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South Africa

SUSTAINING PRODUCTION FROM OUR ASSETS

 
South Africa 1
Vaal River  
Great Noligwa94,000oz
Kopanang307,000oz
Moab Khotsong266,000oz
Surface operations164,000oz
West Wits
Mponeng500,000oz
Savuka49,000oz
TauTona244,000oz
 
Mike O'Hare, Executive Vice President - South Africa

Mike O'Hare
Executive Vice President – South Africa

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Our continuous improvement programme,... under the banner of [Project] ONE, has definitely improved our safety and productivity.

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In South Africa, AngloGold Ashanti has six deep-level mines and a surface operation. (1) They are:

These operations produced 1.62Moz of gold in 2011, equivalent to 37% of group production (Vaal River operations 51%, and West Wits operations, 49%) and 1.38Mlb of uranium as a byproduct. The South African operations employed an average of 32,082 people during the year.

Regrettably, there were nine fatalities during the year. The all injury frequency rate (AIFR) improved to 15.56 per million hours worked in 2011 from 17.72 in 2009.

Total cash costs in US dollar terms increased by 16% to $694/oz. Mponeng, with a total cash cost of $546/oz, was the lowest cost producer in the region.

Capital expenditure for the region totalled $532m, an increase of 25% on the $424m spent in 2010. The bulk of this was spent at Mponeng $172m, Moab Khotsong $147m, Kopanang $92m and TauTona $79m.

AngloGold Ashanti’s Mineral Resource in South Africa totalled 97.63Moz at year-end and the Ore Reserve, 32.43Moz.

At a regional level, a review of the community investment strategy is underway together with the development of a revised socio-economic model in conjunction with key stakeholders (refer Sustainability Report 2011Sustainability Report ).

(1) More than one surface operation, but collectively reported as one.



South Africa – contribution to
group production [graph]
South Africa – contribution
to production by mine
 
South Africa – gold production [graph]

1,624000oz

South Africa – capital expenditure [graph]

$532 m

 
South Africa – total cash costs [graph]

$694/oz

South Africa – average number of employees*

32,082people employed



Vaal River – Great Noligwa

Key statistics
Great Noligwa   2011 2010 2009
Pay limit (oz/t) 0.58 0.36 0.43
(g/t) 13.14 11.69 14.90
Recovered grade (oz/t) 0.163 0.175 0.167
(g/t) 5.58 5.99 5.73
Gold production (000oz) 94 132 158
Total cash costs ($/oz) 1,194 884 794
Total production costs ($/oz) 1,443 1,129 990
Capital expenditure ($m) 29 24 24
Productivity (oz/TEC) 2.72 3.35 2.86
All injury frequency rate (AIFR) (per million hours worked) 23.92 21.63 17.51
Average number of employees 2,967 3,315 4,739
Employees 2,884 3,225 4,612
Contractors 83 90 127
 
Gold production [graph]
Capital expenditure [graph]
 
Total cash costs [graph]
Average number of employees* [graph]
Description

Great Noligwa is a mature operation which adjoins Kopanang and Moab Khotsong and is located close to the town of Orkney, near the Vaal River. The Vaal Reef, the operation’s primary reef, and the Crystalkop Reef, a secondary reef, are mined from a twin-shaft system over eight main levels at an average depth of 2,400m. Given the geological complexity of the orebody at Great Noligwa, a pillar mining method is employed.

The mine shares a milling and treatment circuit with Moab Khotsong and Kopanang.

Performance

Great Noligwa produced 94,000oz at a total cash cost of $1,194/oz in 2011, compared with 132,000oz at a total cash cost of $884/oz the previous year. The strategy at the operations has shifted from conventional mining to pillar extraction, given its limited remaining life and the fact that mining has reached boundary limits.

The mine faced a challenging year in 2011, with a combination of factors curtailing production and pushing costs higher. These included a lack of mineable face length caused by the intersection of unexpected geological features, followed by difficulties encountered in quickly re-establishing and equipping pillars. Ore-pass blockages caused by poor ground conditions further limited output. As with the other South African mines, Great Noligwa also felt the impact of Section 54 safety stoppages imposed by the state mines inspector, as well as power-price increases, the industry-wide wage strike and resultant payroll increase and also the general inflationary pressures affecting the mining industry.

An 81% improvement in contribution from uranium by-product output helped mitigate some of those headwinds, following an increase in the price for the nuclear fuel and opportunistic sales to take advantage of the higher prices.

Growth and improvement

Great Noligwa is a mature mine with little opportunity to significantly increase the production base. Growth initiatives in 2012 will consist mainly of vamping operations in old working areas and extraction of higher-grade pillars. The mine’s Crystalkop reef will be used to test technology which, if successful, may be used on other group mines. In the meantime, the rollout of Project ONE at the mine aims to improve overall operating efficiencies by improving the capability and accountability of all crews and management, and enhancing planning and scheduling activities.

A high-grade block of ore, named Fish, within a large fault loss area, was initially identified in 2006. Access required extensive opening up, rehabilitation and re-equipping of old haulages in order to start development. Subsequent to initiation of access procedure, a seismic event caused extensive damage. The area was modelled from a rock engineering point of view during 2010 and a recommendation was made that a second escape was required to enable safe mining. Additional capital for this work was approved at the beginning 2011 and this is expected to be completed during 2013.

Although reef metres improved from 2010 levels, improved flexibility is only expected to be realised in 12 to 18 months. Being a pillar mine, flexibility is partially created by development and partially by re-establishment of previously abandoned face length which often poses delays and difficulty when accessing old workings. Alternate access methods are being explored with the help of external experts. Holing into old workings revealed increased requirements for re-support of the holing areas due to deteriorated ground conditions, further delaying development. Given its age and the large database of information on the orebody, grade estimation is not a significant risk. As far as practically possible, however, geological drilling into pillars that were abandoned in past years will be undertaken.

