Brazil
AngloGold Ashanti Córrego do Sítio Mineração (AGA Mineração)
Key statistics
| AGA Mineração | 2010 | 2009 | 2008 | |
|---|---|---|---|---|
| Pay limit | (oz/t) | 0.13 | 0.11 | 0.12 |
| (g/t) | 4.40 | 3.82 | 4.16 | |
| Recovered grade* | (oz/t) | 0.210 | 0.205 | 0.222 |
| (g/t) | 7.21 | 7.02 | 7.62 | |
| Gold production | (000oz) | 338 | 329 | 320 |
| Total cash costs | ($/oz) | 407 | 339 | 300 |
| Total production costs | ($/oz) | 651 | 486 | 432 |
| Capital expenditure | ($m) | 142 | 84 | 69 |
| Total number of employees | 3,426 | 2,964 | 2,987 | |
| Employees | 2,486 | 2,249 | 1,954 | |
| Contractors | 940 | 715 | 1,033 | |
| All injury frequency rate | (per million hours worked) | 2.62 | 4.19 | 5.79 |
* Underground operation
| Outlook for 2011 | ||||
|---|---|---|---|---|
| Production | (000oz) | 361 – 378 | ||
| Total cash costs | ($/oz) | 497 – 516 | ||
| Capital expenditure | ($m) | 234 |
Gold production
(000oz)
Capital expenditure
($m)
Total cash cost
($/oz)
Total number of employees*
Description
Reorganisation of the corporate structure was completed during the first half of the year, combining the Cuiabá/Lamego/Queiroz and the Córrego do Sítio and São Bento operations to capture operating and financial synergies. The new company is called AngloGold Ashanti Córrego do Sítio Mineração (AGA Mineração).
The wholly owned AGA Mineração mining complex is located in southeastern Brazil, in the state of Minas Gerais, close to the city of Belo Horizonte, with operations in the municipalities of Nova Lima, Sabará and Santa Bárbara.
Ore is sourced from the Cuiabá and Lamego underground mines and processed at the Cuiabá and Queiroz plants, while the Córrego do Sítio open pit mine has a heap-leaching facility.
Operating performance
Gold production increased by 3% to 338,000oz from 329,000oz in 2009, due mainly to the implementation of the Lamego project. Total cash costs increased by 20% to $407/oz, driven largely by higher maintenance costs. These effects were partially offset, however, by higher revenue from the sale of sulphuric acid, a by-product of the Cuiabá mining operation.
Capital expenditure was $142m, of which $73m related to expansion projects, $25m to Ore Reserve development and $44m to stay-in-business activities.
As part of the conceptual study for the Cuiabá Future Project, which is investigating ways of sustaining performance in the longer term, actions were taken to enhance production from underground ore and waste transport logistics and to investigate alternative mining methods. A study was conducted in support of this initiative to define the best technical approaches regarding transport logistics (large truck capacity, conveyor and new shaft) that will be detailed throughout 2011, in parallel with the conceptual mining methods study.
The management maintenance programme continued its focus on the optimisation of costs and also on improving fleet availability. Efforts have been made since January 2010 to improve the maintenance management process for heavy mobile equipment at Cuiabá. In addition to the implementation of Project ONE, an integrated maintenance management system is ongoing and all efforts are organised into two strategies: short-term results focused on costs and equipment availability and medium- to long-term results focused on SIGM Pyramid (maintenance management process). These initiatives resulted in a 7% improvement in the performance of sponsored heavy mobile equipment during the year.
Further productivity improvements are expected from Project ONE. Previous implementation experiences show that the successful stabilisation of the work management portion can help operations to improve key parameters from the historical average to the 75th percentile of production rate.
Growth prospect
An exploration programme is currently under way on the former São Bento property, acquired in December 2008 from Eldorado Gold. The property adjoins AngloGold Ashanti’s existing Córrego do Sítio mine which, together with São Bento, has been renamed Córrego do Sítio Mineração. Phase 1 of the Córrego do Sítio project, approved by the board in May 2010 with estimated capital expenditure of $195m, covers the Laranjeiras, Carvoaria Velha and Cachorro Bravo orebodies with trial mining at the latter already completed. The capital project is proceeding according to schedule. The initial focus of the project team is on the refurbishment of the São Bento plant, the ramp-up in mine production and construction of infrastructure, including the new road to transport ore and waste. Annual production from Phase 1 is planned to start in 2011, following a mine and plant ramp up and will continue at an average of 140,000oz a year for the initial 11-year life of mine. The second phase of this project has the potential to increase production through the addition of Mineral Resources and the expansion of the plant. The scope and size of the expansion will depend on the results of exploration drilling currently under way.
The Lamego project, approved in September 2009, is currently being implemented. Production from the mine rose from 18,000oz in 2009 to 35,000oz in 2010, with full production of 47,000oz scheduled for 2011. Lamego is expected to produce approximately 469,000oz of gold over nine years from 3.2Mt of milled ore.
