Ergo Mining, which is a 50/50 joint venture between DRDgold and Australian company Mintails, symbolises a comeback for tailings retreatment in South Africa. When the original Ergo, one of AngloGold Ashanti’s five major divisions in South Africa at the time, shut down due to low gold prices, rising costs and diminishing reserves, it looked as if surface retreatment of old gold tailings in South Africa had reached the end of the line. Over its 25 years of operation Ergo had processed 890 million tonnes of tailings to produce 8.2 million ounces of gold and 5.5 million pounds of uranium. Even DRDgold’s Crown Mines operation, which remained profitable while all other surface reclamation projects fell, was in its final phases and management was looking at ways of extending its life.
Mintails, which is involved with tailings retreatment on the West Rand, was able to bring to the table the Ergo plant and that coupled with DRD’s surface tailings resources meant there was a match. Outside the joint venture, Mintails owns the rights to process and extract gold and uranium from over 305 million tonnes of slimes, sands and rock tailings materials located on the West Rand.
This provides it with a gold resource of 2.17 million ounces. DRDgold already has extensive surface tailings retreatment operations with its Crown Gold Recoveries division which produced over 100,000 ounces of gold in 2007. DRDgold has the rights to the famous old mine dump on top of which was built Johannesburg’s once popular movie drive-in, Top Star. That 5.1-million tonne Top Star dump is estimated to contain 128,000 ounces of gold
The Ergo Mining joint venture, with rights to large mine dumps extending from the Central Rand across the East Rand which contain 1.7 billion tonnes of material, has consolidated tailings retreatment on the East Rand. “The project is not the result of the recent surge in gold price and we originally started looking at it in 2006 when the gold price was R125,000/kg,” DRDgold CEO Niel Pretorius says.
The venture, which is investing R477 million, is looking at a break-even cost of about R130,000 to R140,000 a tonne, or about US$500/oz. “When we started to look at the project, operating cost projections were R18/t and this increased to about R21/t at the last update.” At current prices the operation will take about five years to pay back its investment.
“It would have cost about R400 million alone to build a new processing plant for mine dump material,” Pretorius says. “In comparison, the purchase of the Ergo plant cost R40 million and another R100 million is being spent on refurbishment.
Pretorius expects Ergo Mining to be a long life operation, with over 25 years of material available for processing and the possible recovery of 15 million ounces of gold. It will provide a steady income stream and provide the company, which owns the deep level ERPM and Blyvooruitzicht gold mines, two ageing and volatile assets, with a more balanced mix of production. Because of their marginal nature, those old deep mines were among the hardest hit by the power restriction interventions in South Africa, and the surface reclamation operations, which use much less power, can help offset this.
Tailings retreatment operations have the advantage of certainty. The tonnage and grades are a given as is the knowledge of where these are located. All the dumps owned by Ergo Mining are being drilled to determine their resources for gold, uranium and acid production.
To start with, tailings will be pumped through a 500 mm diameter pipeline from DRD’s existing Benoni retreatment site to the Ergo plant, where refurbishment and recomissioning of a single carbon-in-leach (CIL) circuit will be completed by the end of this year. The 600,000 tonne a month pipeline is to be commissioned in October. With 15 million tonnes of material remaining, the Benoni tailings dump has two more years to run.
“The Benoni retreatment site allows for easy entry to the project, it being half the distance to the Ergo plant and it provides the opportunity to open a wide mining front in the Elsburg tailings complex,” Charles Symons, the regional manager of DRD’s Crown operations and now part of Ergo Mining’s management team, says.
Future planning at Ergo Mining has not extended beyond the Elsburg tailings complex, which straddles the N17 highway about 12 km east of the plant. The Elsburg tailings, which cover some 200 hectares, comprise 171.6 million tonnes at a grade of 0.3 g/t for 1.67 million ounces of contained gold. It is expected that the gold recovery rate will be about 50%.
