Reports Tool + open

IN THIS SECTION
  Introduction

South America Region - Introduction

    [ South America Region ]
    Maintaining the production and exploration momentum



Juan Luis Kruger
Executive Vice-President: South America Region
Juan Luis Kruger

Introduction

During financial 2010 the main focus in the South America Region was to build on the significant operational and financial momentum achieved at the Cerro Corona Mine during financial 2009, and to consolidate the exploration successes at the Chucapaca project.

Capex and operating profit
(R million)
Capex and operating profit (R million)
 
Total cash cost and NCE
(US$/oz)
Total cash cost and NCE (US$/oz)
 

Financial 2010 marked the first year of full production of the Cerro Corona Mine, which is owned by Gold Fields La Cima S.A. (GFLC), in which the Group has an 80.7 per cent interest. During the year under review 13.7 million tonnes of ore and waste were mined in line with the lifeof- mine plan, while 6.1 million tonnes of ore were processed. A significant focus on optimising recoveries in the plant resulted in the mine exceeding its output targets, with year-on-year gold equivalent production increasing by 82 per cent from 219,000 ounces in financial 2009 to 394,000 ounces in financial 2010. Operating profit for the year was US$277 million; the NCE margin 47 per cent, and free cash flow generated US$163 million (US$417 per equivalent ounce). A total of US$50 million of the project financing debt was repaid during the financial year.

The Group’s safe production rules have been rolled out on the mine and the philosophy of if we cannot mine safely, we will not mine was fully embraced by employees. Only one Lost-Day Injury was recorded during the year and Cerro Corona was awarded first place in the open-pit category of the Annual Mining Safety Competition by the Peruvian Mining Safety Institute. During the year the mine also implemented the OHSAS 18001 safety management system and was awarded OHSAS 18001 certification.

Two additional significant milestones were achieved during financial 2010: Cerro Corona obtained ISO 14001 certification for its environmental management programme and construction of the Las Gordas and Las Aguilas tailings management facilities was completed to the planned level of 3,740 meters above sea level, on schedule and within budget.

Cerro Corona also consolidated its position as a leader in the field of sustainable development in the region. Since the commencement of development activities at the mine a number of innovative sustainable development projects have been launched to improve the quality of life of the communities in the areas of direct influence of the mine. These include, inter alia, road infrastructure construction; a rural electrification project; potable water projects; various education and healthcare programmes; the training of local workers and the creation of associated employment opportunities; and the development of a number of self-sustaining agricultural activities. During the year under review significant progress was made at these projects. In addition, the construction of a new flagship dairy plant project was completed to process the dairy production of the communities surrounding the mine. As recognition for its distinctive environmental practices and social responsibility programmes, the municipality of Cajamarca granted GFLC the Green Seal Award.

GFLC was also recognised for a second consecutive year by the Lima Stock Exchange as one of the top ten companies in Peru in terms of best corporate governance practices.

During the year to June 2011 the focus will be on optimisation and growth at our operations. In particular, management will implement further operational improvements to the existing sulphide processing plant to exceed its nameplate capacity. The objective is to maintain plant throughput at 800 tonnes per hour, which is a seven per cent increase over the nameplate capacity of 750 tonnes per hour, achieved during financial 2010. The construction of the third raise of the tailings dam to a level of 3,746 meters, the installation and commissioning of a pebble crusher, and the construction of an additional lime silo to increase on-site storage capacity are also scheduled over the next 12 months.

A detailed design and feasibility study is under way for the expansion of the process plant to treat the 7.5 million tonnes of life-of-mine oxide ore, the bulk of which has already been stored on surface. Should the feasibility study prove positive and the required permits obtained, construction of the plant will commence in 2011. Early indications are that the oxide stockpiles contain approximately 300,000 ounces of recoverable gold, which could be brought to account over the next five years.

Conversion of Mineral Resources into Mineral Reserves at Cerro Corona is another strategic objective. Over the next 12 months we will continue to analyse alternatives to solve the current tailings storage capacity constraints and to develop an infill drilling programme.

Gold Fields plans to expand its production footprint in the South America Region to one million ounces, either in production or in development, by 2015. The aforementioned projects at Cerro Corona, combined with greenfields exploration projects being developed by Minera Gold Fields Peru S.A. (MGFP), Gold Fields’ fully owned exploration subsidiary, provide us with a strong platform to achieve this objective.

No additional exploration activity was undertaken during the year by Consolidada de Hualgayoc, the exploration joint venture between GFLC and Compañía de Minas Buenaventura S.A.A. (Buenaventura), owing to the social issues in the affected communities. However, good progress was made on a number of other projects, most notably at the Chucapaca project in southern Peru.

The Chucapaca project is an advanced-stage exploration joint venture project which Gold Fields is pursuing through MGFP (51 per cent) in partnership with Buenaventura (49 per cent). In May 2010 Gold Fields and Buenaventura announced an Inferred Mineral Resource estimate of 5.6 million gold equivalent ounces, with additional potential beyond the extent of current drilling, on the Canahuire deposit, which forms part of the Chucapaca Project area (CPA). The Inferred Mineral Resource for the Canahuire deposit is approximately 83.7 million tonnes at 1.9 grams per tonne gold, 0.09 per cent copper and 8.2 grams per tonne silver, for a total of 5.6 million gold equivalent ounces.

Table 1: Chucapaca project, Canahuire deposit Inferred Mineral Resource (1 May 2010)*
Tonnes Grade Au Grade Ag Grade Metal AuEq
(Mt) (g/t) (g/t) Cu (%) (Moz)
83.7 1.9 8.2 0.09 5.6

* These Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. Attributable metal to Gold Fields and Buenaventura is 2.9 Moz AuEq and 2.8 Moz AuEq, respectively. The Mineral Resource is reported at a 0.67 g/t gold equivalent cut-off grade constrained within an optimised pit shell. The pit shell is based on price assumptions of US$1,150/oz gold, US$3.00/lb copper and US$17/oz silver. The Mineral Resource estimate, which is reported in accordance with the South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves, 2007 Edition (SAMREC code), is reported without dilution or ore loss.

The Canahuire deposit is one of several targets in the 12,700 hectare CPA, which is on average 4,800 meters above sea level and located in the Altiplano area of southern Peru, 120 kilometers northeast of the city of Moquegua. Gold Fields has also consolidated a significant portfolio of additional concessions adjacent to the CPA and is independently advancing exploration on these concessions.

During financial 2010 the joint venture company, Canteras del Hallazgo S.A.C. (CDH), filed a modification to the environmental impact assessment for the Chucapaca project with the Peruvian Ministry of Energy and Mines to permit expanded activities for further scoping and infill drilling.

Exploration at Chucapaca
Exploration at Chucapaca

An interim conceptual scoping study was completed during June 2010 and the decision was made to advance the project towards pre-feasibility. The next phase of drilling is focused on defining extensions of mineralisation towards the west of the Canahuire deposit as well as to test other exploration targets within the CPA. Drilling commenced in July 2010 after permitting approval was obtained.

Since exploration started at Chucapaca, CDH has worked closely with all key stakeholders, particularly local communities, by providing open and transparent information. Agreements have been reached with the Corire, Santiago de Oyo Oyo and Chucapaca communities, which facilitate the continuation of exploration activities and studies. These agreements provide for health and education programmes in collaboration with the appropriate authorities, sustainable development programmes identified by the communities, other participatory work, and a variety of training initiatives for community members.

It is expected that a construction decision will be reached on the Canahuire deposit within the next three years.

Cerro Corona
Cerro Corona