JOHANNESBURG (miningweekly.com) – Sibanye Gold will probably launch its West Rand Tailings Retreatment Project (WRTRP) in the next six months.
The WRTRP - which aims to recover 11-million ounces of gold, 170-million pounds of uranium, as well as sulphuric acid from 1.3-billion tonnes of tailings - offers 35 years of mine life, 5 000 construction jobs and 500 sustainable jobs.
There are important environmental benefits in that the WRTRP lowers water risk by taking the sulphide material off the dolomites and putting the sulphur into sulphuric acid that Sibanye uses in its own leaching process.
Questioned on the Cooke acquisition after last week’s Stillwater Mining announcement, Sibanye CEO Neal Froneman recalled that the reason the company had bought the Cooke assets was to get access to the high-quality uranium in the Cooke tailings dams.
The Cooke operations, in Randfontein, go back to 1888 when they hosted the biggest stamp mill battery in the world to create 40-million tonnes of coarse sand and fine slime.
Froneman said that acquiring Cooke was necessary to enable Sibanye to treat and recover the multimillion ounces of gold it has in its own surface tailings dams, as part of a commercial initiative as well as an environmental clean-up.
“Probably within the next six months, we’ll launch the tailings retreatment project, which is really where the bulk of the Cooke value is,” Froneman revealed during the webcast in which Creamer Media’s Mining Weekly Online took part.
He said that the WRTRP was progressing “very well” and although uranium prices had lowered, the company remained bullish about uranium in the medium term.
In August, Sibanye VP Grant Stuart told Mining Weekly Online that all things being equal, Sibanye would be having a pretty good shot at securing funding for the WRTRP by the end of 2016. (Also watch attached Creamer Media video).
Operationally, the plan is to turn the tailings material from the Cooke, Driefontein and Kloof complex into a slurry for transportation to a plant, where the gold, uranium and sulphur will be extracted, prior to the residue being redeposited on to a deposition site.
The first module to treat the first 1.4-million tonnes a month is earmarked for eventual potential expansion to four-million tonnes a month, which would make it South Africa's biggest tailings retreatment operation.
A throughput of 1.4-million tonnes a month will enable Sibanye to produce 100 000 oz to 115 000 oz of gold a year over 18 years and a throughput of four-million tonnes a month would mean the WRTRP eventually getting up to 210 000 oz of gold and 2.5-million pounds of uranium a year.
Envisaged is an initial R9.6-billion of capital expenditure (capex) to build a regional tailings storage facility, plus the first gold, uranium and sulphuric acid recovery module.
Should extra modules be added incrementally, the total capital bill will rise to between R12.5-billion and R13-billion.
With the feasibility study complete, the Johannesburg- and New York-listed company reached front-end engineering design several months ago.
The early earthworks and civils construction packages for the building of the required plant have been taken to a high level of accuracy and the company is reportedly “very far advanced” in the permitting process.
The WRTRP proposals were due to be taken to the board before year-end with a full execution budget and execution plan to deliver the initial 1.4-million gold ounces in the next 18 to 20 years, and planning for the 17 years thereafter.
Several mining houses have over the years spent a collective R800-million to understand the technical nature of the project, which began in 2008 with a mega-dump scheme evolving into Rand Uranium's Cooke Uranium Project.
Running in parallel was the West Wits project under Gold Fields, which spent significant capital to understand the resources.
From the technical, metallurgical and industry perspectives, Sibanye now understands how to deliver the gold and uranium with a financially robust outcome.
Rand Uranium's Cooke Uranium Project had a strong uranium resource in the Cooke tailings dam, which contains 34-million pounds of uranium at three to four times the average grade of any dump in the area.
At the same time, the West Wits tailings project under Gold Fields was driven by the exceptionally high grades in the Driefontein tailings complex, which had the required scale, but lacked high uranium grades.
As these can now be put together without the duplication of capex, the WRTRP is regarded as having an excellent chance of significant success under Sibanye, which is able to leverage the synergies of the former Rand Uranium and Gold Fields projects.
At Sibanye's disposal are 70-million tonnes of material in Driefontein’s three and five tailings dams, which contain 1.2 m ounces of gold, as well as Cooke's 34-million pounds of uranium.
These dams alone have the potential to get Sibanye into the business of surface material retreatment and cover the large portion of ‘getting-into-business’ capex.
At the back-end is an additional 500-million tonnes of more Driefontein and Cooke resource, which offer an additional 4.5-million ounces of gold and 65-million pounds of uranium, outside of the ‘getting-into-business’ start-up phase.
Existing infrastructure is also becoming available for use. For example, in 2020, when the WRTRP is scheduled to come on stream, a recently upgraded carbon-in-leach plant, currently treating surface rock material, will become available to process WRTRP gold.
Sibanye does not intend treating every single tonne of ore that gets taken from the tailings dam.
