RICHARD DUFFY

AngloGold Ashanti executive
vice-president: Africa,
Richard Duffy.

AngloGold Ashanti, third-largest gold producer in the world with 73% of its 5.5 million ounces produced in Africa last year, believes in the opportunity West Africa represents, and, having re-visited its green-fields targets, insists that this region is back on the company’s radar screen in terms of geological potential.

In an interview with Mining Review Africa, executive vice-president: Africa Richard Duffy emphasised his belief that West Africa remains a prospective part of the world. Headquartered in Johannesburg, AngloGold Ashanti has 20 operations and a number of exploration programmes in both the established and new gold-producing regions of the world. While the bulk of its 2007 production (43%) came from South Africa, its operations in West Africa contributed a total of 23%, with Ghana responsible for 10%, Mali 8% and Guinea 5%.

OB

The Obuasi sulphide
treatment plant at night
.

Under the new AngloGold structure, Duffy is in charge of Africa which has been divided into three regions: the South African division, which has been re-located to Potchefstroom; the West Africa division, which is based in Accra and services the company’s operations in Ghana, Mali and Guinea; and the East African division, which at this stage consists basically of the Geita mine in Tanzania. “We face many challenges in terms of operating, not just in West Africa, but in Africa generally,” Duffy goes on to say. “The key challenges for us, particularly in West Africa, revolve around costs, energy and the changing tax situation.

“Our gold production in West Africa in 2007 amounted to just under 1.25 million ounces, and our official guidance for 2008 at this stage is for between 1.2 and 1.3 million ounces.” AngloGold’s five West African mines made a combined gross profit of US$124 million last year. Total capital expenditure on the mines in 2007 amounted to US$110.3 million."

Siguiri in north-eastern Guinea has considerable upside potential to expand, and the focus here is on investing in scaling up the operation,” he says. “At Obuasi in south-western Ghana the focus is on a turnaround intervention that will provide appropriate support to get the mine, currently producing 360,000 ounces a year, back to 400,000 oz a year in the first instance, and then through 500,000 ounces a year, before we look at the Obuasi Deeps potential which would take us beyond that. The first step is to get beyond 400,000 oz next year, and achieving 500,000 will probably take another year or two.

GOLD PLANT

The gold plant at the
Morila gold mine in Mali.

“These are the two core assets in West Africa in terms of being able to move the dial for the business as a whole,” Duffy contends. Iduapriem, also in south-western Ghana, is continuing to look at operational improvements around efficiencies and productivity. “We have invested money in the crushing circuit of the plant in particular.”

In Mali, AngloGold Ashanti has interests in three operations: Morila (40%), Sadiola (38%) and Yatela (40%). “We manage Sadiola and Yatela, and decided to remain as an investor in Morila, having passed operatorship over to Randgold. Yatela has been a great project for us which has generated a good return over the years, but is now nearing its end of life. And the key to Sadiola’s future is how we take forward the potential of its deep sulphide deposits.

OPEN PIT

The open pit operation
at Siguiri in Guinea
.

” Duffy emphasises that the key projects to talk to are the plant upgrade at Siguiri; the turnaround project, and accessing of the deeps ore body, at Obuasi; the plant at Iduapriem and the potential to expand the operation; and the deep sulphide project at Sadiola.

Exploration the Priority at Siguiri
“Generally Siguiri is going pretty well for us. It has improved its production this year and we are confident we will meet the 306,000 oz guideline, or go slightly higher to about 310,000 oz, which will be 10% up on last year. “

Going forward, it really depends on how quickly we can scope the potential upside based on exploration. We’re going to do quite a bit more drilling. There is a lot of mineralised material on our tenement and it extends over quite a big area; there is potential to find additional deposits that require separate infrastructure because they’ll be too far away from existing infrastructure,” he adds.

“The short-term focus for Siguiri is to get an exploration strategy in place that allows us to better understand its potential, and to develop an understanding of the harder sulphide material that sits below the existing softer oxide material,” Duffy says. “We would expect to continue to see resource addition and reserves, and in terms of the mine life of 10 to 12 years, it could be a great deal longer than that.

