Integrated Annual Report 2014

Manufactured capital and intellectual capital

Review of operations

Driefontein shaft [map]

DRIEFONTEIN

Located on the Far West Rand, in the mining district of Oberholzer, some 70km south-west of Johannesburg in the province of Gauteng, South Africa, Driefontein operates under new order mining rights covering a total of 8,561ha. It is an underground mine with surface reserves represented by rock dumps and tailings storage facilities that have accumulated throughout the operating history of the mine.

Driefontein has six operating shaft systems and three metallurgical plants, and operates at depths of between 700m and 3,420m below surface.

Driefontein has access to the extensive national electricity grid and to water, road and rail infrastructure. Located near regional urban centres where it can routinely obtain supplies, the mine was formed from the consolidation of the East Driefontein and West Driefontein mines in 1981.

2014 PERFORMANCE

Gold production at Driefontein decreased by 6% to 17,735kg (570,200oz) in 2014. The average yield decreased from 3.54g/t to 3.31g/t due to a decrease in underground volumes and grade.

Underground ore milled decreased by 1% to 2,497,000t. A fire in the first half of the year resulted in the loss of 40 shifts and lost production of approximately 510kg.

The cost of underground ore milled at R1,773/t was only 1% higher year-on-year despite the lower volumes. Main development decreased by 2% to 17,376m and on-reef development of 3,940m was 10% lower, as planned mainly at Masakhane shaft.

Cost-saving initiatives, including a reduction in employees in service and less reliance on contractors mostly offset the above-inflation increases in electricity and wages, and resulted in underground operating costs increased by at R4,428 million in 2014.

Underground operating profit decreased by 5% to R2,773 million as a result of the lower underground gold production and the increase in costs. The underground operating margin decreased from 40% in 2013 to 39% in 2014.

Lower grades at the surface operations, partially offset by an increase in throughput, accounted for the decline in gold production from the surface operations by 24% to 1,406kg (45,200oz).

Capital expenditure increased by 12% to R1,149 million. Capital was predominantly spent on ORD, mining equipment and stabilisation of the shaft barrel at the Ya Rona shaft during the December break and the installation of a carbon-in-leach (CIL) circuit at the Driefontein No 2 plant, which was commissioned at the end of 2014.

GEOLOGY

Gold mineralisation at Driefontein is contained within three reef horizons: the Carbon Leader Reef, the Ventersdorp Contact Reef (VCR) and the Middelvlei Reef (MVR), which occur at depths of between 500m and 4,000m.

Stratigraphically, the Carbon Leader is situated 40m to 70m below the VCR and MVR, and is a generally high-grade reef comprising different facies. It dips to the south at approximately 25 degrees.

The Carbon Leader sub-crops against the VCR in the eastern part of the mine. The west-dipping Bank Fault defines the eastern limit of both reefs. The VCR is most extensively developed in the east, and subcrops to the west. The MVR is a secondary reef, situated approximately 50m above the Carbon Leader and, at present, is a minor contributor to reserves and production. The average gold grades vary with lithofacies changes in all of the reefs.

INFRASTRUCTURE

Shaft system Hoisting capacity
No 155,000tpm
No 2165,000tpm
No 457,000tpm
No 5159,000tpm
No 6*26,000tpm
No 855,000tpm
  • * Shaft No 6 Tertiary and 6 Main are currently only operated on a limited scale with focus on reclamation and cleaning while shaft No 10 remains a pumping facility.
Processing plant Capacity Recovery factor
No 1 plant240,000tpm97%
No 2 plant180,000tpm90%
No 3 plant100,000tpm79%

No 1 plant, upgraded in 2004, has processing capacity of 240,000tpm and treats underground ore from the Driefontein shafts. The upgraded circuit at No 1 plant consists of a semi-autogenous (SAG) mill circuit followed by cyanide leaching, carbon-in-pulp (CIP) and a central Zadra elution facility.

Driefontein surface rock dump (SRD) material is delivered to No 2 plant by rail and truck to the plant feed bunkers. Plant flow incorporates two SAG mills and a ball milling circuit, cyanide leaching and a CIP plant.

