GLENN BALDWIN

Glenn Baldwin, Gold Fields’
head of international
operations.

West Africa (Ghana) is one of four regions where Gold Fields operates mines, the others being South Africa, Australia plus Asia and South America (Peru). The company has structured itself into four operating regions, South Africa with a two to 2.3 million ounce a year target and each of the three international regions targeted in the medium term to produce one million ounces of gold a year attributable to Gold Fields. Amidst its international diversification, the West African region remains important for Gold Fields with US$288 million of its US$777 million profit in the past financial year coming from the Tarkwa and Damang operations. Gold Fields has a 71.1% holding in two companies in Ghana, Gold Fields Ghana which owns the Tarkwa mine and Abosso Goldfields which owns the Damang operation. The government of Ghana has a 10% share in these operations, with Iamgold owning the remainder.

Glenn Baldwin, Gold Fields’ head of international operations, who oversees the non-South African operations, assisted by a locally based managing director in each region, says the medium term goal is to grow the company’s West African operations from a current attributable output of 675,000 ounces a year.

As part of its target to produce one million ounces a year in West Africa, Gold Fields is completing the expansion of its carbon-in-leach (CIL) plant at Tarkwa from 450,000 tonnes per month (tpm) to one million tpm. This plant, which is expected to be in full production by the end of 2008, will produce an extra 80,000 ounces of gold a year, increasing Tarkwa’s total production from 670,000 ounces a year to 750,000 ounces a year. This may be even higher during the first years and will maintain at that level for ten years, out of Tarkwa’s remaining 15 year life of mine.

The Tarkwa orebody is well understood, with well defined reserves and resources. The reserves as stated at the end of December 2006 were 12.5 million ounces of gold and at the end of July this year were at 11.2 million ounces; at a grade of 1.5 g/t. This means reserve reduction has been in line with the rate of mining and effectively no reserves have been lost due to sterilisation as a result of operating cost escalations, such as electricity, tyre, fuel, ammonia nitrate and other input cost increases. The resource at Tarkwa has dropped from 18.9 million ounces over the same period to 15.4 million ounces, and this is at a grade of 1.2 g/t.

Diesel is the biggest operating cost for Gold Fields in West Africa, accounting for some 25% to 30% of operating costs. The company’s Ghanaian mines consume some 80 million litres of diesel a year in their mining activities. “We have put into place a call option on the price of diesel that gives us insurance against a blow-out in oil price. This enables us to contain any diesel cost escalations within about 10% of our budgeted figure over a year,” Baldwin says.

Electricity price increases are another major source of operating cost escalation. To combat the unavailability of electricity due to drought, a few years ago Gold Fields together with three other mining companies, Newmont, AngloGold Ashanti, and Golden Star, entered into a deal to build a nominal 80 MW gas-fired power station, where Gold Fields was allocated 20 MW. This power station, which connects to the Ghanaian grid, currently runs on diesel though the original intension was for it to be supplied via a gas pipeline from Nigeria. That is still the plan. However, in the interim the cost of electricity has gone up, from US6c/kWh in 2007 to US10c/kWh in 2008, with a further increase under negotiation.

CIL TANK

The new CIL tanks at the
Tarkwa plant expansion.

The CIL plant expansion at Tarkwa, costing about US$160 million, includes adding a second mill the same size as the first, two additional thickeners to add to the existing one, nine additional CIL tanks which are about 23 metres tall to supplement the existing seven, and the addition of a second conveyor to the mills. The operation, which produces some 20 million tonnes of ore a year and has been processing 5.5 million tonnes a year in its existing CIL plant with the balance being processed in the South and North heap leach plants, will change the ratio of this production.

When the expanded CIL plant is in full operation some 12 million tonnes a year of Tarkwa’s projected 22 million tonnes of ore a year will go through this plant. The remaining 10 million tonnes a year will be treated by the North heap leach circuit, which is expanding with replacement pads being added, in part to replace dead pads. That heap leach extension project, which involved work through the wet season and work in forest, came in on schedule and budget. In addition, Tarkwa is building a new tailings dam.

