AngloGold: Exceeding expectations

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 28 Aug 2017   Posted by admin


Image: AngloGold.

 

BY REUBEN ADAMS

 

IN February, AngloGold chief executive Srinivasan Venkatakrishnan told Mining Indaba delegates that the company would look inwards to expand its operations, rather than growth through mergers and acquisitions. In Australia, the third-largest gold miner in the world is focused on increasing production and extending the life of its optimised Tropicana and Sunrise dam assets.

 

AngloGold’s embattled South African assets dragged half year results into the red to the tune of $93 million, compared with a $93 million profit for in the respective period in 2016. AngloGold set aside $47 million for massive job cuts as it restructures its loss-making South African operations, and also included $46 million for the possible settlement of a lung disease court case brought by former employees. Then there’s Tanzania, where new legislation affecting mine development agreements are a concern for its tier one asset, Geita.

This turmoil didn’t touch Australia, where it’s Tropicana and Sunrise assets are performing well and undergoing upgrade and optimisation initiatives. The WA gold sector, in particular, has been resurgent over the past 18 months as prices for the precious metal have retained a healthy glow.

A key part of its global portfolio, Sunrise Dam and Tropicana (Anglo 70 per cent) are responsible for about 522,000 ounces per annum, or 15 per cent of portfolio production. For the 6 months ending June production totalled 255,000oz at a total cash cost of $775/oz, which compared favourably to 251,000oz at a total cash cost of $806/oz in the same period last year.

Production was slightly higher due to an increase in gold output at Tropicana, which more than offset a 5 per cent drop in production at the aging Sunrise Dam. The higher production at Tropicana also contributed to lower total cash costs.

At the annual Diggers & Dealers conference in Kalgoorlie, AngloGold underlined the economic contribution that these operations, which boasted a full time workforce of more than 500 and a 1000 contractors, had made in the region. Between 2013 and 2017, $103.4 million has been paid in royalties to the WA Government. The company’s average annual spend was $203 million in the Eastern Goldfields, and a further $521 million in WA.

 

Sunrise Dam

 

55km south of Laverton in WA, Sunrise celebrated its 20th anniversary this year – and with a long track record of consistently growing reserves and resources the company sees a long future ahead.

After more than 17 years of operation, the open pit was completed in 2013 to a depth of 490m below surface. In 2014 the underground mine became the primary source of mill feed, but lower grades meant that all-in sustaining costs have continued to creep higher.

Production for the June half was 107,000oz at a total cash cost of $977/oz,  compared to 113,000oz at a total cash cost of $858/oz in the same period last year.

Total cash costs – a measure that has been replaced by the more realistic all in sustaining costs by many gold producers – were higher due to lower gold production and higher underground mining costs, with a 17 per cent increase in ore tonnes mined compared to the six months ended 30 June 2016.

A plan is in place to accelerate development and grade control drilling in the Vogue and Cosmo work areas to lift the mined grade.

Concurrently, a strategy is underway to lift recovered grade at the Sunrise Dam Processing Plant – the Recovery Enhancement Project – by an average of 8 per cent.

In June, GR Engineering Services was awarded a $31.3 million engineering, procurement and construction (EPC) contract to undertake the design and construction of a brownfields upgrade to Sunrise processing facilities.

Under the contract, GR Engineering would design and construct a new flotation and ultra-fine grind processing facility with associated services upgrades to operate within the existing processing infrastructure currently in operation.

Work is scheduled for completion in June 2018.

“We are extremely pleased to be working with AngloGold Ashanti, a top tier global gold producer,” GR Engineering managing director Geoff Jones said.

“GR Engineering looks forward to making a positive contribution to the Sunrise Dam gold mine which has been in operation for more than 20 years, through the safe and successful delivery of this accretive brownfields project.”

 

Tropicana

 

“On to a very good new story that is developing at Tropicana; we’ve continued to exceed our initial planning assumptions,” AngloGold senior vice president Ludwig Eybers said in the Q2 earnings call.


“We’ve now accelerated mining rate to 90 million tonnes per annum with the introduction of a 600 tonne face shovel.


The accelerated mining rate has brought productivity improvements to lower mining unit cost by 37 per cent over the past two years.”

For the half, Tropicana (Anglo 70 per cent, Independence Group 30 per cent) production was 148,000oz at a total cash cost of $575/oz, compared to 137,000oz at $704/oz in the same period last year.

The higher production was due to a 12 per cent increase in mill throughput to 7.5mtpa from original 5.8mtpa nameplate capacity, following completion of a processing plant optimisation and expansion project late in 2016. There is potential to increase mill throughput rate even further to between 7.6mtpa and 7.7mtpa by the end of CY17 with completion of plant improvements. The increase in production contributed to lower total cash costs.

 

Long Island Study

Work continued during the six months ended 30 June 2017 on the Long Island Study which aims to extend Life of Mine through to 2027-2030.

Mr Eybers said the Study gave the company “optionality”.
“Long Island comprises eight stages and there are three major decision points, which is great, because it gives us the flexibility to tailor our approach at each decision point depending on the market conditions,” he said.

Studies are investigating cutback options to the Boston Shaker, Havana and Havana South open pits utilising short-haul open pit options. The completed Tropicana pit – due to be mined out in the second half of 2018 – would be used as a void into which waste will be backfilled, reducing haulage costs. The study is expected to be completed in the fourth quarter of 2017.

Long Island technical studies have already de-risked a strip mining approach and the associated in pit dumping. Elevated mining rates of about 90mtpa in 2017 have also derisked the increase to the Long Island mining rate of between 100mtpa and 110mtpa.

Minimal capital spend would be about $18 million, primarily for camp and heavy vehicle workshop infrastructure expansions, with completed studies and approvals expected in the upcoming December quarter.

Pre-Feasibility is also nearing completion on the $20 million addition of a second ball mill, designed to boost throughput to between 8mtpa and 8.2mtpa and improve recovery from about 89 per cent to 92 per cent.

AngloGold stated that drilling beneath Long Island final pit shells continued to confirm the underground potential – a current resource of 3moz which could contribute supplementary high grade production from 2020 – with additional drilling planned beneath Boston Shaker in the September quarter.

Regional exploration was also focused on the mineralised corridor as the potential source of additional mill feed from 2020 onwards.