Engineering & Mining Journal

JUL 2014

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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50 E&MJ; • JULY 2014 www.e-mj.com S I B A N Y E G O L D Success is the best form of revenge, they say, and as such, Sibanye is dishing it out in spades. The once-unloved orphan child set adrift by Gold Fields has seen its share price more than double since it was listed in February last year. The com- pany continues to squeeze life out of three older assets it took control of at its foundation, Kloof, Driefontein and Beatrix. E&MJ; was invited along for an underground inspection of the venerable old lady of the three, Driefontein. Gold was first discovered in the Carltonville area west of Johannesburg in 1939. War interrupted the development of the deposit but began days after the U.S. bombed Hiroshima. Ever since, Driefontein has steadily produced gold. "Shaft 10 is probably the most pro- ductive gold shaft ever, producing 2 tons a day in its heyday," said Koos Barnard, vice president of the Driefontein mine. "Even now, the mine continues to be a valuable asset—last year it delivered near- ly $100 million in profit to the group." Gold mineralization occurs at depths between 3,200 ft and 13,000 ft below surface. Two major orebodies, the Carbon Leader Reef (CLR) and the Ventersdorp Contact Reef, are the major contributors to production with a third, the Middelvlei Reef, making a small contribution. The CLR comprises various facies from single carbon seam to single and multiple band conglomerates. It is a high-grade reef at the base of the Central Rand Group, and at Driefontein it dips at 25°. Keeping the network of shafts and access tunnels operational is quite an undertaking. The complex spans 68 miles. "We have 27 holes leading into the mine, shafts and vent shafts," Barnard said. Because it lies under porous dolomite formations, flooding is a constant threat. Around 26 million gallons a day are pumped out, at a cost of nearly $100 million annually. Production is running at roughly 700,000 oz/yr and is expected to remain at this level, gradually tapering off from 2022. Currently, life of mine extends to about 2030 with the last few years of production coming from support pillars as the mine is gradually shuttered. However, Driefontein may yet live on beyond her projected years. Technical studies are under way to exploit "white areas"—potential project zones that were left intact because of cost or engineering challenges. A study by previous owner Gold Fields indicated that 8.8 million oz of gold could lie below the mine's existing infrastruc- ture, which has reached a depth of 2.1 miles. The deepening of No. 9 subvertical shaft would extend Driefontein's life by at least 13 years to around 2035. The com- pany has also been evaluating the recov- ery of high-grade CLR pillars from the No. 10 Shaft complex. There's also the possibility of a drop down shaft below the lowest level of the No. 5 shaft. "We are looking at all of our options," said Barnard. "We have plans for the last shaft standing, but are also looking at ways to extend the mine's life, and the cost implications it will have to the company." He echoed the message that the com- pany's executive team had repeated, it seemed as often as they could: "It will all depend on how it affects cash flow— nothing will be done unless there's a business case." In all likelihood, sublev- el development will take place incremen- tally, he added. "A big bang is not nec- essarily the best way forward. A gradual incline shaft may be a better option than a vertical shaft being sunk." So far, the numbers are looking satisfactory. During the six months to December, group gold production increased 18% from the previous six months to 774,600 oz; cash costs fell 12% to $804/oz; and it has increased reserves 46% to 19.7 million oz, extending the life of its mines by five years to more than 13, according to the company's annual report. Given its success and a comfortable production outlook, it's perhaps not sur- prising that CEO Neil Froneman is on the hunt for new assets. He has indicated that Sibanye is talking to platinum pro- ducers about an acquisition, as well as other opportunities. It's the acquisition of the Burnstone mine, the troublesome deposit to the east of Johannesburg, that could determine the company's long-term fate. Currently, Sibanye is digesting Wits Gold, following a R407 million ($38 mil- lion) bid made in December. This will give it a sizeable land holding in the Free State and access to the newly built Burnstone in Mpumalanga province, which Wits is buying from the liquidators of Great Basin Gold. It will now fall to Sibanye to pick up the tab to bring the Burnstone mine into pro- duction of about 100,000 oz a year. Sibanye Sets its Sights on Burnstone Sibanye Gold began the year with the enviable reputation as the world's lowest cost producer, but the recent acquisition of cash-burning Burnstone may change that By Gavin du Venage, South African Editor Sibanye Gold may be a new company but its Driefontein complex has been producing gold since the end of World War II. (Photos by Gavin du Venage) EMJ_pg50-52_EMJ_pg50-52 7/1/14 2:52 PM Page 50

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