Pillar mining introduces a constraint on the mine call factor mainly due to multiple ore handling stages before the product is delivered to the plant, as well as the effect of dilution in negotiating geological structures. Recovered grade remains fairly constant and is only disrupted by unforeseen anomalies, if and when they occur.

Sustainability

Tragically, one fatality was recorded in January 2011 during scraper winch operations.

The mine recorded significant safety achievements during 2011, including 500,000 fatality-free shifts during September. Commitment to providing a safe and productive workplace was reinforced when OHSAS 18001 and ISO 14001 certification was maintained. However, the all injury frequency rate was 23.92 per million hours worked compared with 21.63 the previous year.

As with the other South African operations, the mine’s “three-pillar” strategy will focus on removing people from areas of risk, modifying behaviour and attitudes to risk and improving planning. Crews have also been initiated into the Simunye safety training programme (for further information on Simunye, see below). The introduction of this safety management programme is expected to assist in further improving safety through its requirements to ensure regular inspections, behaviour observations, group meetings and frequent workplace risk assessments.

Great Noligwa’s management has held and will continue to hold regular meetings with labour unions to track progress towards reaching the employment equity target of 40% of management roles held by historically disadvantaged South Africans. The mine is more than halfway toward this goal and has agreed a plan to meet the target with labour unions.

Great Noligwa remained active in the region with various outreach projects and fundraising events among staff and in the local community.

Socio-economic development is an essential aspect of the South Africa region’s business strategy, both from the perspective of compliance, to ensure the retention of mining licences and also because a downward trend in the region’s gold production profile, together with a strategy of removing employees from high-risk areas, will inevitably lead to significant reductions in the labour force over the medium term.

Following extensive stakeholder engagement, the region has designed a framework to integrate community development into core business activities, while providing support for national and international development policies and objectives, particularly those addressing youth unemployment. More information is provided in the case study under Sustainability Report 2011Community relations, Country focus – South Africa.

Vaal River – Kopanang

Key statistics
Kopanang   2011 2010 2009
Pay limit (oz/t) 0.48 0.41 0.40
(g/t) 10.93 13.08 13.85
Recovered grade (oz/t) 0.189 0.179 0.197
(g/t) 6.47 6.13 6.74
Gold production (000oz) 307 305 336
Total cash costs ($/oz) 681 613 406
Total production costs ($/oz) 939 867 586
Capital expenditure ($m) 92 61 58
Productivity (oz/TEC) 4.79 4.67 5.63
All injury frequency rate (AIFR) (per million hours worked) 23.18 21.86 22.71
Average number of employees 5,892 5,938 6,059
Employees 5,468 5,484 5,612
Contractors 424 454 447
 
Gold production [graph]
Capital expenditure [graph]
 
Total cash costs [graph]
Average number of employees* [graph]
Description

Kopanang is located in the Free State province, roughly 170km south-west of Johannesburg and approximately 10km south-east of the town of Orkney on a lease area of 35km². The operation is west of neighbour Great Noligwa and bound to the south by the Jersey Fault. Gold is the primary output with Uranium Oxide as a by-product from a single shaft system to a depth of 2,600m.

Kopanang almost exclusively exploits the Vaal Reef, although minor amounts of gold are also extracted from the secondary Crystalkop Reef. Given the geologically complex orebody, scattered mining is used.

Performance

Kopanang produced 307,000oz at a total cash cost of $681/oz in 2011, compared with 305,000oz at a total cash cost of $613/oz the previous year. As with the other South African mines, Kopanang also felt the impact of Section 54 safety stoppages imposed by the state mines inspector, power-price increases, the sector-wide wage strike and resultant payroll increase, and also the general inflationary pressures affecting the mining industry. Progress was made in reducing the number of mine-wide safety stoppages through a forum comprising government, labour and management. During 2011, 20 shifts were lost compared with 29 in 2010. In addition, pipe failures underground, engineering work required to rehabilitate a portion of the shaft, along with a shortage of key underground mining skills, together limited the increase in production.

Despite these challenges and the inflationary pressure on mining operations, the cost increase was contained at only 11% with the help of an improved by-product contribution and a 6% increase in reef yield. The latter resulted from an improved mine-call factor, less reef dilution and higher mining grades compared with 2010. Geological drilling targets were achieved which improved confidence in planning for face length and reef metres. Reserve availability also increased, improving the flexibility of the operation. Overall productivity improved 3% from 2010, despite the skills shortage. Additional novices were employed and training increased in order to obviate this scarcity.

The greater emphasis placed on reef-end preparation and aggressive geological exploration drilling, especially noticeable in the second half of the year, will continue into 2012 and management believes this will lay the foundation for increased face-length availability in 2013 and 2014.

Growth and improvement

Production at Kopanang is expected to remain stable. In addition, work is underway to realise further productivity gains in coming years with continued focus on improving mine-call factor, which rose by two percentage points in 2011.

This measure of efficiency in extracting available gold has been historically low at Kopanang and efforts to improve it are focused on retrieving “old gold” from abandoned working areas, reducing fragmentation and improving sampling quality.

Additional production crews will be used to sustain production targets while Simunye training continues. Pillar crews are expected to be in place by mid-year. Simunye is the safety training programme allied to Project ONE. For further information on Simunye, see below.

