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New technology safely mines ‘all gold, only gold, all the time’

AngloGold Ashanti CEO Srinivasan Venkatakrishnan (Venkat) and AngloGold Ashanti COO Mike O’Hare tell Mining Weekly Online’s Martin Creamer that gold production is emerging from eight drill holes where the company’s new South African technology is being deployed. Photographs: Duane Daws. Video: Nicholas Boyd. Editing. Shane Williams.

7th August 2013

By: Martin Creamer

Creamer Media Editor

  

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JOHANNESBURG (miningweekly.com) – Interest in AngloGold Ashanti’s new “game-changing” technology, which safely mines “all of the gold, only the gold, all the time”, is now being shown by the company’s gold-mining and platinum-mining peers, the company’s new CEO Srinivasan Venkatakrishnan (Venkat) said on Wednesday.

“There’s no drill and blast. Effectively it removes the seismic impact, brings a safe working environment, eliminates dilution and brings all of the gold out,” Venkat told Mining Weekly Online in a video interview (see attached).

AngloGold Ashanti posted an adjusted headline loss of $135-million during the second quarter, which included the impact of the reduced gold price during the quarter and the consequential write down of ore stockpiles, as well as retrenchment costs.

The company is cutting 40% of its non-mining, corporate jobs from 2 000 to 1 200, an elimination of 800 positions.

AngloGold Ashanti COO South Africa Mike O’Hare said the South African operations had found a different and improved mining method in the South African technology.

Specially designed reef-boring machines, which were under construction, would begin arriving on site in the first quarter (Q1) of 2014, O' Hare added.

“We’re quite confident,” Venkat said during a media roundtable.

Production is emerging from eight of the drill holes at Tau Tona gold mine and the technology is now moving across to the Kopanang gold mine, with the full benefits expected to emerge in 2.5 years.

Other gold companies have shown interest in the technology, which is why AngloGold Ashanti has not patented it.

“We’ve done this effectively as a common initiative, which could improve not just gold mining, but also potentially platinum and other sectors as well,” Venkat said, adding that the technology had been discussed with the unions, every step of the way.

“This is not a technology to replace the labour count,” he added.

If the industry fails to make use of the technology, in the longer term the profile of South African gold mining is bound to taper down further.

The technology has the potential to reverse the downward trend.

The productivity gain is the result not having to waste time drilling and blasting and eliminating mining waste.

There is also the benefit of being able to return to mined-out areas where the gold has been left in the ground because it was uneconomic to mine.

It also facilitates the mining of high-grade shaft pillar areas and being able to extract far greater volumes of gold.

The capital cost is higher, but so is the cash flow.

“That’s where the productivity improvement comes in,” Venkat said.

NEW CUTTER HEADS

New cutter heads for the four new machines, which have already been delivered, are expected to improve cutting rates.

A solution has been found to the problems being experienced beyond 100 m of reverse-circulation drilling in the form of stronger drill-rod string, which is expected to increase the penetration rate.

Areas of the company’s resource not currently in its reserve are being targeted.

Production sites have been constructed at shaft-pillar areas of the West Wits region.

These are areas of very high grade from which the company retreated for safety reasons.

Three production sites have been set up at Tau Tona and a fourth at Kopanang, where the intention is to drill out an ultra narrow reef band.

If the Kopanang test is successful, the full-blown marginal C-reef will open up for profitable extraction.

SAVINGS UPDATE

AngloGold Ashanti, which opted to avoid declaring an interim dividend in the current volatile business environment, provided an update on potential savings and efficiency improvements of $482-million next year that will help improve operating margins.

The company is aiming to halve corporate costs next year from their 2012 levels, while narrowing the focus on its exploration and evaluation programme to three core regions.

Together, these two elements of overhead expenditure, which accounted for $752-million in 2012, are expected to decline to between $270-million and $315-million next year.

Complementing these cost improvements is new production from the Tropicana mine in Australia, which is expected to start production before the end of next month, and the Kibali joint venture with Randgold Resources in the Democratic Republic of Congo, which is expected to pour its first ounce of gold in October.

The two new mines are expected to contribute 550 000 oz to 600 000 oz of new yearly production next year in the $700/oz cost range.

Production for the three months to June 30 was 935 000 oz at a total cash cost of $898/oz, compared with 899 000 oz at $894/oz the previous quarter.

Production was aided by improvements from mines in Africa, as well as from Serra Grande in Brazil.

AngloGold Ashanti also moved to strengthen its balance sheet, improve liquidity and extend debt maturities by the successful issue last month of $1.25-billion in new bonds maturing in seven years.

The proceeds will be used to offer early repayment of the $732.5-million convertible bond that matures in May, while the surplus provides additional liquidity if needed, during the current volatile market conditions.

The gold price has traded significantly lower this year, with current levels of around $1 290/oz, considerably weaker than about $1 600/oz recorded at the end of 2012.

Two employees died in work-related accidents at AngloGold Ashanti’s West Wits region during Q2.

No fatalities have been recorded at any other area of the business in 2013, with the Africa region, comprising eight mines in five countries across the continent, not recording a single lost-time injury in June.
 
Q3 production is forecast at 950 000 oz to one-million ounces at a total cash cost of $860/oz to $890/oz.

Edited by Creamer Media Reporter

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