This is the encouraging picture painted by Gold Fields executive vice president: international operations Glenn Baldwin in an exclusive interview with Mining Review Africa.
The company is one of the world’s largest unhedged gold producers, with annual gold production of more than 4 million ounces from mines in Africa, Australia and South America, as well as ore reserves of 65 million ounces and mineral resources of 179 million ounces. It is listed on the NYSE, LSE, JSE, DIFX, Euro next and Swiss Exchanges.
Looking first at West Africa, a decision on whether to mine the Essakane project in north-eastern Burkina Faso can be expected by early 2008, although production would not be scheduled before 2010.
Gold Fields, through its subsidiary, Orogen Holding (BVI), acquired 50 per cent of the Essakane joint venture in June 2005 by making an aggregate exploration expenditure of US$8 million (R56 million) in the area. The company has since committed an additional US$21 million (almost R150 million) on completion of a pre-feasibility study and ongoing exploration, and is earning the right to increase its shareholding to 60% by completing the bankable feasibility study (BFS) which is scheduled for delivery in the second half of 2007.
The interim resource estimate for Essakane reported within a US$650 per ounce pit shell at a 1.0 gram per ton cut-off amounted to 43 million tons at 2.4 grams per ton gold for a total of almost 3.3 million ounces. More than 80 per cent of this inventory is classed as indicated resource.
HIGH LEVEL OF EXPECTANCY
“Concurrent with the BFS, the initial work is underway on issues such as sustainable development preparation, consultation, and designing infrastructure required for the project” says Baldwin, “and because there is a high level of expectancy that the BFS will be positive, work is already underway on the social issues and relocation of the communities involved.”
He adds that as soon as the BFS is completed, and the results are sufficiently economic, “we would start preparing to move into the next phase of the project early next year. First we would review the project internally to finalise our proposal to the Board,” he explains. “Then – subject to approval by our Board and our partner Orezone Resources Inc. — we would have a decision to develop the project, and could start with actual construction soon after,” Baldwin reveals.
It is difficult to predict construction until the BFS is released, but the key areas to focus on will be infrastructure, consultation and government relations. This phase could easily take up to 24 months with production not starting before 2010.
“The region where this project will be located has its own significant challenges,” Baldwin points out. “It lies in a very remote part of the country, and constructing anything there is a greater challenge than in other areas in which we operate such as South Africa and Ghana, which are more developed from a mining perspective — there is just nothing there out in the desert!”, he adds.
“As far as volumes are concerned, we do have some indications from the pre-feasibility study,” he says, “but it is too early to start quoting numbers — particularly before we have the benefit of knowledge from the detailed design that the BFS will provide. Again, it is expected that early production would be in 2010,” Baldwin adds, “but the BFS will give us the real schedule to which we can work.”
PROSPECTS IN MALI AND DRC
Also in West Africa, Gold Fields is involved in ongoing exploration at Sankarani in Mali, but there is little to say in terms of progress at this stage. “We have completed followup diamond drilling, but we will only release details when we have results that are sufficiently positive to impact on our reserve and resource statement,” he explains. “Current activities are part of a bigger drill programme planned for Mali in due course, and as results are generated we will continue to assess the success of the targets.”
Turning to Central Africa, Gold Fields has reached a stage of advanced exploration on the Kisenge project in the southern DRC, some 680 km from Lubumbashi. The project comprises four exclusive research zones (ZERs) which represent a combined area of 18,220 squ km. Their title is held by Miniere d’Or du Kisenge (MDDK), an 80:20 joint venture between Kisenge Limited (wholly owned by Gold Fields) and EMK-Mn.
“Kisenge is a very prospective site which looks really good to us, and we have a reasonable level of confidence that we will get something out of it,” Baldwin believes. “The anomalies look attractive, theory tells us there might be something, and we’re excited enough to plan a spend of several million dollars drilling it,” he enthuses.
But he hastens to add a note of caution. “It is still at an early stage and no study has been done yet. Until the drilling is completed there is nothing to report in terms of a resource, and until you have a result you don’t even have a potential project that would warrant a study,” he emphasises.
The style of geology is may be similar to that experienced at other Gold Fields operations, according to Baldwin. “That is encouraging because we may be able to use existing knowledge within the company to optimise target generation and selection,” he explains. “We will be going ahead with a significant drilling programme for rest of this year, which means quite a few million dollars,” he confirms.
An update on this project will be provided in the new Gold Fields annual report later this year.
GHANA PROJECTS ON TRACK
“Meanwhile in Ghana, the US$175 million (more than R1.3 billion), expansion projects at the Tarkwa Gold Mine are on track, and they remain scheduled to be commissioned in mid-2008 on time and within budget,” Baldwin assures.
“The US$126 million (almost R900 million) expansion to the carbon-in-leach (CIL) process plant facility — already producing at 20 to 25% above its nameplate capacity of 4.2 Mtpa — will ramp-up to its full 12Mtpa level by around mid-2009, “he reveals. “It would be great if we could pull this project in earlier, Baldwin hints. “We are focusing on really pushing the stripping as hard as possible to see if we can pull the production schedule forward.”
In addition to the main process plant, this project also entails expansion of the tailings storage facilities and associated infrastructure.
The second project involves expansion of Tarkwa’s North Heap leach facility by adding a replacement heap leach pad (Phase 5) to the complex. Phase 5 will add 39 million tonnes of stacking capacity to the current area, and will enable continuation of stacking at the North facility until June 2011.
“This US$49 million (R350 million) expansion project is also within budget and on schedule, with its commissioning deadline remaining at mid-2008,”Baldwin confirms. “It will then receive and handle the 12Mtpa. Expansion to this facility does not in itself change the production profile — it is simply a replacement of the old treating facility,” he explains.
“The additional milling capacity really replaces the south heaps, which are getting to the end of their life, as opposed to providing additional ounce production capacity from the complex as a whole,” he continues, “so we are merely replacing for the next 8 to 10 years what has been in place for the last 8 years.”
Budgeted capital expenditure for this project is US$ 49 million (R350 million), consisting of US$35 million (R250 million) to expand the leach pads, and US$14 million (R100 million) to build associated infrastructure and services required for Phase 5 and subsequent Phases 6 to 8 of the leach pad complex.
“These expansion projects will maintain the total ore tonnage treated at approximately 21.6 Mtpa, comprising 9.6 Mtpa of heap leach and 12.0 Mtpa of milled ore,” Baldwin calculates. “This will enable gold production to be maintained at a level of about 700 000 ounces per annum till 2021, and will minimise the sub-optimal processing of ore by improving overall recovery,” he contends.
“At Damang we have quite a significant exploration programme on the go at the moment. We’re focusing on extending the life of Damang and at worst trying to maintain the reserve base at around five years by at least adding back what we take out of the reserves each year” Baldwin explains.
“We mine about 5Mtpa from the open pits and stockpiles,” he concludes, “and the reserve statement says we have 29.3m tonnes of reserves, which should mean a mine life of closer to six years at this stage.”