Life extension projects identified in 2011 include the Shaft Fault area, pillars and potential resources above 42 level, offlease opportunities and the Ventersdorp Contact Reef (VCR). Additional information will be obtained from ongoing exploration to convert resources to reserve. Reef was intersected west of the current mining front, above 42 level, returning encouraging values of 16.35g/t. Incorporation of new sampling data from drilling and underground chip sampling resulted in 1.475Moz being added to resources.

The Shaft Fault remains a very prospective target area for new ounces and exploration will continue during 2012. Below 68 level drilling has commenced. The major structure, the Jersey Fault, has been intersected, resulting in more accurate modelling of the fault to identify reef target blocks.

Three surface drill rigs have also been mobilised to explore the Vaal Reef and VCR both on- and off-lease. This exploration plan will continue during 2012. The mining rights application for the Altona area has been lodged with the Department of Mineral Resources.

Six strategic thrusts – consistent daily blast, improving the quality of mining and the mine-call factor, meeting business expectations and life-of-mine extension, re-design of western mining front, and adoption of off-the-shelf technology to achieve productivity – have been identified to achieve targets and reduce unit costs. Major focus on the creation of mineable face length will improve mining flexibility.

Sustainability

Tragically, four fatalities occurred at the mine during the year. The first occurred in August when a rescue triage member was inundated by super-fine ore during silo maintenance. In October, a stope team leader was fatally injured in an accident during water jet cleaning operations and in December a winch operator and an acting team leader were fatally injured in two separate fall of ground incidents. Specific new strategies for operating water jets and for cleaning ore boxes and silos for maintenance purposes have been employed.

Strategic plans to prevent falls of ground were also revised and rolled out. These accidents followed Kopanang’s achievement of more than 1 million fatality free shifts and more than a year without a fatality related to a fall of ground.

As with the other South African operations, the mine’s “three-pillar” strategy will focus on removing people from areas of risk, modifying behaviour and attitudes to risk and improving planning. Crews have also been initiated into the Simunye training process. The introduction of the safety management programme is expected to assist in further improving safety through its requirements to ensure regular inspections, behaviour observations, group meetings and frequent workplace risk assessments.

Energy consumption will be addressed with the introduction of the cooling auxiliary project to reduce electricity usage by the refrigeration plants. This project also involves the implementation of compressed air valves to control pressure at the stations and to minimise power consumption during off-peak periods. In addition, water jets will be modified to reduce the pumping load, and thus energy demand.

Management will continue to hold regular meetings with labour unions to track progress toward reaching the employment equity target of 40% of management roles held by historically disadvantaged South Africans, currently at about 32%. Projects are on track to convert the Kopanang residence into single-room accommodation. By 2011, 468 rooms were in place with another 16 blocks expected to be converted to single-room accommodation during 2012.

Kopanang maintained its OHSAS 18001 and ISO 14001 certifications during the year.

Socio-economic development is an essential aspect of the South Africa region’s business strategy both from the perspective of compliance – to ensure the retention of mining licences – and also because a downward trend in the region’s gold production profile, together with a strategy of removing employees from high-risk areas, will inevitably lead to reductions in the labour force over the medium term.

Following extensive stakeholder engagement, the region has designed a framework to integrate community development into core business activities, while providing support for national and international development policies and objectives, particularly those addressing youth unemployment. More information is provided in the case study under Sustainability Report 2011Community relations, Country focus – South Africa.

Vaal River – Moab Khotsong

Key statistics
Moab Khotsong   2011 2010 2009
Pay limit (oz/t) 0.57 0.49 0.60
(g/t) 12.84 15.87 20.57
Recovered grade (oz/t) 0.274 0.263 0.273
(g/t) 9.39 9.03 9.36
Gold production (000oz) 266 292 247
Total cash costs ($/oz) 689 588 424
Total production costs ($/oz) 1,058 982 737
Capital expenditure ($m) 147 120 104
Productivity (oz/TEC) 5.03 5.61 5.79
All injury frequency rate (AIFR) (per million hours worked) 20.48 19.72 28.82
Average number of employees 6,581 6,452 6,069
Employees 4,618 4,651 4,334
Contractors 1,963 1,801 1,735
 
Gold production [graph]
Capital expenditure [graph]
 
Total cash costs [graph]
Average number of employees* [graph]
Description

Moab Khotsong is the newest gold mine in South Africa. It is situated near Orkney, Klerksdorp and Viljoenskroon, about 180km southwest of Johannesburg. Stoping operations began in November 2003, with the mine expected to reach full production in 2013. Given the geological complexity of the Vaal Reef, scattered mining is employed.

The Zaaiplaats orebody in the Moab Khotsong lease area presents a significant growth opportunity and capital has been allocated to support its development in phases.

Performance

Moab Khotsong produced 266,000oz at a total cash cost of $689/oz in 2011, compared with 292,000oz at a total cash cost of $588/oz the previous year. The 9% decline in production and the resultant increase in costs were due to Section 54 safety-related stoppages enforced by the state mine inspector, as well as complex geological structures which complicated normal mining operations.

As with the other South African mines, Moab Khotsong also felt the impact of power-price increases, the industry-wide wage strike and resultant payroll increase, and also the general inflationary pressures affecting the mining industry.

Notwithstanding a difficult operating environment, the mine achieved a strong development performance which helped maintain flexibility. Ore Reserve development and long-inclined borehole drilling (LIB) proceeded according to plan in 2011.

In order to obtain critical information on a timely basis, a comprehensive risk-drilling programme was revised to include macro drilling up to three cross-cuts ahead of the current development ends, thus improving grade prediction and development planning. This allowed more proactive mine design and the opening up of reef, while the development of new raises provided additional grade information. The active drilling programme employs five LIB drilling and ten hydraulic drilling machines to ameliorate the risk of intersecting dip features within the 12-month mining plan.

