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Harmony’s Expansion Projects

Harmony, which is one of the world’s largest gold producers, has been working upon a number of major projects to upgrade its assets. These are the Elandsrand new mine, the Phakisa project, the Doornkop project and the Tshepong Sub-66 and Sub-71 projects.

Harmony produces about 1.5 million ounces of gold a year from its operations located primarily on South Africa’s Witwatersrand basin. In South Africa these encompass 10 underground operations, an open-pit mine and surface operations in Gauteng, North West province, Mpumalanga and the Free State.

Harmony also recently announced the formation of Rand Uranium that will turn to account the substantial uranium-rich material held by the group at its Randfontein operations.

The company’s operations in the Free State, where it holds the dominant position, include Bambanani that produces 175,000 ounces of gold a year (oz/y), Joel (67,000 oz/y), Masimong (129,000 oz/y), Target (93,000 oz/y), Tshepong (273,119 oz/y) and the Virginia operations (275,000 oz/year). These figures are based on Harmony’s most recent annual production numbers. The Virginia operations include the Harmony 2, Merriespruit 1 and 3, Brand and Unisel shafts. There is also the Phakisa operation, which has just begun its ramp-up of production.

In Gauteng, Harmony’s operations include the Doornkop mine, which produced 48,000 ounces in the past year, and Elandsrand which produced 174,000 ounces over the past year.

In Mpumalanga, the company’s Evander operations that include the Evander 2, 5, 7 and 8 shafts produce at 263,000 ounces a year, the Kalgold opencast operation produces at 102,000 ounces a year, and the Phoenix surface mining produces at 35,000 ounces a year. Harmony’s other surface mining operations in Mpumalanga produce some 26,000 ounces of gold a year.

Elandsrand New Mine Project
The US$139 million Elandsrand new mine project achieved its first production in October 2003 and will achieve full production in June 2012. It will have a life-of-mine of 23 years and produce 370,000 ounces of gold a year. It has an average reserve head grade of 6.46 g/t giving it 7.95 million life-of-mine ounces. In January 2009 the access development on the 113 level was completed and the 102 level bulk air cooler was commissioned.

If the new mine project was not embarked upon Elandsrand would in all probability be closed by 2012. The new mine will be delivering 100% of Elandsrand production by 2015/16. At the moment the Elandsrand new mine project already accounts for 43% of the overall mine output.

This long life high reserve ounce project is seen as a particularly attractive one for Harmony to enhance the quality of the company’s reserve base. It was a project taken over from AngloGold Ashanti, which had only completed the sinking and equipping of the sub-shaft and ventilation shafts as well as the development around the stations. Harmony did most of the horizontal access development on 102, 105, 109 and 113 levels.

Elandsrand schematic

Schematic showing the Elandsrand new mine

Harmony has done or is currently establishing all infrastructure development for the 100 level sub-station, and the 100 level and 98 level refrigeration complex, the 115 level pump station, the 92 level turbine complex and the sinking of the No 2 and No 3 backfill shafts.

Elandsrand mines the Ventersdorp Contact Reef (VCR) orebody, a tabular orebody with an average dip of 23O to 25O. The orebody has a strike distance of about six kilometres at Elandsrand, with the dip distance in excess of four kilometres. The VCR is a conglomerate band that varies from 10 cm to 100 cm and has an average thickness of 40 cm.

To the west of the mining area, the Elsburg reef subcrops against the VCR. The Elsburg reef is a massive conglomerate with thickness varying from 100 cm to 300 cm with value ranges comparable to the VCR.

Mining width at the Elandsrand new project varies from 121 to 135 cm as a result of the thicker Elsburg reef mining to the west of Elandsrand. The mining grade varies from 1,100 cmg/t to 1,450 cmg/t, averaging about 1,320 cmg/t. Dilution is well managed with an instope average dilution of 7.6% consisting of gully dilution, off reef and forced off reef mining. The recovery grade out of the new mine is planned to range between 5.6 g/t and 6.8 g/t over the life of the project.

Elandsrand mines down to 3,000 meters below surface, and therefore is the biggest consumer of electricity amongst the Harmony shafts. Electricity is mainly consumed for refrigeration, pumping, compressed air generation, ventilation fans and winding of people, material and rock.

Deep level gold mining also has its own challenges with regard to rock engineering conditions and requires a much more intense support system to ensure safe mining. The support system used at Elandsrand is expensive and consists of backfill, wooden pre-stressed packs, elongates, rock bolting, mesh and lacing, gunniting and pre-stressed mechanical anchors.

