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Cash costs plunge below $700/oz at AngloGold’s Mponeng mine

IMPROVED PRODUCTION Mponeng gold mine achieved a cash cost of $692/oz for H1 2016, representing a 25% year-on-year improvement

SAFE PRODUCTION STRATEGY Mponeng has achieved one-million fatality-free shifts in Q1 2016 following the implementation of AngloGold Ashanti’s Safety Production strategy

Photo by Bloomberg

CHRIS SHEPPARD Mponeng has shown pleasing improvements due to a well-constructed de-risked production plan supported by a comprehensive logistics de-bottlenecking programme

Photo by Duane Daws

23rd September 2016

By: David Oliveira

Creamer Media Staff Writer

  

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Mponeng gold mine, near Carletonville, in the North West, currently the world’s deepest mine, was one of the lowest-cost producers in South Africa during the first half of 2016, states South African gold mining major AngloGold Ashanti in its earnings report for the six months ended June 30, released in mid-August.

The gold miner highlights that, for the first half of the year, its South African flagship operation, which is undergoing a six-phase expansion project, achieved a cash cost of $692/oz, which reflected a 25% year-on-year improvement.

“Mponeng has shown pleasing improvements, owing to a well-constructed derisked production plan supported by a comprehensive logistics debottlenecking programme, both of which are supported by a disciplined set of management and supervisory work routines,” explains AngloGold Ashanti South Africa COO Chris Sheppard.

In its Operation Profile 2015 report, AngloGold Ashanti notes that production at Mponeng had been seriously affected by safety-related stoppages.

The mine also experienced further operational delays to Phase 1 of its life-extension project below 120 Level. “Mining flexibility was curtailed, as production was undertaken on only three levels, at 120 Level and above, towards the lateral extremities of the orebody, where travelling distances and lower grades hampered efficiency,” the report explains.

The report adds that a derisking plan has been implemented at Mponeng to address the seismicity challenges. A decision was made in 2015 to withdraw from affected areas to improve safety; however, this reduced the available mining area, resulting in lower extraction rates.

All-in-sustaining costs at Mponeng were 19% higher at the end of 2015, but this increase was countered by the weaker rand relative to the dollar, as well as “modest contributions” from AngloGold Ashanti’s Project 500 efficiency initiative, which aims to save R500-million in costs.

“Performance was significantly affected by the lower volumes mined, as well as ongoing inflationary pressures in South Africa, which is fully exposed to above- inflation administered price increases for critical inputs, [such as] power and water,” the report states.

Mponeng Expansion
Since Mponeng’s establishment in 1986, then known as the Western Deep Levels South Shaft, or No 1 Shaft, the mine has exclusively exploited the Ventersdorp Contact reef (VCR) orebody down to its current depth of about 3 800 m.

In 2007, AngloGold Ashanti undertook an expansion project comprising six phases that would further exploit the VCR and Carbon Leader reef (CLR) orebodies, which have been mined at the adjacent Savuka and TauTona gold mines, both owned and operated by AngloGold Ashanti. The CLR orebody is planned to be mined at Mponeng in the future.

As at the end of the first half of 2016, the company had spent about $300-million on the project, which is being financed by cash generated from Mponeng’s mining operations.

Phases 1, 3 and 5 will focus on the VCR, while phases 2, 4 and 6 will exploit the CLR.

Sheppard tells Mining Weekly that each phase of the expansion programme consists of two mining levels covering a vertical elevation of 200 m to 220 m.

Phase 1 of the project, currently in the execution phase, will extend the mine from 120 Level to 123 Level, and 126 Level through a set of four declines. Phase 1 is nearing capital completion, with the project having spent over 90% of the capital budget so far.

“To date, ore reserve development on 123 Level has progressed well, with two raiselines having been holed and an additional two raiselines planned to be holed during the second half of this year, which would open up the ore reserve for ledging and stoping activities next year,” Sheppard explains.

He adds that critical infrastructure extensions – including a conveyor, monorail transport system, ore silos and water management facilities – to support 126 Level ore reserve development and future production are progressing on schedule.

Production targets for Phase 1 are expected to reach their peak performance of 20 000 m2 by about 2021. “. . . 123 Level will reach its steady-state performance in 2018, while 126 Level will achieve steady-state performance also by 2021,” Sheppard notes.

Meanwhile, Phase 2 of the project is similarly focused on developing infrastructure necessary for a two-level extension to access the CLR orebody south of TauTona and Savuka. Phase 2 was approved in 2012; however, Sheppard explains that, after an 18-month period, the project was deferred to investigate alternative access methodologies that could create further value upliftment. As such, Phase 2 is undergoing a prefeasibility review process.

Phase 1 of the project has a resource of about 5.8-million ounces and a reserve of about 2.8-million ounces. Phases 2 and 4 have a combined resource of about 15.8-million ounces and a reserve of about seven-million ounces. Phases 3 and 5 have a resource of about six-million ounces and 2.4-million ounces respectively but are not contained in the mines published reserves as of yet. Phase 6 has a resource of about 7.3-million ounces and a reserve of 1.6-million ounces.

Phases 3, 5 and 6 are in the study phase.

Mining Method
Sheppard explains that there are two major mine design categories for deep-level mining – sequential grid and longwall mining.

He asserts that sequential grid mining is the more modern and appropriate mining method for Mponeng, as it “allows for the extension of development infrastructure beyond the ore extraction or stoping faces, which has the benefit of providing advanced knowledge of orebodies ahead of mining fronts”.

This enables significantly better on-reef infrastructure and extraction planning, as well as pillar positions, making sequential grid mining more flexible and safer, Sheppard adds.

“Longwall mining does not [hold these benefits], as development is always behind the stoping fronts, reducing options, owing to the lack of geological knowledge, and resulting in mining whatever lies ahead with less flexibility and a generally higher rock-stressed mining environment,” he avers.

Brief History
Mponeng is the most recently sunk of the three AngloGold Ashanti mines – including TauTona and Savuka – in the western Witwatersrand area. The mine’s name changed to Mponeng in 1999.

Surface sinking of the twin shaft started in 1981 and was commissioned along with the gold plant complex in 1986, the same year mining began at Mponeng, which used two hoisting shafts, a subshaft and two service shafts for production.

Safety Strategy
In January last year, AngloGold Ashanti reported that a miner’s assistant was fatally injured in a fall-of-ground incident at Mponeng.

The company is in the early stages of implementing its Safety Production strategy across all its mining operations in South Africa, with Mponeng acting as the pilot for the project. Sheppard explains that the strategy “focuses on improving skills, behaviour and attitudes, planning work and removing people from risk”.

As a result, Mponeng achieved one-million fatality-free shifts in the first quarter of 2016, while the Free State-based Kopanang gold mine achieved one-million fatality-free shifts on June 14, as well as one-year fatality- free shifts on July 1. The Moab Khotson gold mine, located near the towns of Orkney and Klerksdorp, in the North West, followed, achieving one-year fatality-free shifts on September 4.

“It is important to note that the single biggest differentiator from the previous safety strategy is the added pillar of knowledge and skills. It is a critical enabler to unlocking success in most other areas because it will lead to a good foundation of workplace compliance, which is fundamental in achieving sustainable safe production,” Sheppard highlights.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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