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Arrow Message from the Chairman
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Arrow Message from the Chief Executive Officer
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Arrow South Africa Region
   Arrow Driefontein Gold Mine
   Arrow Kloof Gold Mine
   Arrow Beatrix Gold Mine
   Arrow South Deep Project
Arrow West Africa Region
  Arrow Tarkwa Gold Mine
  Arrow Damang Gold Mine
Arrow Australasia Region
  Arrow St Ives Gold Mine
  Arrow Agnew Gold Mine
Arrow South America Region
  Arrow Cerro Corona Gold Mine
Arrow Exploration and Business Development
Arrow Mineral Resources and Reserves
   
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REVIEW OF OPERATIONS: AUSTRALASIA REGION

Agnew Gold Mine

Fatal Injury free again.
Waroonga production increased by 45 per cent.
Kim Lode production increased by 40 per cent.
Substantial plant maintenance completed, including planned major mill works.

OVERVIEW

Location: Agnew is located 23 km west of the town of Leinster in Western Australia, approximately 375 km north of Kalgoorlie and 1,000 km (by road) northeast of Perth at latitude 27°55`S and longitude 120°42`E. The mine is served by a network of sealed roads and an all weather airstrip at Leinster. Infrastructure: Ore is currently mined from the Kim and Main ore bodies which form part of the Waroonga underground mining complex. Processing is via one CIP plant with 1.3 Mtpa capacity. Geology: Structurally controlled hydrothermal gold deposits situated in the Norseman- Wiluna Greenstone Belt which is part of the Yilgarn Craton, a 2.6Ga granite-greenstone terrain. Employees in service: The mine has 140 permanent employees and 200 contractors.

SAFETY AND ENVIRONMENT

Agnew incurred four lost time injuries in F2009, and it reduced medically treated injuries from fifteen in F2008 to seven in F2009. The operation has remained fatality free since acquisition. A Zero Incident Process (ZIP) programme was rolled out in F2009, with 70 per cent of employees completing the programme thus far, while the remainder will complete the programme in F2010. This is designed to complement the various other safety initiatives at Agnew.

The mine maintained certification for AS4801:2000 Occupational Safety and Health Management System, and ISO14001:2004 (Environmental Management Standard). It was also awarded substantial ICMI Cyanide Code Compliance.

A significant amount of effort regarding environmental management and reporting has resulted in the site achieving an impressive run of no significant environmental incidents in F2009.

OPERATIONAL REVIEW

Gold produced decreased by six per cent from 204,000 ounces in F2008 to 192,000 ounces in F2009. This was due to the completion of processing of Songvang stockpiles by mid F2009, with 94 per cent of production sourced from the Waroonga underground complex containing the Kim and Main lodes.

Tons milled decreased from 1.32 million in F2008 to 1.07 million in F2009. This was due to the depletion of the low grade Songvang stockpiles.

Underground ore tons mined increased from 0.51 million in F2008 to 0.74 million in F2009. This increase was at the Waroonga Complex where a step change in production volumes occurred in F2009.

Revenue increased from A$188 million in F2008 to A$230 million in F2009. The higher gold price received was partially offset by the lower production.

Operating costs, including gold-in-process movements, decreased by 10 per cent from A$115 million in F2008 to A$104 million in F2009. This decrease was mainly due to lower processing volumes due to the depletion of the Songvang stockpiles and credits received on two toll treatment parcels to utilise spare mill capacity in the second half of the year.

Total cash cost increased from A$496 per ounce in F2008 to A$541 per ounce in F2009 as a result of the lower production.

Operating profit, before amortisation, increased from A$74 million in F2008 to A$125 million in F2009. Operating margin increased from 39 per cent in F2008 to 55 per cent in F2009.

Capital expenditure increased from A$37 million in F2008 to A$42 million in F2009. The majority of this increase related to the Cyanide Code compliance project, additional capital development and ventilation upgrades. On- mine exploration amounted to A$18 million.

Notional cash expenditure increased from A$634 per ounce in F2008 to A$743 per ounce in F2009.

F2010 Focus Areas

  • Maintain a consistent production rate throughout the year;
  • Exploration of the Kim Lode from underground and surface to convert resources to reserves;
  • Continue exploration at Maria North, Cinderella and the mine corridor conglomerate; and
  • A series of studies will be conducted on the infrastructure at Waroonga with the view to developing a five-year life of mine plan.

Serious Injury Frequency Rate
per million man hours worked

Serious Injury Frequency Rate -  per million man hours worked

 

Australia consolidated

          2009   2008   2007  
  Net earnings   A$m   94.3   41.2   52.8  

Agnew Gold Mine

          2009   2008   2007  
  Open pit mining                  
  Waste mined   '000t     191   9,315  
  Ore mined   '000t     202   1,532  
  Head grade   g/t     3.24   2.58  
  Strip ratio   W:O     0.95   6.08  
  Underground mining                  
  Ore mined   '000t   737   505   394  
  Head grade   g/t   7.94   9.34   11.69  
  Processing                  
  Tons milled   '000t   1,066   1,315   1,323  
  Yield   g/t   5.6   4.8   5.0  
  Gold produced   kg   5,974   6,336   6,605  
      '000oz   192   204   212  
  Total cash costs   A$/oz   541   496   377  
      US$/oz   401   445   295  
  Notional cash expenditure   A$/oz   743   634   602  
      US$/oz   550   568   473  
  Capital expenditure   A$m   41.6   37.0   36.3