JOHANNESBURG (miningweekly.com) – South African gold major Gold Fields on Monday reported a sevenfold increase in its uranium resources to 77-million pounds.
Gold Fields CEO Nick Holland said that the sharp increase from last year's 11-million pounds was the result of an accelerated drilling programme of the company's 13 surface slimes dams.
Of the 77-million pounds of uranium resources, 51,4-million pounds are from surface material at the West Wits tailings project and nearly 26,6-million pounds from the West Wits underground project.
Holland added that most of the uranium resources were now in the measured and indicated category, which provided a good base for the JSE-listed company to do the feasibility study on the extraction and reprocessing of the slimes dams, which was due for completion in early 2010.
Gold Fields technical head Tim Rowland described the West Wits tailings project as a low-grade gold and uranium reclamation project, which would produce sulphuric acid as a "very important additional revenue" by-product.
Rowland said that 30 km of drilling had taken place on the slimes dams in the 2009 financial year and the project's environmental impact and legislative process was also "well" under way.
The cutoff grade used was $75/lb and the underground uranium resource was based on the gold life-of-mine design and scheduling.
"It's an exciting project and will represent the new ‘fifth mine' for the South Africa region." Rowland said.
Gold Fields' gold equivalent reserves totalled 81-million ounces, which made the company the third largest in the world and enabled it to keep mining at current levels for another 20 years.
In South Deep alone, it had the ability to mine for the next 50-years-plus. Six out of its nine mines had gold reserves of five million ounces or greater.
In the last ten years, there had been only 13 gold deposits found that were bigger than five million ounces, using an annual $2,5-billion exploration budget.
Holland said that the company's gold resource base rise to 271-million ounces had been price driven, compared with the 250-million ounces for the year ended June 30, 2008.
In future, however, the company would not necessarily be using higher gold prices to drop the company's pay limits or cutoffs.
"The reason for that is we want to protect our margins and we want to make sure that these higher prices do report through to the bottom line and that we can see a margin expansion," Holland added.
"One of the problems of the gold industry is that we haven't always seen the higher prices reflect in higher margins. We are going to be particularly careful on our cutoff points.
"You might say well, what if gold goes to $2 000/oz, well that's a Hollywood problem. Let's talk again if that happens. But, for the moment, we're going to stick with these reasonably conservative cut-offs and make sure that we go for quality," Holland said.
Its pay-limits/cutoff grades in South Africa are being maintained at R195 000/kg; the cutoff grades in Ghana and Peru at $650/oz; and those in Australia at A$850/oz."
The attributable 81-million-ounce gold reserves included copper converted to gold equivalent, compared with the 82,8-million ounces for the year ended June 30, 2008. All numbers were net of 12 months' depletion.
The gold resources were calculated using a gold price of R285 000/kg in South Africa; A$1 250/oz in Australia; and $1 000/oz in West Africa and South America, while reserves used a gold price of R230 000/kg in South Africa; $1 000/oz in Australia; and $800/oz in West Africa and South America.
The enhanced mechanism for the technical reporting used this year deploys the so-called technical short form reporting format for exploration, operations and group consolidation.
"Fundamental to the Gold Fields value proposition is the optimal exploitation of our orebodies. To this end, development, which will create greater flexibility and reduce volatility in the operating performance of especially our South African mines, has been elevated as a key strategy, second in importance only to safety," Holland said.
The company, he said, had allocated an additional R500-million towards development for its 2010 financial year, and was mechanising all flat-end development at its long-life shafts.
Nearly one-half of all flat-end development had been mechanised, with a target of achieving 100% by the end of this calendar year.