AngloGold sees reef-boring technology doubling mines life
The gold miner plans to extend the life of its South African mines by as much as 30 years using reef-boring technology.
Posted: Tuesday , 04 Feb 2014
AngloGold Ashanti Ltd., the third- largest producer of the metal, expects to extend the life of its South African mines by as much as 30 years using reef-boring technology that taps new ore from previously drilled areas.
The equipment may double the life of the operations, which currently have about 20 to 30 years left of mining, Chief Executive Officer Srinivasan Venkatakrishnan said today in an interview in Cape Town.
“South Africa is going to long outlive me and probably the next five CEOs of the company,” he said at a mining conference. “Our resource base is 70 to 100 million ounces. Even if you assume half of that comes on to the books, or a third of it, it doubles the lives potentially of our South African operations.”
The boring machines, which AngloGold has developed with its suppliers, are able to remove just the gold-bearing ore from the reef, replacing it with cement and chemicals that stabilize the mining structure. Using technology rather than manual labor means the Johannesburg-based company can operate 24 hours a day.
The machines “enable you to go into mined-out areas where you otherwise wouldn’t go,” Venkatakrishnan said. “Effectively gold that is written off comes back into the books.”
After more than a century as the world’s biggest gold producer, South Africa has now slumped to sixth position. Production fell by a third to 167,236 kilograms in the five years to 2012, according to the Chamber of Mines, the industry lobby group. China, Australia, the U.S., Russia and Peru have all overtaken the nation’s output.
AngloGold, with 21 operations in 10 countries, scrapped its dividend in August and is cutting jobs and spending to weather a decline in the price of bullion. Gold plunged 28 percent in 2013 and has risen about 3.6 percent this year to $1,248.49 an ounce.
The company could pay a dividend this year as long as gold prices don’t drop and development of mines in the Democratic Republic of Congo and Australia goes to plan, Venkatakrishnan said. AngloGold started production at the Kibali project in Congo in September and is ramping up output. The Tropicana mine in Western Australia also produced its first gold that month.
AngloGold has advanced 30 percent this year in Johannesburg trading, the most among the 42 companies on the FTSE/JSE Africa Top40 Tradeable Index, which has declined 3.7 percent.
Gold companies in South Africa are preparing for a March 14 court hearing at which the Association of Mineworkers and Construction Union will argue its case for a walkout over pay. The AMCU, the biggest labor group at AngloGold’s Mponeng mine, was last week blocked temporarily from striking.
The gold companies’ case “certainly looks very strong,” Venkatakrishnan said today. “We don’t see a strike as a major threat coming in 2014.”
AngloGold is the world’s largest gold producer after Barrick Gold Corp. and Newmont Mining Corp.
--Editors: Amanda Jordan, John Viljoen
To contact the reporter on this story: Kevin Crowley in Johannesburg at firstname.lastname@example.org
To contact the editor responsible for this story: John Viljoen at email@example.com
©2014 Bloomberg News