DesSoft Client - DRA featured in SA Mining Magazine 2011


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DesSoft Client - DRA featured in SA Mining Magazine 2011

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  3. 3. March 2011 issue CURRENT AFFAIRS • • • 10 17 Burnstone: officially launched, officially open Petmin’s prospective pipeline Xstrata opens new chrome mine SPECIAL FEATURES: GOLD, ENERGY, MINERALS PROCESSING, AND MATERIALS HANDLING 17 • • • • 30 42 58 42 Major megawatts to the rescue With the completion of two significant mining projects, Aggreko’s focus on the sector remains high COVER STORY: A new and passionate MD for DRA Mineral Projects “My intention is to drive greater growth through passion,” says Angus Fynes-Clinton 58 30 Gold Fields – major exploration for major growth Aspirations to grow annual gold output from 3.6moz to 5moz by 2015 54 24 Gold juniors run rampant in West Africa Viking Ashanti Avocet Mining Ampella Mining Riverstone Resources Minerals processing – taking the initiative on innovation MC Process upholds its name as a technology trendsetter SPECIAL FOCUS: GREEN MINING (PAGE 66 – 100) 102 Going large on logistics Aurecon has been involved in a number of rail transport and new port/port expansion study projects set to lift South Africa and Mozambique’s export capacity in the mid-tolong-term future OF INTEREST 4 Out of Africa 110 Making mines work 114 Site and Road 66 70 SA Mining SAMining MARCH 2011 R25.00 (incl VAT) International R28.50 (excl tax) READ WHAT REALLY GOES DOWN GOLD, ENERGY, MINERALS PROCESSING, GREEN MINING, and MATERIALS HANDLING MAJOR megawatts to the RESCUE Angus Fynes-Clinton, newly appointed MD for DRA Mineral Projects, aims to ensure that the company maintains its strong foothold in the mining industry. “Our engineers are passionate about their work, this culture is the backbone of our success and I have every intention of reinforcing it,” he says. GOLD JUNIORS RAMPANT IN WEST AFRICA GO GREEN OR GO HOME environment feature NEW DRA MINERAL PROJECTS MD 74 March 2011 102 PASSIONATE ABOUT PROCESSING ANGUS FYNES-CLINTON Mining March 2011 Outside Front Cover.indd 1 2011/03/17, 07:59 AM 1 SA Mining March 2011 Visit SA Mining on the Web:
  4. 4. behind the words EDITOR Laura Cornish Tel: (011) 280-5365 E-mail: ASSISTANT EDITOR Nelendhre Moodley Tel: (011) 280-5782 E-mail: SALES MANAGER Nicki Nemeth Tel: (011) 280-5789 E-mail: ADVERTISING CONSULTANTS Gill Williamson Tel: (011) 280-5191 Fax: (011) 328 2226 E-mail: Angela Summers Tel: (011) 280-5367 Fax: (011) 328 2226 E-mail: Estelle Kerrane – Site and Road Tel: 011 280 5736 Fax: (011) 328-2240 Email: SWITCHBOARD: (011) 280-3012 ART DIRECTOR Fred van de Werken E-mail: SUB-EDITOR Mike Scarth FREELANCE PHOTOGRAPHY Jeremy Glyn SALES AND PRODUCTION CO-ORDINATOR Gail Mortinson Tel: (011) 280-5369 Fax: (011) 328 2226 Evelyn Nkutha – Site and Road Tel: (011) 280-5894 Fax: (011) 328-2240 E-mail: PUBLISHER Justice Malala ASSOCIATE PUBLISHER Jocelyne Bayer Tel: (011) 280-5899 SUBSCRIPTIONS Hotline 0860 200 737 Fax: (011) 280-5755 PRINTING CTP Books Cape Town EDITORIAL AND ADVERTISING ENQUIRIES AVUSA MEDIA LTD, PO Box 1741, Saxonwold, 2132 Copyright Avusa Media Ltd. No part of this publication may be reproduced, stored in a retrieval system or be transmitted in any form or by any means, electronic or mechanical, without prior written permission. Avusa Media Ltd is not responsible for the views of its contributors. Magazine Division A division of AVUSA MEDIA Ltd SA Mining March 2011 2 Laura Cornish. The AMD report – don’t hold your breath Acid mine drainage (AMD) – the hype is massive, and the issue just seems to go on and on … and on! Ironically, the problem, according to experts, is bigger than huge, timing is shorter than short, and, if we hold our breath waiting for a solution from the DMR, the ending won’t be very pretty. What we can’t seem to get right is taking precautionary steps to prevent the problem from reaching crisis mode – AMD was highlighted in September 2002, when it started flowing from an abandoned shaft in the Randfontein area of the Western Basin as a result of mine flood water. Yet in the space of almost nine years, even when the crisis was staring everyone in the face, nothing has changed. Yes, AMD flooding from the Wits basin (West, Central and East) is critical, and therefore is a priority, but the problem is so much greater than that. Having read a significant portion of the DMR’s official AMD report, which is 146 pages long, it addresses the severity of the situation, has included a variety of specialists to assist in looking at the problem, identifies at length what options could be considered viable to solve the problem, and in conclusion states: “The recommendations in this report represent the start of a process.” The start? Really? Isn’t it a little late to only be starting a process carrying such dire consequences? And that is just a summary of the Wits AMD catastrophe. The report adds that AMD problems are also being experienced in other gold mining areas, including the Klerksdorp/Orkney/Stilfontein/Hartebeesfontein (KOSH), Free State, Far West Rand and Evander gold mining areas; the coal mining areas of Mpumalanga and KZN and the O’Okiep copper district. Surely the obvious solution is to look at preventative measures now, instead of sitting with more Wits-like issues five or ten years down the line. In Pravin Gordhan’s 2011 budget speech he announced R3.6bn has been allocated for water infrastructure and services, including funding for AMD, but one of the underlying issues in the AMD report is the costs associated with solving the problem, including looking at partnering with the private sector. The report covers issues like, how AMD started, what risks it poses to the environment, how it should be monitored, what water treatment solutions would be viable, etc. The only element missing is what action plan is being taken, and when. It looks like Jhb’s basement floors and Gold Reef City’s tourist gold mine will have to start flooding before some sort of decision will be made – which with every passing day is growing more expensive to fix as the severity of the problem escalates. And considering we are one of the major mining capitals of the world, how does it look if we fail to handle and manage such a massive environmental hazard. The report also looks at how AMD is managed in Australia, Canada and the US, where large amounts of capital are allocated to managing the problem. With numerous case studies to learn from and observe, I cannot understand why we cannot immediately resolve what will be one of the biggest environmental disasters in South African history. m
  5. 5. out of africa BISHA GOLD PROJECT (PHASE 1) – ERITREA Single African mine owner and developer TSX/NYSElisted Nevsun Resources’ Bisha mine in Eritrea has reached commercial production. Commercial production marks the completion of project development, commissioning and operational ramp-up of the mine and processing plant. The operation is currently producing gold at a rate in excess of 1000ozpd. The commissioning of the plant commenced in late October, with first gold pour in late December and a progressive ramp-up thereafter. Plant throughput averaged approximately 5250tpd over the last 30 days, with a peak of 6560tpd, well above schedule. Recoveries are also higher than planned, averaging 89%. During the commissioning phase, Bisha has produced approximately 40 000oz of gold. ANGOVIA GOLD MINE – COTE D’IVOIRE AIM/TSX-listed West Africa-focused gold mining company Cluff Gold has taken the decision to temporarily suspend operations at its Angovia mine in Cote d’Ivoire. Operations at the mine have been temporarily suspended due to critical supplies, including fuel, explosives, cement and cyanide, being only intermittently available as a result of the political situation in the country – making it difficult to sustain operations. The Angovia mine will remain on care and maintenance until Cote d’Ivoire returns to the level of political stability required for restarting operations. Peter Spivey, Cluff Gold CE, says: “The suspension of our operations at Angovia is unfortunate, but we have no choice in the matter. Although our gold production will be affected until we can re-open the mine, we are confident that the shortfall in production will be minimal and will have a limited effect on our overall budgeted cashflow for the year.” HUSAB URANIUM PROJECT – NAMIBIA Australia-based uranium company, Extract Resources is holding discussions with Rio Tinto around a potential combination of the Husab uranium project (formerly known as Rössing South) with the neighbouring Rössing uranium mine, with a view to capturing the significant potential synergies that could be generated from a joint development of the two projects. Extract is also holding discussions with Kalahari Minerals to explore various options that might simplify the Extract/Kalahari shareholding structure. Kalahari currently owns 40% of Extract. Extract Resources’ principal asset is its 100%-owned Husab uranium project, which contains one of the five largest uranium-only deposits in the world. SA Mining March 2011 4 MAVUSI URANIUM, BASE METALS AND RARE EARTH PROJECT – MOZAMBIQUE Southern Africa focused minerals explorer Jacana Resources has agreed with AIM-listed southern African multi-commodity resource company North River Resources to farm into its Mavuzi project, in the Tete Province, Mozambique, with an agreed earn-in of up to 80% upon completion of a bankable feasibility study. The initial earn-in of 51% over a period of 12 months involves the expenditure of a minimum of $400 000. Mavuzi, in central Mozambique, is in a known mineralised uranium district, with various old mine workings. The only recent drilling has been around old mine locations, which revealed widespread uranium content of up to 4600ppm. In addition, there are widespread radiometric anomalies, most of which have never been drill-tested, in addition to gold, base metal and rare earth prospectivity. The Mavuzi tenements cover an area of known uranium mineralisation. Production records indicate that 50t of uranium was extracted from 1947 to 1950. The only modern drilling to date has been around the old mine area and immediate surrounds. Results include: • Mavuzi mine – 2m @ 3400ppm U308, within 8m @ 1000ppm U308 from 30m down-hole with a maximum value of 4600ppm U308. • Airport – 2m @ 3400ppm U 30 8, within 8m @ 1000ppm U308 from 30m down-hole with a maximum value of 4600ppm U308. • Kaboazi Creek – 7m @ 300ppm U308 from 31m down-hole with highest values up to 1000ppm. Historical reports record copper and molybdenum occurrences in the area. m
