So says Gold Fields executive vice president: international operations Glenn Baldwin in an exclusive interview with Mining Review Africa.
Currently Gold Fields is achieving total annual gold production of more than 4 million ounces from its mines in Africa, Australia and South America, and has 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.
Gold Fields holds 50 per cent of the Essakane joint venture in north-eastern Burkina Faso, and is earning the right to increase its shareholding to 60% by its current completion of the bankable feasibility study (BFS) scheduled for delivery any day now. The other partner is Orezone Resources Inc. The Essekane project is some 330 km north-east of the capital Ouagadougou.
“There are many dynamics with Essakane,’’ says Baldwin, “and the BFS will highlight a number of critical areas. We want to be absolutely sure of our facts when we go to market with the details, and we will be once the BFS is complete and the capital budget estimates are done. It could be sooner or later than January, but we are under no time pressure, as our agreement with Orezone sets a time frame of mid-2008,” he adds.
Although the Essakane BFS was due as we went to press, and an actual decision to mine is therefore expected by January 2008, the future of the mine seems assured, and various new facts and figures are emerging.
At the latest Gold Fields investor day, corporate development and exploration were highlighted by executive vice president John Munro, who described the envisaged Essakane operation as a conventional surface mine operating at a rate of 24 Mtpa, and with a CIL process plant with a capacity of 5.4 Mtpa. “With an average life of mine production of 5.4 Mtpa of ore, average annual production of gold will be 290 000 oz,” he added.
The interim resource estimate for Essakane reported within a US$650 per ounce pit shell at a 1.0 gram per ton cut-off, amounts to 43 million tons at 2.4 grams per ton gold for a total of almost 2.5 M oz. More than 80 per cent of this inventory is classed as indicated resource.
“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 re-location of the communities involved.”
“Any responsible company will examine the environment in which it is working, and will do the necessary sustainable development work,” Baldwin points out. “So part of the feasibility study – and part of the subsequent recommendations to the board – will underline the extent of homework that has to be done on the project,” he explains.
“It’s very important for people to understand that these days mining is not just about finding an ore body and mining it – it’s about finding an ore body, figuring out how to mine it, and – as a parallel process – making sure that you take into account the environment,” Baldwin insists. “Do you have the infrastructure, how are you going to impact on the community, what tangible benefits are there going to be for the local and national economies, and what positive impact are you going to have on the environment?
“These days we continue to find mineralisation that we intend turning into ore bodies in increasingly challenging environments,” Baldwin continues. “Those environments really do look for support from mining, and it’s up to the responsible miners to ensure that we do it properly – to make sure we don’t pollute rivers or displace people unnecessarily, and that they are properly compensated when we have to.”
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.
Construction and production dates, as well as capital investment, cannot be predicted precisely until the BFS has been analysed. “It is difficult to quote exact figures at this early stage, but the BFS will provide us with a real schedule to which we can work,” Baldwin explains.
Concept numbers quoted by Munro at the latest investor day estimate early production at early 2010, ramping up to full production by the middle of that year. Construction capital costs have been set provisionally at US$375 million (more than R2.6 billion).
It is a reasonable assessment of a small to medium-size operation in West Africa to say it will take at least two years from start of construction to commissioning and first production. With first production predicted for early 2010, this means that actual construction would have to commence pretty early in 2008.
“Moving away from Burkina Faso, my main West African focus as head of operations is on Ghana – on ensuring that we optimise the Tarkwa and Damang operations and deliver as much value to our shareholders and stakeholders as we can,” Baldwin reveals.
“Both projects at Tarkwa Gold Mine – the US$126 million (almost R900 million) expansion to the carbon-in-leach (CIL) process plant, and the US$49 million (R350 million) expansion of the North Heap leach facility – remain on track for commissioning in Q1 of our 2009 financial year, which means between July and September 2008,” he explains.
The CIL facility is scheduled to ramp-up to its full 12Mtpa level by mid-2009, and the North Heap leach facility will have the capacity from commissioning next year to receive and handle the throughput of 12Mtpa.
“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,” he contends.
“At Damang we are focusing on trying to extend the life of the mine with quite a significant exploration programme,” Baldwin reveals.
“We have been doing some RC drilling here in the search for more resources, and we have had some nice sniffs,” he says. But he hastens to add that Gold Fields does not report on individual results of boreholes. “So at this stage our reserve statement still gives us in excess of four years of life of mine, but we are definitely working at trying to extend that limit,” he adds.
“We have a new exploration manager for the group starting shortly – I need to sit down with him to discuss and analyse the whole situation and do some planning and strategising,” Baldwin continues.
Gold Fields is also involved in ongoing exploration at Sankarani in Mali, but there is little to say in terms of progress at this stage. Current activities are a prelude to a bigger drill programme planned in the near future. “I will be reviewing the strategy for Mali as well with our new exploration manager,” Baldwin states.
From an international operations perspective at this moment in time, everything seems to be pretty much on track in terms of production and development, and I am quite comfortable with the situation,” Baldwin concludes. “As far as exploration is concerned, ‘steady progress’ is the word – nothing spectacular to report at this stage.”