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| REVIEW OF OPERATIONS: WEST AFRICA REGION
OVERVIEW Location: Damang is located in southwestern Ghana, approximately 300 km by road, west of Accra, the capital, at a latitude 5°11’N and longitude 1°57’W. It is situated some 30 km north of the town of Tarkwa with reasonable access roads and an established infrastructure. The mine is served by a main road connecting to the port of Takoradi, some 90 km to the southeast. Infrastructure: Multiple open pits, surface stockpile sources and a CIL plant. Geology: The Damang Gold Mine exploits oxide and fresh hydrothermal mineralisation in addition to Witwatersrand style, palaeoplacer mineralisation similar to that of the Tarkwa Gold Mine. Employees in service: 407 permanent employees, 1,101 contractors. SAFETY AND ENVIRONMENT Damang Gold Mine experienced another good safety year and the mine remains fatality free since acquisition by Gold Fields. The mine has shown an improvement in safety, evident in the Lost Day Injury Frequency Rate improving from 0.68 to 0.37. This achievement has earned the mine the prestigious Chairman’s Award for the best safety improvement over a three year period. The mine’s safety management system has been OHSAS18001 certified since 2006 and re-certification was achieved following an external audit conducted in May 2009. Damang also retained its ISO14001:2004 (Environmental Management System) certification following an external audit during the year, and remains fully compliant to the ICMI Cyanide Code. OPERATIONAL REVIEW Gold produced increased by three per cent from 194,000 ounces in F2008 to 200,000 ounces in F2009. This was due to the build up of the crushed ore stockpile in F2008, which resulted in a consistent feed to the mill in F2009. Thus, tons milled increased from 4.52 million tons in F2008 to 4.99 million tons in F2009. Tons mined decreased from 31.4 million tons to 19.5 million tons as a result of mining the deeper, higher-grade Damang pit cutback. Ore mined increased from 4.1 million tons in F2008 to 4.4 million tons in F2009. Revenue increased from US$160 million in F2008 to US$176 million in F2009 resulting from the higher gold price received and increased production. Operating costs, including gold-in-process movements, increased by 20 per cent from US$108 million in F2008 to US$130 million in F2009. This increase was mainly due to increased mining of the more expensive Damang pit cutback and increased mill consumable costs. Total cash cost increased from US$551 per ounce in F2008 to US$660 per ounce in F2009 as a result of the higher costs. Operating profit, before amortisation, decreased from US$53 million in F2008 to US$46 million in F2009. Operating margin decreased from 33 per cent in F2008 to 26 per cent in F2009. Capital expenditure decreased from US$28 million in F2008 to US$17 million in F2009. The decrease was mainly due to higher Damang pit cutback development costs in F2008. The majority of expenditure in F2009 was for upgrading the primary crusher, exploration drilling and developing the Rex pit. Notional cash expenditure decreased from US$753 per ounce in F2008 to US$745 per ounce in F2009.
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