  6. 6. A subsidiary of Johannesburg Istanbul Perth Jakarta Brisbane Calgary Sudbury Santiago Our Services Include ü ü ü ü Mining Software Solutions Mining Communications Technology Professional Mining Consulting Transformation Management Planning Room to Boardroom
  7. 7. corporate briefing Optimal mine designs with mine2-4D, mineCAD and EPS Figuring out which mine planning and design solution to implement is not easy. That’s why you need to go with a product that has been chosen by hundreds of other mines like yourself. Just looking at the name won’t necessarily give you the best result – you will need to do some homework about your business as well as your solutions provider to make the right choice. With unrivalled experience in developing underground mine design, planning and scheduling solutions, GMSI supports mines in more than 50 countries around the world. With specialised extensions for both underground as well as open pit planning and scheduling, you will have to cast your net very wide to find a set of solutions able to keep up with GMSI’s mine2-4D and Earthworks Production Scheduler (EPS) – never mind what your mine looks like. The set of mine planning activities in the mineral resource management discipline is often addressed in isolation instead of as an integrated whole. This lack of process-based understanding of the organisation has caused many mines to purchase systems that work well in isolation, but have a hard time sharing information to up-and downstream disciplines. This fragmentation of the process causes designs and schedules to be slanted toward a single department’s objectives or approach to the detriment of the total organisation. Further optimisation of designs and schedules are also impeded by the inability of non-integrated solutions to create a variety of feasible scenarios for the most efficient and profitable mining of an orebody. It is with a view on integration, together with speed and accuracy of planning, scheduling and optimisation that mine2-4D and EPS were developed. SA Mining March 2011 8 mine2-4D is a complete, automated underground mine planning and scheduling system that delivers cost and performance improvements through efficient data and information management. It produces fully integrated long and short-term mine plans, Gantt schedules linked to 3D designs, 3D animations and complete reconciliation, while interfacing with your current mining or CAD system. Using design types to model mining excavations and activities, many mining methods are supported, including: • Fixed cross sections, for example tunnels, room and pillar • Outlines, for example sliping of a drift • Complex solids, for example open stoping, cut and fill Collecting inputs: The first step in the mine planning process is to gather the relevant data – this includes geological models as well as attribute information describing the models. Mine2-4D’s centralised database structure allows automatic interrogation of the geological data (which can be sourced from a variety of popular geological modelling solutions) and enables the planner to orientate himself in the orebody as well as to identify mineable areas in order to select the most appropriate mining method Mine standards: By creating mine standards databases, design consistency is maintained company-wide or throughout a project. Changes in the database are directly applied to the design items such as design cross-sections. Defining rules early on in the process allows for predictable, repeatable and accurate models and scenarios to be developed: • Multiple calendars can be applied to both resources and activities; for example development and backfill crews working on different shift systems • Attributes are used to describe the components of the mine plan and can be applied using both automatic and manual methods for quick turn-around from design to schedule. • Naming conventions can be built up from attributes and then split out to create a summary structure in the scheduler. • Resources can be either equipment or labour, and can be assigned graphically or by ‘drag and drop’ onto activities. A resource-based Schedule can be built, and availability and cost over time can then be changed. • Prices and/or costs can be changed over time to reflect the variations in planned revenue, costs, and cash flow.
  8. 8. Designing and sequencing: Once planned excavations have been designed, those designs can be sequenced quickly and easily utilising mine2-4D’s unique methodology. Changes to the design do not require manual re-sequencing. Manual link creation is also possible and the sequence can be “tested” with the click of a button Mine designs can be created using either mine2-4D’s design window, or specialised CAD solutions such as Gijima’s mineCAD product. An advantage of working with GMSI’s mineCAD to do the designs is that it integrates fully with mine2-4D. mineCAD contains a host of specialised features such as: • Optimised mine design tools • Intelligent annotation tools • Advanced 3D view management • Robust printing and plotting facilities • Ventilation and rock mechanics modules • Modify task period values in the Gantt Chart inter- • • • • • Scheduling When it comes to creating and testing schedules, Enhanced Production Scheduler (EPS) is the premier scheduling tool for the mineral extraction industry. The product was developed to bridge the gap between traditional project schedulers and spread sheets, where the majority of planners currently schedule mining activities. Unlike many other scheduling tools, EPS is a purposebuilt scheduling application for mining – not only a set of macros or scripts built on top of an “off-the-shelf” project scheduler. Designed by mine planners for mine planners it has the capability to rapidly assess different scenarios and report the requisite numbers. EPS is fully integrated with Mine2-4D, facilitating twoway transfer of activity/resource data and dependencies to ultimately produce an animated schedule. Subsequently, modifications to the design/geological information are reflected in the schedule. EPS is packed with outstanding features, such as the ability to: actively - actually snapping to design elements in the Gantt chart or visualisation by simply selecting it in either of the views Dynamically view a 3D visualisation of the schedule using the EPSViz module, with full video exporting and even annotation capabilities Create user-defined physical properties, such as tonnage, metres and grade (such as gold) Specify tasks as either rate or duration driven and assign scheduling constraints, with the ability to vary the rates over time Customise the display of tasks and dependencies with colouring, based on user-defined text fields and layers etc. Level schedules based on variable resource availabilities as assigned to specific tasks and much more. Optimisation: Over and above these and many more scheduling productivity tools, Gijima Mining has raised the game yet again by developing EPSOT – an optimisation tool using automated genetic algorithms and heuristic rules to create thousands of scheduling alternatives that are ranked according to your detailed financials. Developed with Mirarco in Canada, EPSOT was officially launched in 2008 and designed to save mine planners time by generating near-optimal mine schedules based on given parameters and constraints. EPSOT is being commercialised in partnership between Gijima and Mirarco, and its development is ongoing with new and improved versions regularly being released. The combination of mine2-4D, mineCAD and EPS solves the integration issue – even for small mines who cannot invest in a fully-fledged enterprise solution. If you are interested in obtaining more information about these products and their application in the South African mining environment, please contact Gijima Mining through:
  9. 9. current affairs Burnstone officially launched, officially open Ferdi Dippenaar - GBG CEO: “In the four and a half years following the commencement of the decline boxcut here at Burnstone in May 2006, we evolved from a so-called greenfields project to a production facility, during which time we focused on mine construction, infrastructure development and the early-stage establishment of an operating environment. It seems like a short time, and it probably is, but the team has successfully delivered the mine and associated infrastructure.” Underground drilling at Burnstone.
