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Exploration and business development

Exploration and business development

    [ Exploration and business development ]
    Developing a strong pipeline of greenfields projects



Tommy McKeith
Executive Vice-President: Head of exploration and business development
Tommy McKeith

Gold Fields’ international expansion strategy is driven by its extensive exploration programme and the successes delivered in financial 2010 prove that growth through the drill-bit is a costeffective way to achieve accretive growth. Gold Fields has expanded its exploration portfolio onto five continents with exploration being managed from two hubs based in Perth, Western Australia and Denver, Colorado. The Group also has offices in Santiago, Chile; Lima, Peru; Vancouver, Canada; Bamako, Mali; and Accra, Ghana.

During financial 2010 Gold Fields spent a total of US$152 million on exploration, which included US$81 million on greenfields exploration and US$71 million on near-mine exploration. Over the next 12 months we have set aside around US$150 million for exploration, which reflects the continued strength of the portfolio.

Salient features

  • Discovery effort anchored by exploration drilling in excess of 480,000 meters.
  • Completion of an Inferred Mineral Resource and a preliminary scoping study for the Canahuire deposit in Peru within 18 months of discovery.
  • Delivery of Indicated and Inferred Mineral Resource for the Talas Project in Kyrgyzstan.
  • Consolidation of the Komana and Sankarani Projects in Mali into the 100 per cent-owned Yanfolila Project.
  • Near-mine exploration success increased the Mineral Resources and has the potential to substantially boost the Mineral Reserves at St Ives, Agnew and Damang.
  • Robust pipeline of initial drilling projects in Australia, Canada, Chile, Ghana, Kyrgyzstan, Mali and the Philippines.

Exploration objectives

  • Grow the Gold Fields Mineral Reserve base and production on a per-share basis through quality exploration and discovery.
  • Develop a strong pipeline of quality greenfields opportunities capable of contributing to the goal of increasing international production to three million ounces per annum over the next five years, either in production or in development by 2015.
  • Establish Gold Fields’ exploration capability in a limited number of Regions identified to seek exceptional prospects and become the dominant explorer in those camps.
  • Contribute to the growth initiatives of the three international regional business units by supporting business development opportunities and accelerated development of Mineral Resources and Mineral Reserves proximal to Gold Fields’ existing operations.

Growth strategy

A continued lack of quality gold discoveries in the industry has led to escalating competition for advanced exploration and production assets and makes value-accretive growth through acquisition increasingly difficult. Gold Fields’ growth strategy is focused on creating high-quality opportunities through an aggressive greenfields exploration programme. Through a disciplined assessment of exploration opportunities, along with attention to quality and timely execution, the exploration group leverages its technical excellence in area selection to improve the likelihood of success and significantly reduce project development timelines. Results from this exploration focus are expected to grow Gold Fields’ Mineral Reserves and production on a per-share basis and thereby create significant value for the company’s shareholders.

Four advanced stage exploration drilling prospects

1. West Africa – Yanfolila in Mali
2. South America – Chucapaca in southern Peru
3. Central Asia – Talas in Kyrgyzstan
4. Europe – Arctic Platinum project in Finland

                 Rest      
  Development South of the    
  stage Africa   Australasia   America   world   Total  
  Advanced drilling 1     1   2   4  
  Initial drilling 8   14   3   12   37  
  Target definition 41   18   18   7   84  

Gold Fields’ exploration strategy is based on a cautious approach when selecting new projects for the portfolio. The aim is to strike the appropriate balance between size, quality and the risks associated with an exploration project. These trade-offs will continually be reassessed as a project advances through the development pipeline to ensure its economic potential is commensurate with the technical, commercial, geopolitical, social and environmental risks.

The company has targeted opportunities in its three international operating regions: South America, West Africa and Australasia. This eases the exploration effort by leveraging existing Gold Fields infrastructure, while delivery of growth will also be facilitated through the use of Gold Fields resources and capabilities. The exploration group has also prioritised near-mine exploration at the Gold Fields operations in Australia and Ghana as the easiest place to find gold is near an existing gold operation. Near-mine exploration is focused on delivering the option value of the company’s sites and providing a robust platform for regional growth.

Gold Fields is developing its exploration efforts in a few key prospective geological belts where we can establish ourselves as a dominant player. This effort will centre on new exploration search spaces which are underexplored and often have never seen a drill-bit.

Gold Fields maintains rigorous QA/QC protocols on all its exploration programmes using industry best practice in data acquisition, laboratory verification and sign-off by qualified persons under the NI43-101, 2007 SAMREC and JORC codes.

