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Gold Fields Limited is one of the world’s largest unhedged producers of gold with attributable production of 3,64 million oz per annum from eight operating mines in South Africa, Ghana and Australia. A ninth mine, Cerro Corona Gold/Copper mine in Peru, commenced production in August 2008 at an initial rate of approximately 375,000 gold equivalent oz per annum. The company has total attributable ore reserves of 83 million oz and mineral resources of 251 million oz.

Review of International Operations

Damang Gold Mine

Damang Gold Mine
PRODUCTION: 6,041 kg (194,200 ozs) TOTAL CASH COSTS: R128,770/kg (US$551/oz)

Overview

Location: Damang is located in southwestern Ghana, approximately 300 km by road, west of Accra, the capital, at a latitude 5°11’N and longitude 1°57’W. It is situated some 30 km north of the town of Tarkwa with good access roads and an established infrastructure. The mine is served by a main road connecting to the port of Takoradi, some 60 km to the southeast. Infrastructure: Multiple open pits, surface stockpile sources and a CIL plant. Geology: The Damang Gold Mine exploits oxide and fresh hydrothermal mineralisation in addition to Witwatersrand style, palaeoplacer mineralisation similar to that of the Tarkwa Gold Mine. Employees in service: 320 permanent employees, 1,276 contractors

Damang Gold Mine

        2008   2007   2006  
Open pit mining                  
Waste mined   ’000t   27,330   28,109   21,563  
Ore mined   ’000t   4,092   3,141   3,172  
Head grade   g/t   1.43   1.20   1.47  
Strip ratio   W:O   6.7   9.0   6.8  
Processing                  
Tons processed   ’000t   4,516   5,269   5,328  
Yield   g/t   1.3   1.1   1.4  
Gold produced   kg   6,041   5,843   7,312  
    ’000oz   194   188   235  
Total cash costs   US$/oz   551   473   341  
    R/kg   128,770   109,379   70,077  
Notional cash expenditure   US$/oz   753   637   439  
    R/kg   175,927   147,390   90,290  
Net attributable earnings   Rm   133.2   81.8   123.9  
    US$   18.4   11.4   19.4  
Capital expenditure   Rm   204.2   227.9   163.8  
    US$   28.1   31.7   25.6  

Safety, health and environment

Damang Gold Mine experienced another fatality free year and has remained fatality free since acquisition. The mine has also remained LTI free since December 2007 with the LTIFR improving from 1.28 to 0.68.

The development of new pits at the Tomento North and East project areas resulted in the relocation of 26 landlords to Damang and Huni- Valley communities.

About 2,000 illegal miners (galamsey) invaded the Rex and Cinnamon Bippo Project areas. Consultations were held with the District and Regional Security Committees for assistance to evict the illegal miners. Agreement was reached with the illegal miners to clear the Rex Project area which was done amicably and without incident.

The mine remains certified to ISO 14001. Damang also achieved over 365 days without any major environmental incident and received an award for corporate social responsibility in the western region of Ghana from the Regional Chamber of Commerce and Industry. The mine achieved certification under the ICMC (International Cyanide Management Code) during this period.

Operational performance

Damang increased gold production year on year due to higher grade ore from the Damang Pit Cutback (DPCB) and improved efficiencies due to construction and early commissioning of a seventh leach tank.

Total gold production was 194,200 ounces (6,041 kilograms), slightly up on the 187,900 ounces (5,843 kilograms) recovered in F2007. The increase was due to the improved mill recovery from 92.2 per cent to 93.8 per cent following the installation of a seventh CIL tank and a second gravity unit. The mining from DPCB, particularly with a reduced strip ratio during the second half of the year, also contributed to the increase in gold production compared with the previous year. The mill head grade was 1.43g/t in F2008 (F2007 1.20g/t). The increased volume from the primary crusher allowed for the expansion of the crushed ore stockpile which improved operational and blend flexibility in plant feed during the second half of the year.

The eastern haul ramp of the DPCB slipped at the end of January 2008, making it inaccessible. The pit was redesigned with the ramp through the west wall. Mining resumed in February 2008 via the new ramp. DPCB achieved full production during late F2008.

Cash costs for F2008 rose to US$551 per ounce (F2007: US$473 per ounce) due to continued fuel price pressure coupled with an increase in mining contractor costs due to longer haulage distances. Plant maintenance inputs, increased brownfields exploration drilling and raised power tariffs also contributed to increase in cash costs. In addition, Damang itself generated power intermittently during the year and was affected during the first half of F2008 by fluctuations in power supply from the national grid.

Revenue generated during the year was US$160 million with an operational cost of US$118 million as well as a credit to Gold in Process of US$11 million, realising a net operating profit (before amortisation) of US$53 million for F2008. Net attributable earnings totalled US$18 million at an average gold price of US$826 per ounce.

Capital expenditure for F2008 totalled US$28 million spent mainly on the ongoing DPCB, tailings storage facility as well as Huni pit prewaste stripping.

The galamsey mining activity in the Abosso project area hampered commencement of exploration drilling of the Abosso underground target. The exploration drill programme was changed to include the brownfields exploration sites in the Bonsa area.

Outlook for F2009

  • The DPCB is scheduled to be completed in F2013 when the final pit limits are mined.
  • Total gold production for F2009 operational plan is projected at 220,000 ounces. The operational focus remains on maintaining plant efficiencies and optimising throughput volumes. Planning, taking into account permitting requirements and social challenges, aims to optimise gold production and associated costs, whilst ensuring the continuous development of additional ore sources.
  • Unit costs are expected to rise due to continued price pressure on all inputs.
  • Resource definition diamond drilling for F2009 commenced on Tarkwaian conglomerate reefs in the Bonsa North prospect but was temporarily stopped after four holes due to heavy rains.
  • The F2009 drilling campaign was planned around 20,900 metres RC and 21,200 metres DD at a total estimated cost of US$5.5 million. Proportionally, US$3.2 million will be dedicated to extensional capital projects and US$2.3 million will be allocated to brownfields working cost projects.
  • A further US$2.0 million has been allocated to the South West Ghana Project Group, for regional exploration on the current tenements surrounding the Damang and Lima South mining leases.