  10. 10. THE MILESTONES: • In 2007, Tranter Burnstone, a BEE company, became the owner of approximately 20m GBG common shares, or 26% of local operations. • On March 10, 2008, the DMR approved an amended Environmental Management Plan (EMP) for the sinking of the vertical shaft. • The application for a Mining Right was granted on October 28 of the same year, effective February 17, 2009, for a period of 18 years. The 18 years was based on the reserves available for mining at the time. The reserves have since increased and the LOM at Burnstone is estimated between 23 and 25 years, at a higher production rate than previously planned. • In 2009, GBG decided to focus on rebuilding its balance sheet, restoring financial liquidity and continuing to develop Burnstone. “We were faced with a decision to either take on extremely expensive debt or mothball the Burnstone project.” Burnstone metallurgical plant. In Gear for your Success! The Leading Industrial Gearbox Manufacturer... The preferred partner for the supply of a comprehensive range of drive solutions supported by unsurpassed field service, maintenance and repair. TRANSMISSIONS Performance Powered Solutions Tel: (+27 11) 397 2495 Fax: (+27 11) 397 2585 Email: Website:
  11. 11. current affairs Aerial view of Burnstone plant and headgear. 2010 was a defining year in positioning GBG as a serious emerging gold producer: • Reef was intersected on February 4, and assays to date indicate results either in line with, or better than, expected. • The final blast was conducted on the 485m vertical shaft in April, and in May raise boring of the 305m ventilation shaft was competed. • The access decline, vertical and ventilation shafts, as well as the metallurgical plant are complete, as is the associated surface infrastructure. “And today we stand before you as a company that is finally pouring gold, generating revenue and returns for our shareholders.” A SUMMARY OF BURNSTONE: • A 20moz ounce ore resource, one of the ten largest gold ore bodies left to be mined in the world; • 6.36m proven and probable ounces in reserve category; • Approximately R3bn to build Burnstone; • Plans to directly employ approximately 1100 people. m
  12. 12. Petmin’s prospective pipeline Petmin’s organic expansion projects are on track – with an exciting pipeline of prospective iron ore projects in place, Petmin remains well positioned for growth, with low gearing and significant cash resources. The company will double production at its flagship Somkhele operation during calendar year 2012, to in excess of 1.1mtpa of saleable product. Veremo Holdings, in which Petmin has a 25% interest, has applied for a mining licence for its Stoffberg magnetite project. The application is awaiting final adjudication by the DMR. Together with its joint venture partners in Canada, Petmin has approved an exploration programme with the aim of defining a 40-year inferred magnetite resource, based on the production of 500 000t of pig iron a year. The initial exploration results are expected to be published towards the end of the second half of the 2011 calendar year. The first phase of the exploration programme at Mount Ginka in Liberia – to demonstrate whether a commercially saleable magnetite concentrate can be produced – was approved. At 31 December 2010, the group had cash on hand of R270m and undrawn facilities of R65m. m Bird’s eye view of Somkhele.
  13. 13. current affairs Xstrata opens new chrome mine Limpopo premier Cassel Mathale has officially opened Xstrata’s Magareng chrome mine in Steelpoort, Limpopo. The mine, which is being built at a cost of R700m, forms part of the R4.9bn second phase expansion of the Lion Ferrochrome mine and smelter complex announced in late 2010. Premier Mathale highlighted Xstrata’s contribution to the Limpopo province where it has chrome and platinum group metals operations. “Mines contribute enormously towards job creation and play an active role in the communities. Mining is From left: Johan Combrink, GM - Xstrata Eastern chrome mines, a part of our lives and we would like to congratulate Xstrata on David Magabe, executive mayor of the greater Sekhukhune this tremendous investment. Thank you for your contribution. district, Cassel Mathale, Honorable Premier of Limpopo. Acting together we will not fail.” Xstrata Alloys CEO Peet Nienaber highlighted the socio-economic benefits of the expansion, including creating in excess of 2000 direct and over �� ���� �� ���� ������� ���� � ��������� ����� 6000 indirect jobs. “This expansion will bring last���� ������ � ������� ����������� ��� ��� ������� ���� �� ���� ������� �� ���������� �������� �� ���� ����� �� ������ ����� ������� ing economic benefits ��� ���������� �� ����������� ���������� ��� �������� �� ����� for our employees and ����� ���������� our surrounding community. It gives us an opportunity to increase our already significant existing investment in employee wellness, community enterprise development, skills development and other initiatives,” he says. Magareng mine will produce 182 000t of chrome ore in 2011, ramping up to 1.2mtpa by 2014. The Lion phase II expansion will add another 360 000t of ferrochrome capacity per annum and significantly reduce the venture’s overall production costs. JSE-listed Merafe Resources has a 20.5% participation in Xstrata’s chrome business under the Xstrata-Merafe Chrome Venture, which includes Lion Phase 1. Merafe has an option to participate in the expansion and negotiations in this regard are under way. m ���� ��� ����� �������� �� �� ��� ����� �������� ������ ��������������������������� �������� � � ������������������������ �������� �� ������ ������ ������� �������� �� ��������� � ���������� ���� ����� �������� ���������� ���������
  14. 14. Coal is poured onto a stockpile.
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  16. 16. gold juniors The return of the ‘bull’ in the commodities market and the subsequent loosening of financial fists is seeing a number of viable projects by junior miners get to the starting blocks. In fact, resource-rich West Africa is like the proverbial nectar, attracting a swarm of explorers, investors and overseas miners. Over the past few years a diverse range of commodities such as copper, gold, diamonds and iron ore have been brought into production in West Africa. Already a number of companies have established a presence in the country, including Newmont, Anglogold, Axmin, Redback Mining and Compass Gold. Aside from being a commodities haven, West African governments have become proactive in creating ease of business development by actively courting foreign investment. In fact, most West African mining destinations offer good infrastructure, including roads and telecommunications. West Africa’s Burkina Faso has in the past seven years distinguished itself as a premier gold-producing destination. In fact, over the last three years the country has produced six gold mines, including the first Taparko mine in 2007 by High River Mines, followed by two mines commissioned in 2008 (Semafo’s Mana Mine and Etruscan’s Youga gold mine), Cluff Gold’s Kalsaka Mine located north of Burkina Faso and two mines last year (Avocet’s Inata gold mine and Iamgold’s Essakane mine). m Running rampant in WEST AFRICA 17 SA Mining March 2011
  17. 17. gold juniors seeking golden glory in Ghana The fundamentals for gold over the next five years at least are expected to remain robust, driving the gold price to record highs. Demand will be driven by China as it bulks up its gold reserves, explains economist David Halle of David Hale Global Economics. Speaking at the Mining Indaba in Cape Town in early February, Halle outlined the global economic impact on the commodities sector over the next few years. Nelendhre Moodley writes. As China bulks up its gold reserves, Africa, and in particular West Africa, which is emerging as a serious goldproducing region, will benefit significantly. Among the slew of emerging gold exploration companies aiming to ‘make a gold killing’ in West Africa is ASX-listed Viking Ashanti, which has three properties in various stages of development in Ghana. Diamond drilling at the Akoase East project. SA Mining March 2011 18 All three of its properties, which were acquired from Resolute Mining, are located on the ‘unrivalled’ Ashanti Gold Belt in Ghana. “Since the late 1990s Resolute, which has a 33.25% stake in Viking, has spent around $7m progressing these projects,” says Viking MD Peter McMickan. The company is keen to get its projects off the ground as soon as possible. Since its listing in May last year Viking has
  18. 18. raised $8m in a bid to further its projects. Its most advanced project, Akoase, located 150km north of the capital Accra, continues to be extensively drilled. “We are looking to build upon Resolute Mining’s 0.5m resource,” explains McMickan. So far the drilling results have been encouraging, including intersections such as 2.2g/t over 14m and 6.4g/t over 8m. Akoase has a prime location – 25km from Newmont’s Akyem gold project, which has an 8.5moz resource – the largest undeveloped gold project in Ghana at the moment. The Akoase ore-body remains open at depth and strike. On Akoase, Viking is busy rolling out a 2000m diamond drilling programme aimed at expanding the existing 500 000oz resource. ties projects, McMickan says that it is a positive operating environment with the government of Ghana proactive in fast-tracking mining projects. “It is a politically and socially stable country.” Ghana has a long history of mining and has a well-developed mining infrastructure and skills base. “Accra has become a hub for servicing the West African mining industry and over the years established mining drilling and assay companies.” With no debt and a $6.2m exploration budget, Viking is working hard on firming up its resources in a space of the next two years. The company has a market cap of Aus $20m. m Outcropping mineralisation at Akoase East. Ghana is a positive operating environment with the government proactive in fast-tracking mining projects. A further 8000m of RC drilling is planned. The objective is to increase the resource base to in excess of 1moz of gold within the next two years. Further, soil sampling at Akoase and its West Star properties has identified new anomalies. Through to May this year Viking has planned a further 1000m of diamond and 4000m of RC drilling at West Star/Blue River properties. These properties, located 150km west of Accra, are adjacent to ASX-listed Adamus’s Nzema gold mine, which poured its first gold at the beginning of February. Meanwhile, the West Star/Blue River property extends about 17km along the fault structures that Adamus is mining. Over the next year, starting from May, Viking will be involved in further drilling on the properties. Its third exploration venture – the Nchiadi and Nyame Dzikan properties – located 20km north-west of the Blue River/West Star, is a grassroots exploration programme in JV with a Ghanaian partner. The properties are at an early stage of evaluation and a systematic, staged work programme is planned to advance the properties. “We are currently involved in a stream sediment and soil sampling programme which will run over the next 12 months and are also looking for gold hosted within granite.” Perseus’ Mining Ayanfuri project is located 80km from the projects. Speaking of Ghana as a country to roll-out commodi-
