Gold Fields outlines 2010 strategy

Allan Seccombe | Tue, 29 Sep 2009 17:25
[miningmx.com] -- APART from safety, Gold Fields is tackling two critical issues in its 2010 financial year: ramping up development of its ore bodies at its South African mines after that process fell behind to address safety, and hunting for fresh gold deposits around its existing operations in the rest of the world.

Gold Fields has a well-stated strategy under chief executive Nick Holland, the former financial director who took up the role in May 2008, of growing production in South Africa to between 2.2 million and 2.5 million oz in within five years.

In the same time frame, it wants each of its producing regions – Australasia, South America and West Africa – at a million ounces each, either in production or in development.

An ambitious target set out in the 2008 annual report of the company reaching a million ounces of gold a quarter in 2009 has been pushed back to beyond 2010. Output rose to 906,000 oz in the fourth quarter of 2009 from 798,000 in the first.

“We are working towards our goal of producing at a run-rate of between 925,000 and 950,000 ounces of gold per quarter during F2010. I believe that, beyond F2010, achieving one million ounces per quarter is realistic,” Holland said in the 2009 annual report.

The key focus for the company after safety, which has resulted in a remarkable 55% decline in fatalities year-on-year to 21, is ramping up development work, which was put on the back burner as the world’s fourth-largest gold producer tackled safety at its South African mines, resulting in a six percent fall in gold output of 3.4 million oz for the year.

Now that work on rehabilitating infrastructure is finished, work is focused on building South African production up to between 550,000 to 575,000 oz per quarter, Holland said. South African production fell 400,000 oz in 2009 to two million oz because of safety related issues.

“While progress towards this goal has continued during the second half of the year, the build-up was impeded by a lack of flexibility caused by the focus on the backlog secondary support, which saw development crews redeployed from development into backlog secondary support,” Holland said.

“This situation is in the process of being remedied and ore reserve development has been designated as the second highest priority for F2010, second only to safety,” he said, setting a target of having at least 24 months of opened-up reserves.

we see our growth coming primarily from exploration success

Turning to growth, Holland said there was a lot of potential for meeting the five-year growth targets from exploration near existing mines. “At Gold Fields we see our growth coming primarily from exploration success, both near mine and green fields. While we do not discount the possibility of acquisitions, it is difficult to make accretive purchases in the current environment.”

One of the strategic targets for 2010 is to finalise a feasibility study of the Athena discovery at St Ives in Australia by mid-financial 2010 and start construction of an underground mine there.

Together with another target called Hamlet, these two prospects can add more than two million ounces to St Ives’ resource base and double the life of mine there.

Gold Fields hopes to bring at least one of three advanced-stage exploration projects into a pre-feasibility study within the next 12 months. The three projects are in southern Mali, southern Peru and Kyrgyzstan.

Tommy McKeith, head of exploration and business development said Gold Fields was looking outside its key regions. The Talas project in Kyrgyzstan is in the advanced drilling stage and an in-house conceptual study should be completed by June next year.

“New exploration search spaces can also arise through the application of new geological concepts and technologies, which we have employed at our initial drilling projects in Canada located within a supposedly mature exploration terrain in British Columbia,” he said.

Gold Fields plans to have a feasibility study completed early in calendar 2010 into extracting uranium from tailings at three of its four South African mines, excluding Beatrix, from fresh ore at these operations. Holland is calling the project Gold Fields’ “fifth mine”.

At the Arctic Platinum Project in Finland, which Gold Fields has tried unsuccessfully to sell, it is conducting promising hydrometallurgical test work, which it is tweaking to make it commercially viable on a larger scale. The process uses pressure oxidation to create a base and precious metals concentrate. A decision on building a pilot test plant will be made in the fourth quarter of financial 2010.