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

4.2 Operation: Damang

Introduction

Damang is located approximately 30km north of our neighbouring Tarkwa mine. It consists of four open pits, as well as surface stockpiles and a Carbon-In-Leach processing plant.

Strategic overview

Our focus is to stabilise production at the mine to between 200,000 ounces and 250,000 ounces per year in the medium- to long-term. Damang has experienced an overall decline in production due to its transition from the mature Damang pit into the developing Huni and Juno pits, which are expected to provide most of the new mining volumes over the next two years.

Nonetheless, we are also seeking opportunities to significantly expand the Damang pit in the medium to long term and harness the value of the mine’s 10 million ounce Mineral Resource. Although the pit (in its current form) is expected to be depleted in approximately two years, significant Mineral Reserve potential exists below the current floor, which is only accessible via a significant cut-back. The viability of the cut-back will be investigated during 2013.

Performance overview

In 2012, managed gold production fell by 24% to 166,400 ounces – compared with 217,700 ounces in 2011. This was due to mining restrictions imposed by ongoing safety concerns in higher-grade parts of the Damang pit – resulting in decreased volumes of high-grade feed ore. These concerns included potential risks around the southern interface between the Juno pit and the Damang pit, as well as deteriorating ground conditions on the east wall.

Additional challenges during the year included:

  • Related-blending constraints, resulting in suboptimal grind and recovery performance
  • Below-capacity plant performance

The impact on production was partially offset, however, by the implementation of an additional work shift in the first quarter to accelerate waste stripping, increase mining volumes, maintain a constant feed to the plant and optimise equipment utilisation.

In addition, we are implementing a significant US$21 million plant upgrade programme (US$8 million to be spent in 2013) to improve reliability, enhance recovery (under current blending conditions), reduce processing costs and ensure the necessary processing capabilities are in place for the likely extension of Damang’s life of mine. The programme, which is expected to be completed in the first half of 2013, includes:

  • Introduction of an intensive leach reactor
  • The addition of an eighth leach tank
  • Introduction of a pre-leach thickener to improve the circuit water balance
  • Upgrading of the gravity circuit
  • Preventative maintenance

Improved processing performance helped stop production declines in the third quarter – and contributed to a 10% production increase in the fourth quarter. Nonetheless, the plant is still processing below its 5 million tonnes per year historical nameplate capacity at 4.4 million tonnes per year – with run rate optimisation reliant on the implementation of mill feed size and crushing rate improvements. These are due to be fully commissioned in the second half of 2013.

Pit at Damang, Ghana
Pit at Damang, Ghana

Net operating costs increased by 9% to US$153 million, primarily due to annual wage increases, general cost inflation and increased power rates – partially offset by the ongoing savings generated by owner-mining initiated in early 2011. For example, owner-mining has produced savings of US$35 million over the course of the year.

The mine’s NCE margin fell to 2% (2011: 33%). Capital expenditure of US$114 million has been focused on pre-stripping, exploration, the acquisition of mining fleet and the upgrading of the processing plant. A high level of pre-stripping is necessary to open up the significant Mineral Reserve potential at the Huni and Juno pits.

Near-mine exploration

In early 2012, drilling focused on the Amoanda open pit, with the aim of adding Mineral Reserves to complement the Damang, Huni and Juno pits.

Near-mine exploration focused on an initial framework drilling programme on high priority targets in the Bonsa Hydrothermal project. This defined highly prospective structural target is similar in style to the main Damang deposit. We are awaiting final assay results to inform the geological interpretation of the results.

2013 outlook

Planned production at Damang is estimated at between 165,000 ounces and 180,000 ounces of gold at a total cash cost of US$1,010/oz and an NCE of US$1,650/oz. This plan assumes:

  • No changes in the current tax regime
  • Debottlenecking of the crusher circuit to restore throughput to 5.2 million tonnes per year by no later than the first half of 2014

During 2013, we plan to advance our concept study for a high-grade cut-back on the Damang pit. This is one of a number of options being examined to optimise the extraction of the ore body.

Key indicators

Figure 4.8: Optimising our operations indicators – Damang

Category 2012   2011   2010   2009   2008  
Gold produced – attributable (’000oz) 149   174   162   144   140  
Total cash cost (US$/oz) 918   701   660   635   629  
Notional Cash Expenditure (NCE) (US$/oz) 1,630   1,056   973   698   783  
Gold price (US$/oz) 1,670   1,565   1,230   963   863  
Operating profit (US$m) 125   201   134   71   45  
Operating costs (US$m) 157   142   146   122   134  
Operating margin (%) 55   59   48   36   26  
NCE margin (%) 2   33   21   28   9  
Fatal Injury Frequency Rate (FIFR) 0.00   0   0   0   0  
Lost Time Injury Frequency Rate (LTIFR) 0.36   0.19   0.64   0.17   0.16  
Energy consumption (TJ) 1,519   1,303   1,046   976   1,122  
CO2 emissions (’000 tonnes) (Scope 1 & 2) 107.3   90.3   63.7   59.8   71.0  
Water withdrawal (million liters) 1,817   5,127   3,011   906   436  

Figure 4.9: Growing Gold Fields indicators – Damang

Category 2012   % of Group total  
Attributable Mineral Resources (million oz) 7.59   4  
Attributable Mineral Reserves (million oz) 3.68   6  

Figure 4.10: Securing our future indicators – Damang

Category

2012

 

2011

 

2010

 

2009

 

2008

 
Total employees 1,132   969   463   411   414  
Employee wages and benefits (US$) 20   17   14   10   9  
Total taxation and royalties paid (US$m) 35   45   39   16   8  
SED spend (US$m) 1   1   n/a   n/a   n/a