for the six months ended 30 June 2023
COMMENTARY Review of Operations
Six months ended 30 June 2023 compared with six months ended 30 June 2022
Figures may not add as they are rounded independently.
Australia region
| June 2023 |
June 2022 |
% Variance |
||
| Gold production | 000’oz | 509.3 | 527.4 | (3) % |
|---|---|---|---|---|
| AISC | A$/oz | 1,729 | 1,554 | 11 % |
| US$/oz | 1,169 | 1,117 | 5 % | |
| AIC | A$/oz | 1,879 | 1,685 | 12 % |
| US$/oz | 1,270 | 1,211 | 5 % | |
| Adjusted free cash flow* | A$m | 293.1 | 326.6 | (10) % |
| US$m | 198.1 | 234.8 | (16) % | |
| * | Includes Australia consolidated tax paid and working capital movements of A$112.9m (US$75.9m) in H1 2023 and A$209.1m (US$150.2m) in H1 2022, respectively |
Gold production decreased by 3% to 509koz for the six months ended 30 June 2023 from 527koz for the six months ended 30 June 2022 with lower production from Granny Smith, St Ives and Agnew for H1 2023 when compared to the comparative period in H1 2022. AIC increased by 12% to A$1,879/oz (US$1,270/oz) for the six months ended 30 June 2023 from A$1,685/oz (US$1,211/oz) for the six months ended 30 June 2022 mainly due to inflationary pressures.
The region produced adjusted free cash flow of A$293m (US$198m) for the six months ended 30 June 2023 compared with A$327m (US$235m) for the six months ended 30 June 2022.
Gruyere
| June 2023 |
June 2022 |
% Variance |
||
| Mine physicals in table on a 100% basis | ||||
| Ore mined | 000 tonnes | 4,180 | 5,309 | (21) % |
|---|---|---|---|---|
| Waste (capital) | 000 tonnes | 8,068 | 10,498 | (23) % |
| Waste (operational) | 000 tonnes | 3,354 | 3,799 | (12) % |
| Total waste mined | 000 tonnes | 11,422 | 14,297 | (20) % |
| Total tonnes mined | 000 tonnes | 15,602 | 19,606 | (20) % |
| Grade mined | g/t | 1.21 | 1.14 | 6 % |
| Gold mined | 000’oz | 163.1 | 193.9 | (16) % |
| Strip ratio | waste/ore | 2.7 | 2.7 | – % |
| Tonnes milled | 000 tonnes | 4,791 | 4,554 | 5 % |
| Yield | g/t | 1.03 | 1.07 | (4) % |
| Gold produced | 000’oz | 158.7 | 156.8 | 1 % |
| Gold sold | 000’oz | 160.1 | 159.2 | 1 % |
| AISC | A$/oz | 1,616 | 1,345 | 20 % |
| US$/oz | 1,092 | 967 | 13 % | |
| AIC | A$/oz | 1,648 | 1,348 | 22 % |
| US$/oz | 1,114 | 969 | 15 % | |
| Sustaining capital expenditure | A$m | 26.7 | 22.1 | 21 % |
| – 50% basis | US$m | 18.0 | 15.9 | 13 % |
| Non-sustaining capital expenditure | A$m | – | – | – % |
| – 50% basis | US$m | – | – | – % |
| Total capital expenditure | A$m | 26.7 | 22.1 | 21 % |
| – 50% basis | US$m | 18.0 | 15.9 | 13 % |
| Adjusted pre-tax free | A$m | 89.3 | 86.7 | 3 % |
| cash flow | US$m | 60.4 | 62.3 | (3) % |
Gold production increased by 1% to 158,700oz for the six months ended 30 June 2023 from 156,800oz for the six months ended 30 June 2022 due to increased ore processed.
Total tonnes mined were down 20% to 15.60Mt for the six months ended 30 June 2023 from 19.61Mt for the six months ended 30 June 2022 with lower reliability and utilisation of the production drills, lower availability of blasting resources and a significant rain event negatively impacting ore and waste mining. The lower ore tonnes mined resulted in a draw-down of low-grade stockpiles to supplement the mill feed. A recovery plan will be implemented in H2 2023 which includes the deployment of new drill rigs and additional mining fleet to claw back some of the deficit in tonnes mined during H1 2023.
Ore tonnes mined decreased by 21% to 4.18Mt for the six months ended 30 June 2023 from 5.31Mt for the six months ended 30 June 2022 and operational waste tonnes mined decreased by 12% to 3.35Mt for the six months ended 30 June 2023 from 3.80Mt for the six months ended 30 June 2022 for the reasons detailed above as well as by decreased activity in stage 2 of the Gruyere pit.
Capital waste tonnes mined decreased by 23% to 8.07Mt for the six months ended 30 June 2023 from 10.50Mt for the six months ended 30 June 2022 for the reasons detailed above as well as the completion of pre-stripping stage 3 of the Gruyere pit during 2022.
As a result of the 21% decrease in ore mined partially offset by a 6% increase in grade mined to 1.21 g/t for the six months ended 30 June 2023 from 1.14 g/t for the six months ended 30 June 2022, gold mined decreased by 16% to 163,100oz for the six months ended 30 June 2023 from 193,900oz for the six months ended 30 June 2022.
Ore processed from ex-pit was 4.2 Mt at 1.21 g/t and ore processed from stockpiles was 0.6 Mt at 0.86 g/t for the six months ending June 2023. This is compared to ore processed from ex-pit of 4.6 Mt at 1.20 g/t and no stockpile ore during the six month period ending 30 June 2022.
AIC increased by 21% to A$1,648/oz (US$1,114/oz) for the six months ended 30 June 2023 from A$1,348/oz (US$969/oz) for the six months ended 30 June 2022 due to increased capital expenditure and higher cost of sales before amortisation and depreciation.
Cost of sales before amortisation and depreciation (on a 50% basis) increased by 21% to A$86m (US$58m) for the six months ended 30 June 2023 from A$71m (US$51m) for the six months ended 30 June 2022 due to a 4% increase in cost of sales before gold inventory change and amortisation and depreciation (on a 50% basis)for the six months ended 30 June 2023as well as a gold inventory charge to cost (on a 50% basis) of A$4m (US$3m) for the six months ended 30 June 2023 compared to a gold inventory credit to cost of A$9m (US$6m) for the six months ended 30 June 2022.
Cost of sales before gold inventory change and amortisation and depreciation (on a 50% basis) increased by 4% to A$82m (US$56m) for the six months ended 30 June 2023 from A$79m (US$57m) for the six months ended 30 June 2022 mainly due inflationary pressures on commodity inputs and employee and contractor costs which resulted in higher production costs, partially offset by lower operational tonnes mined.
Gold inventory charge to cost (on a 50% basis) of A$4m (US$3m) for the six months ended 30 June 2023 compared to a gold inventory credit to cost of A$9m (US$6m) for the six months ended 30 June 2022 with ore tonnes mined lower than tonnes processed with the mill supplemented with a subsequent draw down of stockpiles for the six months ended 30 June 2023 compared to higher ore tonnes mined than tonnes processed for the six months ended 30 June 2022.
Capital expenditure (on a 50% basis) increased by 21% to A$27m (US$18m) for the six months ended 30 June 2023 from A$22m (US$16m) for the six months ended 30 June 2022, with A$7m (US$5m) spent on a third pebble crusher to maintain plant throughput as Gruyere depletes its stocks of oxide ore.
Gruyere generated adjusted pre-tax free cash flow (on a 50% basis) of A$89m (US$60m) for the six months ended 30 June 2023 compared with A$87m (US$62m) for the six months ended 30 June 2022.
