[miningmx.com] — GOLD Fields has decided it will not develop its proposed uranium project until it has both a strategic partner and a supply offtake agreement in place.
CEO Nick Holland said at a presentation to financial media in Johannesburg on Thursday: “Our assessment of the uranium project is positive, but we don’t want to do it on our own.
“Our key focus is now to find a suitable partner and we will concentrate on that from early next year. We have already had some high-level discussions with potential partners, but have not gone into any detail.
“In the meantime, we have continued with the environmental permitting process and hope to have most of that completed in the next six months.’
The project will recover uranium and gold from surface tailings dumps created by Gold Fields’ mining operations at Kloof and Driefontein on the West Rand.
Holland has previously described the project as a “fifth mine’ for Gold Fields in South Africa.
The size of the resource in the dumps was estimated in January 2009 at 402 million tonnes of material at an average grade of 65grams per tonne uranium content.
That was sufficient to produce 58 million pounds of uranium as well as 4.2 million ounces of gold in total.
Turning to other projects, Holland highlighted the development of South Deep as a major growth project in South Africa but stated Gold Fields’ future growth lay overwhelmingly outside the country.
This is because of the great depth of much of the remaining gold resource in South Africa. The present average depth of Gold Fields’ mining operations at Driefontein and Kloof is about 3,500m.
Holland said: “We are the only guys actually investing in growing the industry in South Africa. Everybody else is just trying to slow down the rate of decline.
“There are still a lot of opportunities in South Africa, but they are below 4km in depth and we don’t want to go below 4km. I don’t see us sinking any major new shafts in the group.
“It’s just not sensible to spend billions in capital on a deep level project with a 15-year payback period when you can start mining from surface on a gold project in a country like Mali.
“However, at a gold price of R500,000/kg and assuming current major input cost levels remained the same, we would be having a very different discussion.’
Holland indicated Gold Fields expected to reduce its total workforce including contractors by 4,000 during 2011 from the current total of about 50,000.
He stressed this would be achieved through natural attrition and voluntary retrenchments, as well as replacement of contractors on various functions by mine employees.
He added that the Mining Industry Growth, Development and Employment Task Team (Migdett) – a tripartite initiative by government, organised labour and the mining industry set up in 2008 to transform the industry and make it more competitive – had to start delivering in 2011.
“We need to see concrete action plans, deliverables and targets set out and a start made on rolling them out next year if we are to change the downward trends in the SA gold mining industry,’ he said.
He cited the main problems as rising electricity charges and lack of certainty on Eskom’s long-term price policy, as well as labour costs which had consistently risen at rates above ruling inflation levels for the past decade.
Holland indicated earlier this year that Gold Fields was keen on negotiating a new working system on the mines with the labour unions to improve production.
He had said it would be difficult for the group to maintain current employment levels on the mines, given the underperformance in terms of overall production without such changes.
Asked about the latest situation on those negotiations, Holland replied: “We have not been able to make much progress on that.’
The writer owns shares in Gold Fields.
