JOHANNESBURG (miningweekly.com) – Johannesburg- and New York-listed gold mining company Gold Fields has managed to improve the performance of its only remaining South African mine, South Deep, on the West Rand of Johannesburg, CEO Nick Holland said on Thursday.

The company expected the transformation to the new mechanised operating model to continue to gain traction through the June quarter and result in greater stability and improved productivity during the second half of the year.

Speaking at a roundtable on the company’s results for the first quarter ended March 31, Holland said South Deep's new full production target to be achieved by the end of 2017 – at an all-in-cost (AIC) of about $900/oz – was between 650 000 oz and 700 000 oz a year.

This was, however, longer than the initial expected timeframe of 2016 and was attributed to execution constraints caused by the lack of a modern mechanised mining culture, the inadequate availability and use of the mining fleet, suboptimal mechanised mining skills levels, as well as discreet ore-handling and logistical constraints underground.

Holland was confident that South Deep would reach its required production levels with the help of the Australian technical team headed by new GM Garry Mills, formerly of Gold Fields’ Agnew mine, in Australia.

The team was focused on derisking the momentum and sustainability of the new build-up plan for the 39.1-million-reserve-ounce South Deep mine and positioning it to achieve cash break-even by late 2014 or early 2015, assuming prevailing rand gold prices.

Holland believed that stopping the cash burn at the South Deep operation was key to achieve a cash break-even by this time, noting that reaching this “would be a key milestone for the South Deep operation in future”.

South Deep was currently half way to achieving commercial levels of production, having mined an average of 154 000 t/m of reef last year.

The 70 year life-of-mine (LoM) South Deep operation, acquired by Gold Fields in April 2007, consisted of a main shaft and a ventilation shaft – collectively referred to as the Twin Shaft complex, which had a combined hoisting capacity of 330 000 t/m of ore.

Gold Fields had essentially built most of the mine and key infrastructure to support its build-up to full production. The company completed the Twin Shaft infrastructure, upgraded the plant capacity, installed full LoM tailings and backfill capacity on surface, and completed all the key ancillary surface infrastructure.

Production for the full year was expected to be around 10% lower than the full-year guidance of 360 000 oz but the company's destress mining (a mining method which reduces rock stress at depth) was expected to be on guidance at 54 600 m2, thus, providing an important underpin for the build up plan.

South Deep was expected to achieve its all-in-sustainable-costs guidance for the full year of $1 290/oz and AIC of $1 350/oz.

The first quarter results indicated that capital expenditure at South Deep was expected to be around R1.34-billion for the full year, while net operating costs at the mine decreased by 9% from R781-million in the December quarter to R714-million in the March quarter, mainly owing to restructuring of the cost base at the mine.

Holland forecast that it would take until the end of 2015 to achieve a meaningful sustainable improvement in mechanised mining practices and skills through what he expected to be a five-year journey towards transformation at South Deep.