Moab Khotsong improved overall efficiency, evidenced in the improvement of its mine-call factor by two percentage points to 84.2%.

Growth and improvement

The Simunye safety training component of Project ONE commenced midway through 2011 and will continue in 2012, with the aim of improving productivity rates. (For further information on Simunye, see below). The continued ramp-up of Project ONE, and specifically its work management component, are expected to assist in mitigating cost inflation at the mine. Project ONE was launched in September, with the development end on Section 26 chosen as the first site.

The key focus areas identified for Project ONE are the area mined in square metres, ore reserve development, reef development, tonnes hoisted and grade.

Project Zaaiplaats is designed to extend the operation‘s life to about 2037 by exploiting the Zaaiplaats block southwest of the current mine, unlocking 5.4Moz of gold. This will also provide a gateway for further opportunities. Phase 1, which was approved in August 2010 and will yield no gold, is currently underway. It will establish the infrastructure required for phase 2 which in turn will create a drilling platform to further increase the geological (structural) confidence of a bigger portion of the Zaaiplaats orebody, while delivering first production from the project to bridge the gap between current mining activities and access to the main portion of the Zaaiplaats orebody.

Phase 1, which will cost R165m, will conclude in 2012 with the establishment of the infrastructure to continue with phase 2. Phase 2 will follow with development of the eastern access. Redesign and supplementary studies will continue along the way, with changes incorporated from drilling information and practical experience of the use of trackless equipment. In order to begin critical path development, an additional R136m was approved as “early start” capital for phase 2. During phase 3, scheduled for 2014, full approval of the remaining phase of the Zaaiplaats project will be sought.

Phase 1 is currently in the implementation stage and access development has been completed ahead of schedule.

Construction of two 800t ore-storage silos is in process and is expected to be completed in 2012. This crucial component of phase 1 will increase rock-handling capacity on 101 and 102 levels in anticipation of phase 2 and phase 3.

The Zaaiplaats project will use a modified approach to predevelopment to facilitate drilling platforms for gathering orebody and structural information, together with the possibility of earlier gold production given the anticipated drilling outcomes. A mechanised development contract is expected to be negotiated in 2012.

Sustainability

Tragically, a fatality was recorded at Moab Khotsong as a result of a tramming incident. Despite this, the mine sustained a year-on-year improvement in the fatal injury frequency rate, from 0.13 per million hours worked in 2010 to 0.06 in 2011. This improvement aligns the mine‘s performance with industry milestones for 2013.

Moab Khotsong mine recorded 1.96m fatality-free shifts in August 2011, a new record for this operation. There were also 2.5m fall-of-ground fatality-free shifts, which milestone was achieved over a period of 18 months.

The mine also retained its OHSAS 18001 and the ISO 14001 certification during 2011.

As with other South African operations, the mine‘s “three-pillar” strategy will focus on removing people from areas of risk, modifying behaviour and attitudes to risk and improving planning. Crews have also undergone Simunye training. The introduction of the safety management programme is expected to assist in further improving safety by requiring and ensuring regular inspections, behaviour observation, group meetings and frequent workplace risk assessments.

Regular meetings are held with unions and associations in order to support the equity employment process and promote the advancement of historically disadvantaged South Africans (HDSAs). The workplace skills plan and employment equity report were also signed off by all unions prior to submission to the Department of Labour. The percentage of HDSAs in management improved to 29% at the end of 2011. An employment equity plan is in place to help achieve the 40% HDSA representivity target in each management category by 2014.

Moab Khotsong remained active in the neighbouring Matlosana area, donating a total of R430,000 to various charity organisations. Socio-economic development is an essential aspect of the South Africa region‘s business strategy, both from the perspective of compliance – to ensure the retention of mining licences – and also because a downward trend in the region‘s gold production profile, together with a strategy of removing employees from highrisk areas, will inevitably lead to reductions in the labour force over the medium term.

Following extensive stakeholder engagement, the region has designed a framework to integrate community development into core business activities, while providing support for national and international development policies and objectives, particularly those addressing youth unemployment.

More information is provided in the case study under Sustainability Report 2011Community relations, Country focus – South Africa.

Vaal River and West Wits – Surface operations

Key statistics – Surface operations: Gold
Vaal River and West Wits   2011 2010 2009
Pay limit (oz/t) 0.010 0.010 0.007
(g/t) 0.209 0.290 0.225
Recovered grade (oz/t) 0.014 0.016 0.015
(g/t) 0.48 0.54 0.53
Gold production (000oz) 164 179 164
Total cash costs ($/oz) 660 485 341
Total production costs ($/oz) 683 516 355
Capital expenditure ($m) 5 3 3
Productivity (oz/TEC) 21.32 39.80 58.27
All injury frequency rate (AIFR) (per million hours worked) 6.44 5.99 9.10
Average number of employees 745 374 234
Employees 745 374 228
Contractors 6
  1. (1) For the 2009 year, the West Wits surface operations were included in TauTona.
  2. (2) The number of employees increased from 2009 to 2010 as the West Gold Plant was classified as a dedicated surface sources plant and consequently all its employees were costed to surface operations.
 