A feasibility study on the Nova Lima Sul Project, which involves the restart of the mothballed Raposos mine, is being prepared for submission to the board in mid 2011. If approved, the implementation will start late in 2011, with refurbishment of the underground infrastructure and construction of a new ventilation system. Mine development will take place in 2012 and 2013 with production scheduled to begin in 2014.
Outlook for 2011
Production for 2011 is planned to increase to between 361,000oz and 378,000oz. This figure includes initial production of 21,000oz from the Córrego do Sítio phase 1 project.
Total cash costs are expected to rise to between $497/oz and $516/oz, reflecting the continued strength of the real, the impact of inflation and the additional ounces coming from the projects at a higher unit cost.
Total capital expenditure expected for 2011 is around $234m, of which $100m relates to expansion projects, $47m to Ore Reserve development, $81m to stay-in-business activities and $6m to capitalised exploration.
Sustainability
Safety
A vastly improved safety performance during 2010 resulted in an all injury frequency rate of 2.62 per million hours worked for the year (2009: 4.19). There were no fatalities.
After taking into account the results of a survey conducted during December 2009 to assess attitudes toward safety, an integrated strategic safety programme was designed to address deficiencies, drive further improvements and reinforce awareness of the importance of working safely. The plan is based on optimising technology to reduce workers’ exposure to risks in the production process and on introducing controls that account for human fallibility in overall safety performance.
Cuiabá completed construction of the refrigeration plant on surface with zero lost-time injuries.
AngloGold Ashanti accepted an invitation to participate in the Brazilian Mining Association’s Safety and Health Strategic Group, which aims to promote institutional actions to ensure improved competitive conditions for Brazilian mining companies.
Community
AngloGold Ashanti is the first mining company in Brazil to receive Social Responsibility (NBR 16001) certification according to the Brazilian Association of Technical Standards (ABTN). ABTN is a private non-profit organisation and a founding member of the International Organisation for Standardisation, the Pan-American Standards Commission and the Asociación Mercosur de Normalización.
A Portuguese-language website was developed and launched in 2010 to aid AngloGold Ashanti’s communication efforts with its Brazilian stakeholders.
The company signed contracts with 25 beneficiary institutions on the First Public Call for Projects Subscription. According to the project timetable, AngloGold Ashanti provided the funds in parallel with meetings and visits to follow up on project implementation. These projects are focused on education, job and income generation and health, and have been run in communities surrounding the group’s operations. This is a voluntary company initiative focused on local development.
Preparations for the local sustainability report in May included a poll of stakeholder expectations. A multi-stakeholder forum included 42 participants from a variety of sectors (e.g. communities, NGOs, clients, suppliers, employees, academies, etc.) and was well received. Participants were invited to provide a critique of AngloGold Ashanti’s Social Responsibility Policy in practice. Responses included an acknowledgement that while the intentions of the policy appear favourable, it requires clarification in certain activities with regard to its local priorities, specifically: health, education, entrepreneurship and socio-economic empowerment, as well as the long-term sustainability of communities. It was also recommended that the company detail its efforts around mitigation and compensation strategies for certain key issues, including greenhouse gas emissions, mine tailings, water usage, closure, economic diversification and community empowerment. Respondents further suggested the company explicitly highlight past, present and future impacts and continue to improve and update its understanding of local social and cultural issues.
Environment
ISO 14001 environment certification was maintained during the year.
Córrego do Sítio II, the former São Bento mine, has a forest reserve which may have to be relocated in order to receive permission from the authorities to conduct exploration work on surface. A request has been submitted to the authorities and is under review.
New regulations have increased the management and cost in respect of the mine closure plan, land impacted by mining, disturbed land, taxes for water consumption, environmental compensation for the new project and especially for the impact of land clearance.
The necessary permits for the underground mine expansion at Córrego do Sítio and the licence for the raising of the wall of the Cuiabá dam were granted by the Environmental Agency.
It was announced in November 2010 that AngloGold Ashanti would receive an environmental award from the Minas Gerais state government at a ceremony in February 2011. This award reflects the alignment of the company’s environmental goals and initiatives with those of the government.
No reportable environmental incidents occurred in 2010.
Serra Grande
Key statistics
| Serra Grande | 2010 | 2009 | 2008 | ||
|---|---|---|---|---|---|
| Pay limit | (oz/t) | 0.09 | 0.11 | 0.11 | |
| (g/t) | 3.20 | 3.92 | 3.91 | ||
| Recovered grade | (oz/t) | 0.118 | 0.132 | 0.200 | |
| (g/t) | 4.05 | 4.52 | 6.85 | ||
| Gold production | – 100% | (000oz) | 155 | 154 | 174 |
| – 50% | 77 | 77 | 87 | ||
| Total cash costs | ($/oz) | 481 | 406 | 294 | |
| Total production costs | ($/oz) | 690 | 542 | 394 | |
| Capital expenditure | – 100% | ($m) | 52 | 67 | 41 |
| – 50% | 26 | 33 | 20 | ||
| Total number of employees | 1,268 | 1,289 | 1,108 | ||
| Employees | 965 | 864 | 725 | ||
| Contractors | 303 | 425 | 383 | ||
| All injury frequency rate | (per million hours worked) | 7.22 | 8.99 | 13.34 |
| Outlook for 2011 (attributable) | ||||
|---|---|---|---|---|
| Production | (000oz) | 74 – 77 | ||
| Total cash costs | ($/oz) | 601 – 624 | ||
| Capital expenditure | ($m) | 23 |
Attributable gold production
(000oz)
Attributable capital expenditure
($m)
Total cash cost
($/oz)
Total number of employees*
Description
Serra Grande is located in central Brazil, in the state of Goiás, 5km from the city of Crixás. AngloGold Ashanti and Kinross Gold Corporation are equal partners in this operation. In terms of the shareholders’ agreement, AngloGold Ashanti manages the operation and has the right to access a maximum of 50% of the earnings accrued and dividends paid by Serra Grande.
