Integrated Annual Review 2012 Annual Financial Report 2012 Mineral Resources and Mineral Reserves Regional overview  
 

1.3 Operation: St Ives

Introduction

Our St Ives mine is located in the highly prospective geological region of the Norseman-Wiluna Greenstone Belt – 80km south of Kalgoorlie in Western Australia. During the year, the mine produced from four underground mines, three open pits and a number of surface stockpile sources, with processing taking place through a carbon in leach plant and a heap leach plant. The lease area includes exploration and mineral rights covering a total of 104,509 hectares.

Strategic overview

Following our Portfolio Review in the second half of 2012, we took the decision to close the marginal heap leach operation at St Ives. Challenges included ageing infrastructure, as well as continued levels of low-grade ore combined with low-recovery levels. Although the mothballing process was initiated in the fourth quarter, full closure will take place in the first half of 2013, depending on the results of the residual leaching programme.

While the removal of the heap leach operations will reduce production by 30,000 ounces to 40,000 ounces per year, it should also contribute to reduced costs and more profitable overall production. In addition, the completion of the transition to ownermining in 2012 means St Ives can expect additional cost reductions to feed-through during 2013 – further enhancing the mine’s ability to support Group cash generation.

Causeway to Invincible at St Ives, Australia
Causeway to Invincible at St Ives, Australia

Performance overview

Gold production decreased by 3% in 2012 to 449,800 ounces (2011: 464,600 ounces). This was largely due to:

  • Increased reliance on lower-grade open pit ore as we carried out further development to open up new underground mining areas at Cave Rocks in the first half of the year
  • Temporary closure of the Leviathan and Mars/Minotaur link high-grade pits due to wall failure in the first quarter
  • A decrease in open pit mining volumes in the third quarter, given the transition to owner-mining
  • The mothballing of the marginal heap leach operation

However, gold production recovered significantly in the fourth quarter, increasing by 5% to 111,600 ounces – reflecting increased throughput of higher grade underground ore. At the underground operations, for example, ore mined increased by 56% to 553,000 tonnes in the fourth quarter, with the Cave Rocks and Hamlet mines continuing to ramp-up towards full production levels.

In 2012, St Ives focused on the transition to full owner-mining at its surface operations. This built on the transition to owner-mining for underground stoping, which was completed in late 2011. During the course of the year, this included a gradual shift from contract- to ownermining in the open pits as elements of our new mining fleet were delivered. The transition to full owner-mining was completed in the fourth quarter, with the passing of drilling and blasting activities to our own teams.

A total of A$54 million (US$56 million) has been spent on the owner-mining programme since it commenced in 2011 – largely on trucks and mobile equipment. The total cost of the mine’s conversion to owner-mining is estimated at A$92 million (US$96 million), with a completion date planned for early 2014. It is expected to significantly reduce open-pit operating costs and has the potential to increase open pit Mineral Reserves by reducing cut-off grades.

Over 2012, net operating costs increased by 3% to A$412 million (US$428 million) – largely due to an increase in mining activity at the higher-cost Cave Rocks underground operation and additional open pit mining.

In 2012, the NCE margin fell to 4% (2011: 19%). Capital expenditure during the year of A$301 million (US$313 million) was focused on:

  • Mine development to extend the life of our existing underground mine at Cave Rocks
  • The purchase of equipment for – and the development of – our Hamlet underground mine
  • Construction of a new tailings storage facility, which was completed in the third quarter
  • Open pit fleet acquisition to support our shift to owner-mining

Near-mine exploration

Our St Ives mine is at the forefront of innovative near-mine exploration thinking and technology, and serves as a centre of excellence within the Group. During the fourth quarter, for example, near-mine drilling at St Ives accounted for approximately 70% of all near-mine drilling carried out at our international operations – with much of this focused on the promising Greater Neptune area.

In addition, a new discovery took place in the third quarter, focused on the new Invincible shallow prospect – including definition of mineralisation over a 1km strike to 200 meters, remaining open along strike and at depth. This represents a significant new exploration search space in the area.

In 2012, we spent A$40 million (US$42 million) on near-mine exploration. This was aimed at ensuring a range of new deposits are in place to fill the longer-term production pipeline.

2013 outlook

Planned production at St Ives is estimated at between 380,000 ounces and 400,000 ounces of gold at a total cash cost of A$930/oz (US$967/oz) and an NCE of A$1,350/oz (US$1,404/oz). This plan assumes:

  • Significantly higher power costs as a result of expiry of the existing power supply agreement – as well as the need to renegotiate a new power agreement
  • Ongoing advancement of open pit owner-mining until final completion in 2014
  • Completion of the heap leach closure process

Key indicators

Figure 1.11: Optimising our operations indicators – St Ives

Category   2012   2011   2010   2009   2008  
        465   468   415   415  
Gold produced – attributable (’000oz)   450
Total cash cost (A$/oz)   899   873   776   816   739  
Notional Cash Expenditure (NCE) (A$/oz)   1,553   1,248   1,064   1,056   1,014  
Gold price (A$/oz)   1,615   1,532   1,336   1,241   1,033  
Operating profit (A$m)   315   312   273   180   116  
Operating costs (A$m)   398   403   376   345   301  
Operating margin (%)   43   44   44   35   27  
NCE margin (%)   4   19   20   15   12  
Fatal Injury Frequency Rate   0   0   0   0   0  
Lost Time Injury Frequency Rate   3.491   2.86   5.03   0.82   1.60  
Energy consumption (TJ)   1,722   1,718   1,805   1,919   1,980  
CO2-e emissions (’000 tonnes) (Scope 1 & 2)   175.0   174.7   183.8   198.1   212.1  
Water withdrawal (million liters)   10,074   10,686   16,309   23,291   22,159  

Figure 1.12: Growing Gold Fields indicators – St Ives

Category   2012   % of Group total  
Attributable Mineral Resources (million oz)   4.72   3  
Attributable Mineral Reserves (million oz)   2.19   3  

Figure 1.13: Securing our future indicators – St Ives

Category   2012   2011   2010   2009   2008  
Total employees   652   466   319   315   271  
Employee wages and benefits (A$m)   69   47   43   36   32  
Total taxation and royalties paid (A$m)   18   18   21   29   16  
SED spend (A$)   146,000   150,000   n/a   n/a   n/a  


1 Excludes restricted work cases – 23.17 if such cases are included