Gold production [graph]
Capital expenditure [graph]
 
Total cash costs [graph]
Average number of employees* [graph]
Key statistics – Surface operations: Uranium
Vaal River and West Wits   2011 2010 2009
Pay limit (lb/t) 0.368 0.316 0.362
(kg/t) 0.167 0.143 0.164
Recovered grade (lb/t) 0.635 0.622 0.584
(kg/t) 0.288 0.282 0.265
Uranium production (000lb) 1,380 1,462 1,442
Capital expenditure ($m) 29 12 5
Average number of employees 199 213 221
Employees 172 185 194
Contractors 27 28 27
 
Uranium production [graph]
Capital expenditure (uranium) [graph]
 
Average number of employees* (uranium) [graph]
 
Description

The surface operation (metallurgy) extracts gold from marginal ore dumps and tailings storage facilities at surface as there is more metallurgical capacity than reef mined. Uranium is produced as a by-product. In addition, backfill product is produced for mining operations. Operating units are: Noligwa Gold Plant, which takes feed from the Vaal River mines and processes marginal ore-dump material; Mispah plant, which also treats marginal ore-dump materials; Kopanang Gold Plant, which treats marginal oredump material and Kopanang reef; West Gold Plant, which treats marginal ore-dump material; East Gold Plant, which treats feed from the Sulphur Pay dam and environmental clean-up material; Mponeng Gold Plant, dedicated to reef from the Mponeng mine; Savuka Gold Plant, which services TauTona and Savuka and treats dump material; South Uranium Plant, which operates in reverse leach mode with Noligwa Gold Plant; and Nufcor, which undertakes Calcining of South Uranium Plant‘s final product. Metallurgy also has rail transport infrastructure, the Vaal River and West Wits Laboratories and tailings management facilities.

Performance

The surface operation produced 164,000oz of gold at a total cash cost of $660/oz in 2011, compared to 179,000oz at a total cash cost of $485/oz the previous year. Uranium production was 1.38Mlb compared with 1.46Mlb the previous year.

As with the other South African mines, the surface operations were also affected by power price increases, the wage strike and resultant payroll increase, as well as general inflationary pressures affecting the mining industry.

The failure of the Mispah mill further impacted production, motivating the redesign of the lubrication system on this and similar mills. The unexpected decline of grade in marginal ore dumps is a concern and has been met with increased focus on optimising mill use, while an additional dump was equipped for mining to improve flexibility. Poor reliability of oxygen and lime supply also affected production. An oxygen plant has now been built on site to ensure supply and a new lime-slaking facility has been constructed to facilitate the use of powdered instead of unslaked lime.

Despite these challenges, production met expectations given the continued success of Project ONE.

Growth and improvement

Project ONE – and in particular its business process framework component – has been rolled out at all plants in South Africa. As part of the second phase, processes are being optimised to ensure maximum benefits are derived. Data based process management is being used at all plants to determine the appropriate measures to be monitored to reduce variability. Encouraging results have been achieved at the South Uranium plant and Mispah plant. The methodologies employed have been implemented at all other plants.

There are three focus areas for growth and improvement, namely:

  • Uranium Expansion Project to upgrade infrastructure to transport Kopanang ore to the South Uranium Plant to recover additional uranium. Completion is scheduled for July 2012;
  • Replacement of the uranium solvent extraction section within the plant to ensure sustainable operations over the life of the operation. Completion is scheduled for the end of the third quarter 2013; and
  • Uranium tailings storage facility (TSF) project to recover uranium and gold from existing tailings storage facilities, using new technology developed by AngloGold Ashanti. This will allow the profitable exploitation of all the Vaal River tailings storage facilities. A business plan has been compiled demonstrating positive returns and allowing this resource to be included in reserves. As a result, gold reserves increased by 3.2Moz and uranium by 92Mlb.

A project was initiated to conduct test work to improve understanding of each surface resource. The potential upgrade to material from marginal ore dumps is being investigated.

Sustainability

Following unseasonal rains, the water containment circuits were unable to manage the amount of water resulting in a number of overflows. A new water management regime was introduced to improve available stormwater dam capacity. Since its introduction, there have been no overflows. Later in the year, unseasonal late rainfall resulted in a water shortage which necessitated a stoppage of the East Gold Plant for three days. Short-term action minimised the impact. In addition, a pipeline is being installed which will make it possible to take some mildly saline water from neighbouring operations, currently discharged into the Koekemoerspruit, into AngloGold Ashanti‘s metallurgical circuit. A second project has been undertaken to increase the amount of well-field water pumped into the metallurgical circuit.

Surface operations experienced 12 reportable environmental incidents during 2011 of which eight were due to dam overflows. The water management philosophy has been revised taking into consideration the infrastructure and operational management of the total water balance. The actions that were put in place ensured that water could be managed during the wet fourth quarter. The replacement of the Mponeng residue pipeline and improvements in operational management have reduced the overall risk of major pipe failures.

Metallurgy holds the following certifications:

  • ISO 14001 – Environment;
  • OHSAS 18001 – Occupational Health and Safety;
  • ICMI – Internal Cyanide Management Institute Certification; and
  • ISO/17025/IEC – International Standard for Testing Laboratories (Vaal River laboratory).

Community complaints were received regarding dust in the Vaal River area. A “best practice” guideline was developed regarding dust mitigation and is being implemented. The initial focus was on the western extension TSF which contributes most of the dust. Capital of $0.2m was made available for phase 1, involving the installation of wind curtains and water spray systems on this TSF. This has been completed. Phase 2 which involves the grassing of high-risk areas on the TSF is due for completion in 2012.

Socio-economic development is an essential aspect of the South Africa region‘s business strategy, both from the perspective of compliance – to ensure retention of mining licences – and also because a downward trend in the region‘s gold production profile, together with a strategy of removing employees from high-risk areas, will inevitably lead to reductions in the labour force over the medium term.