Guidance 2023
The impact of reduced mining volumes in the first six months of the year combined with higher production costs as a result of inflationary increases, partially offset by a lower capital expenditure forecast have made it necessary to update the original guidance of Gruyere to the following:
- Gold produced ~ 160,000oz – 175,000 (50%), (original guidance 170,000oz – 185,000oz (50%));
- AISC ~ A$1,695/oz (US$1,136/oz), (original guidance A$1,665/oz (US$1,170/oz); and
- Total AIC ~ A$1,710/oz (US$1,146/oz), original guidance A$1,685/oz (US$1,180/oz).
Granny Smith
| June 2023 |
June 2022 |
% Variance |
||
| Underground ore mined | 000 tonnes | 858 | 804 | 7 % |
|---|---|---|---|---|
| Underground waste mined | 000 tonnes | 197 | 349 | (44) % |
| Total tonnes mined | 000 tonnes | 1,055 | 1,153 | (8) % |
| Grade mined – underground | g/t | 5.17 | 5.85 | (12) % |
| Gold mined | 000’oz | 142.7 | 151.1 | (6) % |
| Tonnes milled | 000 tonnes | 860 | 777 | 11 % |
| Yield | g/t | 4.85 | 5.54 | (12) % |
| Gold produced | 000’oz | 134.1 | 138.3 | (3) % |
| Gold sold | 000’oz | 134.4 | 138.3 | (3) % |
| AISC | A$/oz | 1,719 | 1,456 | 18 % |
| US$/oz | 1,161 | 1,047 | 11 % | |
| AIC | A$/oz | 1,913 | 1,663 | 15 % |
| US$/oz | 1,293 | 1,196 | 8 % | |
| Sustaining capital expenditure | A$m | 39.1 | 33.5 | 17 % |
| US$m | 26.4 | 24.0 | 10 % | |
| Non-sustaining capital expenditure | A$m | 23.4 | 24.2 | (3) % |
| US$m | 15.8 | 17.4 | (9) % | |
| Total capital expenditure | A$m | 62.5 | 57.7 | 8 % |
| US$m | 42.2 | 41.4 | 2 % | |
| Adjusted pre-tax free cash flow | A$m | 96.6 | 141.9 | (32) % |
| US$m | 65.3 | 102.0 | (36) % | |
Gold production decreased by 3% to 134,100oz for the six months ended 30 June 2023 from 138,300oz for the six months ended 30 June 2022 mainly due to lower grade of ore mined and processed.
Underground waste mined decreased by 44% to 197,000t for the six months ended 30 June 2023 from 349,000t for the six months ended 30 June 2022 with 1,455 metres advanced in development of the second decline for the six months ended 30 June 2022. The second decline was completed by the end of 2022 with no metres developed relating to this project in 2023.
Grade mined decreased by 12% to 5.17 g/t for the six months ended 30 June 2023 from 5.85 g/t for the six months ended 30 June 2022 due to lower grades mined from the Z100, Z110 and Z120 areas in line with the mining sequence. The decrease in grade was partially offset by a 7% increase in ore mined from 804,000t for the six months ended 30 June 2022 to 858,000t for the six months ended 30 June 2023 resulting in gold mined decreasing by 6% to 142,700oz for the six months ended 30 June 2023 from 151,100oz for the six months ended 30 June 2022.
Tonnes milled increased by 11% to 860,000t for the six months ended 30 June 2023 from 777,000t for the six months ended 30 June 2022 on the back of increased ore availability.
Yield decreased as planned by 12% to 4.85 g/t for the six months ended 30 June 2023 from 5.54 g/t for the six months ended 30 June 2022 due to lower grade of ore mined and processed.
AIC increased by 15% to A$1,913/oz (US$1,293/oz) for the six months ended 30 June 2023 from A$1,663/oz (US$1,196/oz) for the six months ended 30 June 2022 due to higher cost of sales before amortisation and depreciation, higher capital expenditure and lower gold sold.
Cost of sales before amortisation and depreciation increased by 12% to A$166m (US$112m) for the six months ended 30 June 2023 from A$147m (US$106m) for the six months ended 30 June 2022 mainly due to a 11% increase in cost of sales before gold inventory change and amortisation and depreciation for the six months ended 30 June 2023.
Cost of sales before gold inventory change and amortisation and depreciation increased by 11% to A$166m (US$113m) for the six months ended 30 June 2023 from A$150m (US$108m) for the six months ended 30 June 2022 mainly due to inflationary pressures on commodity inputs and employee and contractor costs which resulted in higher cost of sales before gold inventory change and amortisation and depreciation combined with structural increases in costs related to additional support and paste fill due to increase in depth at the Wallaby underground mine.
Gold inventory credit to cost of A$1m (US$0m) for the six months ended 30 June 2023 compared to a gold inventory credit to cost of A$4m (US$3m) for the six months ended 30 June 2022.
Capital expenditure increased by 8% to A$63m (US$42m) for the six months ended 30 June 2023 from A$58m (US$41m) for the six months ended 30 June 2022.
Sustaining capital expenditure increased by 17% to A$39m (US$26m) for the six months ended 30 June 2023 from A$34m (US$24m) for the six months ended 30 June 2022 due to expenditure on the underground workshop facility and mobile equipment purchases.
Non-sustaining capital expenditure decreased by 3% to A$23m (US$16m) for the six months ended 30 June 2023 from A$24m (US$17m) for the six months ended 30 June 2022.
Granny Smith generated adjusted pre-tax free cash flow of A$97m (US$65m) for the six months ended 30 June 2023 compared with A$142m (US$102m) for the six months ended 30 June 2022. The reduction in pretax free cash flow for the six months ended 30 June 2023 is due to an unfavourable working capital movement of A$41m (US$28m) which was predominantly caused by a cash inflow of A$16m (US$11m) in 2022 related to the final gold sale of 2021, combined with a receivable of A$12m (US$8m) in 2023 related to the final gold sale in June 2023. Cost of sales before amortisation and depreciation as well as capital expenditure were also higher for the six months ended 30 June 2023 as mentioned above.
Guidance 2023
The impact of higher production costs as a result of inflationary increases has made it necessary to update the original guidance of Granny Smith to the following:
- Gold produced ~ 272,000oz (unchanged);
- AISC ~ A$1,630/oz (US$1,145/oz) (unchanged); and
- Total AIC ~ A$1,820/oz (US$1,219/oz), original guidance A$1,760/oz (US$1,235/oz).
