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
Issue link: https://emj.epubxp.com/i/98266
NEWS-LEADING DEVELOPMENTS ((Gold Fields Spin-off Plan - from p. 5) Group, will become the non-executive chair of Sibanye Gold and will step down from the Gold Fields board. Peter Turner, executive vice president for Gold Fields' South Africa region, as well as the rest of the executive team for the region (excluding those dedicated to South Deep), and the senior operational management teams of the KDC and Beatrix gold mines will remain with Sibanye Gold. Commenting on the future of Sibanye Gold, Froneman said, "These are not short life assets. On their current trajectory, if we do nothing else, they have 16 years of production left. There are a number of projects that will extend the life of these assets considerably, and they are not projects that are going to consume a huge amount of capital." Asked if South African authorities have a positive view of the creation of Sibanye as an independent South African gold producer, Froneman said, "They do view this as positive. "The unbundling itself does not lead to any job losses. I think one of the benefits that you've seen is that the cash flows out of KDC and Beatrix are ring-fenced and can be plowed back into those assets either in the form of capital or to shareholders in the form of dividends.So that is indeed positive. It certainly provides a lot more sustainability. So, on the whole I think it has been very well received." Following the unbundling, Gold Fields Ltd. will focus on cash flow generation, more predictable dividend payouts, and growth through the expansion and life extension of its remaining mines. "The South Deep project is core to our expansion plans, and we will continue to invest in this operation to secure the ramp-up to 700,000 oz/y," Gold Fields CEO Nick Holland said. Mineral reserves at South Deep totaled 40 million oz at year-end 2011. Gold Fields' international mines are Tarkwa and Damang in Ghana, Cerro Corona in Peru, and St. Ives and Agnew in Australia. During 2011, these mines produced 2.2 million gold-equivalent oz, and at year-end 2011, their mineral reserves totaled 24 million oz. Subject to approval by the JSE and the NYSE, Sibanye Gold will be listed as a separate and independent company on both exchanges in February 2013. 8 E&MJ; • DECEMBER 2012 Pressures confronting the Australian industry include rising production costs, a strong Australian dollar, productivity challenges, a tight labor market, and the propensity for government to tap the mining industry for additional tax revenues. However, the report states, "the Mid-Tier 50 is well placed to benefit from the continued growth of China and other emerging economies, provided they are able to navigate the multitude of risks on the supply side." The most notable change in composition of the ASX Mid-Tier 50 was an increase in the number of gold producers, which rose from 11 in 2011 to 19 in 2012, a shift driven by the fact that gold was the only commodity to see prices rise during the year. Thirteen of the 19 gold producers reported increases in operating cash flows; however, share prices did not reflect the positive operating statistics. The PwC report includes an in-depth analysis of factors influencing the gold price and the values of gold company shares. Eight coal producers came off the MidTier 50 list, three eliminated due to acquisitions and the others due to falls in their market capitalizations. PwC's Canadian report, Junior Mine 2012—Must survive before you can thrive, identifies financing as the key challenge for companies operating in the junior sector. In an uncertain market, the report states, investors are not looking to add risk to their portfolios, and high risk-reward ratios are junior mining's "sweet spot." Also, "Investors are demanding more, seeking to get more out of their investments. And we literally mean more— they're showing investment bias toward companies who have strong dividend policies or are announcing creative ways to give shareholders increased exposure to high commodity prices. Juniors don't pay dividends. Only one company in this year's Top 100 paid a dividend." The 27-page PwC report concludes with a four-page discussion of the financing dilemma confronting junior companies. Its headline: "Financing: Making it out of this financing slump alive…" The report is available at www.pwc.com/ca. Harry Winston Agrees to Buy BHP Billiton's Diamond Assets Harry Winston Diamond Corp. announced in mid-November 2012 that it has entered into share purchase agreements with BHP Billiton Canada Inc. and various affiliates to purchase all of BHP Billiton's diamond assets. The agreements include BHP Billiton's controlling interest in the Ekati diamond mine located 310 km northeast of Yellowknife, Northwest Territories, Canada, and associated diamond sorting and sales facilities in Yellowknife and Antwerp, Belgium. The Ekati mine consists of the Core Zone, which includes the current operating mine and other permitted kimberlite pipes, and the Buffer Zone, an adjacent area hosting kimberlite pipes having both development and exploration potential. BHP Billiton holds an 80% interest in the Core Zone and a 58.8% interest in the Buffer Zone, with the remaining interests held by minority joint venture parties. Harry Winston's agreed purchase price, payable in cash, is $400 million for the Core Zone interest and $100 million for the Buffer Zone interest, subject to adjustments in accordance with the terms of the share purchase agreements. The Ekati diamond mine includes both open-pit and underground operations. It was Canada's first diamond mine, having begun production in 1998, and remains its largest diamond mine. It is located near the Diavik diamond mine in which Harry Winston holds a 40% interest. Rio Tinto is 60% owner and operator of Diavik. The Ekati mine has produced an average of about $750 million/y of rough diamonds over the past five years. Over that period, sales from the Core Zone represented approximately 6% of world rough diamond supply by value. The current phase of production at Ekati includes ore sourced primarily from the lower-grade, but high-carat-value, Fox open pit, supplemented by underground production from the lower portion of the Koala kimberlite pipe and from the Koala North pipe. The current Ekati mine plan calls for a further seven years of production, but the property hosts additional resources that could become economic with increased diamond prices. Harry Winston Chairman and CEO Robert Gannicott said, "Completion of this acquisition will bring the opportunity to marry our Canadian diamond sorting and marketing skills with an experienced mine operating and development team, a worldclass operating asset, and future growth potential. Together with our existing mining business, these assets will serve as our platform for sustained, disciplined growth in the upstream diamond sector." www.e-mj.com