Following extensive stakeholder engagement, the region has designed a framework to integrate community development into core business activities, while providing support for national and international development policies and objectives, particularly those addressing youth unemployment.

More information is provided in the case study under Sustainability Report 2011Community relations, Country focus – South Africa.

West Wits – Mponeng

Key statistics
Mponeng   2011 2010 2009
Pay limit (oz/t) 0.41 0.28 0.25
(g/t) 9.16 9.14 8.53
Recovered grade (oz/t) 0.283 0.276 0.253
(g/t) 9.71 9.48 8.66
Gold production (000oz) 500 532 520
Total cash costs ($/oz) 546 453 329
Total production costs ($/oz) 688 576 399
Capital expenditure ($m) 172 122 109
Productivity (oz/TEC) 8.38 8.72 8.11
All injury frequency rate (AIFR) (per million hours worked) 15.39 15.93 14.31
Average number of employees 5,788 5,778 6,029
Employees 5,624 5,732 5,926
Contractors 164 46 103
Gold production [graph]
Capital expenditure (uranium) [graph]
 
Average number of employees* (uranium) [graph]
Average number of employees* [graph]
 
Description

Mponeng is located between the towns of Carletonville and Fochville on the border between Gauteng and the North West Province, southwest of Johannesburg. The operation, the world‘s deepest mine, extracts the Ventersdorp Contact Reef (VCR) at depths between 2,400m and 3,900m through sequential-grid mining. The Mponeng lease area is constrained to the north by the TauTona and Savuka mines, to the east by Gold Fields‘ Driefontein mine and to the west by Harmony‘s Kusasalethu.

Mponeng comprises a twin-shaft system housing two surface shafts and two sub-shafts. Ore is treated and smelted at the mine‘s gold plant.

Performance

Mponeng produced 500,000oz at a total cash cost of $546/oz in 2011, compared with 532,000oz at a total cash cost of $453/oz the previous year. The decline in production was due to a combination of factors which interrupted normal operations at various periods throughout the year and higherthan- anticipated temperatures in the deeper mining areas. A R94.6m upgrade and expansion of the ice plant on surface, which contributed to higher costs, was necessitated by the increased cooling requirements as underground operations at Mponeng deepened. Work on this upgrade began in 2010 and was completed in 2011.

As with other South African mines, Mponeng also felt the effect of power-price increases, the sector-wide wage strike and resultant payroll increase, and also the general inflationary pressures affecting the mining industry. At Mponeng specifically, the operating teams contended with the breakdown of a winder and also trackless equipment used for the deepening project. An increase in the number of Section 54 safety stoppages, ordered by the state mine inspector, caused considerable disruption during the year. Management teams have intensified efforts to avoid these stoppages by continuing to improve overall safety at the mine and ensuring compliance with all relevant safety regulations. Improving development performance remains a key area of focus.

Growth and improvement

Mponeng hosts the most significant of the group‘s South African investment in its below 120 deepening project, which will extend the life of this operation. This project, which will access the Carbon Leader and Ventersdorp Contact reefs below the current 120 level, is being tackled in a phased approach with the development of a decline from the existing infrastructure to gain quicker access to the ore and significantly improve payback, project returns and future expansion options.

The CLR portion of the project will ultimately access 11.3Moz and the VCR another 3.2Moz through to 2030. Phase 1 refers to the VCR below 120 project, currently being implemented to develop four declines from 120 level to the 126/127 levels to exploit the VCR orebody. It includes the installation of the supporting infrastructure (refrigeration, backfill, decline equipping, etc) required to service a 10,000m2/month production plan.

The feasibility study is underway for phase 2, which will focus on the CLR on two levels from 120 level down to 126 level. The access design showing best fit with existing infrastructure and schedule, as well as the best returns and potential for expansion, is the construction of a central ramp, supported by an extension of the SS2 shaft for long-term transportation of men and material. The rock will be trucked up the ramp from 126 and 123 level to 119 level and hoisted to surface through the SS1 shaft rock hoisting system. Phase 2 is expected to be mined at a rate of 12,000m2 per month. The dedicated decline ramp from 120 level will provide fast access to ounces and will minimise the dependence of phase 2 on phase 1 infrastructure, making phase 1 infrastructure available for a phase 3 project opportunity.

Phase 2 will be implemented following board approval which is anticipated during 2012.

At the existing Mponeng operation, additional exploration was undertaken to gain greater knowledge of the orebody and its geological structures in order to improve planning, scheduling and confidence in production targets. Along with this programme, a decision has been taken to minimise ongoing mining activities in the lower-grade eastern sections of the mine.

The grade mined at Mponeng was marginally higher than that achieved in 2010 following the decision to move crews from the eastern areas of the mine, where values were found to decline significantly. The mine-call factor improved marginally to 79.2%.

The introduction of Project ONE at Mponeng will focus on safety transformation to reduce injury rates and eliminate disruptive stoppages; improvement of compliance with mining cycles; improving blast frequency; and optimising vertical transport. Gains in these areas are expected to result in ongoing productivity improvements at the mine through improvements in face advance, mitigating occasional shortages in certain underground mining skills. Rail-bound drill rigs will also be introduced to accelerate development rates and – as with all the mines in the South Africa region – work crews will undergo the Simunye training programme.

New technologies that are introduced at Mponeng to increase productivity are the use of high pressure drill rigs and drill jigs that achieve better development advancement compared to conventional mining equipment. Ore handling improvements at Mponeng are achieved through the use of bigger hoppers that transport higher tonnage of ore and the use of front driven trains. Wi-fi communication was installed underground to assist with better scheduling of handling of material and ore to save time and cost.

