It took a year for the new shaft to reach its bottom level 600 metres below the surface. Ndlovu shaft, located about 40 km east of Johannesburg, will ramp up to 15,000 tonnes per month (tpm) by the end of 2008 and it has targeted production of 30,000 tpm by the end of 2009.

Ndaba Ntsele

Pamodzi group CEO
Ndaba Ntsele

The shaft, which before its official naming was referred to as the North West shaft and which last saw mining in 1962, will produce gold at between 4.5 g/t to 5.9 g/t from an ore body that trends north west to south east. The cut off grade will vary between about 2.8 and 3.5 g/t and this was based on a consistent gold price of 155,000 to 160,000 rand/kg.

The original North West shaft was sunk in 1912 and extended to the 820 metre level before it closed in 1962.

Between 1912 and 1956 there were four shafts in the area and they mined 91 million tonnes of ore and produced 868 tonnes of gold. Some mining took place on a small scale during the 1960s and Harmony looked at mining the ore body during the 1990s. The current project was initiated in February 2006, prior to Pamodzi taking over the asset from Bema Gold, but was stopped for six months due to cash constraints. Pamodzi, upon its takeover, saw the potential of this resource and gave the project a high priority. Although Pamodzi’s original target was to begin operations in the final quarter of 2007, difficult shale-type ground conditions saw the shaft further delayed.

Pamodzi gold new's

Pamodzi Golds new
Ndlovu shaft to the
east of Johannesburg

The project required the replacement of the old timber used as support in the original mine with steel girders and it required the establishment of surface infrastructure and an ore handling system. The result was a fit-for-purpose design for the projected 12 year life-ofmine operation.

The Ndlovu shaft reserve comprises 2.5 million tonnes of ore at 3.69 g/t which totals 9.5 tonnes of contained gold. The shaft’s headgear was refurbished after having been obtained second-hand, as was the case with the other main infrastructure being used. As is typical for an East Rand gold operation the mine will encounter sweet spots in grade, but the nature of these ore bodies means geostatistical analysis cannot determine a consistent grade forecast as is possible on the West Rand. Thus performance will vary on a monthly and even on a quarterly basis. Drilling will be done for structural analysis, and development will be reviewed every two weeks. The plan will be to have 35% to 38% reef development and the operation will use mechanised development.

The capital cost for Ndlovu shaft was R23 million and it employs 350 people full time. The anticipated payback for the project is some 24 months. The main production levels are the 10 and 12 levels where the main reserve and resource are located. Sampling is also taking place on the 14 level where future production may take place. This provides a potential upside of 1.5 million tonnes of ore between the 12 and 14 levels with potential grades of 5.6 g/t.

Peter Steenkamp

Peter Steenkamp, Pamodzi Gold
CEO standing in front
of the Ndlovu shaft.

The Ndlovu shaft will mine the Black Reef as well as the upper Kimberley and C reefs. The C reef lies some 15 to 20 metres below the Kimberley reefs. Operations will include conventional mining and the use of vacuum sweeping of the mining area and underground crushing.

Ndlovu shaft is part of the Cons Modder shaft complex that includes the No 9 shaft located some 2.2 km away and the No 14 incline shaft. All of these are actively producing shafts. The Ndlovu ore will be trucked to a centralised plant some 8 km away. Future possibilities include a conveyor or even a large scale rail option. Access to the Ndlovu ore body could also take place at the No 9 shaft to enable the ramp up of production by allowing mine development to take place.

Overall, Pamodzi Gold’s East Rand Mining Operations comprise eight shafts over three distinct complexes. The group’s skill base is high in the East Rand, though it did report losing some skilled people due to the recent xenophobia that swept across South Africa.

Apart from the Cons Modder shafts, Pamodzi owns the Grootvlei shaft complex that consists of three producing shafts and a fourth that is dedicated to water pumping. Pamodzi has to pump some 95 megalitres a day of water from its East Rand operations during the high season, but as the rains abate this is reduced to 75 megalitres a day during the July to August period. The operation is looking for ways to undertake this water pumping more effectively.

