Download - Gold Fields Ghana
Gold Fields is an unhedged, globally diversified producer of gold with eight operating mines in Australia, Ghana, Peru and South Africa, all with attributable annual gold production of approximately 2.22 million ounces. At the end of December 2013, Gold Fields’ attributable Mineral Reserves totalled 49 million ounces and Mineral Resources equated to 113 million ounces. We spoke with Managing Director, Alfred Baku, regarding this.
WRITTEN BY JACK SLATER
MINING FOR THE FUTURE
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GOLD FIELDS GHANA233 (0)302 770189
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In Ghana, Gold Fields has two subsidiary companies, which each operate a producing mine (Tarkwa Gold Mine and Damang Gold Mine respectively) and in 1996, GFG and the Government of
Ghana signed a management contract to take over what was then the State Gold Mining Company (SGMC) in Tarkwa.
“In 2001, Gold Fields signed an agreement to purchase an interest in the Damang Gold Mine, operated by Abosso Goldfields Limited,” Baku explains, “The Government of Ghana owns a 10% interest in each of Gold Fields Ghana Limited, Tarkwa Gold Mine and Abosso Goldfields Limited, Damang Gold Mine.”
GFG operations focuses on 4 key pillars, which are financial, business optimisation, people and social license. Financial aims at keeping operations sustainable to generate free cash for investors and not just producing ounces at any cost. Business optimisation looks to ensure efficiency from existing assets; brownfields/near mine exploration. Relates to a commitment to invest into training and development of every member of staff and social license is the desire to operate and create a shared value.
“We mine and process gold,” Baku explains, “Gold Fields Ghana carries out open pit mining at both our Tarkwa and Damang Gold Mines.”
According to Baku, both Mines employ a Carbon-In-Leach (CIL) recovery process, producing over 730,000 ounces of gold. The CIL plant at the Tarkwa Gold Mine has a current throughput capacity of approximately 13.3 million tons per annum, whilst at the Damang Gold Mine; the current capacity is approximately 4 million tons per annum.
GOLD FIELDS GHANA
Gold Fields has a primary listing on the Johannesburg Stock Exchange, with secondary listings on the New York Stock Exchange (‘NYSE’), NASDAQ Dubai Limited, Euronext in Brussels (‘NYX’) and the Swiss Exchange (‘SWX’).
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As of December 2013, the total mineral resource of both mines was 16.9 million ounces with total mineral reserves of 8.3 million ounces. The 2 producing mines in the West Africa Region account for 16% of Gold Fields Group’s Mineral Resource and 16% of the Mineral Reserve base, excluding growth projects.
KEEPING MINING SAFEGold Fields has a strong focus on safety and social development,
“Safety is the backbone of the company’s DNA,” Baku says, “Gold Fields has publicly pledged that if we cannot mine safely that we will not mine, which demonstrates the company’s commitment to the safety of its employees, communities and the environment.”
GFG was the first mining company in Ghana to set up a Foundation for the development of its host communities. Called the Gold Fields Ghana Foundation, it is made up of independent persons from the majority of people sitting on the Board of Trustees of the Foundation.
“Both operating mines donate US$1 per ounce of gold produced, plus an additional 0.5% of pre-tax profit to the Foundation,” he explains, “And to date, the Gold Fields Ghana Foundation has spent over US$26Million on community development, in the key areas of education, health, water and sanitation, agriculture and agribusiness and infrastructure.”
Additionally, GFG has spent close to US$15Million on sports development in Ghana, mainly on soccer and the development of golf and they were also the main sponsor of Ghana’s national team, the Black Stars, in the run up to the 2006 and 2010 FIFA World Cup.
LOAD SHEDDINGS AND DROPS“The industry is currently facing the effects of unstable power
supply, high energy costs and increased cost of other inputs, which includes labour,” Baku reflects, “This is compounded by the low price of gold and a strict fiscal environment.”
To illustrate, in Q4 2014, the mines were affected by load shedding of up to 25% and these disruptions have been accommodated through the use of standby generators which ultimately increases the overall costs of production.
“As the mining industry is long term in nature, it is heavily reliant on a stable fiscal situation and other fundamentals, which allow
mining companies to accurately assess the potential life of mine for each project,” he says, “The Government of Ghana is currently in the process of streamlining investor stability agreements for the industry but in the meantime we suffer these problems,”
HANDS ON APPROACHBetween the two mines, Gold Fields Ghana provides
employment to almost 6,000 employees, directly and through contracting and have adopted global best practise training standards, employing specific management and technical training programmes, which are run regularly depending on the needs and competency of each staff member.
“Gold Fields strongly believes that the success of the company is intimately tied to the growth and development of its employees,” Baku says, “Employee development is one of the key strategic focus areas of the company.”
MINING FOR THE FUTUREWithin the next three years Gold Fields Ghana aims to reach
sustainable operations that can produce at least 1,000,000 ounces per annum at an all-in cost (AIC) of US$1,000 per ounce with zero lost time injuries. This will be achieved through business process re-engineering and complementary strategies. Embedding a sustainable power strategy for the Tarkwa and Damang mines, will come primarily through a Power Purchase Agreement with an Independent Power Provider, as well as through efficient reserve power plant capacities. Focussing on growth through a combination of near mine and brownfields exploration at the same mines, so as to increase mineable resources and processing capacity at existing plants will enhance production whilst reducing overall associated costs.
Baku highlights that this will help generate dividends for their investors and stakeholders, which will result in growing the margin and not just gaining ounces. The aim is to generate a 15% free cash flow margin @ US$1300/oz gold price, “In so doing we have committed to ensure that there is no marginal mining, instead we focus on quality mining,” he says, “This also requires a strong focus on protecting the sustainability of ore bodies by investing in development and stripping.”
GOLD FIELDS GHANA