Sustainability

Tragically, two fatalities were recorded at Mponeng. On 27 May 2011, a seismic event of 0.6 magnitude occurred, resulting in a fall of ground. On 11 August 2011, a seismic event of local magnitude 2.0 occurred leading to an extensive fall of ground.

Management believes that the improved planning and scheduling that stem from Project ONE, as well as the more cohesive and productive teams resulting from the Simunye safety training programme, will help achieve further improvements in safety. As with the other South African operations, the mine‘s “three-pillar” strategy will focus on removing people from areas of risk, modifying behaviour and attitudes to risk and improving planning. Crews have also been initiated into the Simunye training process. The introduction of the safety management programme is expected to assist in further improving safety through its requirements to ensure regular inspections, behaviour observations, group meetings and frequent workplace risk assessments.

Simunye translates as “we are ONE”, indicating its relation to Project ONE and the desired training outcome of safe and productive teams who are united in a common purpose. The five-week training programme is mostly activity-based, with exercises that include elements of high-and-low rope activities, challenging and developing the resilience of the participants. A total of 68 crews had been trained by September. The positive impact of the training was immediately apparent as the teams that graduated from the process showed overall improvement in respect of safe planned work, individual and team performance and potential earnings. An early indicator of success came from the first crew that attended the training in Mponeng and achieved a noticeable 62% improvement in output (by September) compared to results before training. The programme is expected to take three years to complete.

During 2011, the all injury frequency rate improved to 15.39 per million hours worked, from 15.93 in 2010 and the mine also achieved 500,000 fatality-free shifts. Improved engagement with the entire workforce regarding every aspect of their responsibilities and daily tasks will be an ongoing responsibility for management.

At Mponeng, the flow meters installed at each level help to minimise pumping during Eskom‘s high-demand times, thus assisting with reduced power consumption.

Work was undertaken to identify and develop key talent at the operation. This will assist in staff retention and improve productivity, while also assisting in achieving the key employment equity target of having 40% of all management positions filled by historically disadvantaged South Africans by 2014 from current levels of about 35%. The plan to achieve this goal has been signed off by labour unions and management at Mponeng.

Water and waste management in the West Wits region is another key area of focus, with the immediate goal being continuous improvement and full compliance with existing regulations. Construction of storm water diversion trenches, containment evaporation ponds, waste water control dams and the upgrade of the salvage yard were initiated in 2011. The only work completed in 2011 was the salvage yard upgrade and about 70% of the storm water diversion trenches.

Mponeng has the following certification:

  • ISO 14001 – Environments; and
  • OHSAS 18001 – Occupational health and safety.

Employees and contractors at Mponeng plan to undergo hazardous substance training during 2012. Also, during 2011 the majority of the cooling towers were converted from potable to service water use as part of the goal of cutting potable water consumption to 120,000kl a month. This was surpassed, with use now stabilised at between 80,000kl and 100,000kl a month. A similar focus will be placed on energy use in 2012, with targets set for the reduction of compressed-air and pumping costs.

Socio-economic development is an essential aspect of the South Africa region‘s business strategy, both from the perspective of compliance, to ensure retention of mining licences, and also because a downward trend in the region‘s gold production profile, together with a strategy of removing employees from high-risk areas, will inevitably lead to significant reductions in the labour force over the medium term.

Following extensive stakeholder engagement, the region has designed a framework to integrate community development into core business activities, while providing support for national and international development policies and objectives, particularly those addressing youth unemployment. More information is provided in the case study under Sustainability Report 2011Community relations, Country focus – South Africa.

In addition, fundraising events were held by Mponeng staff to provide resources for various charities and organisations in the Fochville and Kokosi districts.

West Wits – Savuka

Key statistics
Savuka   2011 2010 2009
Pay limit (oz/t) 0.46 0.56 0.78
(g/t) 10.36 17.86 26.74
Recovered grade (oz/t) 0.195 0.155 0.159
(g/t) 6.69 5.30 5.45
Gold production (000oz) 49 22 30
Total cash costs ($/oz) 864 1,100 1,115
Total production costs ($/oz) 901 1,387 1,387
Capital expenditure ($m) 8 9 13
Productivity (oz/TEC) 4.83 1.68 2.38
All injury frequency rate (AIFR) (per million hours worked) 8.39 7.69 13.23
Average number of employees 815 981 1,054
Employees 785 952 1,019
Contractors 30 29 35
 
Gold production [graph]
Capital expenditure [graph]
 
Total cash costs [graph]
Average number of employees* [graph]
Description

Savuka is situated on the West Wits line in the province of Gauteng, close to the town of Carletonville and approximately 70 kilometres southwest of Johannesburg. The Carbon Leader Reef (CLR) is mined at depths varying between 3,137m and 3,457m below surface and the Ventersdorp Contact Reef (VCR) at a depth of 1,808m below surface.

Savuka shares a processing plant with neighbouring TauTona.

Performance

Savuka produced 49,000oz at a total cash cost of $864/oz in 2011, compared with 22,000oz at a total cash cost of $1,100/oz the previous year. The mine was placed on care and maintenance during 2011 following a shaft accident that damaged underground infrastructure in May 2009. Limited operations continued throughout 2011 using previously developed reserves. Parts of the Savuka deposit will be accessed from the neighbouring Mponeng operation.

Growth and improvement

The mine‘s infrastructure was mothballed at the end of 2011. Ongoing maintenance is required in order to continue water pumping activities for AngloGold Ashanti‘s remaining mines in the immediate vicinity.

Sustainability

Savuka has received the following certifications:

  • ISO 14001 – Environment; and
  • OHSAS 18001 – Occupational health and safety.