  19. 19. gold juniors Bumping up its GOLDEN bounty Since its first gold pour just over a year ago, at the Inata gold mine in Burkina Faso, Avocet Mining (Avocet) has been busy with exploration to extend the life of mine beyond the current six years. Aside from aiming to double its reserve base to 1.8moz by September this year, the company is on the prowl for lucrative gold investment opportunities in West Africa, financial director Mike Norris told Nelendhre Moodley in a recent interview at the Mining Indaba held in Cape Town. However, despite being cash-flush, Norris is quick to point out that early stage gold mining projects in West Africa are currently retailing at a premium. “Exploration companies are pricing the benefits of building a mine into an investment, making exploration projects extremely expensive. However, if we found the right acquisition at the right value, we would make a move.” Aside from investigating acquisitive potential, the company is in the process of shedding its South East Asian assets in favour of firming up its roots in West Africa. In December Avocet agreed to the sale of its South East Asian assets to an Indonesian local for $200m. The company has been operating its mines in South East Asia for more than ten years and produced more than 1.5moz there, having established a presence in Malaysia 15 years ago and Indonesia in 2004. The primary reason for divesting its South-East-Asian assets is that the mines are nearing the end of their life and the opportunity to invest in new early stage ventures in West Africa is extremely compelling, Norris says. “We will use the $200m to develop a bigger business in West Africa, including exploration to expand the reserve at Inata and add-in to our resource in Guinea, where our Tri-K SA Mining March 2011 20 prospect looks very exciting,” he adds. West Africa has over the recent years emerged as a popular destination for mineral exploration activities, especially gold – exploration prospects are larger, the government of Burkina Faso is pro-mining and extremely supportive. There are no issues with protected forests and the populations are much sparser around the mining lease, Norris explains. Speaking of its first mine development in Africa, Norris says that Inata gold mine, located in the northern region of Burkina Faso near Iamgold’s Essakane mine and Cluff Gold’s Kalsaka, mine, last year reached steady state production levels of 13 000 - 15 000ozpm. Inata remains a ‘great success story that was delivered a h e a d of schedule’. Inata mine is an open-cast near-sur-
  20. 20. CJAA792 Consolidations Workflow BI Distribution Financial Avocet exploration team in Guinea. face operation delivering production from three pits – North, Central and South pits. It is located on a 26km² mining licence surrounded by a total 1660km² exploration licence. Working towards gold production of 165 000oz in 2011, Avocet is well advanced in its exploration initiatives aimed at extending the LOM well beyond six years. The company has already surpassed a third of its drilling programme, having drilled 70 000m of its 200 000m target. Avocet plans on completing its drilling programme by mid-year. “The first tranche of drilling results have revealed some very encouraging results, with grades in line with the mine’s existing resource.” Inata’s life of mine reserve grade is 2.06g/t; in 2010 the plant processed at 2.66g/t and is expected to run at around 2.2g/t in 2011. Avocet also has the Tri-K project – an exploration asset of 1100km2 – in Guinea. The deposit currently hosts a 667 000oz resource, and is located in the highly prospective Birimian greenstone belt. Norris remains confident about increasing this resource and taking it to feasibility for a new mine in Guinea, as establishing a presence in a new country is something with which the company is well versed. Avocet is determined to invest significantly in building up its exploration portfolio over the next year in a bid to ‘develop another one or two mines’ in the near future. m Avocet Inata truck fleet. CAMEC digs Accpac Accpac 360º Experience. The complete business solution. With thriving operations in 6 African countries, CAMEC plc is one of the continents fastest growing mining enterprises. Being a successful and well informed organisation, it is no surprise that they chose the Accpac 360º Experience to deliver end-toend business management solutions that help increase productivity, profitability and offers a significant competitive advantage. The Accpac 360º Experience provides cuttingedge business solutions - from a powerful core of financial and distribution modules through to personalised, industry and service specific programmes - which help ensure Africa and around the world. To get the dirt on the kind of business solutions that help improve CAMEC's yield, please visit or call us in Cape Town: 021 701 8442; Durban: 031 566 4510; Johannesburg: 011 304 2000. Accpac ERP
  21. 21. gold juniors The artisanal nature of the work at Ampella. AMPELLA 2013 firms resource for ASX-listed gold-focused Ampella Mining’s market cap has, in the last twoand-a-half years, gone from $6m to $600m on the back of the company progressing its exploration projects in Burkina Faso, West Africa. Armed with a $26m exploration budget for this year Ampella is focused on delivering results to firm up its resource ahead of its proposed gold production in 2013, COO Jean Luc Roy tells Nelendhre Moodley. SA Mining March 2011 22 In the last two years the company has built up its resource base to 2.2moz of gold. The plan for 2011 is to grow the resource and develop its 16 other gold occurrences further. “We have $43m in the bank to explore and complete our feasibility study and then we will seek a combination of equity and debt to raise $200m to fund the mine,” Roy explains. The company expects mill throughput from its first mine at Batie West, located in the south of Burkina Faso and bordering Ghana, to be in the region of 3m - 4mtpa. Annual gold production of about 200 000 – 300 000ozpa is anticipated. “The big factor is that we have an extensive land position with great upside. We predict that there is potential for multiple deposits on Batie,” Roy says. This year the company will focus on deep drilling along the ore body, which is open at depth and strike. Resource upgrade drilling has confirmed continuity of mineralisation at depth and extensional drilling has increased the strike length from 3km to 5km, with some of the best intercepts being: 30m@ 6.5g/t from 137m, 28m @ 4.3g/t from 130m and 31m @3.8g/t from 146m. “Once we finalise the prefeasibility study we will go straight into definitive feasibility study.” Roy considers Batie, the company’s flagship project, to be ‘one of the best exploration projects in Burkina Faso this year’. He remains upbeat about the future of gold and believes that the mine will deliver at a time when demand is high and prices strong.
  22. 22. The company expects mill throughput from its first mine at Batie West, located in the south of Burkina Faso and bordering Ghana, to be in the region of 3m - 4mtpa. Ampella has three exploration projects, the most advanced being Batie West, which consists of nine permits covering 1800km². The initial project consisted of six permits, and the strategic addition of three further permits during last year has enabled Ampella to effectively lock up 110km of a highly prospective major crustal shear zone. Auger geochemistry drilling across Batie West continues to be a major feature of the exploration programme. Augmented with an airborne geophysics survey, these geochemical results will enable Ampella to effectively target new prospects for future drilling campaigns with 16 virgin gold prospects currently identified for further exploration. On its Madougou project, located in the north-west of Burkina Faso, bordering Mali the company has two permits covering 465km². Ampella joint-ventured in January last year with Carbine Resources – an Australia-listed company focused on developing gold projects in Burkina Faso – in a bid to further the project to pre-feasibility study stage. Car- bine Resources can earn up to 80% free carrying Ampella through to completion of PFS. On its third exploration project, Doulnia, located south of Burkina Faso and bordering on Ghana, the company has two permits covering an area of some 500km². Ampella has joint-ventured with Vital Metals to earn up to 80% by free carrying it through to the completion of PFS. There has been limited modern exploration on Doulnia, which has a prospect for zinc and gold. Vital Metals is an Australia-based West African exploration company. m Digging at Ampella.