Elandsrand has been exposed to the same cost escalations as the rest of the mining industry, with steel and explosives prices having increased by about 100% since July 2007, while timber, which is the primary support used along with backfill, saw increases close on 75%. Electricity went up by 40% and, while management expects decreases in the prices of most consumable products during 2009, electricity will be the exception.

To save on electricity the project has re-engineered its refrigeration/cooling system. The original design was to put the condenser heat into the water on 100 level. This has been changed and the condenser heat will now be put into the return air that is dissipated on surface. Thus the refrigeration plants on 71 level will not receive their warm water at such a high temperature, which would have meant them working harder to get the temperatures down.

The original design was to have banks of 500 kW cooling units situated on the 102, 105, 109 and 113 levels. This design was changed and a single bulk air cooler will be installed in both the East and West haulages on these levels. On 109 and 113 levels mobile refrigeration plants will be installed. These units bring the cooling generation closer to the working places, and on 92 level a 4,000 kW turbine is being installed, all of which improves the mine’s energy efficiency.

The building of a new mine allowed for other innovations. This included ensuring that all the section bulk air coolers on 102, 105, 109 and 113 levels will be a closed loop. High pressure water is sent to each cooler. After the cooler, a pressure reducing station reduces the water pressure supplied to the production sections. The water not required for production returns to the clear water dams.

Another innovation was thermit welding of all the tracks in the main haulages on 102, 105, 109 and 113 levels from the station to the east-west split.

Phakisa Project
The US$185.5 million Phakisa project produced its first gold in September 2008 and will reach full production in June 2011. This mine will produce just over 250,000 ounces of gold a year over a 22 year life-of-mine. It has a high average reserve head grade of 8.31 g/t (recovered grade 7.91 g/t) for its life of mine reserve of 5.3 million ounces.

Elandsrand schematic1

Schematic of the Phakisa mine

The mine whose final depth is 2,427 meters below collar, started its decline project towards the end of 2008 and the mine’s rail-veyor system recently ramped up to double capacity by the introduction of a second train. Phakisa commissioned its first ice plant at the end of January 2009.

It is a low cost mine, which has also seen a number of innovations, in particular its rail-veyor system and the use of a modular ice plant. Though teething problems are usually inevitable when introducing a new technology, the rail-veyor stands out as a wonderful new low cost tool for the mining sector.

Phakisa also has a much smaller energy footprint compared with older mines due in part to the modular ice plant where units will be started on demand only. In addition, the pumping head for recirculation of run-of-mine (ROM) water is only 750 meters and the mine has restricted itself to the use of energy efficient lights only.

At Harmony Phakisa falls into the bottom quarter of the lower cost producers. This is due to the fact that the current stoping actual cost compares very favourably with the original targets, and the planned mining costs are at sub R100,000 per kilogram.

Production at the mine rampedup well during the second part of 2008 but was outperforming the rail-veyor system; the introduction of the second rail-veyor train has addressed this challenge. Although the rail-veyor is unique to the industry and numerous challenges prevailed (derailments being the most pertinent) persistence in improving performance ramped one train up to 2,200 tonnes delivery a day. With derailments and software challenges managed, a second train was introduced in late November 2008 doubling the capacity of the whole system to 4,000 tonnes a day.

The access development ramp-up is from 1,100 meters a month to 1,250 meters a month, which will be maintained until the ice plant can deliver 1,000 tonnes of ice a day for cooling (5 MW cooling). At this time access development will further ramp-up to 1,500 meters a month. Early in 2009 the reef tonne profile was at 17,000 tonnes a month, and this will incrementally increase to reach nameplate production during 2011. The shaft sinking contractor for the project was Shaft Sinkers.

The ore-body at Phakisa is mainly represented by the Basal Reef. It is tabular and dips at about 23O from west to east. The reef of economic importance is 20 cm in width overlain by basal quartzite. This is again followed by a shale overlay.

Tshepong –Sub 71 and 66 Decline Projects
First production from the R132.4 million Tshepong Sub-71 decline project is expected in August 2012, with full production anticipated in July 2017. Tshepong also recently undertook its R290 million Sub-66 decline project, and during Harmony’s last financial year completed 1,285 metres of development on that project with 1,098 metres of development completed on the Sub-71 project.

