South Africa region

South Deep Project

Gold production increased by 7 per cent from 1,129 kilograms (36,300 ounces) in the March quarter to 1,203 kilograms (38,700 ounces) in the June quarter, despite the negative effect of the fatal accident in May.

Total tonnes milled increased by 14 per cent from 262,000 tonnes in the March quarter to 298,000 tonnes in the June quarter. Total tonnes milled in the June quarter included 2,500 tonnes of underground waste mined and 26,600 tonnes of surface tailings material compared with 6,200 tonnes of underground waste mined and 31,700 tonnes of surface tailings material in the March quarter. The treatment of the surface material continued to sustain the backfill requirements in both current workings and historical open stopes. Underground reef yield decreased by 10 per cent from 5.01 grams per tonne to 4.49 grams per tonne due to lower recovery from the high grade 3W mining area as a result of unplanned dilution of the long hole stopes in 95 3W (the causes of which have since been remediated) and an increase in gold- in-process in the June quarter due to operational delays in the electrowinning process at month end.

Development increased by 13 per cent from 834 metres in the March quarter to 939 metres in the June quarter. New mine capital development (phase one, sub 95 level) recommenced in May and 83 metres were achieved for the June quarter. Development in the current mine areas in 95 level and above increased from 834 metres to 856 metres. Destress mining decreased from 7,563 square metres in the March quarter to 6,056 square metres in the June quarter. The decline in destress mining is attributed to a reduction in face availability due to more rigid application of spatial compliance and immature destress cuts (number of ends will increase as destress cuts mature).

During the June quarter, the current mine (95 level and above) contributed 77 per cent of the ore tonnes while the new mine (below 95 level) contributed 23 per cent. The long-hole stoping method accounted for 37 per cent of total ore tonnes mined. The proportion of long hole stoping is expected to increase significantly over the balance of the year.

Operating costs increased by 11 per cent from R634 million (US$54 million) in the March quarter to R705 million (US$59 million) in the June quarter, mainly due to the higher production and annual salary increases effective 1 April 2015. In addition, electricity costs increased as a result of the 12.7 per cent annual increase effective 1 April 2015 and the inclusion of one month of higher winter tariff (30 per cent higher) in the June quarter.

The operating loss of R148 million (US$12 million) in the June quarter compared with R118 million (US$10 million) in the March quarter mainly due to higher operating costs, partially offset by higher revenue.

Capital expenditure decreased from R219 million (US$19 million) in the March quarter to R200 million (US$17 million) in the June quarter as a result of lower spending on fleet, partially offset by additional spending to upgrade the Twin Main Shaft man and rock winders.

All-in sustaining costs increased from R726,648 per kilogram (US$1,929 per ounce) in the March quarter to R734,784 per kilogram (US$1,895 per ounce) in the June quarter due to the higher operating costs, partially offset by lower sustaining capital expenditure and higher gold sold.

Total all-in cost decreased from R774,335 per kilogram (US$2,055 per ounce) in the March quarter to R769,847 per kilogram (US$1,986 per ounce) in the June quarter due to lower sustaining and non-sustaining capital expenditure as well as higher gold sold, partially offset by higher operating costs.

Sustaining capital expenditure decreased from R165 million (US$14 million) in the March quarter to R157 million (US$13 million) in the June quarter and non-sustaining capital expenditure decreased from R54 million (US$5 million) in the March quarter to R43 million (US$4 million) in the June quarter.

The following remedial strategies are expected to improve destress mining volumes during the second half of 2015:

Face availability

A number of the new destress cuts are expected to mature during the September and December 2015 quarters. This is planned to result in an increase in face (panel) availability. Significant effort is being exerted to improve spatial compliance (correct sequence of mining) through the integration of the mining and short term mining planning teams.

Low profile (LP) drill rig fleet

The introduction of 4 new LP LHD’s and 6 new LP drill rigs in addition to the existing 19 LP LHD’s (including 4 swing units) and 12 LP drill rigs (including 4 swing units).

Primary support installation

The installation of primary support remains a constraint in the destress mining cycle. In the short term, 8 additional support crews have been employed to increase current support installation in addition to the existing 8 support crews. Further, mechanised support installation methods are being investigated. Low profile mechanised bolters are planned to be trialled from the end of August 2015 to further improve the blasting cycle from one panel per shift to two panels per shift.