Greenfields exploration

Gold Fields operates a disciplined exploration project management system with clear decision parameters based on the potential and economics of a discovery. To be successful, targets first need to be drill tested and advanced to the next exploration phase. There is a strong focus on turning over targets as effectively as possible by drill testing and progressing targets in a timely manner.

Greenfields exploration is generated by reviewing and ranking the most prospective terrains across the world after considering country risk and strategic fit. Each exploration region continuously monitors and reviews opportunities, targeting projects at all stages of development.

When evaluating advanced opportunities or assessing conceptual targets, various metrics are used, including reserve and production potential, operating and NCE margin, payback period, initial capital costs, development timeline, net asset value, earnings and cash flow.

The table on the previous page provides a breakdown, by region, of the number of targets in the Gold Fields portfolio as of 30 June 2010 for each of the five project development stages. The table does not include near-mine exploration projects at Gold Fields’ current operations in South Africa, Ghana, Australia and Peru.

Advanced drilling projects

At the Chucapaca joint venture project in Peru in February 2010 Gold Fields completed its back-in right to earn a 51 per cent interest. Joint venture partner Compania de Minas Buenaventura S.A. (BVN) holds the remaining 49 per cent. Gold Fields and BVN formed Canteras del Hallazgo S.A. (CDH) as the joint venture company to hold, explore and potentially develop the Chucapaca gold-copper property. In January 2010 CDH completed a 22,290 meter delineation drilling programme on the Canahuire deposit at Chucapaca and in May 2010 announced an Inferred Mineral Resource estimate of 5.6 million gold equivalent ounces. In June 2010 CDH completed a conceptual mine scoping study and took the decision to advance the project towards prefeasibility. Environmental permits have been approved for the next phase of drilling which commenced in July 2010. The prefeasibility is expected to be completed in Q3 calendar 2011.

At the Yanfolila project in Mali, Gold Fields acquired Glencar Mining Plc and consolidated a large land position in the Yanfolila belt of south-western Mali.

Since November 2009, Gold Fields has completed 23,286 meters of diamond, 14,167 meters of reverse circulation and 87,320 meters of aircore drilling at the Yanfolila Project. Framework and infill RC and diamond drilling was used to delineate shallow resources over the Komana East and West deposits as well as to test eight initial drilling targets over five licences. Aircore drilling was used to sample the bedrock through the laterite cover and outlined new target areas with encouraging intercepts at Gonka, Bokoro North, Bokoro Main and Sanioumale West. The aim in Mali is to complete a scoping study by the end of calendar 2011 and to proceed towards a feasibility study.

At the Talas joint venture project in Kyrgyzstan, Gold Fields completed its earn-in during February 2010 and now holds a 60 per cent interest in the project with joint venture partner Orsu Metals Corporation holding the remaining 40 per cent. Gold Fields completed a 22,013 meter drilling programme on the Taldybulak deposit at Talas and defined an Indicated and Inferred Mineral Resource estimate of 11.7 million gold equivalent ounces.

Field work was stopped in April 2010 as a result of the political events in Kyrgyzstan resulting in resignation of the president. Work will remain suspended until political stability has returned following the successful installation of a new government. In the meantime metallurgical optimisation studies are examining the possibility of increasing recoveries and extracting metals from the oxidised ores.

At the Arctic Platinum project in Finland, Gold Fields has been investigating the use of various hydro-metallurgical processing options, instead of off-site smelting, to recover copper, nickel, gold and platinum group metals (platinum, palladium and rhodium) from the flotation concentrates. The preliminary test work returned positive results and further engineering work was conducted to provide initial operating and capital cost estimates. Planning is under way to process metallurgical samples through a continuous pilot plant facility.

Initial drilling projects

At the East Lachlan joint ventures in New South Wales, Australia, Gold Fields has earned an 80 per cent interest in two porphyry gold-copper project areas (Wellington North and Cowal East) and achieved the first 51 per cent earn-in of a potential 80 per cent earn-in on the Myall JV. Gold Fields also exercised an option to elect four additional projects (Jemalong, Moorefield, Parkes-Clancy, and Parkes-Centaurus) and take an immediate 80 per cent ownership with joint venture partner Clancy Exploration Limited. Extensive aircore drilling programmes completed at the Myall and Cowal East concessions continue to identify broad areas of gold and copper anomalism associated with widespread porphyry-style alteration and mineralisation. Exploration continues to focus on identifying high-quality targets for initial diamond drill testing.

At the Batangas joint venture projects in the Philippines Gold Fields is in its first year earn-in on three joint ventures with Mindoro Resources, where it can earn up to a 75 per cent interest. The projects, located in the Batangas region of Luzon, are prospective for porphyry copper-gold and epithermal gold mineralisation. Five targets were tested with about 2,000 meters of diamond drilling intersecting two low-grade porphyries. Drilling is now focused on diamond drill testing a large epithermal-related gold anomaly on the Lobo JV.

