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Underground complex key to South Deep's mechanisation - Business Day

Monday, 20 March 2017

Piped music and air conditioning for a small team of engineers and mechanics working in a brand-new warren of workshops 2.7km underground at South Deep is one small indication of the changes at the R29bn mine that Gold Fields has struggled to bring to account over the past decade.

The mollycoddling of the mechanics is more than just Gold Fields allowing its employees a degree of comfort in what are dangerous and uncomfortable conditions. It goes to the very heart of what management wants to achieve, injecting nearly R3bn more into a mine it bought in 2007 to bring it to profitable, completely mechanised production over the next six years.

The new plan will deliver far less gold than previous plans indicated, but analysts Leon Esterhuizen from Nedbank and Derryn Maade from HSBC say it is realistic and achievable.

An initial plan pegged output as high as 800,000oz a year by 2014, with a revision to 680,000oz a few years later. In 2017, it has been reduced to 500,000oz, using purely mechanised mining, keeping the number of employees as low as possible and as safe and productive as possible.

The new system entails work to destress the enormous ore body, which expands as it dips, growing in thickness from 2m to 120m. The deposit was laid down in an alluvial fan in an ancient sea or lake. The work to take pressure out of the rock for the long-hole stoping mining method means large voids can be blasted into the ore, with a fleet of loaders and trucks removing thousands of tonnes of broken rock.

The jagged voids are then filled with cement-laced tailings pumped underground after the gold has been extracted. Gold Fields is testing a new mechanised method to build a wall quickly and cheaply to contain the wet slurry within the void. The new system, as used elsewhere in the world, takes three or four days before it is ready for use, compared with the 12 days with the old labour-intensive system.

Gold Fields spent R152m and took 30 months to build 1,400m of tunnels for a workshop complex to tackle the underperformance of its underground fleet. It includes a storeroom stocked with spares worth R40m.

It will take up to two days to bring something from a surface warehouse to the workshop, so the programmes to rebuild or maintain the 111-strong fleet of machines underground are well planned, says engineering manager Ruaan Greeff.

The workshop was commissioned in December and it has taken 12 weeks to rebuild one ore hauler, but the target is to cut the time to eight weeks. In the past, worn-out machines would be parked and left. Now a machine can be refurbished and put back to work at just 39% of the replacement cost.

Gold Fields CEO Nick Holland says the workshop is one of the big game-changers for South Deep. Mechanised mines around the world work to a standard of 80% utilisation of 80% of their fleet, but at South Deep, there was less than 40% of about 70% of the available fleet.

"The facility here will make a big difference to those numbers and it’s a key part of the plan we have for South Deep," he says.

At the steady state all-in cash cost of $875/oz — the mine was operating at double that in 2013 and 2014 — South Deep would make money, he says. In rand terms, it will break below the R500,000/kg mark in 2020 and reach close to R400,000/kg in 2022.

The gold price on Friday was near R500,000/kg. For the next three years, the mine will operate at above R550,000/kg.

Under Gold Fields’ management, the production high-tide mark was in 2013, when the mine produced 9.4tonnes or 302,000oz of gold. It generated net earnings in only three of the 10 years it has been in the company.

The twin-shaft complex with a 37-million ounce reserve has the single longest vertical shaft in the world, reaching down 3km.

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