St Ives
| June 2023 |
June 2022 |
% Variance |
||
| Underground | ||||
| Ore mined | 000 tonnes | 879 | 801 | 10 % |
| Waste mined | 000 tonnes | 319 | 420 | (24) % |
| Total tonnes mined | 000 tonnes | 1,198 | 1,221 | (2) % |
| Grade mined | g/t | 4.92 | 5.04 | (2) % |
| Gold mined | 000’oz | 139.0 | 130.0 | 7 % |
| Surface | ||||
| Ore mined | 000 tonnes | 1,244 | 201 | 519 % |
| Surface waste (capital) | 000 tonnes | 1,490 | 7,084 | (79) % |
| Surface waste (operational) | 000 tonnes | 730 | – | – % |
| Total waste mined | 000 tonnes | 2,220 | 7,084 | (69) % |
| Total tonnes mined | 000 tonnes | 3,464 | 7,285 | (52) % |
| Grade mined | g/t | 1.66 | 1.08 | 54 % |
| Gold mined | 000’oz | 66.3 | 7.0 | 847 % |
| Strip ratio | waste/ore | 1.8 | 35.2 | (95) % |
| Total (underground and surface) | ||||
| Total ore mined | 000 tonnes | 2,123 | 1,002 | 112 % |
| Total grade mined | g/t | 3.01 | 4.25 | (29) % |
| Total tonnes mined | 000 tonnes | 4,662 | 8,506 | (45) % |
| Total gold mined | 000’oz | 205.3 | 137.0 | 50 % |
| Tonnes milled | 000 tonnes | 2,059 | 2,041 | 1 % |
| Yield – underground | g/t | 4.62 | 5.05 | (9) % |
| – surface | g/t | 1.48 | 1.11 | 33 % |
| – combined | g/t | 2.78 | 2.90 | (4) % |
| Gold produced | 000’oz | 184.2 | 190.3 | (3) % |
| Gold sold | 000’oz | 187.1 | 191.7 | (2) % |
| AISC | A$/oz | 1,723 | 1,649 | 4 % |
| US$/oz | 1,165 | 1,185 | (2) % | |
| AIC | A$/oz | 1,858 | 1,715 | 8 % |
| US$/oz | 1,256 | 1,233 | 2 % | |
| Sustaining capital expenditure | A$m | 58.3 | 76.9 | (24) % |
| US$m | 39.4 | 55.3 | (29) % | |
| Non-sustaining capital expenditure | A$m | 13.4 | 5.6 | 139 % |
| US$m | 9.1 | 4.0 | 128 % | |
| Total capital expenditure | A$m | 71.7 | 82.5 | (13) % |
| US$m | 48.5 | 59.3 | (18) % | |
| Adjusted pre-tax free cash flow | A$m | 133.3 | 221.0 | (40) % |
| US$m | 90.1 | 158.9 | (43) % | |
Gold production decreased by 3% to 184,200oz for the six months ended 30 June 2023 from 190,300oz for the six months ended 30 June 2022 mainly due to lower combined yield and 6,500 ounces drawn down from gold in circuit during January 2022.
At the underground operations, ore mined increased by 10% to 879kt for the six months ended 30 June 2023 from 801kt for the six months ended 30 June 2022 with access at the Invincible mine to high volume extension vein stopes, which also resulted in a decrease in waste mined by 24% to 319kt for the six months ended 30 June 2023 from 420kt for the six months ended 30 June 2022.
Gold mined from the underground operations increased by 7% to 139,000oz for the six months ended 30 June 2023 from 130,000oz for the six months ended 30 June 2022, as a result of the increase in ore mined, partially eroded by a 2% decrease in grade mined.
For the six months ended 30 June 2023 capital waste of 1,490kt and operational waste of 730kt were mined from the open pits, compared with 7,084kt of capital waste for the six months ended 30 June 2022, with the first half of 2022 concentrated almost exclusively on pre-strip. Ore mined of 1,244kt at an average grade of 1.66 g/t for 66,300oz for the six months ended 30 June 2023 compared with 201kt of ore mined at an average grade of 1.08 for 7,000oz for the six months ended 30 June 2022.
The total open pit tonnes mined decreased by 52% to 3,464kt for the six months ended 30 June 2023 from 7,285kt for the six months ended 30 June 2022, reflecting tighter mining conditions at the bottom of stage 7 of the Neptune pit and the use of available idle open pit fleet to assist with progressive rehabilitation during the first half of 2023.
AIC increased by 8% to A$1,858/oz (US$1,256/oz) for the six months ended 30 June 2023 from A$1,715/oz (US$1,233/oz) for the six months ended 30 June 2022 due to higher cost of sales before amortisation and depreciation and lower gold sold, partially offset by lower capital expenditure.
Cost of sales before amortisation and depreciation increased by 7% to A$234m (US$158m) for the six months ended 30 June 2023 from A$218m (US$157m) for the six months ended 30 June 2022 due to a 31% increase in cost of sales before gold inventory change and amortisation and depreciation for the six months ended 30 June 2023, partially offset by a lower gold inventory charge to cost of A$1m (US$1m) for the six months ended 30 June 2023 compared toA$40m (US$29m) for the six months ended 30 June 2022.
Cost of sales before gold inventory change and amortisation and depreciation increased by 31% to A$233m (US$158m) for the six months ended 30 June 2023 from A$178m (US$128m) for the six months ended 30 June 2022 mainly due to 112% increase in total ore mined, higher operational waste tonnes mined at the Neptune open pit as well as higher development metres and structural increases in costs related to support and paste fill. Ongoing inflationary increases mainly impacting contractor costs, explosives, grinding media and employee costs also impacted on costs.
Gold inventory charge to cost decreased to A$1m (US$1m) for the six months ended 30 June 2023 from A$40m (US$29m) for the six months ended 30 June 2022 due to a lower draw-down of stockpiles on the increased ore tonnes mined in the six months ended 30 June 2023.
Total capital expenditure decreased by 13% to A$72m (US$49m) for the six months ended 30 June 2023 from A$83m (US$59m) for the six months ended 30 June 2022.
Sustaining capital expenditure decreased by 24% to A$58m (US$39m) for the six months ended 30 June 2023 from A$77m (US$55m) for the six months ended 30 June 2022 reflecting pre-strip activities at Neptune stage 7 pit for the six months ended 30 June 2022.
Non-sustaining capital expenditure increased by 139% to A$13m (US$9m) for the six months ended 30 June 2023 from A$6m (US$4m) for the six months ended 30 June 2022. A$11m (US$7m) related to greater expenditure on the development of the Invincible Deeps underground mine in H1 2023.
St Ives generated adjusted pre-tax free cash flow of A$133m (US$90m) for the six months ended 30 June 2023 compared with A$221m (US$159m) for the six months ended 30 June 2022. The reduction in pre-tax free cash flow for the six months ended 30 June 2023 is mainly due to a A$56m (US$37m) increase in production cost due primarily to mining volumes and inflation in Western Australia combined with a cash inflow of A$24m (US$17m) in 2022 related to the final gold sale of 2021.
Guidance 2023
The production guidance has been updated positively mainly due to an increase in forecast plant throughput.
The impact of higher production costs, as a result of inflationary increases combined with a draw down of higher cost stockpiles as a result of lower open pit ounces mined has made it necessary to update the original guidance of St Ives to the following:
- Gold produced ~ 385,000oz (original guidance 380,000oz);
- AIC ~ A$1,695/oz (US$1,136/oz), original guidance A$1,620/oz (US$1,135/ oz); and
- Total all-in cost ~ A$1,825/oz (US$1,223), original guidance A$1,770/oz (US$1,240/oz).
Not included in AISC and AIC above is capital expenditure for a hybrid renewable microgrid power facility pending Board approval. This facility will include a wind farm, solar farm, battery energy storage system and diesel generation.
