Name and Location
South Deep gold mine expansion, Gauteng, South Africa.

Client
Gold Fields.

Project Description
South Deep is a fully mechanised underground mine, extracting a wide multiple band reef at depths between of 2 500 m and 3 000 m below surface. The extraction of such deep-level, wide reefs have not been totally mechanised elsewhere in the world. The production methods used at the mine are, therefore, unique and differ markedly from the labour-intensive mining method traditionally applied in underground mines in South Africa.

The project comprises a main shaft and a ventilation shaft – collectively referred to as the Twin Shaft complex, which will have a combined hoisting capacity of 370 000 t/m of ore.

The main shaft was completed in 2004 and comprises a single drop to a depth of 2 995 m.

The ventilation shaft has been deepened from 2 760 m to about 2 950 m and is fully equipped with ore-storage silos and conveyor belts at shaft bottom, a new rock winder and new headgear.

The mine’s headgear at the vent shaft was completed in 2011 using one of the largest fabricated steel headgear frames in the world.

The South Deep metallurgical plant, which was commissioned in November 2012, has also been expanded and has increased processing capacity from 220 000 t/m to 330 000 t/m.

From 2010 to 2012, the mine completed the construction of the centralised tailings storage facility, developed and installed infrastructure around the shaft systems and also changed to full plant tailings backfill for increased production levels. The backfill plant was commissioned in early 2012.

The South Shaft complex will add an additional 120 000 t/m of hoisting capacity to the mine, bringing the total combined hoisting capacity to 450 000 t/m.

The South Deep operation had a resource of 79-million ounces as at December 31, 2012, and a reserve of 39-million ascertained ounces, which will give the operation a life-of-mine of more than 50 years.

Value
Capital expenditure decreased from R2.56-billion in 2012 to R1.96-billion in 2013, in line with increased focus on capital optimisation and scheduling. Most of the expenditure was spent on development, the maintenance of critical infrastructure and equipment, trackless equipment and the full plant tailings backfill.

Duration
South Deep’s production build-up is expected to reach a run rate of between 300 000 and 330 000 reef tonnes a month by the end of 2017.

Latest Developments
Gold Fields has managed to improve the performance South Deep its only remaining South African mine, says CEO Nick Holland.

The company expects the transformation to the new mechanised operating model to continue gaining traction through the June quarter and result in greater stability and improved productivity during the second half of the year.

Holland says South Deep's new full production target to be achieved by the end of 2017 – at an all-in-cost (AIC) of about $900/oz – is between 650 000 oz/y and 700 000 oz/y.

This is, however, longer than the initial expected timeframe of 2016 and is attributed to execution constraints caused by the lack of a modern mechanised mining culture, the inadequate availability and use of the mining fleet, suboptimal mechanised mining skills levels, as well as discreet ore-handling and logistical constraints underground.

Holland is confident that South Deep will reach its required production levels with the assistance of the Australian technical team headed by new GM Garry Mills, formerly of Gold Fields’ Agnew mine, in Australia.

The team is focused on derisking the momentum and sustainability of the new build-up plan for the 39.1-million-reserve-ounce South Deep mine and on positioning the mine to achieve cash break-even by late 2014 or early 2015, assuming prevailing rand gold prices.

Holland believes that stopping the cash burn at the South Deep operation is key to achieving a cash break-even by this time, noting that reaching this “would be a key milestone for the South Deep operation in future”.

South Deep is currently halfway to achieving commercial levels of production, having mined an average of 154 000 t/m of reef last year.

Gold Fields has essentially built most of the mine and key infrastructure to support its build-up to full production. The company has completed the Twin Shaft infrastructure, upgraded the plant capacity, installed full life-of-mine tailings and backfill capacity on surface, and completed all the key ancillary surface infrastructure.

Production for the full year is expected to be about 10% lower than the full-year guidance of 360 000 oz, but the company's destress mining (a mining method which reduces rock stress at depth) is expected to be on guidance at 54 600 m², thus providing an important underpin for the build-up plan.

South Deep is expected to achieve its all-in-sustainable-costs guidance for the full year of $1 290/oz and AIC of $1 350/oz.

The first-quarter results have indicated that capital expenditure at South Deep is expected to be about R1.34-billion for the full year, while net operating costs at the mine have decreased by 9% from R781-million in the December quarter to R714-million in the March quarter, mainly owing to restructuring of the cost base at the mine.

Holland has forecast that it will take until the end of 2015 to achieve a meaningful sustainable improvement in mechanised mining practices and skills through what he expects to be a five-year journey towards transformation at South Deep.

Key Contracts and Suppliers
Redpath (backfill piping, battrice panel installation and the replacement of South Shaft steelwork); Newrack (secondary support); TWP (metallurgical plant design); AEL Mining Services (supply of explosives for blasting) Altlas Copco and Sandvik (suppliers of HME and spares).

Previous contractors and suppliers:
Murray & Roberts Cementation (mine development and shaft deepening); Wilson Bayley Holmes-Ovcon (WBHO) and Wade Walker (tailings dam); MM&G (steelwork fabrication); Steel Services and Allied Industries, Hatch and Cadhouse Design Enterprises (ventilation shaft headgear); Howden Africa (commissioning of main surface ventilation fans); and Sarens South Africa and Crane Corporation (overhead crane for the ventilation shaft headgear).

On Budget and on Time?
The project is on budget, but the roll-out to steady-state production of 650 000 oz to 700 000 oz has been postponed by a year to the end of 2017.

Contact Details for Project Information
Gold Fields VP corporate affairs Sven Lunsche, tel +27 11 562 9763 or email media@goldfields.co.za.
Redpath, tel +27 11 974 2051.
TWP, tel +27 11 218 3000, fax +27 11 218 3100 or email twpinfo@twp.co.za.
AEL Mining Services, tel  +27 11 606 0000.
Altlas Copco, tel +27 11 821 9000.
Sandvik, tel +27 11 929 5300.

Previous contractors and suppliers:
Murray & Roberts Cementation, tel +27 11 201 5000.
MM&G, tel +27 11 914 4740.
Wade Walker, tel +27 11 466 0377.
WBHO, tel +27 11 321 7200, fax +27 11 887 4364 or email wbho@wbho.co.za.
Steel Services and Allied Industries, tel +27 18 787 2059 or fax +27 18 787 3416.
Hatch, tel +27 11 239 5300 or fax +27 11 239 5790.
Cadhouse Design Enterprises, tel + 27 16 429 1643 or email info@cadhouse.co.za.
Howden Africa, tel +27 11 240 4000, fax +27 11 493 0545 or email enquiries@howden.co.za.
Sarens South Africa, tel +27 11 861 3800, fax +27 11 861 3899 or email info@sarenssa.co.za.