Share Price

     
JSE %
NYSE %
RAND/US$ %
RAND/STERLING %
GOLD %
PLATINUM %
 
15 min delayed feed: more

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

Tarkwa Gold Mine

Tarkwa Gold Mine
PRODUCTION: 20,095 kg (646,100 ozs) TOTAL CASH COSTS: R100,552/kg (US$430/oz)

Overview

Location: The Tarkwa gold mine is located in southwestern Ghana, about 300 km by road west of Accra, the capital, at latitude 5°15’ N and longitude 2°00’ W. It is situated some 4 km west of the town of Tarkwa with good access roads and an established infrastructure and is served by a main road connecting to the port of Takoradi some 60 km to the southeast on the Atlantic coast. Infrastructure: Multiple open pits (currently six), two heap leach facilities and a CIL plant. Geology: The ore body at Tarkwa consists of a series of sedimentary banket quartz reef units (conglomerates) of the Tarkwaian System that are very similar to those mined in the Witwatersrand Basin of South Africa. The operation is currently mining multiple reef horizons from open-pits and there is potential for underground mining in the future. Employees in service: 1,805 permanent employees, 44 temporary employees and 2,846 contractors

Tarkwa Gold Mine

            2008   2007   2006  
Open pit mining                      
Waste mined       ’000t   93,440   85,508   75,899  
Ore mined       ’000t   19,901   22,074   21,037  
Head grade       g/t   1.2   1.2   1.2  
Strip ratio       W:O   4.7   4.0   3.6  
Processing                      
Tons processed   Milled   ’000t   5,571   5,620   4,687  
    Heap leach   ’000t   16,464   17,019   16,800  
    Total   ’000t   22,035   22,639   21,487  
Yield   Milled   g/t   1.5   1.5   1.6  
    Heap leach   g/t   0.7   0.8   0.9  
    Combined   g/t   0.9   1.0   1.0  
Gold produced   Milled   kg   8,310   8,457   14,638  
    Heap leach   kg   11,785   13,227   7,422  
    Total   kg   20,095   21,684   22,060  
    Total   ’000oz   646   697   709  
Total cash costs       US$/oz   430   333   292  
        R/kg   100,552   76,988   60,091  
Notional cash expenditure       US$/oz   766   512   364  
        R/kg   179,134   118,414   74,995  
Net attributable       Rm   764.0   598.6   445.2  
earnings       US$m   105.1   83.1   69.6  
Capital expenditure       Rm   1,541.0   775.6   299.7  
        US$m   212.0   107.7   46.8  

Safety, health and environment

The general safety performance of Tarkwa regressed year on year with the LTIFR increasing from 0.23 to 0.26. Unfortunately the mine experienced three fatalities from two incidents, one as a result of an electrocution and two due to a conveyor incident. Following the full accident investigation special safety campaigns reinforcing safety disciplines and the need for risk assessments prior to the commencement of work were conducted. The CIL plant expansion project achieved 1.5 million LTI free man hours.

The mine was recertified to OHSAS 18001:2007 in June 2008, Tarkwa being the first mine in Ghana to achieve this. No serious environmental incidents occurred during the financial year and the mine remains certified to ISO 14001. Tarkwa achieved certification under the ICMC (International Cyanide Management Code) during May 2008.

Operational performance

During the year construction of the phase 5 (North) heap leach expansion project continued on track and within budget for completion during the first quarter of F2009. The CIL expansion project will be completed during the second quarter of F2009 within the forecasted costs.

Total gold production was 646,100 ounces (20,095 kilograms), 7 per cent lower than the 697,100 ounces (21,684 kilograms) recovered in F2007, largely as a result of lower tons mined.

Mining and processing operations were significantly affected by record rainfall (including a one-in-fifty year event) during the first two quarters and unplanned fleet standing time due to a shortage of quality tyres, fluctuations in power supply from the national grid and additional maintenance requirements during the year.

The overall grade recovered from the CIL plant was 1.47 grams per ton in F2008 (F2007: 1.51 grams per ton). This reduction is attributable to lower tons mined from higher grade pits due to the tyre problems and the high rainfall. Tonnage crushed to the heap leach process for the year was 16.464 million tons compared with 17.019 million tons in F2007. The decline was caused primarily by the wet material processed.

Total cash costs increased to US$430 per ounce (F2007: US$333 per ounce) due to continued price pressure on all major inputs, but in particular on power and fuel tariffs.

The tyre retread facility which was built during the financial year has started to produce good quality tyres and will have a positive impact going forward on costs and quality mining.

At the Tarkwa gold mine substantial power shortages and unplanned interruptions to power supply due to countrywide power rationing as a result of the low water levels in the Akosombo Dam impacted on production. Once the drought had broken heavy rainfall replenished the dam back to pre-1984 levels but since the quantity of rain was greater than a 50 year average, there was unprecedented flooding of the pits and this significantly impeded our ability to mine the high grade ore sources from Teberebie. Subsequent to the wet season ending, the mine has been plagued by unplanned power interruptions which have reduced the availability of the CIL plant and heap leach crushing circuit.

The Mine Reserve Power (MRP) project was completed in the second quarter of the financial year 2008 as a joint venture between the four major mining operators in Ghana to generate supplemented power to the national grid in mitigation of national load shedding that occurred in times of drought. The MRP mitigates approximately 25 per cent of the Gold Fields generator needs.

The diesel hedge put in place for F2008 ended with a net realised gain of $0.77 million. The diesel hedge has been renewed for F2009.

Revenue generated during the year was US$532 million with an operational cost of US$283 million, as well as a credit to Gold in Process of US$5 million, realising an operating profit (before amortisation) of US$253 million for F2008. Net attributable earnings totalled US$105 million at an average gold price of US$823 per ounce.

Capital expenditure for F2008 totalled US$212 million spent, mainly on the ongoing CIL and heap leach expansion as well as ongoing pre-stripping at the Teberebie cutback (TCBP). Currency fluctuations, escalation and minor changes in project scope led to a revision of capital costs for the CIL expansion project and associated infrastructure from US$126 million to US$166 million.

Outlook for F2009

  • The CIL expansion project will increase throughput from 400,000 to 1 million tons of ore per month. It is planned to be at full production by the end of Q2 F2009.
  • The South heap leach will be closed in the third quarter and the North heap leach will continue at approximately 10 million tons per annum.
  • The stripping ratio will increase to enable ore mined to match processing volume capacity. It is expected that gold production will reach a steady state of approximately 750,000 ounces per annum. Total gold production is forecast at 700,000 ounces for F2009.
  • During the first half of F2009 production is likely to be affected by construction works on the new mill, specifically tie-in activities between the existing complex and the expansion steel and piping.
  • Gold production for Q1 F2009 is forecast at 159,000 ounces and capex at US$68 million. Unit costs are expected to increase as commodity prices impact negatively during this financial year.