Agnew
| June 2023 |
June 2022 |
% Variance |
||
| Underground | ||||
| Ore mined | 000 tonnes | 520 | 510 | 2 % |
| Waste mined | 000 tonnes | 407 | 433 | (6) % |
| Total tonnes mined | 000 tonnes | 927 | 943 | (2) % |
| Grade mined | g/t | 6.50 | 7.38 | (12) % |
| Gold mined | 000’oz | 108.8 | 121.0 | (10) % |
| Surface | – % | |||
| Ore mined | 000 tonnes | 143 | – | – % |
| Surface waste (capital) | 000 tonnes | 1,335 | – | – % |
| Surface waste (operational) | 000 tonnes | 1,187 | – | – % |
| Total waste mined | 000 tonnes | 2,522 | – | – % |
| Total tonnes mined | 000 tonnes | 2,665 | – | – % |
| Grade mined | g/t | 2.12 | – | – % |
| Gold mined | 000’oz | 9.8 | – | – % |
| Strip ratio | waste/ore | 17.6 | – | – % |
| Total (underground and surface) | – % | |||
| Total ore mined | 000 tonnes | 663 | 510 | 30 % |
| Total grade mined | g/t | 5.55 | 7.38 | (25) % |
| Total tonnes mined | 000 tonnes | 3,592 | 943 | 281 % |
| Total gold mined | 000’oz | 118.6 | 121.0 | (2) % |
| Tonnes milled | 000 tonnes | 673 | 584 | 15 % |
| Yield – underground | g/t | 6.06 | 6.42 | (6) % |
| – surface | g/t | 2.15 | – | – % |
| – combined | g/t | 5.17 | 6.42 | (19) % |
| Gold produced | 000’oz | 111.7 | 120.5 | (7) % |
| Gold sold | 000’oz | 112.8 | 121.0 | (7) % |
| AISC | A$/oz | 1,831 | 1,652 | 11 % |
| US$/oz | 1,238 | 1,188 | 4 % | |
| AIC | A$/oz | 2,038 | 1,882 | 8 % |
| US$/oz | 1,377 | 1,353 | 2 % | |
| Sustaining capital expenditure | A$m | 37.0 | 43.0 | (14) % |
| US$m | 25.0 | 30.9 | (19) % | |
| Non-sustaining capital expenditure | A$m | 17.9 | 25.7 | (30) % |
| US$m | 12.1 | 18.5 | (35) % | |
| Total capital expenditure | A$m | 54.9 | 68.7 | (20) % |
| US$m | 37.1 | 49.4 | (25) % | |
| Adjusted pre-tax free cash flow | A$m | 86.8 | 86.1 | 1 % |
| US$m | 58.7 | 61.9 | (5) % | |
Gold production decreased by 7% to 111,700oz for the six months ended 30 June 2023 from 120,500oz for the six months ended 30 June 2022 due to a decrease in grade of ore mined and processed, partially offset by an increase in ore tonnes milled.
Overall grade mined from underground mines decreased by 12% to 6.50g/t for the six months ended 30 June 2023 from 7.38g/t for the six months ended 30 June 2022 due to lower grades of ore mined at the Waroonga Kath ore body and the Sheba ore body at New Holland, in line with the mine plan. As a result of the decrease in grade partially offset by a 2% increase in ore mined, gold mined decreased by 10% to 108,800oz for the six months ended 30 June 2023 from 121,000oz in the six months ended 30 June 2022.
Pre-strip activities at the Barren Lands open pit which commenced during the latter part of 2022, concluded during the six months ended 30 June 2023 with 1,335Kt of capital waste mined (six months ended 30 June 2022 – nil). For the six months ended 30 June 2023,1,187Kt of operational waste and 143Kt of ore at 2.12g/t for 9,800oz were mined (six months ended 30 June 2022 – nil). The Barren Lands open pit will provide the gateway to the Barren Lands and Redeemer Underground Complex. The project also enables access to new underground exploration platforms.
Tonnes milled increased by 15% to 673,000t for the six months ended 30 June 2023 from 584,000t for the six months ended 30 June 2022 due to the additional open pit ore mined.
AIC increased by 8% to A$2,038/oz (US$1,377/oz) for the six months ended 30 June 2023 from A$1,882/oz (US$1,353/oz) for the six months ended 30 June 2022 due to higher cost of sales before amortisation and depreciation and lower gold sold, partially offset by decreased capital expenditure.
Cost of sales before amortisation and depreciation increased by 6% to A$142m (US$96m) for the six months ended 30 June 2023 from A$134m (US$96m) for the six months ended 30 June 2022 due to an11% increase in cost of sales before gold inventory change and amortisation and depreciation for the six months ended 30 June 2023, partially offset by a gold inventory credit to cost of A$2m (US$1m) for the six months ended 30 June 2023 compared to a gold inventory charge to cost of A$4m (US$3m) for the six months ended 30 June 2022.
Cost of sales before gold inventory change and amortisation and depreciation increased by 11% to A$144m (US$97m) for the six months ended 30 June 2023 from A$130m (US$94m) for the six months ended 30 June 2022 mainly due to a 2% increase in underground ore tonnes mined as well as the addition of 1.3Mt of operational tonnes mined, at a cost of A$9m (US$6m), at the Baren Lands open pit (no open pit tonnes mined in the comparative period). Ongoing inflationary pressures on commodity inputs and employee and contractor costs also resulted in higher production costs.
Gold inventory credit to cost of A$2m (US$1m) for the six months ended 30 June 2023 compared to a gold inventory charge to cost of A$4m (US$3m) for the six months ended 30 June 2022.
Total capital expenditure decreased by 20% to A$55m (US$37m) for the six months ended 30 June 2023 from A$69m (US$49m) for the six months ended 30 June 2022.
Sustaining capital expenditure decreased by 14% to A$37m (US$25m) for the six months ended 30 June 2023 from A$43m (US$31m) for the six months ended 30 June 2022, with A$5m (US$4m) spent during the six months ended 30 June 2022 on the expansion of the accommodation village (six months ended 30 June 2023 – nil).
Non-sustaining capital expenditure decreased by 30% to A$18m (US$12m) for the six months ended 30 June 2023 from A$26m (US$19m) for the six months ended June 2022 due to expenditure incurred on the mill crushing circuit replacement project of A$15m (US$10m) during the six months ended 30 June 2022.
Agnew generated adjusted pre-tax free cash flow of A$87m (US$59m) for the six months ended 30 June 2023 compared with A$86m (US$62m) for the six months ended 30 June 2022.
Guidance 2023
The impact of higher production costs as a result of inflationary increases has made it necessary to update the original guidance of Agnew to the following:
- Gold produced ~ 240,000oz, (unchanged);
- AISC ~ A$1,810/oz (US$1,213/oz), original guidance A$1,780/oz (US$1,245/oz); and
- Total AIC ~ A$1,970/oz (US$1,320/oz), original guidance A$1,910/oz (US$1,335/oz).
South Africa region
South Deep
| June 2023 |
June 2022 |
% Variance |
||
| Ore mined | 000 tonnes | 798 | 816 | (2) % |
|---|---|---|---|---|
| Waste mined | 000 tonnes | 148 | 99 | 49 % |
| Total tonnes | 000 tonnes | 946 | 915 | 3 % |
| Grade mined – underground reef | g/t | 6.26 | 6.17 | 1 % |
| Grade mined – underground total | g/t | 5.28 | 5.50 | (4) % |
| Gold mined | kg | 4,995 | 5,031 | (1) % |
| 000’oz | 160.6 | 161.7 | (1) % | |
| Development | m | 5,879 | 5,705 | 3 % |
| Secondary support | m | 5,523 | 7,051 | (22) % |
| Backfill | m3 | 178.9 | 153.8 | 16 % |
| Ore milled – underground reef | 000 tonnes | 808 | 761 | 6 % |
| Ore milled – underground waste | 000 tonnes | 106 | 79 | 34 % |
| Ore milled – surface | 000 tonnes | 511 | 659 | (22) % |
| Total tonnes milled | 000 tonnes | 1,425 | 1,499 | (5) % |
| Yield – underground reef | g/t | 5.94 | 6.59 | (10) % |
| Surface yield | g/t | 0.07 | 0.13 | (46) % |
| Total yield | g/t | 3.40 | 3.40 | – % |
| Gold produced | kg | 4,841 | 5,097 | (5) % |
| 000’oz | 155.7 | 163.9 | (5) % | |
| Gold sold | kg | 4,743 | 5,097 | (7) % |
| 000’oz | 152.5 | 163.9 | (7) % | |
| AISC | R/kg | 811,816 | 672,915 | 21 % |
| US$/oz | 1,387 | 1,359 | 2 % | |
| AIC | R/kg | 811,816 | 705,623 | 15 % |
| US$/oz | 1,387 | 1,425 | (3) % | |
| Sustaining capital expenditure | Rm | 658.5 | 811.3 | (19) % |
| US$m | 36.2 | 52.7 | (31) % | |
| Non-sustaining capital expenditure | Rm | – | 166.7 | (100) % |
| US$m | – | 10.8 | (100) % | |
| Total capital expenditure | Rm | 658.5 | 978.0 | (33) % |
| US$m | 36.2 | 63.5 | (43) % | |
| Adjusted free cash flow | Rm | 1,758.5 | 1,131.2 | 55 % |
| US$m | 96.6 | 73.5 | 31 % | |
South Deep production decreased from H1 2022 to H1 2023 as a result of reduced stope availability following ground related incidents that limited access to planned mining areas and a shortage of skilled operators and artisans for long-hole stoping drill rigs. The ground related conditions were largely in Q1 with some flow through to Q2. As a result, ore mined marginally decreased by 2% to 798kt for the six months ended 30 June 2023 from 816kt for the six months ended 30 June 2022 while gold produced decreased by 5% to 4,841kg (155,700oz) for the six months ended 30 June 2023 from 5,097kg (163,900oz) for the six months ended 30 June 2022. The production for the six months ended 30 June 2023 of 4,841kg included a 591kg draw-down of gold inventory.