Finally there is the Nigel operation which currently has one operating shaft, Marievale, where the stoping width is 85 cm. Generally mining on the East Rand by Pamodzi features a stoping width of just over one metre. “The secret is dilution management and decisions on where to leave pillars and where support can be put into place so pillars can be mined,” Peter Steenkamp, Pamodzi Gold CEO, says. “It is the application of suitable mining techniques and rock mechanics principles. For every 250 metre change in depth one changes the rock support standard.” Pamodzi has in-house rock mechanics expertise with consultants used on a contingency basis.

The mining licence areas of Pamodzi’s East Rand Mining Operations cover a span of 36 km north to south and some 20 km east to west. The processing plant, located on the Grootvlei property, which serves this multi-reef operation, has a 200,000 tonne per month (tpm) capacity. The plant is operating at 170,000 to 180,000 tpm, which gives it scope for it to bring in material for toll treatment. It undertakes some 14,000 tpm of such toll treatment for Manhattan Corporation.

Like Pamodzi’s other operations, the East Rand Mining Operations, which it took over in 2007, represents a turn around situation and as Pamodzi completes that phase it will look to increase volumes. Ndlovu’s production will be over and above that of the group’s existing shafts on the East Rand.

One of Pamodzi’s other operations is the Orkney gold mine in the North West province, which it took over from Harmony in February 2008, and which will produce some 100,000 to 110,000 ounces of gold this year. A lot of this is from pillar mining, but there are also areas of open ground where geological modelling and infrastructural development could lead to further opportunities. The operation has some 1,500 metres of developed reef available and it looks to have 2,800 metres available. It will take some 12 to 18 months to reach that stage.

President steyn mine

The President Steyn mine.

There is also the President Steyn gold mine located at Klerksdorp in the Free State, which Pamodzi took over from Thistle at the same time. Here Pamodzi has targeted 135,000 ounces for this year. The previous owner of the operation did not invest in much reef development and Pamodzi is looking at undertaking 1,000 metres a month of development work. It will take Pamodzi some three to six months to build up to its desired development position.

Overall, Pamodzi anticipates between 340,000 and 373,000 ounces of gold production this year. This is while it undertakes its turnaround strategy at the latter two assets with a goal of achieving consistent performance at these by the end of this year.

The company’s strategy is to obtain old mines, those which have become non-core assets and consequently have been neglected. As a result, such assets have economically viable resources and reserves that are not being explored or used and have limited operational flexibility. Pamodzi’s target is to recapitalise such ore bodies and emphasise ore reserve management, identify and mine high grade pillars where possible, and in this way produce gold profitably.

This is part of what is described as the Pamodzi way and is not dissimilar to the manner in which Harmony started out. One of the legs upon which the Pamodzi strategy is based is that of empowerment, in that mine management is empowered to be responsible and accountable for their gold mining through profit sharing remuneration structures and skill transfer.

Pamodzi’s business culture also includes changing the mindset at the mines by actions to promote safety, responsibility, innovation and productivity improvements. “At two of the President Steyn shafts we stopped work as we took the decision not to continue until they met our safety criteria,” Steenkamp says. “If it is not safe to work in certain areas we will not produce from them. We use the robot system; if it is red one stops, if it is amber one must look and determine if it is safe to continue and if it is green then it is safe to mine. All incidents must be reported.”

Headgear at the orkney

Headgear at the Orkney mine.

Finally the Pamodzi approach is to operate the assets under a flexible and efficient cost structure to maximise profit over the remaining life of mine. “The key to this is to focus rather on profit making than on cost saving, which is a mantra across the industry. We believe too many operations focus on saving costs, rather than taking the actions that will maximise profit,” Steenkamp says. “Ore reserve management is the key and the rest is about the people.” Pamodzi has chosen mine managers who will relish the challenge and the freedom to work independently, and this entrepreneurial approach should hold the company in good stead.

Pamodzi group CEO Ndaba Ntsele says the company, which is listed on the JSE and has only been operating for about a year and a half, planned to become a million ounce producer three years after its start up, before it seeks a listing on another exchange. Pamodzi gold is about halfway through this three year window. This year it will process between 3.5 million and 3.8 million tonnes of ore at a cash cost ranging between US$569/oz to US$626/oz. The East Rand operations produce gold at about R150,000/kg, and the company anticipates that the cost of its Orkney operations will come down to below R150,000/kg and those at President Steyn will come down to some R170,000/kg. The company has been working to raise US$50 million to settle debt and raise working capital.