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18 E&MJ; • MARCH 2016 www.e-mj.com REGIONAL NEWS - AFRICA Budget, Job Cuts Ahead for South32 African Manganese Operations South32 Ltd. recently announced the results of its South Africa Manganese strategic review and its intention to sub- stantially reduce cash costs at a number of operations. Citing poor forecasts for commodity demand and prices, South32 said it expects to take a pre-tax, non-cash impairment of $1.7 billion when it reports its December 2015 half-year financial results. Most of that relates to the Australia Manganese and South Africa Energy Coal divisions—$900 mil- lion and $400 million, respectively. In response to a sharp decline in man- ganese ore and alloy prices, South32 had suspended mining activity at the Hotazel manganese mines (Hotazel) in November. This removed about 700,000 metric tons (mt) of manganese ore pro- duction from the global supply chain and inventories at the Hotazel mines have declined substantially as a result. South32 said it will restart Hotazel, but at a substantially reduced rate. The Hotazel mines will ramp up to a saleable production rate of 2.9 million mt/y, tak- ing approximately 900,000 mt/y or 23% of saleable production out of the market for the foreseeable future. South32 plans to eliminate 620 jobs across the Samancor joint venture, of which it is 60% owner and operator. It will accelerate the second phase of the Central Block development project at the Wessels mine, which will enable mining to relocate closer to critical infrastructure and reduce cycle times. Saleable produc- tion will be reduced by 36% at Wessels to 740,000 mt/y. Saleable production will be reduced by 18% to 2.2 million mt/y at Mamatwan. The company will operate only one of four furnaces at the Metalloys smelter, which is now generat- ing free cash flow. The Samancor Manganese joint ven- ture is the world's largest producer of manganese with operations in South Africa and Australia. The joint venture's African operations include the HMM mines, Wessels and Mamatwan, located in the Kalahari Basin in South Africa's Northern Cape Province. African Gold Group Targets Kobada Project Development African Gold Group (AGG) reported that a completed definitive feasibility study of its Kobada gold project in southwest Mali supports development of an open-pit project producing 50,000 oz/y of gold over a mine life of eight years. All-in sus- taining costs are estimated at $788/oz. Proven and probable reserves in two pits total 12.7 million mt grading 1.25 g/mt gold and containing 511,000 oz of gold. Total pre-production capital expendi- ture to develop the Kobada project is estimated at $45.4 million, with an addi- tional $15.7 million of sustaining capex and $21 million of capitalized waste mining over the life of the project. Project economics are based on a gold price of $1,200/oz. AGG plans to use the feasibility study to support funding initia- tives for development of the project. Contract mining will be based on 40- mt trucks and 70-mt excavators. The min- ing schedule calls for delivery of 1.6 mil- lion mt/y of ore to the process plant. The extraction process is expected to recover an average of 82% of the gold contained in ore. Detailed design of the plant and ordering of longer-lead time items is planned to begin in July, with plant com- missioning targeted for September 2017. Kobada project proven and probable reserves are contained in measured and indicated mineral resources totaling 1.2 million oz of gold. Additional inferred resources total 1 million oz. AGG plans to fund further development and up- grading of these resources using internal cash flow generated after the start of mine production. AGG is a Canadian company listed on the TSX Venture exchange. Hope Dims for Workers Trapped in South African Mine Collapse The fate of three missing workers who disappeared following a ground collapse that occurred weeks ago at Lily gold mine in South Africa remains uncertain, as res- cuers sought to stabilize the site before continuing efforts to get to them. On February 5, a surface crown pillar collapsed, trapping 87 workers inside the mine. At the same time, a container on the surface converted into an office was swallowed by the resultant sinkhole. The miners were soon freed without loss of life or significant injury, but three clerical employees remain trapped in the con- tainer now below ground. Lily is owned by the Australian company Vantage Gold, and is located in Mpumalanga province, east of Johannes- burg. Rescue efforts were halted about a week in, after subsequent falls of ground made the site unsafe. Management now plans an operation similar to what was used to rescue 33 Chilean miners in 2010, using a drill to create a rescue shaft to where the con- tainer is thought to be. "The drill rig is capable of drilling a 660 millimeter diam- eter hole 80 meters deep, which will allow access to Level 5," the company said in a statement. However, it will be at least three weeks before the site is stable enough to proceed, the company warned. Initial rescue efforts at one point came as close as 10 m to the trapped container, and signs of life were detect- ed. Since then the container has slid fur- ther into the sinkhole, and contact was lost. The three workers were reported to be without food or water, and the avail- ability of oxygen is uncertain. The accident comes at a time when the South African mining industry has achieved its lowest casualty rate in decades—75 fatalities reported last year, out of a workforce of nearly half a million. South32's plans include reopening of the Hotazel man- ganese mine at a significantly reduced production rate.