Long-hole stopping production in H1 2023 was negatively impacted by a fall of ground incident in 100 2B West Cut 3 MAD, unexpected scaling of the 2 West ramp, sidewalls stability and deterioration of the 2 West Cut 1A access drive which limited access to stoping areas. Rehab work is underway and access in 2B West Cut 3 MAD and in 2W Cut 1A will be regained by end of August. Production was further aggravated by a shortage of skilled operators and artisans for long-hole stoping drill rigs. The mine also continues to focus on addressing shortages of skilled operators and artisans and on productivity improvements to enable the production ramp-up to a steady state of 12t per annum of gold output.
Development metres increased by 3% to 5,879 metres for the six months ended 30 June 2023 from 5,705 metres for the six months ended 30 June 2022 as a result of improved ground handling capability associated with the commissioning of the in-cut tip infrastructure leading to improved efficiencies.
Waste mined increased by 49% to 148,000t for the six months ended 30 June 2023 from 98,800t for the six months ended 30 June 2022 due to an increase in capital infrastructure development and new in-cut development which will subsequently generate stopping reserves.
Secondary support decreased by 22% to 5,523 metres for the six months ended 30 June 2023 from 7,051 metres for the six months ended 30 June 2022 as fewer areas required rehabilitation, this reduction is in line with the business plan and anticipated ground condition improvements associated with new layouts. Backfill increased by 16% to 178,900m3 for six months ended 30 June 2023 from 153,800m3 for the six months ended 30 June 2022 as more stopes became available for backfilling.
Underground reef yield decreased by 10% to 5.94g/t for the six months ended 30 June 2023 from 6.59g/t for the six months ended 30 June 2022, due to a lower mine call factor (MCF) for the six months ended 30 June 2023,which has now stabilised at 100%.
AIC increased by 15% to R811,816/kg (US$1,387/oz) for the six months ended 30 June 2023 from R705,623/kg (US$1,425/oz) for the six months ended 30 June 2022, mainly due to a decrease in gold sold and higher cost of sales before amortisation and depreciation, partially offset by lower capital expenditure.
Cost of sales before amortisation and depreciation increased by 20% to R3,075bn (US$169m) for the six months ended 30 June 2023 from R2,558bn (US$166m) for the six months ended 30 June 2022 due to a 12% increase in cost of sales before gold inventory change and amortisation and depreciation for the six months ended 30 June 2023 and a gold inventory charge to cost of R213m (US$12m) for the six months ended 30 June 2023 compared to a credit to cost of R2m (US$0m) for the six months ended 30 June 2022.
Cost of sales before gold inventory change and amortisation and depreciation increased by 12% to R2.9bn (US$157m) for the six months ended 30 June 2023 from R2.6bn (US$166m) for the six months ended 30 June 2022 mainly due to higher maintenance cost on the mobile fleet of R94m (US$6m) and inflationary increases on consumables, contractors, electricity and employee costs.
Gold inventory charge to cost was R213m (US$12m) for the six months ended 30 June 2023 compared to a credit to cost of R2m (US$0m) for the six months ended 30 June 2022 due to a 591kg draw-down of gold inventory in the current year.
Capital expenditure decreased by 33% to R659m (US$36m) for the six months ended 30 June 2023 from R978m (US$64m) for the six months ended 30 June 2022. The higher expenditure in 2022 was driven by purchasing of solar panels and construction of the solar plant, which is now completed, as well as higher expenditure on the tailings storage facility.
South Deep adjusted free cash flow increased by 55% to R1,759m (US$97m) for the six months ended 30 June 2023 compared with an inflow of R1,131m (US$74m) for the six months ended 30 June 2022. The increase is mainly due to a 22% higher gold price received for the six months ended 30 June 2023 compared to the six months ended 30 June 2022 and lower capital expenditure, partially offset by higher cost of sales before amortisation and depreciation.
Guidance 2023
The impact of the production delays experienced during H1 2023 made it necessary to update the original guidance of South Deep to the following:
- Gold produced ~ 10,000kg (321,500oz), (original guidance 10,800kg (347,200oz));
- AISC ~ R808,000/kg (US$1,356/oz) (original guidance R730,000/kg (US$1,330/oz)); and
- Total AIC ~ R808,000/kg (US$1,356/oz) (original guidance R730,000/kg (US$1,330/oz))
Ghana region
| June 2023 |
June 2022 |
% Variance |
||
| Gold production | 000’oz | 396.9 | 424.0 | (6) % |
|---|---|---|---|---|
| AISC | US$/oz | 1,194 | 1,197 | – % |
| AIC | US$/oz | 1,210 | 1,230 | (2) % |
| Adjusted free cash flow | US$m | 115.8 | 154.4 | (25) % |
Total production (100% basis for Tarkwa and Damang and 45% for Asanko) decreased by 6% to 397koz for the six months ended 30 June 2023 from 424koz for the six months ended 30 June 2022 mainly due to the planned decrease in production from Damang and Asanko on the back of lower yield at both operations, partially offset by increased production at Tarkwa.
AIC decreased by 2% to US$1,210/oz for the six months ended 30 June 2023 from US$1,230/oz for the six months ended 30 June 2022 mainly due to lower cost of sales before amortisation and depreciation and lower capital expenditure, partially offset by lower gold sold.
The region produced adjusted free cash flow (excluding Asanko) of US$116m for the six months ended 30 June 2023 compared with US$154m for the six months ended 30 June 2022.
