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Move to high-profile mining yielding benefits for Gold Fields' flagship mine

2nd September 2016

By: Donna Slater

Features Deputy Editor and Chief Photographer

  

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A move from low-profile to high-profile mining at gold major Gold Fields’ South Deep mine is yielding benefits, having not only improved production volumes by 87% in the first and second quarters of this year, compared with the same period last year, but also increased other key metrics.

One of the key benefits of high-profile mining at South Deep is that it has made it possible to mine destressed ore, and Gold Fields CEO Nick Holland says the volumes mined using this method have increased from 0% in 2015 to “virtually all the tonnes” at present. He believes that this method will be key to sustaining and improving production at the mine.

High-profile mining enables greater aerial coverage of the mined area, resulting in more tonnes per metre advanced, which translates into a significant increase in the ore volumes mined, compared with the low-profile mining methods previously employed.

“We stopped all the low-profile mining . . . earlier than what we thought we would,” says Holland, adding, however, that this is not necessarily because the mine is ahead of schedule, but, rather, because some of the geotechnical risks identified by South Deep compelled the company to accelerate its move to high-profile mining.

Although high-profile mining at South Deep has been ongoing for a year, he notes, the method is not yet operating “near the level we want”, adding that there is room for improvement and efficiency to be incorporated.

A management team which included Holland visited the South Deep mine face on August 17 to witness first-hand the experience of operators at the working surface of high- profile mining. “The operators like high-profile mining. They feel much better now that they can do the entire value chain.”

As of August, South Deep is fully mechanised, using large double-boom equipment.

According to Holland, the major benefits of the shift to high-profile mining include support mechanisms being installed faster, the acceleration of mining operations, a safer environment for operators and improved mining face shapes. However, he notes that there is still “some way to go” in terms of enhancing the entire high-profile operation at South Deep. “I think that will be continual improvement over the next number of years.”

Further, the use of longhole stoping techniques at South Deep is steadily increasing, from 23% in the first quarter of 2015 – having peaked at 42% in the first quarter of 2016 but dropping to 33% by the second quarter of 2016. During the second quarter of 2016, setbacks from falls-of-ground incidents damaged two of the seven Atlas Copco Simba longhole rigs, which had to be decommissioned for a “period”.

To ensure South Deep has sufficient rig capacity during the time it takes to recommission the two damaged Simba rigs, Holland says, Gold Fields plans to acquire additional swing-unit rigs to meet operational requirements, as longhole rig applications are the “meat and potatoes” of stoping operations at South Deep.

Meanwhile, he highlights, another programme is in place to improve the maintenance of equipment, some of which should have lasted four or five years, but only managed three years. “Our maintenance has not been great over the past number of years,” Holland confesses, adding that he would like to see an improvement in this regard to ensure improved equipment life.

South Deep’s maintenance protocols are being enhanced, but he says the process of improving maintenance operations is likely to be lengthy. However, in the meantime, Holland states that maintenance personnel, with assistance from Gold Fields, need to “up their game”.

Improving Sustainability
As production has been improved significantly over the past several quarters, South Deep has been able to lower costs from $2 000/oz during mid-2015 to $1 257/oz in mid-2016, in what Holland describes as a trend “in the right direction”.

A key factor in lowering costs at South Deep is the incorporation of new skills across the operation, from senior management all the way down. Vigorous training of South Deep personnel has been undertaken, with the company having assessed 90% of its operators and also having begun assessing its supervisors and artisans. These assessment and training programmes, Holland says, are showing positive results. However, it may take two to four years to get operators and artisans to the level desired by South Deep.

In terms of cash flow, he notes that the mine has managed to “stop the bleeding”, placing itself in positive financial territory in the second quarter.

In addition, South Deep plans to commit to reducing its reliance on fossil-fuel-based energy sources to power operations at the mine, which it hopes to achieve by introducing a solar photovoltaic (PV) power project.

Highlighting the savings to be accrued by incorporating cost-cutting measures for energy at the mine, Holland says about 20% of the operating cost base at Gold Fields operations is linked to energy.

The plan for the renewable-energy project is to construct two 20 MW solar PV plants at South Deep, thereby lowering the cost of buying power from the national grid, lowering demand from the mine’s installed capacity generation of about 115 MW and ensuring diversification of energy sources to improve energy security.

Although there is still a lot of work to be done to implement the solar power project, Holland notes that the mine is in consultation with a preferred bidder to supply the solar power installation, adding that a tangible deal is due to be agreed on by the end of the year.

Further, any future projects undertaken by Gold Fields will be accompanied by a commitment from the miner to feature 20% renewable-energy solutions to supplement other forms of energy.

Mine Plan
With gold prices riding current highs, Gold Fields plans to “make hay while the sun shines”, thereby ensuring its operations are profitable going into the future, Holland states.

“We are committed to delivering on our plans, in terms of both production and costs,” he says, adding that he would like to be in a position to report by year-end that 2016 is the fourth consecutive year Gold Fields has met production targets and exceeded its cost reduction targets. “That is what we are looking to do by the end of 2016.”

However, although Gold Fields’ balance sheet improved recently, Holland warns that the gold mining industry needs to “take a hard look at itself and figure out” how to finance operations in the future, because the uncertainty of gold prices could lead to another industry slump.

“South Deep, of course, is key. We have got to continue the work . . . There are a lot of things still to do. I think [South Deep VP] Nico Muller and the team have done a great job to date,” he says, adding that improving operations at South Deep is a “work in progress”.

Even though the current trends at South Deep are “positive”, Holland says there are still three or four years of hard work ahead at the mine.

South Deep’s guidance for the remainder of the year has been increased by 50 000 oz to the 2.1-million-ounce to 2.15-million-ounce range.

In addition, the mine’s costs will remain similar to those of earlier reports, but Holland notes that, in terms of costs and capital, gold miners prioritise business capital for the future of mines. He points out that an alarming trend in the mining industry is a reduction in stay-in-business capital, with this critical capital being allocated instead to operational requirements.

“We are determined to make sure that we invest not just for today, but for tomorrow . . . that is why we have increased our capital . . . we are putting more into South Deep to make sure we can sustain and improve our production,” concludes Holland.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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