Gold Fields Damang Mine records sustainable profitability

Gold Fields Ghana's Damang Mine says it is beginning to record profitability after experiencing losses for months due to the falling gold price on the global commodities market.

 

Proceeds from the Damang Mine are expected to boost the mining giant’s overall revenue.

The Damang Mine last year experienced high operational cost, which was trigged by falling gold prices on the global market.

But in its first quarter results for this year, the mining giant said the mine has now been restored to sustainable profitability.

Last year Gold Fields announced it would take a firm decision on the mine by April this year, because the cost of production there was becoming prohibitive and unprofitable.

According to the mining giant, nearly half of the gold production in Ghana was “under stress” because of falling world prices at the time.

The company is one of many others that have been affected by the plunge in global prices of gold.

Last year, the company embarked on retrenchment exercise that affected about 160 workers -- and is expected to lay-off an additional 300 at its Tarkwa Mine this year.

According to the company’s first quarter results for the year the Damang Mine has now been restored to sustainable profitability and is expected to make a meaningful contribution to the group’s strategy of generating cash flow for at least the next five years, and likely well beyond that.

A statement by Nick Holland, Chief Executive Officer of Gold Fields said the company's production increased by three percent from 45,400 ounces in the December quarter to 46,700 ounces in the March quarter, due to higher mill throughput as a result of improved plant availability.

Total tonnes mined, including capital stripping, decreased from 7.3 million tonnes in the December quarter to 5.2 million tonnes in the March quarter.

Ore tonnes mined decreased from 1.3 million tonnes to 1.0 million ton nes, and operational waste tonnes decreased from 6.1 million tonnes in the December quarter to 4.2 million tonnes in the March quarter. 

The lower tonnages mined in the March quarter were due to a strategic decision to reposition the mine in 2014. In light of the lower gold price, mining operations were focused in lower strip ratio areas and mined grades were optimised by continually improving grade control and mining quality. 

Despite these interventions, the mine grade is however still below the reserve grade. The strip ratio decreased from 4.8 to 4.4.

The yield decreased from 1.41 grammes per tonne to 1.35 grammes per tonne due to mining lower grades from Saddle pit.

Tonnes processed increased from 1.0 million tonnes in the December quarter to 1.1 million tonnes in the March quarter. 

The increased throughput was due to the continuous stabilisation of the milling circuit availability and utilisation.

Net operating costs, including gold-in-process movements, decreased from US$49million to US$41million due to good cost control and lower tonnages mined in the March quarter.

Operating profit increased from US$8million in the December quarter to US$19million in the March quarter as a result of the higher revenue due to higher gold production and lower net operating costs.

Capital expenditure increased from US$6million to US$7million due to timing of expenditure, with the majority spent on Far East tailings storage facility raise.

The all-in sustaining costs and total all-in cost per ounce decreased from US$1,261 per ounce in the December quarter to US$1,111 per ounce in the March quarter due to the higher gold production and lower operating costs, partially offset by the higher capital expenditure.

Tarkwa Mine

Gold production at the Tarkwa Mine decreased by nine percent from 160,000 ounces in the December quarter to 145,200 ounces in the March quarter due to the planned cessation of stacking at the North heap leach operations and decreased CIL head grade and yield, partially offset by increased throughput.

Total tonnes mined, including capital stripping, decreased from 33.8 million tonnes in the December quarter to 24.5 million tonnes in the March quarter -- mainly due to the rescheduling of operations required by discontinuation of the North heap leach operation. 

Ore tonnes mined decreased from 4.5 million tonnes to 3.5 million tonnes. Operational waste tonnes mined decreased from 17.5 million tonnes to 8.8 million tones, and capital waste tonnes mined increased from 11.8 million tonnes to 12.2 million tonnes. 

The decrease in operational waste tonnes mined is in line with the 2014 mine plan. Head grade mined decreased from 1.30 grammes per tonne in the December quarter to 1.28 grammes per tonne in the March quarter. 

The strip ratio decreased from 6.5 to 6.0. The reduced mining rates, as a consequence of the cessation of the Heap leach operations, indicate that the average and peak stripping ratios over the remaining life of 12 years are expected to be 5.1 and 6.8, respectively, based on depletion of the current reserve of seven million ounces.

The CIL plant throughput increased from 3.06 million tonnes in the December quarter to 3.38 million tonnes in the March quarter. Realised yield from the CIL plant decreased from 1.35 grammes per tonne to 1.19 grams per tonne. 

During the March quarter, as a result of the closure of the North heap leach operation, both medium and high grade ore were fed to the CIL. 

In the December quarter, with the North heap leach still in operation, medium grade ore was fed into the heap leach operation and only high grade material was fed to the CIL plant. The CIL plant production decreased from 133,100 ounces in the December quarter to 129,800 ounces in the March quarter.

Feed to the North heap leach section decreased from 1.76 million tonnes in the December quarter to 192,000 tonnes in the March quarter. 

Gold production from the North heap leach operation decreased from 26,900 ounces in the December quarter to 15,400 ounces in the March quarter. 

The heap leach produced 15,400 ounces, of which 12,900 ounces was rinsed from inventory and 2,500 ounces was produced from the 192,000 tonnes stacked during the quarter.

Net operating costs, including gold-in-process movements, decreased from US$118million in the December quarter to US$96million in the March quarter; mainly due to lower production and cost reductions as a result of the North heap leach closure.

Operating profit increased from US$85million in the December quarter to US$92million in the March quarter as a result of lower net operating costs and higher gold price received, partially offset by the lower gold production.