Damang
| June 2023 | June 2022 | % Variance | ||
| Ore mined | 000 tonnes | 2,265 | 3,610 | (37) % |
|---|---|---|---|---|
| Waste (capital) | 000 tonnes | – | 4,312 | (100) % |
| Waste (operational) | 000 tonnes | 5,633 | 4,629 | 22 % |
| Total waste mined | 000 tonnes | 5,633 | 8,941 | (37) % |
| Total tonnes mined | 000 tonnes | 7,898 | 12,551 | (37) % |
| Grade mined | g/t | 1.06 | 1.57 | (32) % |
| Gold mined | 000’oz | 77.3 | 182.6 | (58) % |
| Strip ratio | waste/ore | 2.5 | 2.5 | – % |
| Tonnes milled | 000 tonnes | 2,386 | 2,351 | 1 % |
| Yield | g/t | 1.03 | 1.66 | (38) % |
| Gold produced | 000’oz | 79.3 | 125.2 | (37) % |
| Gold sold | 000’oz | 80.4 | 125.2 | (36) % |
| AISC | US$/oz | 1,193 | 884 | 35 % |
| AIC | US$/oz | 1,230 | 964 | 28 % |
| Sustaining capital expenditure | US$m | 3.5 | 27.9 | (87) % |
| Non-sustaining expenditure | US$m | – | 5.2 | (100) % |
| Total capital expenditure | US$m | 3.5 | 33.1 | (89) % |
| Adjusted free cash flow | US$m | 18.3 | 50.1 | (63) % |
Gold production decreased as planned by 37% to 79,300oz for the six months ended 30 June 2023 from 125,200oz oz for the six months ended 30 June 2022 mainly due to lower yield. Yield decreased by 38% to 1.03g/t for the six months ended 30 June 2023 from 1.66g/t for the six months ended 30 June 2022. This was a function of low-grade material fed from stockpile and Huni pit due to completion of mining from Damang Pit Cut Back (DPCB) in December 2022. A total of 1,002kt ore was rehandled from the stockpile for the six months ended 30 June 2023 at a grade of 1.12g/t compared with 294kt at a grade of 1.32g/t for the six months ended 30 June 2022.
Total tonnes mined decreased by 37% to 7.9Mt for the six months ended 30 June 2023 from 12.6Mt for the six months ended 30 June 2022 due to completion of mining at DPCB in December 2022.
Operational waste tonnes mined increased by 22% to 5.6Mt for the six months ended 30 June 2023 from 4.6Mt for the six months ended 30 June 2022 due to the inclusion of Lima Kwesi Gap pit mining in addition to Huni pit. Ore tonnes mined decreased by 37% to 2.3Mt for the six months ended 30 June 2023 from 3.6Mt for the six months ended 30 June 2022 due to completion of mining at Damang Pit Cut Back (DPCB) which is in line with the mining plan.
Gold mined decreased by 58% to 77,300oz for the six months ended 30 June 2023 from 182,600oz for the six months ended 30 June 2022 due to lower ore tonnes and grade mined from Huni and Lima Kwesi Gap pits in line with the plan.
AIC increased by 28% to US$1,230/oz for the six months ended 30 June 2023 from US$964/oz for the six months ended 30 June 2022 due to lower gold sold and higher cost of sales before amortisation and depreciation, partially offset by lower capital expenditure.
Cost of sales before amortisation and depreciation increased by 16% to US$80m for the six months ended 30 June 2023 from US$69m for the six months ended 30 June 2022 due to a lower gold inventory credit to cost of US$19m for the six months ended 30 June 2023 compared to US$36m for the six months ended 30 June 2022, partially offset by a 5% decrease in cost of sales before gold inventory change and amortisation and depreciation for the six months ended 30 June 2023.
Cost of sales before gold inventory change and amortisation and depreciation decreased by 5% to US$99m for the six months ended 30 June 2023 from US$104m for the six months ended 30 June 2022 mainly due to a 4% decrease in operational tonnes mined and lower fuel cost, partially offset by inflationary increases mainly impacting explosives and grinding media.
Gold inventory credit to cost decreased to US$19m for the six months ended 30 June 2023 from US$36m for the six months ended 30 June 2022 due to a reduction in ore tonnes mined and stockpiled as well as the strategy to process the higher grade material while adding the lower grade material to stockpiles.
Capital expenditure decreased by 89% to US$4m for the six months ended 30 June 2023 from US$33m for the six months ended 30 June 2022.
Sustaining capital expenditure decreased by 87% to US$4m for the six months ended 30 June 2023 from US$28m for the six months ended 30 June 2022 due to no capital waste stripping expenditure for the six months ended 30 June 2023.
Non-sustaining capital expenditure decreased to nil for the six months ended 30 June 2023 from US$5m for the six months ended 30 June 2022 due to reclassification of the TSF raise from growth to sustaining capital.
Damang generated adjusted free cash flow of US$18m for the six months ended 30 June 2023 compared with US$50m for the six months ended 30 June 2022 mainly due to the lower gold sold.
Guidance 2023
Damang gold production has been revised up for the year as a result of mining a backlog of 1.6Mt from Huni pit from 2022 as well as the addition of the Lima Kwesi Gap pit. Damang’s guidance is therefore revised as follows:
- Gold produced ~ 142,000oz, (original guidance 136,000oz);
- AISC ~ US$1,550/oz, (original guidance US$1,830/oz);
- Total AIC ~ US$1,550/oz, (original guidance (US$1,830/oz); and
- The lower AIC is mainly driven by higher gold sold combined with a lower gold inventory charge to cost as a result of processing less stockpile material due to mining of additional ore tonnes related to the Huni and Lima Kwesi Gap pits.
Tarkwa
| June 2023 |
June 2022 |
% Variance |
||
| Ore mined | 000 tonnes | 9,957 | 6,341 | 57 % |
|---|---|---|---|---|
| Waste (capital) | 000 tonnes | 19,835 | 22,305 | (11) % |
| Waste (operational) | 000 tonnes | 14,635 | 14,714 | (1) % |
| Total waste mined | 000 tonnes | 34,470 | 37,019 | (7) % |
| Total tonnes mined | 000 tonnes | 44,427 | 43,360 | 2 % |
| Grade mined | g/t | 1.20 | 1.14 | 5 % |
| Gold mined | 000’oz | 384.2 | 232.6 | 65 % |
| Strip ratio | waste/ore | 3.5 | 5.8 | (40) % |
| Tonnes milled | 000 tonnes | 6,981 | 6,966 | – % |
| Yield | g/t | 1.28 | 1.15 | 11 % |
| Gold produced | 000’oz | 287.7 | 257.3 | 12 % |
| Gold sold | 000’oz | 290.3 | 257.3 | 13 % |
| AISC | US$/oz | 1,181 | 1,306 | (10) % |
| AIC | US$/oz | 1,181 | 1,306 | (10) % |
| Sustaining capital expenditure | US$m | 121.7 | 120.2 | 1 % |
| Non-sustaining expenditure | US$m | – | – | – % |
| Total capital expenditure | US$m | 121.7 | 120.2 | 1 % |
| Adjusted free cash flow | US$m | 97.5 | 104.3 | (7) % |
Gold production increased by 12% to 287,700oz for the six months ended 30 June 2023 from 257,300oz for the six months ended 30 June 2022 due to higher grade fed. Yield increased by 11% to 1.28g/t for the six months ended 30 June 2023 from 1.15g/t for the six months ended 30 June 2022 due to higher grade ore mined and processed. Ore processed from stockpile was 0.46Mt at a grade of 1.20g/t for the six months ended 30 June 2023 compared to 0.96Mt at a grade of 1.54g/t for the six months ended 30 June 2022 while ex-pit ore processed was 6.5Mt at a grade of 1.34g/t for the six months ended 30 June 2023 compared to 6.0Mt at 1.14g/t for the six months ended 30 June 2022.
Total tonnes mined, including capital waste stripping, increased by 2% to 44.4Mt for the six months ended 30 June 2023 from 43.4Mt for the six months ended 30 June 2022 in line with the 2023 production schedule. Ore tonnes mined increased by 57% to 10.0Mt for the six months ended 30 June 2023 from 6.3Mt for the six months ended 30 June 2022 due to higher equipment availabilities. Capital waste tonnes mined decreased by 11% to 19.8Mt for the six months ended 30 June 2023 from 22.3Mt for the six months ended 30 June 2022 in line with the mining schedule. Operational waste tonnes mined decreased by 1% to 14.6Mt for the six months ended 30 June 2023 from 14.7Mt for the six months ended 30 June 2022 in line with the plan. Strip ratio decreased by 40% to 3.5 for the six months ended 30 June 2023 from 5.8 for the six months ended 30 June 2022 due to increased ore tonnes mined in line with the 2023 production schedule.