  23. 23. gold juniors Karma a three-year target Overview of the Nami artisanal site. TSX-listed Riverstone Resources expects to bring its most advanced exploration project, Karma, located in the north-central region of Burkina Faso West Africa, into production in the next three years, CEO Michael McInnis tells Nelendhre Moodley. Riverstone Resources plans to release an updated resource estimate by the end of February, which is expected to increase the resource by approximately 50%. Since its initial resource estimate in May 2009 the company has completed an additional 30 000m of drilling. In the second quarter of this year the company is scheduled to start a pre-feasibility study – this will be bumped up to feasibility study which is expected to take about a year, followed by mine development. “By 2013 to early 2014 we are hoping to have a producing mine,” McInnis enthuses. With the highest grades reaching 3g/t and the lowest at 0.9g/t McInnis is confident SA Mining March 2011 24 that the four deposits that make up Karma will deliver the required ounces. In response to the question of viability, McInnis points out that there are a number of mines around the world right now with average grades of 0.8g/t that are extremely viable. “These are all open-pit low-cost oxidised deposits that will be heap-leached.” Gold resources are shallow, with the bulk in oxide material above 100m in depth. Initially the company will mine
  24. 24. The Rambo pit. higher grades first. “This is an open-cast operation with significant underground potential,” he explains. There is potential for centralised gold processing facility to handle material from all deposits. Riverstone Resources has an exploration budget of $5m which will see it comfortably through to the next six to eight months. “Sometime later this year we will raise between $20m and $30m through another equity raising. This should take us through to production decision in the next two years.” Riverstone Resources has five other gold projects at different stages in Burkina Faso. Three of these are joint ventures with RoxGold on which it has options on Solna, Bissa West and Yaramoko properties. Roxgold is a Vancover-based mineral exploration and development company focused on developing large mineral concessions in Burkina Faso. Riverstone Resources was established in 1996 but only actually started its involvement in gold mining in West Africa in 2002 where it began accumulating land for gold exploration with the intention of becoming a gold producer. “Burkina Faso has excellent gold geology, low competition and initially the evidence of gold production from artisanal miners was unbelievable.” AZ_Heavy_SA_150508 16.05.2008 12:12 Uhr Seite 4 C M Y CM MY CY CMY K ������������������������ ������������������������� ������������������������� � ����������������������������������� �������� Gold nuggets are assessed. ������� ��������� ���������� ��������������������������������� ������������ ������������������������������� ����������������� �������������������������� ������������������������
  25. 25. Over the past seven years Burkina Faso has established itself as a premier gold producing destination. In fact, over the last three years the country has produced six gold mines, including the first Taparko mine by High River Mines in 2007, followed by two mines commissioned in 2008 (Semafo’s Mana mine and Etruscan’s Youga gold mine), Cluff Gold’s Kalsaka Mine located in the north of Burkina Faso and two mines last year (Avocet’s Inata gold mine and Iamgold’s Essakane mine). Aside from being a gold miner’s haven, McInnis reports that Burkina Faso is a politically stable region with a government keen on fostering mining. Although mines have to provide their own power through gen-sets, the country offers good telecommunications and roads. Over the last five years infrastructure has improved significantly and continues to expand. m
  26. 26. IT PAYS TO TALK TO A SPECIALIST With over 35 years in the mineral processing industry and offices around the globe, Delkor is the specialist in solid/liquid separation and mineral processing applications. Delkor has the expertise in providing and delivering fully integrated design, engineering, manufacturing and commissioning services. So for your next mineral processing requirement, it pays to talk to Delkor. FILTRATION • SEDIMENTATION • CLARIFICATION • SCREENING • FLOTATION • FLOCCULANT PLANTS IT NOW ALSO PAYS TO VISIT THE RELAUNCHED DELKOR GLOBAL WEBSITE. YOUR ONLINE SPECIALIST. Part of the Bateman Engineering Group Tel: +27 11 201 2531 Fax: +27 86 680 1308
  27. 27. gold GOLD FIELDS major exploration, for major growth NOT IN SA Major international gold mining company Gold Fields has aspirations to grow its annual gold output from its current 3.6moz to 5moz (through development or production) – by 2015. Thanks to a significant exploration budget, across almost every continent, the long-term output and lifespan from its South African old ladies needs only to be stable and steady, writes Laura Cornish. Recognised predominantly in South Africa for its three old mines – Driefontein, Kloof and Beatrix, and, more recently, South Deep, Gold Fields’ international exposure is gaining momentum as it aspires to bring a host of new mines on stream, from Africa, as well as Peru, the Philippines and Finland. During financial 2010, Gold Fields spent a total of $152m on exploration, which included $81m on greenfields exploration and $71m on near-mine exploration. Over the next 12 months the company has set aside around $150m for exploration. Despite their age, the South African mine portfolio remains significant – “we are stabilising our legacy mines, going as far as to consolidate Kloof and Driefontein into a single entity/complex to be called the Kloof Driefontein Complex (KDC),” says Gold Fields’ CEO, Nick Holland. SA Mining March 2011 30 On the development curve, there are five ‘imminent’ new mines: • South Deep – South Africa • Yanfolila – Mali • Chucapaca – Peru • Arctic Platinum – Finland • Far South-east – Philippines. South Deep may be the last remaining deep-level gold mine in South Africa with a significant untapped reserve – 30moz. Gold Fields is injecting massive amounts of cash into helping this mine realise the potential that none of its previous owners have.
  28. 28. Driefontein at night. Between 2010 and 2014, the project’s upgrade will be extensive – which includes a new refrigeration plant, a twin ventilation shaft, a new tailings storage facility, overall plant expansion and new mining development. “This will see the mine reach its target of 750 000oz of gold per annum.” SOUTH DEEP CAPITAL PROGRAMME: 2009 2010 2011 2012 2013 2014 R1bn ~R1.6bn ~R1.8bn ~R2.1bn R1.5bn ~R1.2bn Chucapaca – situated on the south side of Peru – is 51% owned by Gold Fields, and 49% owned by Buenaventura. It comprises 12 700ha of land in total. One particular deposit – Canahuire – has already been well defined, and an initial resource target of 5.6moz has been declared. A view of operations at South Deep. The pit will be amenable to open-pit mining, where 10 drill rigs are positioned on site, working towards 100 000m of infill and step-out drilling. A feasibility study is targeted for the project to commence in 2012. The Mali project, Yanfolila, holds promise, just by taking into account its closest neighbours – Loulo, Sadiola, Morila and Essakane. While a scoping study is only expected to commence in the third quarter of this year, Gold Fields is already targeting a 200 000ozpa “starter project” from a 1.5moz initial reserve. Its Far South-east project (60% owned) on the Luzon Island in Peru is, according to Gold Fields, one of the highest grade gold and copper porphyries in the world. An initial 80 000m drill programme is under way, working towards the commencement of a feasibility study in 2012. Two veins in particular, Victoria and Enargite, according to historical data, show 18mt @ 7.71g/t and 40mt @ 3.05g/t (2.25% copper) respectively. The most intriguing project on Gold Fields’ project list, described by Holland as the “sleeper in the portfolio” is its 100%-owned Arctic Platinum project – based in Finland. It has a 12moz platinum and palladium resource with gold, copper and nickel by-products. Gold Fields has been investigating the use of various hydro-metallurgical processing options, instead of off-site smelting, to recover the various metals from the flotation concentrates. The preliminary test work has returned positive results and further engineering work was conducted to provide initial operating and capital cost estimates. Planning is under way to process metallurgical samples through a continuous pilot plant facility – this study is due to be complete at the end of 2012. According to Holland, the 12moz feasibility was completed in 2003 and significant upside on this volume has been determined since then. 31 SA Mining March 2011
  29. 29. gold Brownfields expansion Tommy McKeith Executive vice-president: Head of exploration and business development At the Damang mine in Ghana, the emphasis was on extensional drilling to the south of the main mine, and between some of the smaller surface mines. Good indications for extensional opportunities were highlighted and near-mine exploration during financial 2010 was directed at two core growth projects, Greater Damang and Greater Amoanda. The Greater Damang project extends for about 5km from Huni North in the north to the Nyame prospect in the south, while Greater Amoanda extends for 2km from the Tomento East surface mine in the south of the Amoanda mine. The objective over the next 12 months is to advance the Greater Damang project, with additional in-fill drilling to support a feasibility study decision on an enlarged surface mining operation. At its St Ives mine in Western Australia, the development focus during financial 2010 was on completing the portal at Athena and sinking the decline to the ore position, which was intersected in May. Full production from Athena is scheduled for the end of this year. After completion of the Athena feasibility study, nearmine exploration shifted to the Hamlet discovery, which is located about 1km east of Athena. Hamlet is a lodestyle deposit similar to Athena. It has an indicated and inferred mineral resource of 1.03moz of gold. Drilling to further expand the mineral resource and support a feasibility study is under way and a construction decision is planned in late calendar 2011. Other near-mine opportunities in the Argo-Athena camp were discovered and tested during the year with initial drilling undertaken to assess open-pit and underground mining opportunities. The intention over the next 12 months is to advance the exploration of at least two of these discoveries with infill and extensional drilling. At Cerro Corona in Peru, the exploration programme at the Consolidada de Hualgayoc JV (a 50% Gold Fields, 50% Compania de Minas Buenaventura S.A. JV) was suspended in September 2009 due to opposition by the local community. Within the Cerro Corona mine property, an initial review was completed in May last year to evaluate the potential. A data review is currently in progress and, should results be positive, a diamond drilling programme will be motivated as a proof of a concept drill test. m A view of Kloof operations. VUSA p - T, O, L 2/20/11 9:07 PM Page 2 C M Y CM MY CY CMY K
