JOHANNESBURG (miningweekly.com) - With South America generally viewed as Gold Fields’ 'runner-up' region, the area is now positioning itself for growth and reaching one-million ounces in gold production and development within five years, a senior executive said this week.

Speaking at the company’s analyst day in Johannesburg, Gold Fields head of the South American region Juancho Kruger said that the company now knows how to operate in this highly endowed and prospective geological region.

A steady cash flow of above $25-million has been generated from the region in the past two quarters, that can mainly be attributed to its Cerro Corona project running at a steady state production, with the first phase of the project being completed.

“A year ago, the Cerro Corona project shipped its first parcel of concentrate to Korea. Today, the project has delivered above 85 000 oz over the past two quarters, at a very low cash cost. The project is a strong cash-generating operation for the group,” Kruger commented.

Currently, the cash cost is already below $350/oz, with a cash cost for the life-of-mine estimated at around $358/oz.

Kruger said that the company aims to increase efficiency at its Cerro Corona project, and to develop some of its promising exploration opportunities in the region.

“We need to start converting our resources into reserves. One key driver behind this lies in finding suitable tailings facilities.”

The mine has the potential to increase resources to reserves by 28-million tons. However, a key constraint is its tailings storage capacity. The company has been met with a number of social and environmental challenges in this regard.

To speed up the conversion, Gold Fields has implemented three initiatives. The Cerro Corona phase two feasibility analyses are under way, a drilling programme has kicked off this quarter, and alternative sites are being identified for the tailings storage facilities.

Meanwhile, Kruger noted that the region also boasts a strong exploration pipeline. One of the furthest advanced exploration projects is the Chucapaca project, in Peru, with a scoping study expected by the end of the 2010 financial year. Resource definition drilling will start in January 2010.

Currently, the company is producing around 219 000 oz/y from South America, and envisages an estimated run rate of about 350 000 oz/y by the 2010 financial year. Kruger said that the expansion of the company’s Cerro Corona project should add an additional 170 000 oz.

Gold Fields also expects to bring an additional 250 000 oz to the portfolio from its late stage exploration projects.

“The region should reach about 750 000 oz/y to 775 000 oz/y by 2015.

“I realise that this leaves a gap of about 225 000 oz/y, which we believe could be filled by some of our current early stage exploration projects in the predicted timeline,” said Kruger.

“In a nutshell, I believe that we have proven our ability to operate in a new and very challenging region, and have correctly positioned this region for future growth,” he concluded.