Group attributable equivalent gold
production increased by 4 per cent to 557koz
(Q2 2015: 535koz), with most operations
producing more gold in the September
quarter. Encouragingly, all-in sustaining
costs (AISC) decreased by 8 per cent to
US$948/oz (Q2 2015: US$1,029/oz) and
total all-in cost (AIC) decreased by 9 per cent
to US$961/oz (Q3 2015: US$1,059/oz). In
addition to the increase in production,
weaker currencies and the lower oil price are
favourably impacting costs. The Group
realised a FCF margin of 11 per cent at a
gold price of US$1,103/oz in Q3 2015,
compared with 9 per cent at a gold price of
US$1,174/oz in the June quarter.
We are pleased to report that our ongoing
efforts to improve safety allowed us to
achieve a fatality free quarter.
As the gold price continues to languish, we
constantly review our portfolio. While the
weaker currencies offer some respite in most
regions, Ghana is fully exposed to further
declines in the US$ gold price. In particular,
Damang is challenged in the current
environment and as such, we are considering
various options for Damang which include a
recapitalisation of the mine to expose the
higher grade ore or whether it would be more
appropriate to preserve the inherent value of
Damang until gold prices recover. We should
be in a position to announce a decision in early
2016.
Better quarter at South Deep
South Deep delivered a much improved
quarter in Q3 2015, with gold production up 42
per cent to 54.9koz (1,709kg), driven by a 30
per cent increase in tonnes milled and a 13 per
cent increase in underground yield.
As previously reported, we reviewed the
destress mining method in collaboration with a
team of leading international and local
geotechnical experts. A strategic mine design
change in the destress methodology was
adopted with a detailed transition programme
developed to guide the change process. The
conversion from low profile (2.5m vertical
height) to high profile (5.0m vertical height)
destress mining commenced in the quarter and
is expected to simplify and derisk the mining
process. The transition to high profile destress
is expected to continue until the early part of
2017.
At the end of Q2 2015, we undertook to provide an update on the leading indicators, in order to track progress being made at South Deep. Progress was made on a number of important activities at the mine during Q3 2015:
| • |
The cash outflow came down from R330 million (US$27 million) in
the June quarter to R266 million (US$20 million) in the September
quarter. |
| • |
Development increased 58 per cent from 939 metres in the June
quarter to 1,486 metres in the September quarter. Included in this
was 347 metres of new mine capital development (phase one, sub
95 level), which increased from 83 metres in the June quarter. |
| • |
Destress mining increased 57 per cent from 6,056 square metres in
the June quarter to 9,523 square metres in the September quarter.
The increase in destress mining is attributed to the commissioning
of new low profile fleet, improved mining cycles and the introduction
of dedicated supervision per activity per corridor. |
| • |
Total reef tonnes broken increased 37 per cent to 333kt. Longhole
stoping accounted for 40 per cent of total ore tonnes mined,
compared with 37 per cent in the June quarter. |
| • |
Secondary support improved by 14 per cent during the quarter to
1,584 metres, while backfill cubes increased by 42 per cent from 79
cubic metres in the June 2015 quarter to 113 cubic metres in the
September quarter. Both secondary support and backfill are crucial
to providing improved mining flexibility. |
| • |
As at the end of the September quarter, 87 per cent of the critical
skill positions of 164 personnel identified had been filled. |
| • |
A total of 20 out of the 27 new category 1 equipment purchased
during the year had been commissioned by the end of the
September quarter. The balance of 7 category 1 units are expected
to be commissioned by the end of the 2015 year. |
Production for the full year is expected to be between 5,900kg (190koz)
and 6,000kg (193koz), with H2 2015 being up around 50 per cent on H1
2015. We expect 2016 production to be significantly better than 2015.
Australia
Gold production at the Australian operations increased by 6 per cent to
249koz (Q2 2015: 235koz). AIC for the region decreased by 9 per cent
to A$1,173/oz (Q2 2015: A$1,288/oz). In US$ terms, costs were 15 per
cent lower at US$859/oz (Q2 2015: US$1,008/oz). Net cash flow
generated from the region was US$64 million compared with US$40
million in the June 2015 quarter.
Production at St Ives was 6 per cent lower mainly due to a drawdown of
gold-in-circuit in the June quarter. Despite challenging ground conditions
at Waroonga, production at Agnew/Lawlers increased by 7 per cent
driven by higher grades. Darlot had a good quarter, with production
increasing by 46 per cent as a result of the higher grades mined at Lords
South Lower, and as a consequence, returned strong cash positive
results. Granny Smith continued its strong performance with production
up by 10 per cent.
Ghana
Attributable gold production at the West African operations decreased
as anticipated by 2 per cent to 174koz (Q2 2015: 178koz), driven by
lower production at Tarkwa due to lower grades mined. Damang had an
improved quarter with production up by 7 per cent on higher volumes
and grade. Despite the lower production, the region reported a 7 per
cent decrease in AIC to US$962/oz (Q2 2015: US$1,029/oz), with net
cash flow for the quarter of US$32 million. The exceptional quality of
Tarkwa was again highlighted in the quarter, with the mine producing
150koz, at AIC of US$872/oz.
Peru
Attributable equivalent gold production at Cerro Corona decreased by 5
per cent to 78.8koz (Q2 2015: 83.2koz), mainly due lower gold and
copper head grades. Consequently, AIC per equivalent ounce increased
by 10 per cent to US$731/oz (Q2 2015: US$662/oz).
FY15 guidance
We expect our FY15 production to be within 1 per cent to 2 per cent of
previous guidance. However, costs are expected to be better than
previously guided at around US$1,035 per ounce for AISC and
US$1,055 per ounce for AIC.
Mining Phakisa
We commend the South African government for arranging and leading
the Mining Phakisa that is currently underway. We fully support the
initiative and believe that constructive dialogue between the various
stakeholders in the industry can only yield positive results.