At the SBX joint venture project in Chile Gold Fields is earning a 90 per cent interest in certain claims held by SBX Asesorias e Inversiones and has an option to acquire 100 per cent of the Pircas gold property held by S.C.M. Aguas Heladas, a private Chilean company. During the year, the first stage of diamond drilling was completed at Pircas and results continue to be encouraging. In January 2010 Gold Fields signed an option agreement to acquire 100 per cent of the nearby Pedernales property from S.L.M. Terrier, a Chilean company. The Pedernales property is located seven kilometers to the north-west of the Pircas property. Drilling is scheduled on these properties over the next 12 months.

At the Tacna project in Peru Gold Fields completed a total of 1,854 meters of diamond drilling in six widely spaced drill holes at the Cotapaccha target, one of seven blocks of concessions that the company staked for potential to host epithermal gold-silver mineralisation. Further work is in progress to develop other drill targets within Cotapaccha and adjacent concessions.

At the Woodjam North project in British Columbia, Canada, Gold Fields signed a joint venture agreement with Fjordland Exploration and Cariboo Rose Resources (the Woodjam Partners) to earn up to 70 per cent interest on a 40,500 hectare property covering several known porphyry copper and gold targets. Diamond drilling commenced in October 2009 and positive results have justified continued drilling in financial 2011. On 20 May 2010 Gold Fields signed a second joint venture agreement with the Woodjam Partners to earn 70 per cent on the adjacent Woodjam South property which includes the SE Zone porphyry discovery.

Also in British Columbia, Gold Fields is earning up to a 75 per cent interest in Cascadero Copper Corp’s Toodoggone copper and gold project. The initial diamond drilling programme concluded in October 2009. Force majeure has been declared to suspend the joint venture terms while Gold Fields tries to resolve the First Nations’ opposition to exploration activities in the project area. Meetings with the relevant groups are ongoing.

Near-mine exploration

At the St Ives Mine in Western Australia the development focus during financial 2010 was on completing the portal at Athena and sinking the decline to the ore position, which was intersected on 13 May 2010. Full production from Athena is scheduled for end-calendar 2011. After completion of the Athena feasibility study, near-mine exploration shifted to the Hamlet discovery, which is located about one kilometer east of Athena. Hamlet is a lode-style deposit similar to Athena and Gold Fields on 20 May 2010 announced an Indicated and Inferred Mineral Resource of 1.03 million ounces of gold. Drilling to further expand the Mineral Resource and support a feasibility study is under way and a construction decision is planned in late calendar 2011. Other near-mine opportunities in the Argo- Athena camp were discovered and tested during the year with initial drilling undertaken to assess open-pit and underground mining opportunities. The intention over the next 12 months is to advance the exploration of at least two of these discoveries with infill and extensional drilling.

At the Agnew Mine in Western Australia the drilling programme focused on the underground extension and reserve delineation at Waroonga, specifically Kim south. Directional surface drilling technology was successfully introduced and the surface drilling project, was completed in May 2010 to depths of 1,400 meters below surface covering 21,734 meters. A total of 11,608 meters was drilled from underground stations and the programme was completed in March 2010.

Drill testing of the shallow Cinderella deposit, located a short distance from the Agnew processing plant, was completed late in financial 2010 (18 holes for 3,050 meters) and the intention is to assess the open-pit mining potential of the deposit before the end of 2010.

At the Damang Mine in Ghana, the emphasis was on extensional drilling to the south of the main Damang Mine and between some of the smaller surface mines. Good indications for extensional opportunities were highlighted and near-mine exploration during financial 2010 was directed at two core growth projects, Greater Damang and Greater Amoanda. The Greater Damang Project extends for about five kilometers from Huni North in the north to the Nyame prospect in the south, while Greater Amoanda extends for two kilometers from the Tomento East surface mine in the south of the Amoanda Mine. The objective over the next 12 months is to advance the Greater Damang Project with additional infill drilling to support a feasibility study decision on an enlarged surface mining operation.

At Cerro Corona in Peru, the exploration programme at the Consolidada de Hualgayoc JV (a 50 per cent Gold Fields, 50 per cent Compania de Minas Buenaventura S.A. joint venture) was suspended in September 2009 due to opposition by the local community. Within the Cerro Corona Mine property an initial review was completed in May 2010 to evaluate the potential for Cu-Au skarn mineralisation at the margin of the porphyry system. A data review is currently in progress and, should results be positive, a diamond drilling programme will be motivated as a proof of a concept drill test.