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South Africa Region

A material restructuring at South Deep was announced in August 2018, aimed at reducing the workforce and mobile equipment levels in alignment with consolidating mining activity to increase focus and to recalibrate the cost base with anticipated levels of production.

The robustness of the Upper Elsburg ore body, coupled to the commitment to a new operating model designed to enable delivery on future planned output, are key elements central to South Deep continuing as a key opportunity to create long-term shareholder value. The thick Upper Elsburg ore body lends itself to mechanised bulk mining methods with the potential to become a safe, low-grade, bulk mechanised and profitable mine.

Strategic imperative

In the wake of the South Deep Rebase Plan not delivering on production and cost targets, the primary objective of the restructuring is to get the mine to breakeven at current levels of production, minimise the cash burn and to drive productivity improvements under the new operating model to bring the mine to profitability.

The mine has experienced a challenging period over recent years, despite multiple interventions to meet its plan and build production volumes to leverage unit costs and become profitable. The mine, in its previous form, was not sustainable, and a transformational organisational change was required to set the mine on a path to value. South Deep is a unique mine unable to rely on industry proxies to inform its strategy and provide benchmarking, and a strategic option evaluation process was conducted in 2018. The intent was to identify the preferred way forward and short circuit and rectify the prevailing issues restricting performance compliance to plan. Subsequent to the assessment of multiple options, the process framed a strategy to reconfigure the operating model, reduce the fixed cost base, drive cash-flow and build the foundation to become a modern, efficient and profitable operation.

SOUTH AFRICA REGION
SOUTH AFRICA REGION SALIENT POINTS
Mineral Resources       Mineral Reserves
56.2Moz*       32.8Moz*
(-15% net of depletion)       (-12% net of depletion)
* 90.75% attributable to GFI        

The new life-of-mine (LoM) plan addresses the previous disconnects between mine plan and execution and encompasses the revised strategy and new operating model. It remains anchored by the Rebase Plan design and fundamentals, with a specific renewed focus on improved operational efficiency and execution. The new plan sets out the foundation and installs the key enablers required to fully convert the mine to a fully mechanised bulk-efficient operation with an effective organisational culture supportive of mechanised operations.

SOUTH AFRICA REGION SALIENT POINTS

The key activities undertaken in 2018 to support implementation of the South Deep revised strategy are listed:

  • Fundamental restructuring initiated in Q3 2018, anchored by a new operating model centred on closing loss-making areas and consolidating mining activity to increase focus with a commensurate reduction in the workforce and size of the mobile equipment fleet
  • Progress was made on a number of technical and planning fronts:
    • Reduced the mining footprint in marginal areas by suspending Level 87 and largely limiting activity to sustaining services at South Shaft
    • Increased focus on fleet utilisation and reliability to improve overall performance
    • A reduction in capital associated with new mine development and non-critical path infrastructure
    • Significant advancement in the geotechnical programme enhancing ground support protocols and updated mine design and scheduling
    • Implementation of long-hole stoping rig improvements based on increased stope availability and enhanced stope turnaround times
  • Implementation of efficiency improvement programmes based on five Business Improvement (BI) initiatives and supporting enabling projects:
    • Enabling visible felt leadership
    • Reinvigorating the leadership system
    • Improving and enhancing the effectiveness of mining face time
    • Facilitating and sustaining key enabling logistics
    • Implementation of Horizon 1 I&T systems

Going forward, emphasis is placed on South Deep showing substantive progress and traction on the mine’s core strategic project themes, key performance indicators and enablers in the short to medium term. This is important in establishing the operation’s capacity to achieve profitability and deliver the LoM plan steadystate volumes.

For more information on the operations/projects, view the online 2018 Mineral Reserves and Resources Report