South Africa region

KDC

      Sept
2012
  June
2012
 
  Gold produced - 000’oz 238.3   279.6  
    - kg 7,411   8,698  
  Yield - underground - g/t 7.2   7.2  
           - combined - g/t 3.4   3.6  
  Total cash cost - R/kg 297,085   242,596  
    - US$/oz 1,119   936  
  Notional cash expenditure - R/kg 390,163   311,163  
    - US$/oz 1,469   1,201  
  NCE margin - % 10   26  

Gold production decreased by 15 per cent from 279,600 ounces (8,698 kilograms) in the June quarter to 238,300 ounces (7,411 kilograms) in the September quarter. This decrease was as a result of a fire at Ya Rona shaft (formerly Driefontein 4 shaft) which started at the end of the previous quarter and accounted for approximately 30,000 ounces (900 kilograms) lost production during the quarter. The illegal industrial action accounted for a further 35,000 ounces (1,100 kilograms).

Underground tonnes milled decreased from 1.08 million tonnes in the June quarter to 0.88 million tonnes in the September quarter. The underground yield remained constant at 7.2 grams per tonne. Surface tonnes milled decreased from 1.32 million tonnes to 1.28 million tonnes offset by the yield which increased from 0.7 grams per tonne to 0.8 grams per tonne.

Main development decreased by 18 per cent from 11,600 metres to 9,470 metres and on-reef development decreased by 10 per cent from 1,926 metres to 1,724 metres. The average development value decreased from 2,013 centimetre grams per tonne to 1,723 centimetre grams per tonne.

Operating costs increased by 7 per cent from R2,074 million (US$257 million) to R2,221 million (US$270 million). This increase was evenly split between the annual salary increases of between 9 and 10 per cent for the lower and middle category workers, who comprise around 95 per cent of the workforce, and an increase in electricity costs due to two months of higher winter tariffs compared with one month of higher winter tariffs in the June quarter. This increase was partly offset by a reduction in labour costs due to the illegal strike and lower stores costs in line with the decrease in production. Total cash cost for the quarter increased from R242,596 per kilogram (US$936 per ounce) in the June quarter to R297,085 per kilogram (US$1,119 per ounce) in the September quarter. This increase was due to the increase in costs and the decrease in production.

Operating profit decreased from R1,590 million (US$198 million) in the June quarter to R1,009 million (US$121 million) in the September quarter due to the decrease in production.

Capital expenditure increased from R633 million (US$79 million) to R671 million (US$82 million) mainly due to increased expenditure on technical projects, self-rescue pack replacements and tailings storage facilities, partly offset by lower ore reserve development.

Notional cash expenditure increased from R311,163 per kilogram (US$1,201 per ounce) in the June quarter to R390,163 per kilogram (US$1,469 per ounce) in the September quarter as a result of the lower production and increases in operating costs and capital expenditure. The NCE margin decreased from 26 per cent to 10 per cent due to the higher NCE partly offset by the higher gold price.

Even though the strike has been resolved it is expected to take towards the end of November before full production will be restored as the workforce needs to be acclimatised and making safe procedures, such as additional support and destressing the work areas, need to be completed. At this stage we estimate around 116,000 ounces will be lost due to the strike for the year.

With regard to the Ya Rona fire which started on 30 June 2012, preliminary findings regarding necessary improvements, as identified during systems audits conducted at the operations following the incident, have been implemented. These included the review and updating of standards and procedures relating to fire detection and monitoring systems. Following an extensive sealing programme in the affected area, the fire was officially declared extinguished on 14 August and full production has been restored post quarter end.

Beatrix

      Sept
2012
  June
2012
 
  Gold produced - 000’oz 77.6   79.6  
    - kg 2,415   2,477  
  Yield - underground - g/t 4.2   4.4  
           - combined - g/t 2.7   2.8  
  Total cash cost - R/kg 297,019   273,436  
    - US$/oz 1,118   1,055  
  Notional cash expenditure - R/kg 368,654   347,679  
    - US$/oz 1,388   1,342  
  NCE margin - % 16   18  

Gold production decreased by 3 per cent from 79,600 ounces (2,477 kilograms) in the June quarter to 77,600 ounces (2,415 kilograms) in the September quarter. This was mainly due to a decrease in underground mining grade because of the lower grade areas currently being mined at the North section, which contributes over half of the volume mined.

Underground tonnes milled increased from 543,000 tonnes to 551,000 tonnes, and surface tonnes milled decreased from 351,000 tonnes to 328,000 tonnes. Surface yield was unchanged at 0.3 grams per tonne quarter on quarter.

Main development decreased from 6,117 metres in the June quarter to 4,985 metres in the September quarter and on-reef development decreased from 1,606 metres to 994 metres. The decrease in development metres was incurred as a result of safety related stoppages and the embedding of the new communication system at the North Section to improve safety. The weighted average value of the main reef development decreased from 1,076 centimetre grams per tonne to 998 centimetre grams per tonne as a consequence of the grade variability of the areas being developed.