Commissioning of a carbon-in-leach (CIL) circuit was done in 2014 at No 2 plant to replace the aging CIP circuit, which will improve recoveries and enable treatment of more complex material.

No 3 plant, originally commissioned as a uranium plant, was converted to a lowgrade surface rock-treatment gold plant in 1998. The plant was constructed using a combination of new as well as existing equipment on site. Similar to No 2 plant, ore is received from SRDs by rail and truck. The plant has four SAG mills followed by cyanide leaching and CIP.

Loaded carbon from the No 2 and No 3 plants is trucked to No 1 plant and processed at the central elution and smelting facility.

Kloof shaft [map]

KLOOF

Located in the Far West Rand mining district of Westonaria, some 60km south-west of Johannesburg in Gauteng province, South Africa, Kloof’s mining rights cover a total of approximately 20,100ha. It is principally an underground mine with nominal surface reserves represented by surface rock dumps and tailings storage facilities accumulated during the operating history of the mine.

Kloof is an intermediate to ultra-deep level mine with operating depths of between 1,300m and 3,500m below surface. The mine, situated near regional urban centres where it can routinely obtain supplies, has access to the national electricity grid and to water, road and rail infrastructure. Kloof’s existing scope of operations is the result of the consolidation of the Kloof, Libanon, Leeudoorn and Venterspost mines in 2000. Gold mining began in the area now covered by these operations in 1934.

2014 PERFORMANCE

Gold production increased by 7% to 17,038kg (547,800oz) in 2014. In addition to an improvement in underground yields, there was an increase in volume.

Underground ore milled increased by 4% to 1,983,000t and the underground yield increased by 3% to 7.89g/t due to a reduction in mining from marginal areas, together with an improvement in the mine call factor. The cost of underground ore milled increased by 4% to R2,061/t in 2014.

On-reef development increased by 12% to 3,989m and main development decreased by 3% to 18,743m as planned. The average development value decreased to 1,637cm.g/t from 1,875cm.g/t as a result of an increase in secondary reef development in order to delineate payable areas.

Operating costs increased by 10% to R4,502 million as a result of aboveinflation increases in electricity and wages and the increase in throughput, partly offset by cost-saving initiatives.

The increase in production more than offset the higher operating costs, resulting in a 5% increase in operating profit to R3,001 million. The operating margin was maintained at around 40%.

Underground operating profit increased by 9% to R2,800 million as a result of the 7% increase in production and the marginally higher gold price. The underground operating margin was maintained at 41%.

Surface throughput increased by 15% to 2,670,000t including the Python plant which was commissioned in August 2013. However, as a result of lower processing grades and higher ore reclamation and feed costs, the Python plant was discontinued in July 2014. The yield from the surface operations decreased to 0.52g/t from 0.62g/t in 2013.

Capital expenditure of R1,236 million was 5% lower in 2014. Primarily due to the completion of the Python plant in 2013. Capital was mainly spent on ORD, safety systems and general equipment upgrades.

GEOLOGY

Kloof is located on the West Wits Line that forms the Far West Rand of the Witwatersrand Basin. The bulk of ore extraction at Kloof is focused on the VCR, which occurs at depths of between 1,300m and 3,350m below surface. The VCR is a tabular orebody, with a general northeast-south-west strike, that dips to the south-east at between 20 and 45 degrees. The MVR is classified as Kloof’s secondary reef and further minor production volumes are delivered from the Kloof and the Libanon reefs.

Kloof’s underground workings lie between the Bank Fault to the west, and the northtrending West Rand Fault to the east. The latter truncates the VCR along the eastern boundary of the mine with a 1km to 1.5km upthrow to the east. Normal faults are developed sub-parallel to the west-dipping West Rand Fault with sympathetic north/ north-east trending dykes that show little or no apparent offset of the stratigraphy. A conjugate set of faults and dykes occurs on a west/south-west trend with throws of 1m to 50m. Structures that offset the VCR increase in frequency toward the southern portion of the mine as the Bank Fault is approached.

INFRASTRUCTURE

Kloof’s operations comprise five producing shafts systems and two gold metallurgical plants.