Next year will see the doubling of processing capacity at the Ergo plant to 14.4 million tonnes a year and the installation of a 500 mm diameter pipeline from the plant to the Elsburg tailings complex.
At that stage the plan is to produce 75,000 ounces of gold a year. The plant will process 1.25 million tonnes of material a month, which translates to 190 kg of gold produced a month.
In 2010 a second CIL circuit will be refurbished at Ergo and capacity will double again to 30 million tonnes a year.
The flow diagram for the process is a simple one. Material is pumped to a desanding plant and any oversize material is removed. Where necessary the material can be pumped directly to thickeners first. Then follows the standard process of CIL, tails screening, loading of the gold bearing material onto carbon, elution, electro-winning and smelting.
The project will also investigate the production of uranium and sulphuric acid, as well as property development opportunities presented by the reclaimed sites. DRDgold will set up a property division to pursue these, taking into account that industrial and commercial and even some residential development has replaced some of Jo’burg’s most famous mine dumps lining the busy M2 highway south of the old CBD.
Batean is the looking at the process for recovering uranium and acid and this covers the design and cost of an acid plant. “At US$80/lb, uranium in the dumps is a resource that can be exploited.” Pretorius says. This year will see a bankable study for uranium and acid production completed, and if the outcome is positive this will be followed by possible start of construction of the uranium and acid plant next year. These would be commissioned in 2011.
Symons, says few skills involved with Ergo Mining came from outside the DRDgold group and Ergo Mining can piggyback on the services already available inside Crown Mines which does tailings retreatment in the Central Rand area. “Newcomers have not had a good track record in this business and we have taken note of that."
Symons points out that unless you have all five pillars of the dump retreatment business you will struggle, these being the resource, the plant, adequate deposition sites, servitudes and water.
Ergo Mining has no shortage of resources to mine, even assuming all the expansions in production pan out. The 60 or so mine dumps located between the centre of Jo’burg and the far East Rand to which the venture has rights won’t all disappear for many decades. “We have the resource and also have undertaken the test work to determine what the reagent consumption will be.
“The second pillar is the plant and we have an established licensed plant.” The Ergo plant, though it has stood idle for five years was well built and maintained by Anglo. It also comes with an old order mining right, which DRD has undertaken to convert. But until Department of Minerals and Energy approval is given it can start up operations using the old Anglo mining license.
In order to make tailings retreatment work, particularly in an increasingly crowded and urbanised environment, you need to ensure you have the necessary deposition space for the reprocessed tailings.
Initially the deal with AngloGold Ashanti was for the Ergo plant minus the Withok tailings deposition facility, which has been allocated for future deposition after the adjacent existing Brakpan tailings site is filled up. The deposition site, located near the Ergo plant, was added in a subsequent deal.
“The deposition site is important and by making Ergo Mining into a mega project fixed costs diminish into irrelevance so we can worry only about the variable costs. To achieve this we must have a big enough deposition site,” says Symons. The Brakpan deposition site covers 500 hectares and has room for another 80 million tonnes, and Withok, depending on how it is designed, could accommodate 500 million to 700 million tonnes. This is enough to secure Ergo Mining’s future for a long time to come. The slimes material is also a source of construction material on the Central Rand.
Construction of the Withok tailings facility would begin in 2010. “In the long run when we walk away there will be just one very large tailings dam, which will be grassed on top,” Symons says.
“The fourth pillar involves being able to link the sites, particularly in areas where land is at a premium. We have secured all the old existing servitude rights from Anglo.
“Finally, water is scarce and in future the impacts of this scarcity in this region will be more acute than the electricity shortages we are experiencing.” Sufficient water for the operation will be pumped from underground at ERPM to sustain the surface mining.
Thanks to the rebirth of Ergo Mining in a different incarnation, consolidation of surface gold reclamation has taken place on the Central and East Rand, but with four operators on the West Rand there remains opportunity for consolidation in that area.