AIC decreased by 10% to US$1,181/oz for the six months ended 30 June 2023 from US$1,306/oz for the six months ended 30 June 2022 due higher gold sold and lower cost of sales before amortisation and depreciation.
Cost of sales before amortisation and depreciation decreased by 4% to US$177m for the six months ended 30 June 2023 from US$185m for the six months ended 30 June 2022 due to a gold inventory credit to cost of US$44m for the six months ended 30 June 2023 compared to a charge to cost of US$5m for the six months ended 30 June 2022, partially offset by a 23% increase in cost of sales before gold inventory change and amortisation and depreciation for the six months ended 30 June 2023.
Cost of sales before gold inventory change and amortisation and depreciation increased by 23% to US$221m for the six months ended 30 June 2023 from US$180m for the six months ended 30 June 2022 mainly due to a 17% increase in operational tonnes mined and inflationary increases mainly impacting explosives, grinding media and employee costs, partially offset by lower fuel cost.
Gold inventory credit to cost was US$44m for the six months ended 30 June 2023 compared to a charge to cost of US$5m for the six months ended 30 June 2022 due to a build-up of stockpiles as a result of increase in ore mined in the current year compared to a draw-down of stockpiles for the six months ended 30 June 2022.
Capital expenditure increased by 1% to US$122m for the six months ended 30 June 2023 from US$120m for the six months ended 30 June 2022.
Tarkwa generated adjusted cash flow of US$98m for the six months ended 30 June 2023 compared with US$104m for the six months ended 30 June 2022 mainly due to higher operating cost partially offset by higher gold sold.
Guidance 2023
Tarkwa’s guidance updated positively as follows:
- Gold produced ~ 550,000oz (original guidance 545,000).
- AISC ~ US$1,370/oz, (original guidance US$1,390/oz); and
- Total AIC ~ US$1,370/oz, (original guidance US$1,390/oz).
The decrease in AIC is mainly due to higher gold sold.
Asanko (Equity-accounted Joint Venture)
All figures in table on a 100% basis
| June 2023 |
June 2022 |
% Variance |
||
| Ore mined | 000 tonnes | – | 1,750 | (100) % |
|---|---|---|---|---|
| Waste (capital) | 000 tonnes | – | – | – % |
| Waste (operational) | 000 tonnes | – | 6,599 | (100) % |
| Total waste mined | 000 tonnes | – | 6,599 | (100) % |
| Total tonnes mined | 000 tonnes | – | 8,349 | (100) % |
| Grade mined | g/t | – | 1.53 | (100) % |
| Gold mined | 000’oz | – | 86.0 | (100) % |
| Strip ratio | waste/ore | – | 3.8 | (100) % |
| Tonnes milled | 000 tonnes | 3,023 | 2,888 | 5 % |
| Yield | g/t | 0.68 | 0.99 | (31) % |
| Gold produced | 000’oz | 66.4 | 92.4 | (28) % |
| Gold sold | 000’oz | 68.1 | 88.2 | (23) % |
| AISC | US$/oz | 1,319 | 1,482 | (11) % |
| AIC | US$/oz | 1,435 | 1,576 | (9) % |
| Sustaining capital expenditure | US$m | 11.6 | 4.1 | 183 % |
| Non-sustaining expenditure | US$m | 4.8 | 1.9 | 153 % |
| Total capital expenditure | US$m | 16.4 | 6.0 | 173 % |
| Redemption of preference shares | US$m | – | – | – % |
Gold production decreased as planned by 28% to 66,400oz (100% basis) for the six months ended 30 June 2023 from 92,400oz (100% basis) for the six months ended 30 June 2022 mainly due to lower yield. Yield decreased by 31% to 0.68g/t for the six months ended 30 June 2023 from 0.99g/t for the six months ended 30 June 2022 due to lower grade fed from stockpiles in the current year as a result of the cessation of mining activities in July 2022.
There were no ore and waste tonnes mined for the six months ended 30 June 2023 due to the cessation of mining activities in July 2022.
AIC decreased by 9% to US$1,435/oz for the six months ended 30 June 2023 from US$1,576/oz for the six months ended 30 June 2022 due to lower cost of sales mainly due to the temporary cessation of mining activities, partially offset by higher capital expenditure and lower gold sold.
Cost of sales before amortisation and depreciation on a 45% basis (not included in Group cost of sales) decreased by 35% to US$31m for the six months ended 30 June 2023 from US$48m for the six months ended 30 June 2022 due to a 36% decrease in cost of sales before gold inventory change and amortisation and depreciation for the six months ended 30 June 2023.
Cost of sales before gold inventory change and amortisation and depreciation on a 45% basis (not included in Group cost of sales) decreased by 36% to US$29m for the six months ended 30 June 2023 from US$45m for the six months ended 30 June 2022 mainly due to the cessation of mining activities in July 2022.
Gold inventory charge to cost on a 45% basis (not included in Group cost of sales) decreased to US$2m for the six months ended 30 June 2023 from US$3m for the six months ended 30 June 2022 as the operation treated stockpiles in both periods.
Total capital expenditure (100% basis) increased by 173% to US$16m for the six months ended 30 June 2023 from US$6m for the six months ended 30 June 2022.
Sustaining capital expenditure increased by 183% to US$12m for the six months ended 30 June 2023 from US$4m for the six months ended 30 June 2022 mainly due to expenditure incurred on TSF stage 7 construction.
Non-sustaining capital expenditure increased by 153% to US$5m for the six months ended 30 June 2023 from US$2m for the six months ended 30 June 2022 mainly due to the commencement of the Abore project. The Abore project is a satellite pit with about three years mine life, planned to be mined in 2023. It requires certain pre-development works to be undertaken prior to active pit mining. For the period ended 30 June 2023, a total of US$1.6M was spent.
Americas region
Chile
Salares Norte
| June 2023 |
June 2022 |
% Variance |
||
| Ore mined | 000 tonnes | 420 | – | 100 % |
|---|---|---|---|---|
| Waste (capital) | 000 tonnes | 15,259 | 19,818 | (23) % |
| Waste (operational) | 000 tonnes | 346 | – | 100 % |
| Total waste mined | 000 tonnes | 15,605 | 19,818 | (21) % |
| Total tonnes mined | 000 tonnes | 16,025 | 19,818 | (19) % |
| Grade mined – gold | g/t | 7.18 | – | 100 % |
| Grade mined – silver | g/t | 2.99 | – | 100 % |
| Gold mined | 000’oz | 97.1 | – | 100 % |
| Silver mined | 000’oz | 40.5 | – | 100 % |
| Sustaining capital expenditure | US$m | 56.3 | – | 100 % |
| Non-sustaining expenditure | US$m | 123.3 | 145.1 | (15) % |
| Total capital expenditure | US$m | 179.6 | 145.1 | 24 % |
| Adjusted free cash flow | US$m | (202.3) | (172.0) | 18 % |
The Salares Norte project continued progressing during Q2 2023. Total project progress was 94.0% at the end of June 2023 compared to 77% at the end of June 2022.
Total construction project progress at the end of June 2023 was 94.9%, compared to 73.1% at the end of June 2022.
US$202m was spent on the project for the six months ended 30 June 2023 compared with US$172m spent for the six months ended 30 June 2022. The US$202m spent comprised of US$180m capital expenditure, US$15m exploration, and a US$7m investment in working capital and other. The US$172m spent during the six months ended 30 June 2022 comprised of US$145m capital expenditure, US$15m exploration, a US$6m investment in working capital, US$8m in other cost, partially offset by a credit of US$2m from the realised portion of the currency hedge.