The way to move Siguiri up is to increase the mill capacity, because we believe there is additional ore available. A step we can take is to de-bottleneck the plant. This does not involve a lot of money; we probably intend to spend between US$10 million and US$20 million, which should give us another 5% upside.

“So, we should be able to continue the rising trend at Siguiri,” Duffy says. “There’s a lot more potential than we have currently brought to the table.”

“In Ghana, concentration on the turnaround project at Obuasi is aimed at ensuring that we are investing in the right mine infrastructure to improve the throughput from the current 170,000 tonnes per month (tpm) to between 200,000 and 210,000 tpm. We are evaluating a number of opportunities to provide the additional ore.”

US$50 million conversion of Obuasi Oxide Plant
“Having run out of oxides, which all came from the surface pits, we obtained board approval for a US$50 million conversion of the oxide plant in order to increase the capacity of the TSP sulphide plant, and we expect to build our total processing capacity up to 250,000 tpm treatable over time.

SAD PLANT

The plant at the Sadiola
mine in Mali.

“The challenge now is to have a plant available by mid 2009 to handle those capacities. That’s in line with our strategy of being able to build up the mine from the deeps as well – the target of 600,000 oz is certainly associated with going into the deeper levels.

“The thing about Obuasi is that you are talking about a very substantial ore body, more than 30 million oz. We just have to get the mining to where it needs to be to enable Obuasi to be self-funding, and from there it’s a case of accessing the higher grade deep ore.

Iduapriem, also in Ghana, was due to commission its new crushing circuit at the end of the fourth quarter of 2008. “We are running about a quarter late on that project and are looking at the first quarter of 2009,” Duffy says. “Like a lot of the capital projects globally, it’s taking longer to get equipment in as the lead times are longer than originally anticipated and shipping is an issue. And then when it arrives you have to get the equipment across the country to the project site.”

LOADING TRUCKS

Loading trucks at night
in the open pit at Sadiola.

Some US$50 million to US$55 million has been invested in the improved plant infrastructure at Iduapriem, where AngloGold is looking to lift throughput from 200,000 to 220,000 tpm. Unless we are able to exploit the underground potential at Iduapriem production will remain steady at that level over the next three to five years,” he estimates.

“It is early days, and we are looking at opportunities to see if there is underground potential. We mentioned the large underground deposit at the low grade of 1.8g/t, but it really is too early for us to elaborate on the possibilities there. The question is whether we can either get the grade to a level that will make it pay, or whether we can find a mining method that gives us the economies of scale to make it pay.”

Morila and Yatela Winding Down
Moving onto AngloGold’s mines in Mali, Duffy describes Morila as, “reasonably steady as she goes,” given the age of the mine. “Production in The plant at the Sadiola mine in Mali. 2008 will be slightly lighter than the 182,000 to 187,000 oz stated earlier in the year. We finish blasting in April next year, and from then on it’s clearing the bits and pieces at the bottom, and then treating stockpiles.

“Production at Sadiola was down to 140,000 oz in 2007, but our guidance for 2008 is 155,000 to 160,000 oz, and we are quite comfortable about achieving this.

“Sadiola in the next three to five years really depends on whether we are able to move forward on the Sadiola Deeps, as we have reserves to cover only about two years. The intention is to approach the board in mid 2009 on the feasibility of that project.” There is also potential for Sadiola to act as the consolidator in the area, as there are smaller deposits adjacent to the mine which could go through its plant,” Duffy suggests.

TRUCKS IN PIT

Trucks in the
open pit Yatela mine in Mali.

“Finally at Yatela we are confident that we will be close to the upper level of the 63,000 to 73,000 oz guidance we have given for 2008. The mine was due to have closed at the end of 2007, but a combination of an improved gold price and the discovery of additional ore sources enabled us to extend its life. We are confident about reaching 2010, but moving into the stockpiles could extend operations into 2011.”

“Summing up,” he says, “there certainly is potential for AngloGold’s West African operations to improve their contribution to the broader group as a whole. There’s a threat of spiralling costs, particularly around energy, and if we get on top of that, I think we will get the equation right."