The projects will enable Tshepong mine to maintain its current production profile over a 16 year life-of-mine until 2024. The Sub-66 project feasibility was approved by the Harmony board at the start of 2003, and the project which scoped 12,400 metres of development began in April that year with Cementation Mining as turnkey contractor. However, the project did not go smoothly.

During February 2005, with the contract 2,800 metres behind the original plan the contractor was requested to leave the mining site and received a penalty. It was then decided not to use a contractor, and conventional Tshepong mining crews were used to develop the declines further. The new plan, involving the use of Harmony personnel, started in April 2005.

A further two major delays were incurred in 2005/6. A fall of ground on 69 level required a new mine design to convert from wide haulages to twin haulages in order to develop around the fall of ground. Then extremely poor ground conditions in the chairlift halted development for four months in this end. Development rates were seriously impacted and the chairlift was only completed in June 2008.

In spite of the difficulties encountered, the Sub-66 decline project was still the optimal route for the mine. The decline sinking development was 4,559 metres, comparable to a sub-vertical shaft of 280 metres (including shaft bottom arrangements, ore pass systems, shaft tipping arrangements and winder headgear). The cost of the decline development came to R3,416 per metre compared to R64,000 per metre for sinking a sub vertical shaft (both of these in 2003 money terms). The decline provided further flexibility since as levels open up on reef metres could be reached earlier.

Meanwhile, the feasibility for the Sub-71 level project was approved at the end of 2007. The project scoped 2,800 metres of development and by December 2008, 1,613 metres had been completed. December 2008 also saw development of the project’s 73 level station completed. However, extremely bad ground conditions in the material decline resulted in a decision to stop the decline for six months while secondary support is installed. This will have an impact on the scheduled completion date for this project.

Elandsrand schematic2

Schematic of the Doornkop
South Reef project

Doornkop South Reef
The US$168 million (at an exchange rate of US$1:R10) Doornkop South Reef project entails the three-phase development of the Doornkop main shaft to 1,973 metres below collar, to access the South Reef. It is estimated that the South Reef project has an in situ gold resource of 5.6 million ounces.

The Doornkop South Reef project began production in mid 2007 and is building up to its full production of 294,700 ounces of gold a year by mid 2013. The mine, which will achieve a 5.2 g /t recovered grade, will have a 13 year life-of-mine during which time it will produce about 2.65 million ounces of gold.

The first phase of the project entailed the upgrading of the mine’s sub-vertical ventilation shaft to establish a second outlet, install temporary infrastructure such as pump stations for the shaft sinking process, and create access to the bottom portion of the main shaft in preparation for raise boring. The upgrading of the sub-vertical shaft also focused on increasing the hoisting capacity from 500 tonnes a month to 20,000 tonnes a month.

The second phase saw the establishment of a series of raise bore holes, ultimately linking the existing main shaft bottom with the sub-vent shaft development on 212 level.

The final phase will take mining to below 212 level, through the sinking of an incline shaft to open up the South Reef orebody. It will entail further primary and secondary development.

Key contracts and suppliers on the Doornkop South Reef project include civil contractor Murray & Roberts Cementation, Alstom Mine Winders which supplied the winders, Melfix which is undertaking the shaft works, mechanical contractor Octa Engineering, Weir which is supplying the pumps and FLS Minerals on the winders.

Shaft sinking and partial equipping of the main shaft was completed during 2008. The reef and waste handling systems as well as the shaft bottom loading arrangement have been commissioned allowing for hoisting of rock from the main shaft and hoisting from the sub shaft to be discontinued. Currently two of the four shaft stations have been equipped.

The water handling system will be commissioned in stages to match the mine’s production build-up. The first settler dam and circulating pumps on 205/207 level, and the distribution plant on 192 and 197 levels were being commissioned in April this year and will provide up to 200 litres per second (l/s) of service water to the production sections. The service water plant capacity will be gradually increased and will peak at 400 l/s by the time full production is met in 2013.

Service pipe columns were installed in the shaft during the sinking phase. The newly installed rock winder was commissioned at the end of March 2009 to hoist rock from 132 level where it will be dedicated to the removal of rock from the Kimberly horizon. The installation of guides in the rock hoisting compartments of the shaft below 132 level will continue in the months thereafter and culminate in the commissioning of the rock hoist loading station on 212 level. The rock hoist will be commissioned in time on 212 level to cater for the build-up tonnage which will peak in 2013.

Currently some 15,000 tonnes a month of reef are being produced from the South Reef. The operation will continue to build-up to a maximum of 148,000 tonnes a month in 2013.