Serra Grande currently comprises three mechanised underground mines, Mina III, Mina Nova – which includes the Pequizão orebody and Palmeiras – and an open pit above Mina III.
The Palmeiras mine, where development began in May 2008, started production in 2009 from the primary development works. Annual capacity of the processing circuit, which has grinding, leaching, filtration, precipitation and smelting facilities, was expanded from about 0.8Mt to 1.15Mt. This expansion was completed in February 2009.
Operating performance
Attributable production of 77,000oz was unchanged from the previous year.
Total cash costs increased 18% to $481/oz, due mainly to local currency appreciation and inflationary pressure.
In May, Serra Grande underwent re-evaluation of its Mineral Resources and Ore Reserves and the production programme was revised. The tonnages mined remained unchanged, while plant throughput exceeded the 30,000t initially planned. The feed grade was 13% lower than expected for the year. Despite these challenges, the total cash cost for the year was only 2% higher than forecast.
Growth prospects
A total of 32,447m was drilled in the 2010 exploration programme, which focused on Pequizão, Palmeiras and Cajueiros targets at a cost of more than $5m. The exploration team has reviewed both geological mapping and the database, including agreements with joint venture partners, in order to assist in new target generation.
The Pequizão orebody has shown potential for increased Mineral Resource both down plunge and along strike. The infill drilling campaign confirmed previous results and the deepest hole showed a high-grade intersection 850m deep, keeping the down plunge potential totally open. At the Cajueiro target, drilling was undertaken to understand mineralised structure controls. Preliminary results have confirmed the low-grade potential. During the third quarter of 2010, the Magnetoteluric geophysical method was tested at Mina III, aiming to define the structure III geometry below level 1,000. The preliminary results are being evaluated by specialists.
In 2011, a fast-track exploration programme is planned to define and evaluate the complete potential of mine targets at Pequizão, Palmeiras, Orebody IV and Mina Nova and also to generate new targets in the northwest structure and joint venture partner areas. More than 70,000m of drilling is planned in this programme, including underground and surface drilling as well as geochemical and geophysical surveys to support target generation.
Outlook for 2011
Attributable production for 2011 is forecast to be between 74,000oz and 77,000oz at a total cash cost of between $601/oz and $624/oz.
Capital expenditure of $45m ($23m attributable) is anticipated for 2011, with the main items being primary development, mine infrastructure, mobile equipment and the fast-track exploration programme.
Sustainability
The company retained its safety, health and environmental certifications, including ISO 14001, OHSAS 18001 and ISO 9001. It is fully compliant with the Cyanide Code.
Safety
Safety performance at Serra Grande improved in 2010 with an all injury frequency rate of 7.22 per million hours worked (2009: 8.99) recorded for the year. There were no fatalities recorded for the second consecutive year.
Continuous investments were made during the year in the development of a safety culture across the workforce. All leadership at site underwent seven modules of training with specialist consultants about the nature of human behaviour, how to enhance safety awareness in the workplace and a one-on-one safety approach to work on a daily basis.
Significant investments in technology for safety were made in 2010 and a second scaler to remove rock from the roof and galleries was acquired.
There was increased use of sub-level mining methods during the year in order to minimise the exposure of people at the stope face. Serra Grande currently uses four remote-controlled loaders and Simbas for longer drilling. The ventilation system at the mine was upgraded using raise borer drilling.
Radio communication was installed in every piece of mobile equipment and a dispatch system implemented in all Serra Grande’s mines.
Community
Continuous support was given to local social institutions that assist people, especially children and those with special needs. Support was also given to cultural and religious celebrations and to the restoration of historical buildings to protect the city’s heritage, including an old house dating from the 1700s when the first miners arrived in the area. Donations were made to: the Association of Parents and Friends of Disabled Children; an amateur acting school for youngsters; free soccer lessons for 102 children; and the support of a day care centre that caters for 165 children every day.
Environment
Reviews were undertaken of all safety, health and environmental-related measurements such as water, air, dust, noise and vibration after blasting to ensure compliance with international standards.
Improvements in water usage controls across all industrial processes were developed and locations for all meters were identified with several having been installed by year-end. This will allow improved control of water usage. About 80% of all water used in the production process is currently recycled.
No reportable environmental incidents occurred in 2010.