Operating costs increased from R673 million (US$84 million) to R715 million (US$87 million). This was mainly due to annual wage increases, an increase in underground support and two months of winter electricity tariffs compared with one month in the June quarter. Total cash cost increased from R273,436 per kilogram (US$1,055 per ounce) to R297,019 per kilogram (US$1,118 per ounce).

Operating profit decreased from R374 million (US$46 million) in the June quarter to R341 million (US$41 million) in the September quarter due to the higher operating costs.

Capital expenditure decreased from R188 million (US$23 million) to R176 million (US$21 million). The majority of the capital expenditure was on infrastructure upgrades and ore reserve development.

Notional cash expenditure increased from R347,679 per kilogram (US$1,342 per ounce) to R368,654 per kilogram (US$1,388 per ounce) due to the higher operating costs. The NCE margin decreased from 18 per cent to 16 per cent mainly due to the higher NCE partly offset by the higher gold price.

There was a minimal effect on production in the September quarter stemming from the illegal strike by 9,000 employees as from 21 September. The strike started on the West section (formerly Oryx mine) and spread to the rest of the mine on 24 September. The full complement of strikers returned to work on 18 October after an ultimatum given by management on 16 October. At this stage it is estimated that lost production amounted to around 29,000 ounces, which will be accounted for in the December quarter.

South Deep project

      Sept
2012
  June
2012
 
  Gold produced - 000’oz 71.3   77.8  
    - kg 2,217   2,420  
  Yield - underground - g/t 5.5   5.8  
           - combined - g/t 3.8   4.5  
  Total cash cost - R/kg 292,377   244,215  
    - US$/oz 1,101   942  
  Notional cash expenditure - R/kg 577,492   512,934  
    - US$/oz 2,175   1,979  
  NCE margin - % (33)   (21)  

Gold production decreased by 8 per cent from 77,800 ounces (2,420 kilograms) in the June quarter to 71,300 ounces (2,217 kilograms) in the September quarter due to a decrease in underground reef delivered to the mill at slightly lower grades.

Total tonnes milled, which included 187,000 tonnes of planned off-reef development, increased from 539,000 tonnes to 590,000 tonnes. Underground reef yield decreased from 5.8 grams per tonne to 5.5 grams per tonne, mainly due to reduced volumes from the high grade long-hole stope mining at 95 3West.

Development increased from 2,952 metres in the June quarter to 3,647 metres in the September quarter mainly due to an increase in off-reef development at 95 3West. The new mine capital development in phase 1, sub 95 level, increased from 887 metres to 1,042 metres and vertical development increased from 57 metres to 108 metres. Development in the current mine areas above 95 level increased from 2,008 metres to 2,497 metres. De-stress mining increased by 3 per cent from 11,851 square metres in the June quarter to 12,213 square metres in the September quarter.

Operating costs increased from R599 million (US$74 million) in the June quarter to R656 million (US$80 million) in the September quarter, mainly due to the annual salary increases, two months of winter electricity tariffs and an increase in stores cost due to the increase in underground mining volumes. Total cash cost increased from R244,215 per kilogram (US$942 per ounce) to R292,377 per kilogram (US$1,101 per ounce) due to the decrease in gold production and the increase in operating cost.

Operating profit decreased from R425 million (US$53 million) in the June quarter to R309 million (US$37 million) in the September quarter as a result of the lower revenue and the increase in operating costs.

Capital expenditure decreased from R643 million (US$80 million) to R624 million (US$76 million). The majority of the expenditure was spent on development, the ventilation shaft deepening and infrastructure, the metallurgical plant expansion, trackless equipment and the full tailings backfill plant.

Notional cash expenditure increased from R512,934 per kilogram (US$1,979 per ounce) in the June quarter to R577,492 per kilogram (US$2,175 per ounce) in the September quarter as a result of the decrease in production and increase in operating cost, partly offset by the decrease in capital expenditure. The NCE margin regressed from a negative 21 per cent to a negative 33 per cent as a result of a higher NCE partly offset by the higher gold price received.

Capital infrastructure programmes continue to meet key delivery dates in support of the build-up to a run-rate of 700,000 ounces per annum by the end of 2015. The ventilation shaft deepening project remains on track for commissioning in the December 2012 quarter and the additional rock hoisting is expected to build to a nameplate capacity of 195,000 tonnes per month by December 2013. This, together with the existing Main shaft capacity of 175,000 tonnes per month, is expected to be adequate to sustain the full production of 330,000 tonnes per month. This capacity will be available two years ahead of full production. The gold plant expansion from 220,000 tonnes per month to 330,000 tonnes per month is under final construction, with commissioning planned before the end of the year, three years ahead of full production.