Galiano Gold reported lower-than-revised production from its 45%-owned Asanko Gold Mines (AGM), the Ghana operations it shares with Gold Fields.

The outcome for the Toronto-listed firm was a $68.8m loss for the year which included a $7m impairment after AGM failed to update its reserves estimates as a result of uncertainty over metallurgical recoveries from the Esaase section of AGM.

The total impairment suffered at the asset level was $153.2m which also included a $22.8m write‐down of stockpile inventory to net realizable value.

There was no mention by Galiano that it might have to suspend the mine or undertake unbudgeted capital expenditure as suggested in March. Galiano raised this course of action in order to improve grades at the mine which had been disappointing.

Galiano said it would process stockpiled material at AGM’s Esaase section while recoveries from this part of the mine persisted.

The results, published overnight, will be a concern to Gold Fields which pays Galiano a fee of about $6.5m to manage the asset.

Production for the 12 months came out at 210,241 oz below the revised target of 215,000 to 220,000 oz after earlier promising annual production of 225,000 to 245,000 oz. All-in sustaining costs (AISC) did come in within revised guidance at some $1,177/oz. Production for the current year has been guided to 100,000 to 120,000 oz.

AGM reported a net loss for the year totaling $114.5m and adjusted net income of $38.7m. The balance of shares in AGM consists of Gold Fields’ 45% stake with the Ghana government holding the balancing 10% stake.

Chris Griffith, CEO of Gold Fields, said earlier this year that without an improvement at AGM, his company might have to take action.

One option was for Gold Fields to buy out Galiano from AGM. “We’re not the operator so it could deliver value by making it part of the portfolio,” said Griffith. “We know how to manage complex orebodies.

“I can understand why Galiano will not view that positively, but for now they need to demonstrate that it belongs in the portfolio.”

The fact that Gold Fields excluded Asanko’s contribution from its production forecast for 2022 suggests “… the near term strategic focus will be on the best way to realise value,” said analysts for RMB Morgan Stanley in a report in February.

For its part, Galiano has undertaken a management refresh. Former CEO Greg McCunn has been replaced by the firm’s COO Matt Badylak while CFO Fausto Di Trapani has been replaced by Matt Freeman who was previously senior vice president of finance at Galiano.

Shares in Galiano Gold fell 0.7% following publication of the results at a time when the dollar gold price is 6% higher since January. The share is 16% lower year-to-date and 43% on a 12-month basis.