Gold Fields whips South Deep into shape

Allan Seccombe | Mon, 05 Oct 2009 13:18
[miningmx.com] -- THE approach by Gold Fields to the South Deep mine is a far cry from that of former owner Brett Kebble, who at the official opening of the mine four years ago laced his speech with toilet humour using the world’s single deepest shaft as the butt of those ill-received quips.

At the time of commissioning of the twin-shaft complex in early 2005, Kebble was the chief executive of Western Areas, which was in a dysfunctional joint venture with Placer Dome. The joint venture regularly missed targets and incurred large cost overruns.

Since Gold Fields took ownership of the mine, it has put in 15 months of work to completely re-model the ore body and re-plan the strategy on how best to mine it. The mine is on track to produce 300,000 oz of gold this financial year starting in July and it will ramp up to between 750,000 and 800,000 oz by 2014 at a cost of R8.4bn.

This new time line is well behind the overly optimistic one laid out by Kebble at the commissioning when he spoke of the mine producing 490,000 oz in 2005, rapidly climbing to 800,000 oz in 2009. Given Kebble’s poor reputation, the reputation of Western Areas under his stewardship and the relationship with Placer, funding aggressive growth like that was never going to be easy.

Western Areas was also saddled with an onerous hedge book at South Deep, one of the first things Gold Fields immediately closed in early 2007 at a cost of $528m, arguing correctly it was “crippling” the mine.

With due respect to the management team running the mine back then, the feeling is that Gold Fields is doing a far better and far more thorough job of approaching what is described by the company as the single largest known and untapped gold ore body in the world.

Seen underground, there are in parts spectacular reef packages, towering 30 metres or more, with grades in some places at 12 grams/tonne, hence the decision to use a bulk mining method called long-hole stoping to extract enormous volumes of ore averaging between 7.2 g/t to 4.2 g/t, dropping as the ore body becomes wider and gold more dispersed.

LARGE RESERVES

The mine has 78.4 million oz and 29.5 million oz of resources and reserves respectively, according to the latest statements from Gold Fields.

Gold Fields has a plan detailing monthly work over a five year period and that plan then reverts to an annual guide for the next 25 years, said Vishnu Pillay, the head of Gold Fields’ South African operations.

“We have this operation exactly where we need to have it at this point,” Pillay said. “We are diligently managing every day on this operation.”

The capital expenditure would be funded through facilities currently within the group, be it debt structures and cash amongst others.

“The market has always asked how we will manage this mine given its history and we’ve always said we really need to understand this ore body, the grade distribution and the mining mix. Now we do,” he said.

The mine will be entirely mechanised, shifting to long-hole stoping making up two-thirds of tonnage from the 20% now. Some analysts raised this as a potential risk for the mine, but management said it was a proven technology in Australia and North America and it was the best method for the mine.

Long-hole stoping creates enormous voids at depths of up to 3km below ground, putting enormous stress on the rock. A way around this is to put in de-stressing cuts, or tunnels above or below the area to be mined.

“We fool the rock into thinking it's just 1.2km deep, which means there is a lot less stress on the rock,” said Andy Brown, the head of South Deep. The pressure at 2.6km below surface on virgin rock is 11,000 pounds per square inch (psi). By putting in the de-stress cut, that pressure drops to a more manageable 4,500 psi.

The mechanisation of the mines brings its own challenges. “Skills are going to be one of the biggest issues on this mine,” Brown said.

Critical to this mining method is back-filling those voids, using the rock from which the gold has been extracted, adding cement and chemicals and pouring it into these enormous cavities to set hard-as-rock and allow mining in other areas. Part of the expansion is the construction of a R500m back-fill plant on surface.

One of the risks to reaching this year’s production target is convincing the unions and, by extension, the workforce to move to a seven-day operation from the current system of five days on and two days off with two full production shifts a day.

Gold Fields is talking to the unions about the change to working patterns and hopes to have an agreement in place “in the next month or so,” Pillay said.

The production schedule for the year started with a 10% improvement over target in the first quarter, with output of 2,032kg of gold. This will rise to 2,216kg in the second quarter and a big jump to 2,900kg in the third quarter when the mine moves to a seven-day week and then 3,200kg in the fourth quarter.