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Gold Fields plots growth, sees 4.25m oz output in 2008
Allan Seccombe
Posted: Tue, 14 Aug 2007

[miningmx.com] -- GOLD FIELDS will produce 4.25 million ounces of gold in its 2008 financial year and expects dollar costs per ounce to increase by up to 15% during the period in which it will spend $1bn on its operations, CEO Ian Cockerill said on Tuesday.

“2008 will be a year of consolidation for Gold Fields,” Cockerill told analysts at the company’s annual investors’ day presentations.

Gold Fields produced four million ounces of gold in its 2007 year to end-June.
narrow window left to dominate China
It will also be the year in which it will make an investment decision at Essakane, the gold deposit in Burkina Faso, which has the potential to be a 300,000 oz/year source of gold. Production could start in early 2010, ramping up to full production over six months.

There is three million ounce resource at Essakane, which Gold Fields is exploring with Orezone Resources. Gold Fields will earn 60% once the bankable feasibility study is completed later this month. The partners will spend $375m developing the opencast project.

John Munro, executive vice president of strategy, said the most exciting project was Cerro Corona in Peru. The first phase of the $343m copper gold porphyry project will generate 350,000 gold equivalent ounces, of which 150,000 oz will be actual gold. Full production will be reached in the middle of 2008.

A study into the viability of mining oxide ore near the surface of the deposit is underway. There is some 300,000 oz of gold in the oxide material, which needs a separate processing facility to that for the sulphide ore.

Talks to toll treat the material at Yanacocha fell through and Gold Fields is looking at treating it inhouse.

Nine priority targets have been identified around Cerro Corona by an equally held joint venture between Gold Fields and Buenaventura. Gold Fields will up its stake in the partnership to 60% if a copper gold porphyry is found that can be treated at its plant. Buenaventura will take 60% if the resource comprises mainly base metals.

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Gold Fields is exploring for three types of deposits, namely gold copper porphyrys, high sulfidation epithermals and sediment-hosted orogenics, in Russia, China, Democratic Republic of Congo, Peru, Dominican Republic and West Africa.

In China, Gold Fields has a partnership with Sino Gold and it is looking for large deposits.

“There is a very narrow window left to dominate China and we are looking for large deposits. We are not going to China for small greenstone deposits. We are looking for five million ounce deposits,” Munro said.

“We are trying to crack open a major province of the world for the future,” he said.

Cockerill pointed out that Gold Fields has the largest reserve life of any of the major gold producers at 25 years, measuring the size of reserves against annual production rates. The next largest are Newcrest and Harmony Gold.

Barrick has the largest reserves, but the life of those reserves is around 15 years.

“The life of reserves at our competitors is starting to look scary. People are starting to see that the supply of gold is not infinite,” Cockerill said.

There had been a rush of the senior mining companies to be large “800-pound gorillas” but this bought with it difficulties in managing a large number of mines and, most importantly, in replacing mined ounces, he said.