Gold Fields was exploring two new mining methods at its South Deep mine which would have become South Africa’s biggest for bullion by 2015 had it not been for delays, chief executive Nick Holland said yesterday.
The company, which hired a team of 15 Australians earlier this year to improve performance at South Deep, was looking to simplify how it mined a complex ore body, he said, adding that Gold Fields would choose between the two methods in the next 12 months.
The company plans to produce 650 000 ounces to 700 000 ounces from South Deep by 2017, two years behind its initial schedule.
Production at that level, worth about $900 million (R10 billion) a year in revenue at current spot prices, would continue for about 70 years, Gold Fields estimated.
“I wouldn’t say we’ve been mining in the wrong way, the current method is very sound,” Holland said. “If we can make things easier, all the better.”
South Deep’s complex ore formation, its depth, and operational and safety problems have mired the operation in delays throughout its 24-year lifespan, during which it has been owned by JCI, Western Areas and Barrick Gold.
Two workers died in accidents in May and a safety review will continue until the end of next month.
The first technique being explored is “a variation of the existing destress mining we’re doing”, Holland said, referring to strategically placed cuts in the rock to minimise seismic activity. The second was a “fundamental change” to a so-called incline-slot method used in Australia, he said.
“The two are mutually exclusive and we should either choose one or the other,” Holland said. Both had the possibility of speeding up production.
Gold Fields’ profit excluding one-time items was $18m in the three months to June, compared with $5m in the previous quarter, the Johannesburg-based company said yesterday.
Total all-in costs fell 1.9 percent to $1 093 an ounce. The board approved an interim dividend of R0.20 a share.
“The safety interventions at South Deep… masked what was a better quarter for the group as a whole, in terms of costs, margins and cash flows,” Holland said.
Gold Fields’ output dropped 1.6 percent to 548 000 ounces in the three months to June from 557 000 ounces the previous quarter. Shares of Gold Fields lost 1.46 percent to close at R44.59 yesterday. – Bloomberg