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Australasia Region - Introduction

    [ Australasia Region ]
    Gearing up for reserve growth and life extension



Richard Weston
Executive Vice-President: Australasia Region
Richard Weston

The operational activities of Gold Fields in the Australasia Region are centered on the St Ives and Agnew Gold Mines in Western Australia, both of which have highly prospective opportunities for reserve growth and life extension. Gold Fields also has an extensive portfolio of greenfields exploration projects in the region, including the East Lachlan joint venture projects in New South Wales and the Batangas joint venture projects in the Philippines. These are described in more detail in the exploration section on page 67 of this report.

In line with the Group objective to have at least one million ounces of gold, either in production or in development, from the Australasia Region by 2015, the main operational focus during financial 2010 was on stabilising the current mining operations to provide a stable platform for future growth, by leveraging the existing production footprint through near-mine opportunities at both St Ives and Agnew. This strategic focus will be continued over the next 12 months.

During financial 2010 the St Ives and Agnew Gold Mines continued to manage their health and safety performance by:

  • Embracing the Group’s number one value, if we cannot mine safely, we will not mine;
  • Implementing the safe production rules; and
  • Implementing the Zero Harm, Zero Hurt and the total health and safety philosophy embodied in the Zero Injury Process (ZIP).

However, while Agnew showed a significant improvement by operating for the whole of financial 2010 without a single Lost-Time injury, St Ives regressed with an increase in Lost- Time injuries from two during financial 2009 to 11 during financial 2010. While this can be attributed largely to the implementation of revised and more stringent protocols for the reporting and treatment of minor injuries in the Australasia Region, a significant effort will be made to improve on this performance. Both St Ives and Agnew retained their OHSAS 18001 certification after undergoing independent external compliance audits during financial 2010. Both are also scheduled for follow-up reviews of their safety performance and management systems and processes by DuPont this year.

Both mines also retained the ISO 14001 certification for their environmental management systems after undergoing independent audits during financial 2010, and are fully compliant with the requirements of the International Cyanide Code.

The St Ives Gold Mine has a very large and well-endowed tenement position, from which it has produced in excess of ten million ounces of gold over its 20-year life. St Ives currently mines ore from the Argo, Cave Rocks and Belleisle underground mines; the Leviathan, Apollo and Agamemnon open-pit mines; and a number of surface stockpile sources. This is treated in the Lefroy mill or through the heap leach plant, depending on grade.

The lower production at St Ives during financial 2010 was mainly the result of unexpected lower grades from the underground mines during the first half of the year, which resulted in the delivery of lower-than-planned average grades to the Lefroy mill. This was further compounded by adverse ground conditions at the Belleisle underground mine during the first half of the year, which delayed the development of the new high-grade Niaid extension to the Belleisle ore body. A focused intervention to improve the average grade to a more sustainable level combined with a stabilisation of ground conditions at the Belleisle Mine and subsequent increased production from the new Niaid ore body, resulted in an increase in production to a more sustainable level of 117,000 ounces during the final quarter of financial 2010. It is expected that production from the current ore sources will remain stable at between 110,000 and 115,000 ounces per quarter through to June 2011, providing a stable base for future growth.

In line with the Group strategy of sweating our assets, a comprehensive business process reengineering programme was initiated at St Ives during the latter part of financial 2010. The main objective of this programme is to reduce operating costs and improve operating productivity in order for St Ives to operate at an NCE margin of 20 per cent during for the year to end-June 2011 and a sustainable long-term NCE margin of at least 25 per cent.

The most significant new development at St Ives has been the discovery of the new Argo-Athena camp which is located on the St Ives lease area, less than five kilometers from the central Lefroy processing plant. This is one of the most significant new gold discoveries in Western Australia in recent years and will provide St Ives with a longer life and high grade ore bodies. During financial 2010 the focus was on the further exploration of this camp, with the ultimate goal of securing a ten-year life-ofmine and to develop a pipeline of “ready to go” projects.

Early in financial 2010 we commenced the new Athena project, the first fully defined project within the Argo-Athena camp, with a potential of more than one million ounces. The portal of this new underground mine was completed early in financial 2010, after which the focus shifted to developing the decline to the ore zone, which was intersected on schedule on 13 May 2010. Initial production from this project is scheduled to commence early in the first quarter of calendar 2011, and full production is expected towards the end of 2011.

After the definition of Athena was completed, near-mine exploration shifted to the Hamlet discovery which is located about one kilometer east of the Athena Project. On 20 May 2010 a Mineral Resource of 6.6 Mt at 4.86 g/t for 1.03 million ounces of gold was announced for this project. Drilling to further expand the Mineral Resource and support a feasibility study is under way and a construction decision is planned for the first quarter of calendar 2011. When both Athena and Hamlet are in production, the St Ives Gold Mine should have four higher-grade underground mines in operation, which bodes well for the future of this mine.

Other near-mine opportunities were discovered in the Argo-Athena camp during the year and tested with initial drilling to assess open-pit and underground mining potential. The intention is to advance the exploration of at least two of these additional discoveries with infill and extensional drilling by mid-2011.

In view of the significant exploration potential on the St Ives lease area, the royalty payable by St Ives Gold Mine was terminated for a consideration of A$308 million during August 2009. This transaction will contribute to an improved cost profile for the St Ives Gold Mine into the future, especially as production increases from the new Argo-Athena camp.

At Agnew, also in Western Australia, significant progress was made during financial 2010 towards the goal of increasing the life of this mine. The deep directional drilling exploration programme, which was focused on the underground extension and reserve delineation of the Kim south deposit within the Waroonga Complex, successfully delineated the Kim ore body at depth. Agnew is now expected to achieve its stated aim of five years of Mineral Reserves at the time of the Group’s next declaration at the end of the 2010 calendar year.

Over the next 12 months the deep directional drilling programme undertaken at Kim in financial 2010 will be replicated at the adjacent main ore body. Drill testing of the shallow Cinderella deposit, located a short distance from the Agnew processing plant, commenced late in financial 2010 and the open-pit mining potential of this deposit will be assessed before the end of calendar 2010. The objective is to identify an additional ore source to increase mining flexibility and utilise the available mill capacity at this mine.

During the fourth quarter of financial 2010 production from the Agnew Gold Mine declined as a result of adverse ground conditions and an associated paste failure in the lower reaches of the Kim ore body, which restricted access to higher-grade stopes and required lower-grade and out-of-sequence stopes to be mined. Production is expected to improve over the next two quarters, as additional stopes from the main and Rajah ore bodies become available, resulting in improved mining flexibility and production rates.

In view of the significant increase in Mineral Reserves at the Agnew Gold Mine it was decided to convert the mine from contractor mining to owner mining, which will have a significant impact on the cost profile of this mine. The transition, which commenced during the final quarter of financial 2010, impacted on production as a result of the temporary drop in the availability of the mining fleet.

The transition to owner mining; the progressive stabilisation of ground conditions in the Kim ore body, a return to in-sequence mining in the Kim ore body; and an increase in tonnages mined from the Rajah and main ore bodies, should boost production to historical levels by December 2010. The sustainability will be further enhanced through an increased rate of development to build greater flexibility into the mine, as well as through the installation of a return airway ventilation shaft and associated ventilation fans and power upgrades. These developments are essential to ensure the continued sustainability of underground operations of the Waroonga Complex.

Lake Lefroy
Lake Lefroy