The total tonnes movement of the mine for the six months ending in June 2023 was 16 Mt compared with total pre-strip tonnes movement of 20Mt for the first six months ending June 2022.
The exploration drilling for the six months ended in June 2023 was 9,459 metres compared with 11,103 metres for the six months ended in June 2022 in line with the plan for 2023.
At the end of June 2023, Salares Norte had 176Koz of gold mined placed on stockpile.
Total capital expenditure increased by 24% to US$180m for the six months ended 30 June 2023 from US$145m for the six months ended 30 June 2022.
Sustaining capital expenditure increased by 100% to US$56m for the six months ended 30 June 2023 (six months ended 30 June 2022 nil) due to the mining moving from pre-strip to normal capital waste mining.
Non-sustaining capital expenditure decreased by 15% to US$123m for the six months ended 30 June 2023 from US$145m for the six months ended 30 June 2022. The non-sustaining capital consists mainly of the project construction capital and also included the pre-strip activities during H1 2022 with no pre-strip in 2023.
Guidance 2023
Updated guidance for the project as follows:
- Gold equivalents produced ~ 15,000oz – 20,000oz (original guidance 15,000oz – 35,000oz);
- Gold produced ~ 14,000oz – 18,000oz (original guidance 14,000oz – 32,000oz);
- Silver produced ~ 1,000oz – 2,000oz (original guidance 1,000oz – 3,000oz);
- Sustaining capital expenditure ~ US$128m (original guidance US$159m);
- Non-sustaining capital expenditure ~ US$270m (original guidance US$227m);
- Silver price ~ US$21/oz; and
- Gold price ~ US$1,800/oz.
Peru
Cerro Corona
| June 2023 |
June 2022 |
% Variance |
||
| Ore mined | 000 tonnes | 6,370 | 5,478 | 16 % |
|---|---|---|---|---|
| Waste mined | 000 tonnes | 4,375 | 7,687 | (43) % |
| Total tonnes mined | 000 tonnes | 10,745 | 13,165 | (18) % |
| Grade mined – gold | g/t | 0.69 | 0.72 | (4) % |
| Grade mined – copper | per cent | 0.41 | 0.40 | 2 % |
| Gold mined | 000’oz | 142.2 | 126.6 | 12 % |
| Copper mined | tonnes | 25,812 | 21,930 | 18 % |
| Tonnes milled | 000 tonnes | 3,326 | 3,416 | (3) % |
| Gold recoveries | per cent | 73.8 | 68.7 | 7 % |
| Copper recoveries | per cent | 89.5 | 88.2 | 1 % |
| Yield – gold | g/t | 0.69 | 0.58 | 19 % |
| – copper | per cent | 0.45 | 0.41 | 10 % |
| – combined | eq g/t | 1.27 | 1.18 | 8 % |
| Gold produced | 000’oz | 70.9 | 60.9 | 16 % |
| Copper produced | tonnes | 14,267 | 13,310 | 7 % |
| Total equivalent gold produced | 000’ eq oz | 135.3 | 129.9 | 4 % |
| Total equivalent gold sold | 000’ eq oz | 138.3 | 130.5 | 6 % |
| AISC | US$/oz | 168 | 312 | (46) % |
| AISC | US$/ eq oz | 917 | 940 | (2) % |
| AIC | US$/oz | 307 | 397 | (23) % |
| AIC | US$/ eq oz | 990 | 981 | 1 % |
| Sustaining capital expenditure | US$m | 11.9 | 12.4 | (4) % |
| Non-sustaining expenditure | US$m | 8.2 | 4.0 | 105 % |
| Total capital expenditure | US$m | 20.1 | 16.4 | 23 % |
| Adjusted free cash flow | US$m | 71.2 | 55.8 | 28 % |
Gold production increased by 16% to 70,900oz for the six months ended 30 June 2023 from 60,900oz for the six months ended 30 June 2022 and copper production increased by 7% to 14,267t for the six months ended 30 June 2023 from 13,310t for the six months ended 30 June 2022. In both cases, the increase is mainly due to higher yield as a result of higher head grades processed and higher metallurgical recoveries, partially offset by lower tonnes milled due to lower throughput because of ore hardness. Consequently, total equivalent gold production increased by 4% to 135,300oz for the six months ended 30 June 2023 from 129,900oz for the six months ended 30 June 2022, despite a lower price factor for the six months ended 30 June 2023.
Total tonnes mined decreased by 18% to 10.7Mt for the six months ended 30 June 2023 from 13.2Mt for the six months ended 30 June 2022 mainly due to a decrease in waste mined by 43% to 4.4Mt for the six months ended 30 June 2023 from 7.7Mt for the six months ended 30 June 2022, partially offset by an increase in ore mined of 16% to 6.4Mt for the six months ended 30 June 2023 from 5.5Mt for the six months ended 30 June 2022. This is in line with the 2023 mine plan.
AIC per gold ounce decreased by 23% to US$307/oz for the six months ended 30 June 2023 from US$397/oz for the six months ended 30 June 2022, mainly due to higher by-product credits and higher gold ounces sold, partially eroded by higher cost of sales before amortisation and depreciation and higher capital expenditure. AIC per equivalent ounce increased by 1% to US$990/eq oz for the six months ended 30 June 2023 from US$981/eq oz for the six months ended 30 June 2022, mainly due to higher cost of sales before amortisation and depreciation and higher capital expenses; partially offset by higher equivalent ounces sold.
Cost of sales before amortisation and depreciation increased by 2% to US$95m for the six months ended 30 June 2023 from US$93m for the six months ended 30 June 2022 due to a 5% increase in cost of sales before gold inventory change and amortisation and depreciation for the six months ended 30 June 2023, partially offset by a higher gold inventory credit to cost of US$17m for the six months ended 30 June 2023 compared to US$14m for the six months ended 30 June 2022.
Cost of sales before gold inventory change and amortisation and depreciation increased by 5% to US$112m for the six months ended 30 June 2023 from US$107m for the six months ended 30 June 2022 mainly due to the ongoing high inflation related to commodities such as grinding media and energy, partially offset by lower tonnes mined.
Gold inventory credit to cost increased to US$17m for the six months ended 30 June 2023 from US$14m for the six months ended 30 June 2022 due to a build-up of stockpiles in line with the life-of-mine strategy
Total capital expenditure increased by 23% to US$20m for the six months ended 30 June 2023 from US$16m for the six months ended 30 June 2022.
Sustaining capital expenditure was similar at US$12m for the six months ended 30 June 2023 and related mainly to construction activities at the tailings dam.
Non-sustaining capital expenditure increased by 105% to US$8m for the six months ended 30 June 2023 from US$4m for the six months ended 30 June 2022 mainly due to the infrastructure reallocation located at the north side of the pit, to allow for future pit expansion.
Cerro Corona generated adjusted free cash flow of US$71m for the six months ended 30 June 2023 compared with US$56m for the six months ended 30 June 2022, mainly due to an increase in gold and copper production and higher gold and copper prices; partially eroded by higher operating expenses and capital expenditure.
Guidance 2023
Guidance remains unchanged for 2023 as provided in February: The estimate for 2023 is as follows:
- Gold equivalents produced ~255,000oz;
- Gold produced ~ 126,000oz;
- Copper tonnes produced ~ 27,000t;
- Copper price ~ US$8,400 per tonne;
- Gold price ~ US$1,800/oz;
- AISC ~ US$1,010/eq oz;
- Total AIC ~ US$1,070/eq oz;
- AISC ~ US$450/oz; and
- Total AIC ~ US$570/oz.
Although gold and copper production remain in line with the guidance the gold equivalents produced may differ from the guided number as this is a calculation based on a price factor driven by the gold and copper prices received.