Shaft system Hoisting capacity
No 1100,000tpm
No 336,000tpm
No 482,000tpm
No 732,000tpm
No 813,000tpm
Processing plant Capacity Recovery factor
KP1180,000tpm90%
KP2165,000tpm98%

KP1 was commissioned in 1968 and originally designed as a reef plant. It currently treats ore from SRDs. The plant comprises three-stage crushing, open-circuit rod mills for primary grinding and closed-circuit pebble mills for secondary milling. This is followed by cyanide leaching, filtration, zinc precipitation and smelting. In June 2001, a CIP pump cell was installed to replace the less-efficient filtration and zinc precipitation, and smelting was discontinued. Loaded carbon is transported by truck to KP2 for treatment at an independent elution facility. In 2013, all crushing was stopped, the secondary crushing circuit was bypassed and modifications were made to the conveyor feed ore-delivery system with the addition of an overland conveyor completed to allow screened material from the SRDs to feed the mill silos directly.

In November 1990, KP2 was commissioned and currently treats all of Kloof’s underground ore. Reef is trucked and conveyed to a central stacker pad, which feeds two SAG mills equipped with variable-speed ring motor drives. Milling is followed by cyanide leaching, CIP and treatment at an independent elution and smelting facility. The elution facility was upgraded in June 2001 and again in October 2003 to process loaded carbon from KP1 and the former KP3 (Libanon) plant. The upgrade included the installation of continuous electrowinning sludge reactors.

Beatrix shaft [map]

BEATRIX

Located in the Free State province of South Africa, some 240km south-west of Johannesburg, near Welkom and Virginia, Beatrix operates under mining rights covering a total area of 16,821ha. Beatrix is principally an underground mine with nominal surface reserves represented by surface rock dumps accumulated during the operating history of the mine.

Beatrix has three operating shaft systems with two ventilation shafts to provide additional upcast and downcast ventilation capacity. The mine is serviced by two metallurgical plants.

Beatrix is a shallow to intermediate depth operation, mining at depths of between 700m and 2,200m below surface. Situated near regional urban centres where it can routinely obtain supplies, the mine has access to the national electricity grid and to water, road and rail infrastructure.

The existing scope of operations is the result of the consolidation on 1 July 2002 of the adjacent Beatrix and Oryx mines (No 4 shaft, also known as West Section).

Gold mining began at Beatrix in 1985 and at Oryx in 1993.

2014 PERFORMANCE

Gold production increased by 7% to 10,354kg (332,900oz) in 2014. This was primarily due to normalisation of production at the Beatrix West Section, which was severely impacted by an underground fire in 2013.

Underground ore milled increased by 8% to 2,571,000t in 2014 due to recovery at Beatrix West Section. The underground yield was marginally lower at 3.74g/t as planned. Unit costs decreased by 1% to R1,187/t.

To improve flexibility, management’s focus on on-reef development resulted in improvements of 42% to 6,120m across all the sections. Also, due to the redevelopment of the West Section, which essentially stopped in 2013, main development of 19,733m increased by 13%. The average development value increased marginally to 1,034cm.g/t from 1,012cm.g/t despite development in lower-grade areas at the North section in order to improve flexibility and the mining mix.

Underground operating costs increased by 7% to R3,052 million, reflecting the higher production volumes, mostly from the Beatrix West Section. Underground operating profit increased by 3% to R1,177 million as a result of the increase in gold production, which offset the higher operating costs. The underground operating margin decreased from 29% to 28% in 2014.

Capital expenditure increased by 2% to R548 million in 2014. The increase was predominantly due to the resumption of ORD at Beatrix West Section.

GEOLOGY

Beatrix exploits the Beatrix Reef (BXR) at shafts 1, 2 and 3, and the Kalkoenkrans Reef (KKR) at shaft No 4. The reefs are developed on the Aandenk erosional surface, and dip to the north and north-east at between four and nine degrees.

In general, the BXR occurs at depths of between 570m and 1,380m and the KKR at depths of between 1,800m and 2,200m. Both reefs are markedly channelised and consist of multi-cycle, upward-fining conglomerate beds with sharp erosive basal contacts.

A general east-west trending pay zone, some 500m to 800m wide, has been identified east of shaft No 4 and is known as the main channel. Zone 5 extends south of the main channel and contains the majority of the reserves at the operation.

