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

4.3 Operation: Tarkwa

Introduction

Our Tarkwa mine consists of six open pits, two heap leach facilities (of which one was subsequently closed) and a Carbon-In-Leach (CIL) plant. The operation is currently focused on surface mining multiple reef horizons, with potential for underground mining in the future.

Strategic overview

Tarkwa is a stable, world-class mine – and accounts for the largest volume of production within the new Gold Fields portfolio at a relatively high NCE margin of 37%. As such, it plays a key role in supporting cash flow generation within the Group.

Performance overview

Managed gold production remained steady at 718,800 ounces – compared with 717,300 ounces in 2011.

During the second quarter of 2012, we commissioned a secondary crusher at the CIL plant – with ramp-up to its full run-rate taking place over the rest of the year. This has achieved a 5% improvement in the milling rate to one million tonnes per month since January 2013. This helped us offset some of the production lost as a result of the temporary suspension of heap leach operations in July and August (see below).

Over the course of the year, we also laid the ground for higher future mining volumes through the expansion of our load and haul fleet. This is expected to increase annual mining volumes by as much as 10% – whilst also allowing us to accelerate waste stripping to improve mine flexibility.

During the third quarter, a directive from the Environmental Protection Agency (EPA) instructed Tarkwa to stop the discharge of water from the North and South Heap Leach facilities, pending the installation of water treatment plants to reduce conductivity (i.e. the amount of non-toxic dissolved salts in discharged water). The heap leach facilities typically contribute around 20% of Tarkwa’s production.

In the spirit of environmental best practice and stewardship, we stopped the operations on 16 July and committed to installing new water treatment plants at both facilities. Both facilities reopened on 9 August with the approval of the EPA – following a loss in production of around 15,000 ounces. The North Heap Leach water treatment plant was officially opened on 1 January 2013 with ramped up capacity expected by the end of the first quarter in 2013. The South Heap Leach water treatment facility is scheduled to be operational by the end of the first quarter in 2013, to capture any residual run-off in line with the closure plan.

Net operating costs at Tarkwa increased by 27% to US$470 million (2011: US$371 million). This reflected annual wage increases, general cost inflation, higher fuel costs and an increase in power rates – as well as a reassessment of the carrying value of gold-in-process inventories in 2011.

During the fourth quarter – and as part of Gold Fields broader Portfolio Review – we took the decision to stop production at the marginal and high cost South Heap leach operation, though we continue to perculate residual cyanide through the heap. This reflects Gold Fields strategic focus on cash generation and the depletion of Tarkwa’s low-grade ore stockpiles. Although this will contribute to a decline in output of around 40,000 ounces per year, the closure will eliminate higher cost production and reduce the mine footprint.

The NCE margin held steady at 37% (2011: 42%). Capital expenditure of US$260 million was focused on the acquisition of additional mobile equipment and vehicles, increased stripping to improve flexibility, commissioning of the secondary CIL crusher and the construction of water treatment facilities for the heap leach operations.

Near-mine exploration

No significant near-mine exploration took place at Tarkwa during 2012.

2013 outlook

Planned production at Tarkwa is estimated at between 640,000 ounces and 650,000 ounces of gold at a total cash cost of US$785/oz and an NCE of US$1,190/oz. This plan assumes the closure of the South Heap Leach operation, which produced 51,000 ounces of gold in 2012.

In line with our Group strategy of focusing on low risk, near-mine growth opportunities – we are continuing to investigate the Tarkwa Expansion Phase 6 (TEP6) project, which would see the replacement or partial replacement of all heap leach operations at Tarkwa, with either the expansion of the current processing plant or the construction of a new, additional CIL plant. This would offer considerably higher rates of recovery, helping us optimise utilisation of available high-grade ore sources and increase overall production.

Key indicators

Figure 4.11: Optimising our operations indicators – Tarkwa

Category 2012   2011   2010   2009   2008  
Gold produced – attributable (‘000oz) 647   576   523   473   447  
Total cash cost (US$/oz) 673   556   573   488   494  
Notional Cash Expenditure (NCE) (US$/oz) 1,049   913   831   719   926  
Gold price (US$/oz) 1,668   1,565   1,223   966   863  
Operating profit (US$m) 729   752   480   320   231  
Operating costs (US$m) 494   436   416   342   324  
Operating margin (%) 61   67   53   50   43  
NCE margin (%) 37   42   32   26   (7)  
Fatal Injury Frequency Rate (FIFR) 0.00   0.05   0   0   0  
Lost Time Injury Frequency Rate (LTIFR) 0.15   0.21   0.43   0.13   0.31  
Energy consumption (TJ) 3,982   3,853   3,743   3,397   3,130  
CO2 emissions (’000 tonnes) (Scope 1 & 2) 283.6   270.5   246.7   225.2   215.2  
Water withdrawal (million liters) 3,560   3,684   4,610   6,023   4,528  

Figure 4.12: Growing Gold Fields indicators – Tarkwa

Category 2012   % of Group total  
Attributable Mineral Resources (million oz) 13.11   7  
Attributable Mineral Reserves (million oz) 9.07   14  

Figure 4.13: Securing our future indicators – Tarkwa

Category 2012   2011   2010   2009   2008  
Total employees 2,769   2,575   2,073   1,917   1,748  
Employee wages and benefits (US$) 64   55   45   36   32  
Total taxation and royalties paid (US$m) 199   202   110   31   37  
SED spend (US$) 2   3   n/a   n/a   n/a