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Harmony poised to hit 1.5m oz target – CEO

Harmony Gold CEO Peter Steenkamp talks to Mining Weekly Online’s Martin Creamer. Video & Photographs: Dylan Slater. Video editing: Nicholas Boyd.

22nd May 2018

By: Martin Creamer

Creamer Media Editor

     

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RANDFONTEIN (miningweekly.com) ­– Gold mining company Harmony Gold is well on track to hit its target of 1.5-million ounces of gold a year.

The two big steps needed to ensure this – the acquisition and recapitalisation of the Hidden Valley gold mine in Papua New Guinea (PNG), and the acquisition of the Moab Khotsong in South Africa’s North West province – are both now behind it. (Also watch attached Creamer Media video.)

Harmony, which is within a hair’s breadth of attaining full commercial production at Hidden Valley, is also well on its way towards fully integrating Moab Khotsong into the group before June 30, the financial year-end of the R30-billion, 30 000-employee company, which is listed in Johannesburg and New York.

The two acquisitions, combined with a few other projects, including surface projects, will “take us to the 1.5-million ounces”, Harmony Gold CEO Peter Steenkamp assured Mining Weekly Online in an interview.

South African production will make up 85% of this, with a 15% contribution from PNG, a country that could, in the not too distant future, be contributing significantly more if the greenfield Golpu project gets the go-ahead.

Should Golpu come on stream in 2023, it will have a 30-year life ahead of it – and a very profitable one at that, whereas Harmony’s South African production faces a substantial 400 000 oz production decline in the next five years.

Although the company has long-life South African assets in the form of Joel and Tshepong in the Free State and Doornkop in Gauteng, and although Moab Khotsong also brings with it a potential brownfield Zaaiplaats mine-life-extension option, something more sustainable will be needed to keep the company away from the local ‘cliff’ it is facing.

Will Harmony take the course of buying mines, as has been its wont, or is it prepared to be a mine builder, as is the case in PNG?

“I’ve built quite a few mines in my time, so I’m not shying away from that at all,” was Steenkamp’s response to Mining Weekly Online.

The most glaring local mine-building opportunity facing the company is Target North in the Free State, where Harmony ceased drilling exploration holes in 2007.

Since then, the company has succeeded in getting the prospecting right incorporated into the Target mining right and will recommence exploration drilling from surface in the area this year to establish the mining potential of the Target North resource.

“We’re quite excited about it. What we’ve seen so far doesn’t look at all bad,” said Steenkamp.

As the then Anglovaal Mining discovered several years ago, the mine design in the Target area is required to differ markedly from traditional South African narrow-reef gold mines. Anglovaal found thick zones in the Bothaville Gap area that could be mined using mechanised methods. If Target North did eventuate as a mine, it would typically require a top cut to destress the locality’s twin massives of what would be a deep-level mine.

Other opportunities to avoid the looming ‘cliff’ would include Harmony just continuing to press on with what it has not been given much credit for doing – extending the lives of the mines that it acquires by developing declines, with a typical example of life-extension being at Tshepong-Phakisa, where ongoing decline development has opened up additional ore reserves.

“We’re very good at that type of capital expenditure. It’s not major, big shaft sinking, but it is constant project development of the mines, and we’ve been quite successful at doing that over the years,” Steenkamp pointed out.

Golpu is located close to the Port of Lae and to airport facilities and Harmony would not have to build many roads to access the mine, although crossings over two fairly large rivers will have to be provided.

As far as PNG goes and compared with Hidden Valley, Golpu would be an easier project to build, which will be done in joint venture with accomplished PNG mine developing company Newcrest.

A block-cave mining method would be used at Golpu, which would be a mechanised mine.

SHAFT PILLAR MINING

Harmony has extracted gold from more than 50 shaft pillars and its experience in shaft pillar extraction is likely to help it to mine Moab Khotsong’s high-grade Great Noligwa pillar. Combined with three isolated reserve blocks, a ten-year-plus life-of-mine will unfold at the newly acquired operation.

The company is currently mining the high-grade Bambanani shaft pillar in the Welkom area very successfully, which will add to the experience needed to extract at the larger Great Noligwa pillar.

“We’re busy with the design at the moment,” Mining Weekly Online was informed by Steenkamp, who has been involved in the extraction of all the shaft pillars in the Vaal River area.

“We do have a very skilful pillar-extracting team and that’s always helpful when you do these types of projects,” he added.

URANIUM BREAKING EVEN

The Moab Khotsong also takes in all of AngloGold Ashanti’s involvement in uranium mining, which has been substantial and which also takes in the former entire interest in the uranium calcining facility of Nuclear Fuels Corporation of South Africa (Nufcor).

Uranium is certainly breaking even at this point in time and Harmony is studying ways of taking it forward while continuing to honour the long-standing Nufcor arrangements.

The company is quite happy with the ruling dollar price of gold and is continuing to be protected from the stronger rand by the rand hedges that it put in place.

“But we certainly need to adjust to our new reality by making sure that we have the right cost structures and that we mine at profitable spot prices. We’re going through a tough planning process. The fortunate part is that we didn’t have to knee-jerk because we still have good hedged prices and we have been able to take time to plan properly and do things in an orderly fashion,” said Steenkamp.

Among the adjustments already made has been a cessation of leader reef mining at the fast depleting Unicel mine, where only the Basal reef is being extracted.

Edited by Creamer Media Reporter

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