  30. 30. energy Getting down and DIRTY A determination to re-establish a local presence, particularly in energy-related projects, has finally paid dividends for construction contractor Group Five Projects Division. It recently won some large contracts on coal-miner Exxaro’s Grootegeluk coal project located in Lephalale in the Limpopo Province and Riversdale’s Benga project in the Tete Province of Mozambique. The division’s strategy implemented two years ago of divesting of its 90% over-the-border presence in favour of developing local energy projects will see the division build up to a 40% local participation in 2011, contracts director Carlos da Silva tells Nelendhre Moodley. “We are looking at all coal opportunities, especially in South Africa and Mozambique. In fact, about 30% of our annual turnover for 2011 could be from coal,” reiterates director Richard van den Barg. He is, however, quick to point out that the projects division also has a keen eye on uranium projects, having had extensive experience working on Paladin Energy’s Langer Heinrich project in Namibia and its Kayakelera project in Malawi, where Group Five completed the Smeip installation work. Since Extract Resources’ Husab (formerly known as Rössing South) uranium project has recently received the go-ahead on its environmental impact assessment, it is garnering keen interest from a number of quarters, including Group Five Projects division. Located near Swakopmund on the west coast of Namibia, Extract Resources’ Husab project is the largest in-situ, and highest grade, granitehosted uranium deposit in Namibia, and currently the fifth-largest uranium-only deposit in the world. Extract plans to develop a large-scale load-and-haul, open-pit mining operation, with ore from the mine feed- ing a conventional agitated acid leach process plant, at a rate of 15m metric tons of ore per year. With anticipated annual production of approximately 15mlb of uranium, the Husab project looks set to become the second-largest uranium mine in the world. However, speaking about its recently acquired Grootegeluk contract, construction director Chris Willemse reports that the division won the 14-month contract in January this year and is already under way with detailing and fabrication of structural steel and plate-work. Site erection will begin on May 1. For this R350m contract, the projects division has been contracted to erect the structural steel, mechanical equipment piping and plate-work (SMPP) for a ROM and waste handling facility. The division is hopeful of securing more work from this project. Although it is on target to deliver on its portion of the project, Willemse notes that there are a number of challenges associated with the project, including working within a tight time frame, interfacing closely with civil and electrical contractors and the coordination of the large number Grootegeluk with Matimba in the background. SA Mining March 2011 34
  31. 31. of overhead tower cranes. “Activity co-ordination is key, particularly in relation to the stringent safety policy.” The aim of the contract is to increase ROM feed to local power producer Eskom’s Medupi power station located Limpopo Province. At contract peak, the projects division will employ about 250 people, 75% of whom will be local, while the reminder will come from the broader Gauteng region. The Grootegeluk mine will supply the Medupi power station with an average 14.6mtpa of power station coal over the next 40 years. The mine will start supplying coal to the power station from the second quarter of 2012, coinciding with its planned commissioning. Full coal production is anticipated from 2015. The division also recently won a R75m contract for the coal handling and preparation plant from Sedgman Mozambique for ASX-listed Riversdale’s Benga coal project located 10km from Tete in Benga. Engineering project house Sedgman Mozambique is the client’s appointed EPCM contractor. The Grootegeluk mine will supply the Medupi power station with an average 14.6mtpa of power station coal over the next 40 years. The plan for the first year is to produce 5.3mt of “run of the mine” (ROM) coal. This is the coal before it has been treated in any way. Once it has been sorted, the final product, for export or for domestic use, will be around two million tonnes a year. Benga will produce three types of coal – world-quality hard coking coal, for use in the steel industry; export-quality thermal coal, and lower-grade thermal coal for domestic use (notably for a coal-fired power station which Riversdale plans to build at Benga). Construction of phase 1 has commenced and is expected to be completed in the second half of this year. “This is the first phase of several planned phases. The contract consists of a number of areas, including ten conveyors, A view of the Langer Heinrich project. 35 SA Mining March 2011
  32. 32. energy Aerial view of Grootegeluk plant. sizing and transfer stations, tailings thickener, coal preparation plant, stacker and services,” says contracts manager: projects division Carl Phenix. To date, civil and earthworks are in progress on this greenfields site, with the projects division having already erected the tailings thickener steelwork, the erection of structural steel and installation of mechanical equipment for the coal process plant is also under way. “This project is logistically challenging, as it is rurally located where transport infrastructure is limited, making equipment delivery to site difficult. Further, the border-customs bridge from Tete to Benga has a weight restriction of 48t – this means that heavy equipment has to be barged across the river and then trucked onto site. Added difficulties arise from the fact that the river is running low so that barging has been suspended for the time being.” Larger pieces of equipment therefore have to be trans- ported via Zambia. Another challenge involves contending with temperatures ranging between 40°C and 45°C. The original contract period on the Benga project is six months, however, the division anticipates more follow-on work. In addition to the Benga coal project, Group Five Projects has managed to secure a R25m coal project from Sedgman’s South African branch for diversified mining giant Xstrata’s Atcom coal plant located near Witbank, which requires upgrading for increased capacity from 350tph to 800tph. Site shutdown and induction to site activity started in mid-December last year. This, says Willemse, is a highly complex and challenging project which involves working within a congested small site on a tight schedule. To ensure that the contract is completed within time, the projects division has undertaken 24-hour day-night doubleshifts. The division is working towards project completion by end-March. m
  33. 33. energy NEW COAL new energy source The Industrial Development Corporation’s (IDC) investment in Sekoko Coal is intended to ensure that South Africa’s coal supply will meet the country’s need for more power. Lephalale area in the Limpopo Province. IDC’s head of mining and beneficiation business unit Abel Malinga says it is IDC’s long-term objective to develop and encourage a vibrant mining sector. He says: “This partnership with Sekoko demonstrates our commitment towards increasing industrial capacity, and supporting Government’s New Growth Path.” Power consumption has increased markedly over the past few years in South Africa, due to rapidly-growing economic activities. Malinga estimates that the coal industry needs to grow by at least 4% a year to meet the increasing domestic power generation need in the next ten years. “The industry will have to increase the current production of about 250mt to 350mt by 2020. This will require R100bn worth of new investment in the sector. The Sekoko project is one of the many steps the industry needs to take in meeting the country’s energy demand.” m �������������������� Sekoko recently signed a Memorandum of Understanding (MoU) with state power utility Eskom and Sekoko executive chairperson Tim Tebeila. The MoU will enable his company to supply Eskom’s Matimba power station with its growing need for coal. “Coal production will commence in April 2012 from an open pit, reaching full capacity by April 2015.” “The coal produced will be of a product mix quality that is in high demand from steel manufacturers around the world. It is the preferred feedstock for use in coal-fired powered stations, steel foundries and high-end custom coke manufacture,” says Tebeila. He is confident that the coal supply contract to Eskom’s Matimba power station will offer Sekoko Coal and its joint venture partner, Firestone Energy, a great opportunity to maximise value for their product as well as establish a track record for reliable, high-quality coal production and supply from the Waterberg District’s �������������������������������� ��������������������� ���������������������������������������������� ���������������������������������������������� �������������������������������������������� �������������������������������������������������� �������������������������������������������� ����������������������������������������������� ����������������������������������������������� ������������������������������������������� ��������������������������������������������� ��������������������������� ���������������������� �������������������� ������������������� ����������������������
  34. 34. ������ �������� ���������������������� ��������������������� � ���������������������������������������� ������������������������������������ ������������������������������������������������ �������������������������������������������� ���������������������������������� �������������������������������������������������������� � ��������������������� � � ��������������������������������������������������������� � ������������������������������������������������������ ������������������������������������������������������������� ������������������������������������������������������� ��������������������������������������������������������� � ������������������������������������������������ � ����������������� � � ���������������������������������������������������������� � ������� ��������������������������������������������������� ������������������������������� ���������������� � ����������������� � � ��������������������������������������������������������� ���������������������������������������������������������� ����������������������������������������������������������� ��������������������������������������������������������� ������������������������������������������������������� ��������������������������������������������� � �������������������������� �������������������� ����������������� ������������������������������������������������������������������������ ������������������������������� ����������� �������������������������� ������������������������������������������� ��������������������� �������������������
