Ian Cockerill, CEO Gold Fields
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Gold Fields to dig 11m oz more gold in SA
Allan Seccombe
Posted: Thu, 07 Sep 2006

[miningmx.com] -- GOLD FIELDS will invest R4.7bn deepening its Driefontein and Kloof mines in South Africa to access 10.8m oz of gold and extend its production profile in the country to at least 2035, CEO Ian Cockerill said on Thursday.

The depth extensions, which will be funded from internal sources, have long been flagged by Gold Fields. These are replacement ounces rather than growth ounces.

Gold Fields will spend R3.3bn at Driefontein, to deepen the 9 Sub-vertical shaft to 4.121 km, making it the deepest mine in the world, Cockerill said in a statement.
deepest mine in the world
There are an estimated 600 million oz of gold in the deepest regions of the Wits Basin that could be mined. Even mining 10% of that resource would be equal to a year’s worth of global production, Cockerill said earlier this year.

Full production of 170,000 reef tonnes/month from the deepened shaft will start in 2019. The shaft sinking will start in October 2007 and be completed late in 2011. It will take a further year to equip the shaft, while horizontal development will be completed on seven levels by mid-2014.

The capital investment is $51 per reserve ounce and a return of eight percent is forecast.

Driefontein will mine an extra 8.8m oz of reserves within a resource of 13.9m oz. The project was planned at a gold price of R100,000/kg and a breakeven gold price of R85,360. The life of mine cash costs for the project will be R65,977/kg.

The gold price is currently at R147,170/kg.

At Kloof, the mine will be deepened to 4.02km, giving it access to two million oz of reserves within a resource of 4.5m oz, extending the production profile to 2021. The capital investment is $95 per reserve ounce and the project is expected to deliver a return of 14.6%.
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Full production of an extra 60,000 reef tonnes/month will start during 2018. However, first gold production from the deepening project will start in the second half of 2009.

"The project is being designed to accomodate a possible extension below 48 level, where the potential exists for additional reserves," Cockerill said. There are two million ounces of resources that could be tapped into.

The financial health of the South African gold mining industry has improved because of the higher rand gold price producers have been receiving. “From an average gross loss before capital expenditure in the second quarter of 2005, the industry was able to fully cover capital expenditure and be in the black a year later,” said Zoli Diliza, the Chamber of Mine’s CEO said in a report on the gold industry's second quarter.

AngloGold Ashanti is also deepening its South African mines. “If the price stays above R110,000/kg – and the industry is convinced it will stay above that level for a length of time – it opens a whole new ball game for South African miners,” AngloGold Ashanti CEO Bobby Godsell told Miningmx earlier this year.

Harmony Gold is growing its South African gold output and it has six projects, including Hidden Valley in Papua New Guinea to boost production by 25% to 3.5m oz in 2009. The growth will come from two new South African mines, expansion of another and building new mines through the existing infrastructure of two more.