Processing occurs by way of CIL and CIP treatment at the No 1 and No 2 plants respectively. In 2004, a Knelson concentrator was installed at No 1 plant to remove gold early in the metallurgical process. A gravity concentrating circuit, which was commissioned in November 2006, was installed at No 2 plant in order to reduce locked-up gold in the mills and to improve the overall recovery.

INFRASTRUCTURE

Kloof’s operations comprise five producing shafts systems and two gold metallurgical plants.

Shaft system Hoisting capacity
No 1 and No 250,000tpm
No 3170,000tpm
No 440,000tpm
Processing plant Capacity Recovery factor
No 1 plant243,000tpm96%
No 2 plant130,000tpm96%

 

 

Beatrix shaft [map]

COOKE

Located near Randfontein, approximately 30km south-west of Johannesburg in the province of Gauteng, South Africa, the Cooke Underground operations comprise four vertical shafts (Cooke 1 to 4 and the Ezulwini plant) as well as the surface operation, which are serviced by a developed network of mining and civil infrastructure with adequate electricity and water supplies.

The Cooke mines are shallow (~1,000m), with limited seismicity or heat challenges.

The Cooke 1, 2 and 3 mines are serviced by a developed network of mining and civil infrastructure with adequate electrical power and readily available water. The underground orebodies are exploited by means of conventional hard rock mining methods.

Access to the uranium Ezulwini plant allows for near-term production of uranium from underground ore mined at Cooke as a by-product.

2014 PERFORMANCE

Gold production of 4,305kg (138,400oz) for the seven months ended 31 December 2014 since acquisition reflects good recovery from safety related operational disruptions in the March 2014 quarter.

Underground ore milled was 893,000t in 2014. The underground yield was 4.16g/t. Unit costs were R1,641/t.

Operating costs for 2014 were R1,693 million. An operating profit of R189 million was recorded in 2014. The operating margin was 10% and Cooke made a positive contribution to Group operating cash flow after capex.

Capital expenditure in 2014 was R230 million. The majority of capital was spent on ORD and infrastructure for the uranium plant.

GEOLOGY

The primary mining horizons at Cooke 1 to 3 are the Upper Elsburg Reef and VCR. These reefs are hosted in a stacked package with reef thickness increasing from west to east across the lease area.

Cooke 4 exploits two primary tabular orebodies, approximately 400m vertically apart. The Upper Elsburg orebody, where the majority of mining has been done to date, is primarily gold-bearing, while the Middle Elsburg orebody is a gold- and uranium-bearing deposit that has been less extensively mined.

INFRASTRUCTURE

Cooke has four producing shaft systems as well as three metallurgical plants with further metallurgical treatment provided by Doornkop, a processing plant owned by Harmony.

The Cooke plant was constructed in 1978 and initially treated the high-grade ores from the adjacent Cooke shafts. The plant had a nameplate capacity of 280,000 tons per month for underground ores.

In 2005, the reef plant was converted to a sand treatment plant. The high-grade gold-bearing ore from the Cooke 1, 2 and 3 shafts was diverted and toll treated at the Doornkop plant, which is presenting a volume economy of scale benefit. The mills at the Cooke plant were subsequently converted to treat the sand from Dump 20. The Cooke optimisation project, commissioned in January 2014, increased the plant throughput to 400,000tpm and converted the plant to treat hydrologically reclaimed slime-feed from the Dump 20 and Lindum tailings storage facility. Cooke 3 mixed gold and uranium ore and all of Cooke 4 ore is treated at the Ezulwini plant.

Dump 20 arose from tailings from stamp milling technology that was employed at the Millsite gold plant, which was commissioned in 1911. The battery of stamp mills could not fine grind the ore to effectively extract all the contained gold, resulting in relatively high grades on Tailings Dam 20. Today the Randfontein surface operations process Dump 20 at a rate of approximately 300,000 tons per month producing some 32,000oz per annum.

Shaft system Hoisting capacity
No 113,500tpm
No 228,500tpm
No 355,000tpm
No 445,000tpm
Processing plant Capacity Recovery factor
Cooke plant400,000tpm61%
Ezulwini gold plant150,000tpm96%
Ezulwini uranium plant50,000tpm79%