Gold Fields Ltd. (GFI) is exploring two new mining methods at its South Deep mine, which would have become South Africa’s biggest for bullion by 2015 had it not been for delays, Chief Executive Officer Nick Holland said.
The company, which hired a team of 15 Australians earlier this year to improve performance at South Deep, is looking to simplify how it mines a complex ore body, Holland said today in a telephone interview. Gold Fields will choose between the two methods in the next 12 months, he said.
The company plans to produce 650,000 ounces to 700,000 ounces from South Deep by 2017, two years behind its initial schedule. Production at that level, worth about $900 million a year in revenue at current spot prices, would continue for about 70 years, Gold Fields estimated.
“I wouldn’t say we’ve been mining in the wrong way, the current method is very sound,” Holland said. “If we can make things easier, all the better.”
South Deep’s complex ore formation, its depth, and operational and safety problems have mired the operation in delays throughout its 24-year lifespan, during which it has been owned by JCI Ltd., Western Areas Ltd. and Barrick Gold Corp. Two workers died in accidents in May and a safety review will continue until the end of next month.
The first technique being explored is “a variation of the existing de-stress mining we’re doing,” Holland said, referring to strategically placed cuts in the rock to minimize seismic activity. The second is a “fundamental change” to a so-called incline-slot method used in Australia, he said.
“The two are mutually exclusive and we should either choose one or the other,” Holland said. Both have the possibility of speeding up production, he said.
Gold Fields’ profit excluding one-time items was $18 million in the three months ended June 30, compared with $5 million in the previous quarter, the Johannesburg-based company said today in a statement.
Total all-in costs fell 1.9 percent to $1,093 an ounce. The board approved an interim dividend of 0.20 rand a share (2 U.S. cents).
“The safety interventions at South Deep during the quarter masked what was a better quarter for the group as a whole, in terms of costs, margins and cash flows,” Holland said in the statement.
Gold Fields’ output dropped 1.6 percent to 548,000 ounces in the three months to June 30 from 557,000 ounces in the previous quarter.
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