  35. 35. energy Keaton takes a liking to Leeuw Keaton Energy Holdings has plans to refinance and acquire a 74% interest in South African export coal producer Leeuw Mining and Exploration (LME). The transaction will result in Keaton Energy acquiring an export foothold; a new major shareholder in Plusbay, an affiliate of Gunvor Group – one of the world’s leading energy trading companies; and will also safeguard more than 400 jobs in LME’s operations. LME’s founding shareholder JPI Leeuw and Associates (JPI) will remain a 26% shareholder in LME. Keaton Energy MD Paul Miller says: “This transaction will be good for Keaton Energy shareholders; provide a partial exit for existing LME shareholders to, in part, pursue other mining initiatives; and contribute significantly to the economy of Northern KwaZulu-Natal, where LME’s assets lie. “It will give Keaton Energy a controlling interest in an existing mining operation; significantly increase its portfolio of advanced development projects; provide vital access to export markets and a wider customer base; and will mark a major step towards Keaton Energy’s objective of becoming a mid-tier coal producer with a diverse range of projects to complement our Vanggatfontein and Sterkfontein projects in Mpumalanga.” The transaction consideration will be settled through the issue of new Keaton Energy shares, and R10m in cash through the settlement of an existing loan to LME. The transaction – which is subject to relevant regulatory approvals and fulfilment of various conditions precedent – will also see Geneva-based energy trader Gunvor, through its affiliate Plusbay, become a key shareholder in Keaton Energy, with the intention to obtain a seat on the Keaton Energy Board. Commenting on the transaction, Filippo Faralla, Gunvor’s coal manager in South Africa, says: “The transaction continues our expansion by sector and geography. It marks our entry into South African coal production, complements our growing non-oil energy business, and is another significant step in our development as a leading integrated energy company.” David Salter, Keaton Energy’s
  36. 36. chairman, welcomed Gunvor’s introduction into the company as a mark of approval, adding, “It is pleasing that Gunvor has recognised the achievements of Keaton Energy’s management since listing and is joining with us to develop Keaton Energy into a robust and sustainable South African coal producer.” “The team at LME has worked hard over a period of eight years to take a portfolio of prospecting projects up the value curve right through to producing coal for export. We look forward to partnering with Keaton Energy and Gunvor to take the company and its KwaZulu-Natal projects to the next stage of development,” says Willy Leeuw, CEO of LME. LME owns and operates the Vaalkrantz Anthracite Colliery (Vaalkrantz) near Vryheid in KwaZulu-Natal. Vaalkrantz has been in production since 2003. In addition, LME has: • a 207 000tpa participation in Richards Bay Coal Terminal’s (RBCT) Quattro export programme and a dedicated railway siding facility near Vaalkrantz; • a number of new order prospecting and mining rights over other KwaZulu-Natal coal properties, including: • the Koudelager anthracite project, which will provide a future run-of-mine anthracite supply to the existing Vaalkrantz plant; • the Braakfontein thermal coal project, near Newcastle; • the Balgray anthracite project near Utrecht; and • the Mpati anthracite project near Dundee. REFINANCING In terms of the refinancing of LME, Keaton Energy will acquire: • various loans and claims in LME from Anglo Operations, acting through its Anglo American Thermal Coal Division, (AOL) for R47m, to be settled by the issue of 10 444 444 new Keaton Energy ordinary shares at R4.50 per share; and • 40 preference shares in LME from Anglo Khula Mining Fund (Proprietary) Limited (AKMF) for R8m, to be settled by the issue of 1 777 778 Keaton Energy ordinary shares at R4.50 per share. The total consideration for the acquisition of the AOL loans and claims and the AKMF preference shares is R55m. AOL and AKMF will then dispose of their Keaton Energy ordinary shares to Plusbay. ACQUISITION In terms of the acquisition of 74% of LME, Keaton Energy will acquire: 54% from JPI and 10% from Anglo American Zimele (Anglo Zimele) for 14 177 778 and 2 444 444 new Keaton ordinary shares respectively, at a price of R4.50 per share, with a resulting total purchase consideration of R74.8m, and 10% through the settlement of a R10m short-term convertible loan recently provided to LME by Keaton Energy. JPI and Anglo Zimele will then dispose of their Keaton Energy ordinary shares to Plusbay. m
  37. 37. energy MEGA megawatts to the rescue Alternative power generation company Aggreko has spent the last 15 years delivering major power solutions to the African continent – largely to the utilities and oil sectors. With the completion of two significant projects for the mining industry recently, the company’s focus on the sector remains high as new and expansion projects going forward are being determined on the back of power supply – or lack thereof, country manager Martin Foster tells Laura Cornish. The utilities sector in Africa comprises a significant portion of Aggreko International’s overall business. Until late last year, Aggreko was generating 1000MW of installed power capacity on the continent. As a global business, the company has 6000MW of installed (on rental) power capacity in total. “Demand for power is very shortly going to exceed supply – it’s a global phenomenon, only more amplified in developing countries like South Africa,” Foster explains. “Aggreko’s purpose is to fill the supply/demand gap – which will intensify and escalate in the mining industry in the short and mid-term.” While mining-related work only comprises 4% of Aggreko’s total business, locally, the company is allocating time to educating the mining sector on attaining critical load power to have on standby for power cuts and emergency power requirements. “Our extensive knowledge of what specifics are required for what application has made the difference to winning a contract in the past,” Foster adds. Because an Aggreko generator works on the ‘plug and play’ principle, and is hired as a complete turnkey package – including maintenance, servicing and repair – its appeal in the mining industry will continue to grow. With major service and repair facilities in Dubai, Panama, Singapore and Holland, its lead times are, according to Foster, superior to any competitor, and as a rental service provider, its generators are designed bearing that aspect in mind. “Our gensets are robust, reliable, easily re-locatable, and fully compliant with safety standards.” Aggreko has strong supplier working relationships which further enable it to keep its lead times to an absolute minimum – particularly with key component manufacturers such as its engine and alternator suppliers. Aggreko on site at Bisha mine. SA Mining March 2011 42
  38. 38. Supplying a bulk air handler to Phakisa. Probably less familiar – to the South Africa/African market – is Aggreko’s second business arm – temperature control or cooling and heating services. “We only had intentions to launch these products and services to the African market this year, but with our first order already completed, we have made it available to all our local clients now, and immediately going forward,” says Foster. Since mid-December last year, Aggreko has been providing 3000kWr (kW of refrigeration) of cooling to Harmony Gold’s Phakisa mine in Odendaalsrus in the Free State Province. Like an Aggreko generator, the bulk air handlers are supplied as single units – for Phakisa – three coolers pumping 23m³ of cold air per second at a 9° decline angle, with a closed circuit bulk water chiller supplying the source of cold water. 43 SA Mining March 2011
  39. 39. energy Aggreko generators in the background at Bisha mine. until a permanent power supply is established, with Aggreko This is a temporary cooling solution forcing cool air down technicians manning the site 24 hours a day to ensure a the shafts for the miners while an ice-plant cooling package stable and reliable power supply. (including underground chilled water plants) is installed and “Being in a remote location meant that finding a reliable scheduled for completion in October. power supply was a critical factor; however, Aggreko’s lead As a turn-key service provider, Aggreko provided all astime and modular flexibility fitted well with our planned pects of the cooling package, including design, mobilisation, production schedule,” says Cliff Davis, Nevsun Resources installation and operation. A team of Aggreko technicians is CEO. providing assistance to Harmony Gold and is on stand-by Aggreko’s overall installed capacity in Africa dropped last 24 hours a day to ensure that the temperatures inside the year below 1000MW when one of its major contracts – with mine remain below the legal requirement. Kenya’s main utility company, KenGen – was reduced. “The knowledge and experience Aggreko can provide “Until March last year, we were supplying 290MW of in this area will play an integral part in the operation of the power to KenGen. We have been providing power to them mine until the in-house cooling system is operational next since 2000,” Foster states. year,” adds Marius De Leeuw, project design engineer at Because the majority of Kenya’s power is hydro-generHarmony. ated, a three-year drought period in the country led to one Along its more conventional business line, Aggreko has of Aggreko’s largest supply contracts to date. successfully commissioned a 20MW rental power packThe return of heavy rains age for Nevsun Resource’s to the country saw the Bisha gold mine (Phase 1) “With major service and repair facilities in company relocate a large in Eritrea. “Aggreko is extensively Dubai, Panama, Singapore and Holland, portion of the project to Bangladesh. qualified to provide power lead times are superior to any competitor.” Looking forward, past last to even the most remote lo– Foster. year’s World Cup, where Agcations,” Foster notes, which greko supplied 70MVA of assisted in securing the conpower, the local operation has major growth aspirations, tract, as the Bisha mine is situated in an isolated region of which will see its depot fleet stockholding expand – it Eritrea about 300km from the Red Sea. houses around 80 generators at the moment. Bisha has a high gold value of between 8g/t and 12g/t. “Part of our expansion strategy is to get closer to our For the first two years, gold will be extracted, and, once this customers by establishing a physical presence in key areas,” has been completed, copper and zinc will be mined. Foster points out. The 20MW power package provided by Aggreko was The company is due to open its Durban branch shortly, installed and commissioned in one phase, with final commiswhich will be followed shortly by additional service centres sioning taking place in early October last year. The power in other parts of South Africa. m package is now the mine’s only source of operational power SA Mining March 2011 44
  40. 40. energy Coal’s mix role in 2030 energy Always a pollutant, always necessary. In October 2010, the Department of Energy made public the draft Integrated Electricity Resource Plan (IRP) for South Africa 2010 – 2030. The plan’s intention is to provide an indication of South Africa’s electricity demand; how this demand will be supplied; and what electricity will cost. SA Mining March 2011 46 Hatch Africa associate and president of the South African Coal Processing Society, Gerrit Lok, says that the 20-year electricity capacity plan is crucial towards determining SA’s long-term electricity demand, as well as how this demand should be met in terms of generating capacity, type, timing and cost. Based on an average 4.6% annual Gross Domestic Product (GDP) growth trajectory over the next twenty years; government has investigated three primary options, namely: the Low-Cost Scenario, the Revised-Balance Scenario, and the Low-Carbon Scenario. The scenario evaluation process confirmed that the Revised-Balanced Scenario represents the best trade-off between least investment cost, climate