DAMAGE AT NIGHT

Damang at night.

The EPCM contractor for the CIL plant is EPC of South Africa and the project is being done in the form of an alliance style contract that Baldwin says has worked satisfactorily. The CIL plant will achieve recoveries in the high 90% range, compared to the 60% or so achieved by the heap leach pads, and this will see an immediate gain in ounces of gold produced.

In contrast with Tarkwa, Damang represents a different type of orebody, which life of mine has more in common with Gold Fields’ St Ives mine in Australia. In 1982, St Ives had two to four years of life remaining but the operation continues to this day. “It has never had more than a stable four year future life of mine, which it currently has,” Baldwin says.

TWO NEW THICKNERS

Two new thickeners added
to the existing one at Tarkwa.

The story of Damang is comparable. Damang, which produces some 200,000 ounces of gold a year, never had more than about a four year life of mine ahead of it. Gold Fields purchased Damang in 2002 and the operation should have closed in 2006, but today it still has a four to six year life of mine ahead of it. Damang recently upgraded its processing plant by adding a seventh leach tank, a project which came in early and under budget, rare in this era of mining projects. In addition to a pit cutback, Damang, which has a life of mine stripping ratio of about 4:1, is studying a 50,000 ounce a year underground project, which is in the pre-feasibility stage. At Damang, which is currently mining from some five pits, the reserves at the end of 2006 were 1.6 million ounces, and these had decreased to 1.35 million ounces by mid 2008, but the grade increased from 2 g/t to 2.1 g/t.

Ghana, as is also the case in South America, requires a high level of interaction with government, both at a more senior level and in terms of having a closer relationship. “The relationship with the government is more symbiotic than in places like Australia and the USA as the company and government work together to grow the country in respect of its gold mining sector,” Baldwin says.

Gold Fields worked with the Ghanaian government in establishing a set of ethical and corporate governance conditions, and the company was the 16th signatory of the International Council on Mining and Metals, a group which requires each of its members to approve new entrants and has committed to an operational framework that includes human rights, community relations, and the environment. Other gold company members of this coalition are AngloGold Ashanti, Barrick and Newmont.

EXPANSION

The expansion of the plant
at Tarkwa takes place while it
continues to operate at
existing capacity

What this comes down to is that in its operations in West Africa Gold Fields abides by sustainable development principles that Baldwin believes are key to the future of mining. It involves everything from ensuring mining is a business where employees do not work in conditions above what is regarded as acceptable risk, to having a foundation in Ghana that funds projects that communities, the company and government prioritise, examples being hospitals, education, a fish farm and even a mortuary.

A few years ago it looked likely that Gold Fields would expand its footprint in West Africa beyond Ghana, to Burkina Faso, thanks to the advanced stage Essakane project in joint venture with Orezone. However, Gold Fields opted out of that project. “It is a good orebody, but it lacks the upside potential that, say, Cerra Corona in Peru has with a possible phase 2. Essakane is a great project, but it is not for us,” Baldwin says. “We would have had less than 60% of the attributable production, but would have been operator and carried all the risk in a project that would have been the major contributor to the GDP of one of the world’s poorest countries.” It would have entailed establishing a new set of relationships and would have taken up a lot of management time.

Gold Fields does have some early stage exploration interests in West Africa, some of this undertaken itself. Its exploration in the region also includes a joint venture with Glencar Mining on the Sankarani project in Mali, where soil sampling and mapping has been undertaken, as well as RAB drilling, and a diamond drilling campaign has been planned to test targets. This is the most advanced project Gold Fields has in the region outside its mine tenements.

The company’s biggest focal points by far in West Africa exist around its mining operations, which also make up by some margin the company’s biggest land holding in the region, the properties extending some 40 km by 20 km. “Our biggest drilling effort and most exciting results in the region is our near-mine exploration activity at Damang,” Baldwin says.