Ghana's gold production is set to rise to at least 2.6 million ounces in the next four to five years from 2.1 million in 2005, driven partly by the high gold price, the country's industry regulator said.

"The price of gold has contributed to it significantly...it will be 2.6 million ounces within the next four to five years. If the gold price is sustained, it will be higher still beyond that," Benjamin Aryee, chief executive of Ghana's Minerals Commission, told Reuters late on Thursday.

Gold production peaked at 2.6 million ounces in 1999 but then dipped as production fell at what was then Ashanti Goldfields -- now AngloGold Ashanti following a 2004 merger with South Africa's AngloGold.

Rising gold prices, an attractive fiscal regime and foreign exchange deregulation in the 1980s have contributed to increased investor interest in the West African country, Aryee said.

Ghana is Africa's second-biggest producer of gold after South Africa.

New market entrants such as the world's largest gold firm Newmont, which is expected to produce 500,000 ounces a year at its Ahafo mine from 2007, and Chirano would contribute to higher production, he said.

Firms such as South Africa's Gold Fields and AngloGold Ashanti had mining leases in the country's gold-rich west but exploration for gold and other minerals needed to be carried out in the eastern Volta basin and the northern region, he added.

"About a third of Ghana has not yet been explored, there is a project to carry out a geophysical survey that will show up the potential deposits of gold and other minerals."

SMALL-SCALE MINERS FLOURISH

Rising gold prices had also contributed to a rise in the number of illegal small-scale miners, whose output now accounted for 10.5 percent of Ghana's total production, up from 2.2 percent in 1989, he said.

An estimated 300,000-500,000 small-scale miners operate in Ghana. Some are registered and have their own concessions while many operate illegally on the concessions of large-scale miners.

"There is a need for government support. Over the last five months or so, the government has indicated it will deal with illegal miners on all fronts in a massive way," he said.

The long-term solution was for them to have their own concessions.

"The Commission wants to get illegal miners to regularise operations and help them to operate in an environmentally friendly manner and improve productivity," he said.

Mining activists argue Ghana's regulatory framework favours large firms at the expense of communities and the environment.

Aryee said Ghana's mining laws matched those of other countries, but said institutions such as the Environmental Protection Agency (EPA) and the Mines Department inspectorate did not have enough staff.

"If the EPA had sufficient manpower to monitor all activity, certain entities would have to close down...The Mines Department, the inspectorate, has capacity in terms of skills, but not in terms of numbers," he said.