South Africa region

South Deep Project

Six months ended
      June
2016
  June
2015
 
Gold produced 000’oz   140.0   75.0  
  kg   4,356   2,332  
Yield – underground reef g/t   5.77   4.70  
AISC R/kg   608,825   731,017  
  US$/oz   1,229   1,912  
AIC R/kg   622,453   772,702  
  US$/oz   1,257   2,020  

Gold production increased by 87 per cent from 2,332 kilograms (75,000 ounces) for the six months ended 30 June 2015 to 4,356 kilograms (140,000 ounces) for the six months ended 30 June 2016 due to increased volumes and grades.

Underground tonnes milled increased by 52 per cent from 493,000 tonnes for the six months ended 30 June 2015 to 750,000 tonnes for the six months ended 30 June 2016. Total tonnes milled increased by 104 per cent from 0.56 million tonnes to 1.14 million tonnes. Total tonnes milled for the six months ended 30 June 2016 included 47,900 tonnes of underground waste mined and 346,300 tonnes of surface tailings material compared with 8,700 tonnes of underground waste mined and 58,300 tonnes of surface tailings material for the six months ended 30 June 2015. Underground reef yield increased by 23 per cent from 4.70 grams per tonne to 5.77 grams per tonne due to greater adherence to spatial mining plans along with improved processes in the entire mining value chain.

Development increased by 74 per cent from 1,773 metres for the six months ended 30 June 2015 to 3,078 metres for the six months ended 30 June 2016. New mine capital development (phase one, sub 95 level) increased by 524 per cent from 83 metres for the six months ended 30 June 2015 to 518 metres for the six months ended 30 June 2016. Development in the current mine areas in 95 level and above increased by 51 per cent from 1,690 metres to 2,560 metres. Destress mining increased by 46 per cent from 13,619 square metres for the six months ended 30 June 2015 to 19,845 square metres for the six months ended 30 June 2016. The destress conversion from low profile to high profile mining was completed subsequent to quarter-end. Longhole stoping volume mined increased by 120 per cent from 136,858 tonnes for the six months ended 30 June 2015 to 300,966 tonnes for the six months ended 30 June 2016. High profile destress mining started in June 2015 and improved significantly from 52 square metres for the six months ended 30 June 2015 to 10,599 square metres for the six months ended 30 June 2016 mainly due to the introduction of 3 new drill rigs, improved productivity and the continued roll-out of the method across the entire mine. The high profile and low profile methods contributed 53 per cent and 47 per cent, respectively, to total destress for the six months ended 30 June 2016.

The current mine (95 level and above) contributed 65 per cent of the ore tonnes for the six months ended 30 June 2016, while the new mine (below 95 level) contributed 35 per cent. The long-hole stoping method accounted for 42 per cent of total ore tonnes mined compared with 37 per cent for the six months ended 30 June 2015.

Net operating costs increased by 46 per cent from R1,340 million (US$113 million) for the six months ended 30 June 2015 to R1,959 million (US$127 million) for the six months ended 30 June 2016. The main contributing factor is the 52 per cent increase in tonnes mined, which resulted in higher bonuses paid, higher consumable spend and higher utility consumption. The increased costs were also due to annual salary increases and additional resources (employees and contractors) in line with the strategy to sustainably improve all aspects of the operation.

Operating profit of R668 million (US$43 million) for the six months ended 30 June 2016 compared with a loss of R267 million (US$22 million) for the six months ended 30 June 2015. This was mainly due to the 87 per cent (2,024 kilograms) increase in gold production together with a 31 per cent improvement in the rand gold price, partially offset by increased net operating costs.

Capital expenditure increased by 63 per cent from R419 million (US$35 million) for the six months ended 30 June 2015 to R682 million (US$44 million) for the six months ended 30 June 2016 as a result of higher spending on fleet and the refurbishment of the man winder at Twin shaft.

All-in sustaining costs decreased by 17 per cent from R731,017 per kilogram (US$1,912 per ounce) for the six months ended 30 June 2015 to R608,825 per kilogram (US$1,229 per ounce) for the six months ended 30 June 2016 mainly due to increased gold sold, partially offset by higher operating costs and higher sustaining capital expenditure.

Total all-in cost decreased by 19 per cent from R772,702 per kilogram (US$2,020 per ounce) for the six months ended 30 June 2015 to R622,453 per kilogram (US$1,257 per ounce) for the six months ended 30 June 2016 due to the same reasons as for all-insustainable costs as well as lower non-sustaining capital expenditure.

Sustaining capital expenditure increased from R322 million (US$27 million) for the six months ended 30 June 2015 to R623 million (US$40 million) for the six months ended 30 June 2016 due to additional fleet and the refurbishment of the twin shaft man winder. Non-sustaining capital expenditure decreased from R97 million (US$8 million) to R59 million (US$4 million).

The independent Geotechnical Review Board (GRB), a committee of local and international experts, will continue to peer review progress at South Deep to ensure exposure to relevant industry leading practices and world class geotechnical support in massive underground mining at depth.