A big capital investment is on the cards for AngloGold Ashanti’s Mponeng gold mine, the world’s deepest underground operation.
The former Western Deep Levels Number One operation was on the receiving end of a surfeit of comment when AngloGold Ashanti presented cash-rich results last week.
A brownfield expansion feasibility study is expected to be concluded towards the middle of next year on Mponeng, which upped production by 16% and cut all-in sustaining costs by 14% in the 12 months to December 31.
Situated on the Far West Rand, the mine has a large 50-million-ounce resource base and a 12.5-million-ounce reserve at a high grade of 10 g/t.
Up to now, AngloGold Ashanti COO: South Africa Chris Sheppard and his team have been working on a phased development strategy, but that has been swapped for a combined, twin-reef extraction approach, which is looking at shafts and a combination of declines.
The new approach, which optimises the project as a whole, is expected to set up Mponeng as a producer of 450 000 oz/y of gold for more than 20 years, with all-in sustaining costs improving to about $750/oz.
The capital cost of the Mponeng project will be about $1-billion nominal but is spread over ten years with a maximum capital spend of only $80-million a year.
Typical of these deep-level extensions, project execution occurs in parallel with ongoing production over a fairly lengthy period, AngloGold Ashanti executive VP Graham Ehm explained to investors, analysts and journalists at the results presentation, which saw the JSE- and NYSE-listed gold mining company nearly double free cash flow to $278-million on lower production in the 12 months to December 31.
The gold production across AngloGold’s 17-mine portfolio in the period was 3.6-million ounces, at a total cash cost of $744/oz.
At Mponeng, work is now progressing to the feasibility stage, for completion in the second half of 2018.
Near Carletonville, in the North West, Mponeng is one of the lowest-cost producers in South Africa, despite being 3 800 m deep.
Sheppard commented to Mining Weekly earlier this year that Mponeng had shown pleasing improvements, owing to a well- constructed derisked production plan supported by a comprehensive logistics debottlenecking programme, both supported by a disciplined set of management and supervisory work routines.
AngloGold Ashanti CEO Srinivasan ‘Venkat’ Venkatakrishnan made it clear that inward investment in brownfield projects is being prioritised over merger and acquisition possibilities and he identified Mponeng to Mining Weekly as an opportunity that offers the best brownfield potential in the South African context.
The mine, which has exclusively exploited the Ventersdorp Contact Reef (VCR) orebody down to its current great depth, is to further exploit the VCR but also in future mine the Carbon Leader Reef.
These reefs are mined by the adjacent AngloGold-owned Savuka and TauTona gold mines, which are earmarked for integration into Mponeng in the next 12 to 24 months.
Venkat spoke of targeting after-tax returns in the mid-teens-plus from the company’s brownfield projects, with targets varying from 15% up to 30%.
“I know there’s a case for brownfield projects to go lower but in terms of returns, we’re very focused on it being in the mid-teens-plus,” he said.