Socio-economic development is an essential aspect of the South Africa region‘s business strategy, both from the perspective of compliance, to ensure retention of mining licences, and also because a downward trend in the region‘s gold production profile together with a strategy of removing employees from high-risk areas will inevitably lead to reductions in our labour force over the medium term.

Following extensive stakeholder engagement, the region has designed a framework to integrate community development into core business activities, while providing support for national and international development policies and objectives, particularly those addressing youth unemployment.

More information is provided in the case study under Sustainability Report 2011Community relations, Country focus – South Africa.

West Wits – TauTona

Key statistics
TauTona   2011 2010 2009
Pay limit (oz/t) 0.78 0.60 0.74
(g/t) 17.63 19.27 25.33
Recovered grade (oz/t) 0.220 0.204 0.213
(g/t) 7.55 7.01 7.29
Gold production (000oz) 244 259 218
Total cash costs ($/oz) 818 700 559
Total production costs ($/oz) 1,118 980 797
Capital expenditure ($m) 79 75 57
Productivity (oz/TEC) 5.13 5.34 5.16
All injury frequency rate (AIFR) (per million hours worked) 13.36 19.03 15.84
Average number of employees 4,507 4,609 4,293
- Employees 4,023 4,137 3,842
- Contractors 484 472 451
  1. (1) Underground operation.
  2. (2) The 2009 year includes the results of the West Wits surface operation.
 
Gold production [graph]
Capital expenditure [graph]
 
Total cash costs [graph]
Average number of employees* [graph]
Description

TauTona lies on the West Wits Line, just south of Carletonville in Gauteng, about 70km southwest of Johannesburg. Mining takes place at depths of 1,850m to 3,450m. The mine has a three-shaft system, supported by secondary and tertiary shafts, and is in the process of converting from longwall to scattered-grid mining. The change in mining method was necessitated by the increasingly complex geology being encountered and the unsuitability of the current method for mining through the Pretorius fault. This change is also expected to improve safety.

Performance

TauTona produced 244,000oz at a total cash cost of $818/oz in 2011, compared with 259,000oz at a total cash cost of $700/oz the previous year. As with the other South African mines, TauTona also felt the impact of the power-price increases, the industry-wide wage strike and general inflationary pressures affecting the mining industry.

A decision was taken early in 2011, following a significant seismic event, to cease mining of the Ventersdorp Contact Reef (VCR) shaft pillar and remove it from the immediate mine plan in the interests of safety. This decision contributed to the decline in output.

The increase in costs resulted from lower production, replacement of equipment and additional shifts needed to claw back some of the lost production.

Production crews were deployed to focus on increased sweeping and vamping of old production areas to capture valuable ore-chips and gold displaced after blasting and left behind after work areas were vacated. This helped improve the overall efficiency rate, or “mine-call factor” of the operation. Increased geological drilling enhanced the overall knowledge of the orebody and contributed to the improved grade in the second half of the year.

Growth and improvement

In line with the rollout of the Project ONE business improvement initiative across the South African operations in 2011, continued focus will be placed on productivity improvements through improved scheduling and planning, as well as continued training of work crews through the Simunye initiative, the safety training component of Project ONE. For further information on Simunye, see above.

One of the chief initiatives expected to be implemented in 2012 is a vertical transport optimisation project to accelerate the delivery of consumables and other essential items to work crews, in order to increase production time at the face. Similarly, management expects that the Carbon Leader transfer system will significantly reduce times for horizontal transport, or tramming, due to the reduction in tramming kilometres and elimination of inter-level transfers.

The following energy projects are currently being undertaken:

  • Installation of a pre-cooling tower at the surface fridge plant – this project was started and completed in 2011. The pre-cooling tower results in improved power consumption in ambient temperatures, as the fridge plant does not have to be activated. This results in a saving of R1,100 for every hour the fridge plant does not have to operate.
  • Compressed air automation – this project is expected to be completed in the third quarter of 2012 and should also result in lower power consumption.
  • Energy recovery turbine – this project is expected to be completed by March 2012.

There will be continued emphasis on the management of seismicity to further improve safety and limit production interruption.

Following the success achieved in 2011, additional geological drilling will be undertaken to enhance knowledge of geological structures. Plans and schedules will be revised accordingly. At year-end, more than half the mine had converted to scattered grid mining and increased efforts were made to achieve development targets to improve future underground flexibility.

AngloGold Ashanti has also reached an agreement to drill in the IC2 block, an area belonging to Gold Fields that is adjacent to TauTona‘s existing workings and can be more quickly accessed from there. Drilling started in December 2011 and is expected to be completed by the end of 2012. Scoping work is also underway to determine the viability of mining parts of the Savuka orebody from TauTona, by establishing a link between the two mines.

Sustainability

There were no fatalities in 2011. The all injury frequency rate improved significantly to 13.36 per million hours worked, as AngloGold Ashanti employees at all levels focused on implementation of the safety transformation plan and the basic tenets of Project ONE. The mine achieved more than 1 million shifts without a fatality and more than three years without a fatality related to falls of ground. This is a potent reminder of what is possible, even in one of the world‘s deepest mines.

As with the other South African operations, the mine‘s three-pillar strategy will focus on removing people from areas of risk, modifying behaviour and attitudes to risk and improved planning. Crews have also been initiated into the Simunye training process. The introduction of the safety management programme is expected to assist in further improving safety through regular inspections, behaviour observation, group meetings and frequent workplace risk assessments.

TauTona has received the following certification:

  • ISO 14001 – Environment; and
  • OHSAS 18001 – Occupational Health and Safety.