It will be producing a float concentrate that contains most of the gold and uranium and will be processing only that.
It will, thus, only be incurring operating costs where they need to be incurred, giving gold production a solid profit margin.
That is why the existing infrastructure in the Driefontein complex, plus the existing Ezulwini plant, offer beneficial ‘get-into-business’ help.
Of the 1.3-billion total resource, Sibanye currently has access and owns 750-million tonnes of that tonnage, which contains 6.5-million ounces of gold and 100-million pounds of uranium.
Initial Sibanye focus is on four anchor resources, with the high-grade Driefontein complex alone - where gold grades are as high as 100 g/t - able to cover the capex required for gold recovery.
At the same time, its Cooke tailings dam resource is sufficient to cover the capex required for uranium recovery.
The four key anchor resources are sufficient to feed the plant with 1.4-million tonnes a month for 18 years and cover the capital for the balance of the resources, which then form a yearly income for another 35 years.
The Driefontein 3 and Driefontein 5 tailings dams contain 1.2-billion tonnes for supply to the block thickener, which will thicken the slurry to allow for water recycling and water preservation.
At the central processing plant, gold and uranium will be recovered through flotation and benign tailings free of nasties deposited on to the regional tailings storage facility.
Driefontein 5, which will provide four years of supply, will be followed by Driefontein 3 for another three years, after which the Ezulwini Cooke 4 south tailings dam will come into play, as the third of the four key resources that will be used to pay off the required capital.
In parallel to mining the one-million tonnes, Sibanye intends bleeding in 400 000 t from the Cooke tailings dam. Collectively, this provides the 1.4-million tonnes to the central processing plant, which will be located between Kloof 1 and Kloof 4, in the middle of infrastructure that is already supplied with electricity, compressed air and water.
The central processing plant, which has been structured for modular development, will eventually extend over 75 ha.
The regional tailings storage facility, on a sizeable 1 350 ha, is being planned in two phases in anticipation of the ramp up to treat an eventual four-million tonnes a month, the full tonnage that Sibanye is capable of doing on the West Rand.
The first phase will have a 660 ha footprint, also in two phases, again from a capital management perspective.
Most first-phase land is owned by Gold Fields, for which Sibanye has an acquisition agreement to build the regional tailings storage facility.
While much focus remains on the four key anchor ‘get-into-business’ resources, Sibanye’s ultimate vision is continuously and incrementally to build additional modules to treat the eventually targetted four-million tonnes a month.
It intends doing this by building an additional module every two or three years to increase the throughput incrementally to four-million tonnes monthly through the central processing plant.
What that would mean is that the WRTRP would eventually get up to around 210 000 oz of gold a year and 2.5-million pounds of uranium.
The total capital bill associated with that is anticipated to be around R12.5-billion to R13-billion, the first R9.6-billion going into the establishment of the initial construction, which is essentially the regional tailings storage facility, which will be accommodated in the original phase, but also the first module from the gold, uranium and sulphuric acid perspectives.
An all-in cost of R222 000/kg is calculated for the production of the gold ounces, which translates to $476/oz.
Uranium is expected to cost R494/lb at $34/lb and the sulphuric acid R900/t or $62/t at an exchange rate of R14.50 to the dollar.
Where there is flexibility is that there is a lot of common infrastructure, including the gold, uranium and acid plants as well as the shared capital on the deposition site and pipelines to get the funding strategy off the ground.
Sibanye will look to fund only the capital required for the gold portion of the WRTRP.
The Johannesburg- and New York-listed company is looking to fund only R4-billion of the R9.6-billion, purely to get the 1.3-million ounces of gold out and all the gold that comes out of the annuity resources thereafter.
Memoranda of understanding (MoUs) have been signed with third parties for the funding of the uranium and acid portions of the plant.
A third party will come in and invest in the capital required to generate the 34-million pounds of uranium and for that they would get the offtake of the uranium.
There is a lot of strategic focus around uranium and not its absolute cost and price. It is more around the strategic access to having substantial volumes of uranium produced reliably over a period of time to support nuclear power stations.
Not in the business of producing acid and set to produce far more than its own uranium leaching requirements, steps are being taken to have an engineering, procurement, construction and management (EPCM) contractor to come in on a build, own and operate basis, for which the EPCM will provide the capital.
A tie-up with a third-party distributor to provide the logistics and infrastructure required for acid storage and transport is also being planned
An MoU has been developed and Sibanye is working out the terms, with funding agreements expected to be finalised soon.
The WRTRP, with a net present value of R4-billion, has a 33% internal rate of return at a gold price of R600 000/kg, which does not take into account any of the additional benefits from the annuity resources.
If the funding does not come through as anticipated and Sibanye has to go it alone with gold, Sibanye could delay the capital for the uranium and acid plants.