  41. 41. change mitigation, diversity of supply, localisation and regional development. The Revised-Balanced Scenario proposes that by 2030, SA’s generation mix should include the following: 48% coal, 14% nuclear, 16% renewables and 9% peaking open cycle gas turbine. Lok notes that each one of these energy sources has a cost allocated to it – both from a capital investment cost perspective and from an operating cost perspective. The IRP states that SA will require an estimated R850bn investment, which will see a 250% increase in the cost of power. At a rate of 100 US cents per kWh by 2020, SA will be placed in the top quartile of countries that are its main competitors in the beneficiation of minerals – namely India and China. The IRP inherently contains significant energy efficiency savings, which are accounted for in the demand forecasts. An energy efficiency improvement of 35% is built into the IRP, based on the reducing energy intensities which are used to determine the future energy demand. The IRP assumes that over the next 15 years, most of the reduction in energy intensity will be derived from improved energy efficiency, driven by increased electricity prices. As a result, the energy efficiency field will become hugely-influential and far-reaching. “From Hatch’s perspective, we have already built energy efficiency programmes into our projects and design philosophies, allowing our clients to make their projects more energyefficient,” explains Lok. ������������������������������������� �������������������������������� ��������������������������������������������������������������������������������������������������������������������������������������������������� ������������������������������������������ ���������������������������������������������������������������������������������������������������������������������������������������� ����������������������������������������������������������������������������������������������������������������� �� �� �� �� ������������������� ��������������� ����������������������������� ���������������������� ���������������������������������� ������������������������������ ������������������������������������������ ������������������������������������������� ��������������������������������������������������������� �� �� �� ��������������������� ������������������������� �������������������������
  42. 42. energy NUCLEAR – A NECESSITY URANIUM – DEMAND TO OUTWEIGH SUPPLY? Although nuclear is only included in the energy mix from 2023 in the IRP, a decision must be finalised as soon as possible to allow the procurement process to begin. Early in 2007, state utility Eskom’s board approved a plan to double generating capacity to 80GWe by 2025. This included the construction of 20GWe of new nuclear capacity so that the nuclear contribution to power would rise from 5% to more than 25%; while coal’s contribution would fall from 87% to below 70%. Nuclear groups Areva and Westinghouse offered to build the full 20GWe, with a further ten large EPR units by 2025. However, in December 2008, Eskom announced that it would not proceed with either of the bids due to a lack of finance. “If this had gone ahead in December 2008, SA would have been ‘ahead of the pack’. However, the situation now is that SA is going to be in the middle of the competitive bidding processes by trying to lock in suppliers of nuclear technology,” notes Lok. He points out that although the IRP includes six 1600MWe reactor units coming online in 18-month intervals from 2023; Eskom has said that it would be looking for lower-cost options than the earlier proposals and would consider Generation ll designs from China or South Korea. Lok points out that this could result in the capital cost per MWe almost being halved. “An important consideration is the time it would take to reach the 4.6% GDP growth rate, as well as the necessary 10 - 12 year horizon from when investigations begin to when the project would be complete. “Considering this time line, SA would need to make a decision with regards to nuclear within the next year to meet the 2023 target,” explains Lok. The need for nuclear energy as part of the energy mix is essential if SA is to meet baseload requirements for the future, says Lok. “We do, however, need to look at the operating costs of these nuclear units – specifically with regards to the input requirement of uranium and the cost thereof,” he explains. In addition to the capital required to build a nuclear power station, one also needs to consider the operating cost. While it is commonly stated that the operating costs of nuclear power stations are cheaper than coalfired power stations, this will not necessarily be true for the future. Globally over the next ten years, there will be an additional 91 reactors coming online. “The problem herein lies with the total demand currently, in that there is 180mlb a year of uranium (U308) being consumed globally, while production is only sitting at 140mlb a year. The shortfall is sourced from secondary sources, such as the nuclear arms programmes under treaties between the US and Russian governments. “With the growth in the number of nuclear stations, we can quite possibly expect a significant hike in uranium prices, which will make the operating costs of nuclear power stations much more expensive,” notes Lok. Meanwhile, emerging nations such as China and India are following a very similar approach to the IRP, which is to reduce coal as a percentage of the energy mix. Importantly, this doesn’t mean that less coal will be used – instead coal as a percentage of the energy mix will come down. “Many countries are trying to minimise coal as an input into primary energy, but it is not possible to eliminate it. SA Mining March 2011 48
  43. 43. energy Not just lumps of dusty black stuff. It will actually more than likely grow with regards to the physical tonnage used,” Lok points out. He adds that SA shouldn’t, however, lose sight of the fact that coal is by far the cheapest way to secure economic growth. “For a developing nation like SA, it is very important that we don’t lose sight of this, because if we get this plan wrong, then we won’t be competitive as a nation,” stresses Lok. THE SOUTH AFRICAN COAL ROADMAP The South African Coal Roadmap (SACRM) study is an initiative that commenced in early 2010, with the overall aim of clearly delineating the South African coal industry’s future. The SACRM is currently coordinated and administered by the Fossil Fuel Foundation and supported by the South African Government and many coal industry and related stakeholders. The Fossil Fuel Foundation’s website outlines the following: “The initiative is intended to detail and assess options and scenarios for the future development of the domestic coal industry and extract recommendations to maximise the economic opportunities for coal as a valuable energy and chemical resource whilst ensuring a better quality of life for current and future generations.” Lok urges that all players in the coal industry need to get involved with the SACRM for SA’s future. One of the key issues that the coal industry needs to address is: what happens if the IRP doesn’t work? The fallback position would be going back to coal, thus the widespread involvement of the coal industry will ensure the comprehensive planning of future scenarios of coal usage. “At current projected GDP rates, SA is looking at another 120 – 140 years of coal consumption, which is twice as long as uranium will last. Within the next 150 years, or at least within the next 80 years, renewable energies will need a substantial investment in order to meet electricity demand and pick up the eventual shortfall of uranium and coal,” concludes Lok. m
  44. 44. ������� ���� ������ ����������� ��������������������������������� ������������������������������������� ���������������� �������������������������������������������� ������������������������������������������������������� ����������������������������������������������������� ������������������������������������������������������ ����������������������������������������������������� �������������������������������������������������� ��������������������������������������������������� ������������������������������������������� ���������������������������������������������������������������������� ������������������ ���������� � ���������������������������� ������ � ������������������������ ����� � ���������������������� ������ ������������� ������� � ������������� ��������� ��������� ���������
  45. 45. energy ‘clean act’ Uranium’s regains favour The soaring demand for energy worldwide, particularly clean energy, has recently seen uranium gaining favour from the pundits punting ‘clean green energy’. As a result the recent years have seen an unprecedented rise in the number of nuclear power plants recently constructed, in construction phase or being proposed. In a bid to tap into this lucrative market, the price of which has nearly doubled over the past year, ASX-and Botswana-listed A-Cap Resources is keen to get into production stage. A-Cap Resources MD Andrew Tunks reports that last year uranium traded at $40/lb and already this year the commodity price has spiked to over $70/lb. He is confident that the years ahead will see uranium prices continue to rise. A-Cap Resources is the first company in Botswana to explore for uranium in this modern exploration phase and at the Letlhakane Project ‘has discovered the country’s only JORC-compliant resource, which is already among the top 10 undeveloped uranium prospects in the world’. At this stage the company is busy firming up its resource and continuing with its feasibility study with the aim of mine construction in 2012 and production by 2013 on its Lethakane uranium project located in north-east Botswana. The company plans on completing its pre-feasibility study in quarter two of this year. “This will be a large-scale project producing upwards of 2.5mlb to 3mlb of uranium per annum. It is a simple process requiring low capex,” Tunk states. SA Mining March 2011 52 “The initial design will be a large shallow open pit with a 10-15 year LOM with a heap leach operation alongside, producing around 3mlb per annum.” In December 2010 A-Cap Resources raised $15m through the equity market and from shareholders. However, the company will at some stage need to raise a further $200m to build the mine. This, Turk says, will be done through a combination of debt and equity. In addition to capital raising and its feasibility study, A-Cap Resources is looking for a strategic investor in the uranium and power generation sector. “We are working on aligning ourselves with an expert partner from the nuclear industry to help create a level of credibility in the marketplace and lift us onto the global stage.” The company is already in talks with the Korean govern- Bag sampling on site.