Plans Another 20 Years of Development, $5.3 Billion in Asset Value Faces Policy Changes

Ghana is currently assessing a plan for domestic ownership of large gold mines, and is also considering operators' financing and long-term investment capabilities. According to a Bloomberg report this week, the renewal of Gold Fields (GFI.N)'s Tarkwa mine is still unresolved. This mine is the company's second-largest source of gold.

An announcement made by the company in June confirmed that its Ghanaian subsidiary, in which it holds a 90% stake, had applied in advance in November 2025 to renew five mining leases for Tarkwa. These leases are due to expire in April 2027. At that time, the company stated that the result, timing, and terms of the renewal were still being negotiated with the government.

Conditions for Tarkwa Differ from Those for Transferred Mines

Emmanuel Armah-Kofi Buah, Ghana's Minister of Lands and Natural Resources, said in an interview with Bloomberg that the government is promoting participation of domestic companies in large-scale mining operations and values which companies can raise funds and bear investment risks; many local firms do not yet possess equivalent capabilities.

Since the new government took office at the beginning of 2025, Ghana has gradually shifted from a practice of almost automatic renewal of mining rights for international investors to a case-by-case evaluation. Around six months ago, Gold Fields was required to transfer its mature Damang mine to the state, after which the government organized a tender open only to Ghanaian enterprises.

Before the transfer, Damang mainly handled stockpiled ore and had ceased onsite mining. Tarkwa's situation is different, as Gold Fields has submitted a 20-year development plan to the government. Regarding the renewal, Buah said that some large gold mines with many years of operational life remaining may be more suitable for operation by international companies.

Buah also stated that the government does not have a policy of directly handing over mines developed for many years by foreign enterprises to local companies. This statement leaves room for different operational arrangements, but this interview did not reveal a decision on the renewal of Tarkwa nor confirm a new shareholding ratio.

Gold Price Increments Passed to Shareholders Through Costs and Distribution Policies

Tarkwa contributes significantly to the company's cash flow. A research report by Goldman Sachs released last Thursday estimated that this mine accounts for about 15% to 20% of the group's production. In its baseline model, which includes the assumption of a new royalty, the value of Gold Fields' 90% stake is $5.3 billion, about 15% of the bank’s estimate of the group's asset-level net present value.

Royalties change how much profit remains from higher gold prices. According to Goldman Sachs' assumptions on gold prices and taxes, adjusting the royalty regime would reduce Tarkwa’s net present value by about $1.3 billion. Their model assumes the relevant arrangement would affect the mine starting in Q2 2027; this is a valuation estimate and not a finalized renewal term.

The value of the mine is also influenced by subsequent investments. Goldman Sachs noted that Tarkwa remains a long-term asset, with continued investment aimed at restoring and maintaining an annual production of about 500,000 ounces. Damang’s state of processing stockpiled ore, compared to Tarkwa's ongoing extraction and funding plans, presents different requirements for investors.

In terms of group dividends, Goldman Sachs’ report lists the base distribution policy as 35% of free cash flow before self-determined growth capital expenditures, with a minimum of $0.50 per share per year. The bank modeled gold price, costs, cash flow, and distributions to shareholders separately; dividends do not increase directly with the gold price rise.

In Goldman Sachs’ 2027 sensitivity model, every $100 increase in the gold price per ounce corresponds to about $60 in incremental cash flow per ounce; the incremental base and special dividends are about $21 and $6, respectively, both expressed per gold ounce produced—not as per-share dividend amounts, nor as dividends announced by the company.

Lease Terms and Mining Law Revisions Yet to be Decided

The length of operations is being discussed along with tax and fee arrangements. Bloomberg reported on Thursday that the proposed revisions to the mining law would shorten lease periods, expand government discretion on renewals, and abolish individual agreements that could lock in fiscal and tax terms for a fixed period. These provisions are still pending legislative approval.

The draft itself has been revised. Reuters reported two Fridays ago, citing three sources familiar with the matter, that Ghana is expected to replace the mining law draft submitted to parliament with a revised version, changing the maximum mining lease period from 15 years (in the draft) to 20 years. The current law reportedly allows a maximum of 30 years.

Sources did not provide a timeline for resubmitting the revised draft. A 20-year lease term is a proposed change and cannot be equated with the 20-year development plan Gold Fields submitted for Tarkwa; the company’s operational plan still awaits the support of mining right arrangements.

Gold Fields CEO Mike Fraser told Bloomberg in August that the company would take necessary actions, including legal means, to safeguard shareholders’ rights. In an interview disclosed this week, Buah stated that he expects the revised mining law to be passed by parliament before the end of the year.