Ghana

Iduapriem

Key statistics

Iduapriem   2010 2009 2008
Pay limits  (oz/t)  0.04 0.04 0.04
(g/t)  1.47 1.45 1.43
Recovered grade  (oz/t)  0.050 0.050 0.051
(g/t)  1.70 1.72 1.76
Gold production  (000oz)  185 190 200
Total cash costs  ($/oz)  666 516 525
Total production costs  ($/oz)  868 579 611
Capital expenditure  ($m)  17 28 54
Total number of employees  1,483 1,447 1,780
Employees  729 727 732
Contractors  754 720 1,048
All injury frequency rate  (per million hours worked)  9.73 12.26 13.95

Outlook for 2011
Production (000oz)     188 – 199
Total cash costs ($/oz)     773 – 802
Capital expenditure ($m)     51

Gold production
(000oz)

Gold production (000oz) Iduapriem

Capital expenditure
($m)

Capital expenditure ($m) Iduapriem

Total cash cost
($/oz)

Total cash cost ($/oz) Iduapriem

Total number of employees*

Total number of employees* Iduapriem

Description

Iduapriem, wholly owned by AngloGold Ashanti since September 2007, comprises the Iduapriem and Teberebie properties on a 110km² concession. The mine is situated in the western region of Ghana, some 70km north of the coastal city of Takoradi and 10km southwest of Tarkwa.

Iduapriem is an open-pit mine and its processing facilities include a CIP plant.

Operating performance

Gold production declined by 3% to 185,000oz in 2010. The decline in production was mainly due to a stoppage from 11 February to 20 April to improve and increase the capacity of the site’s tailings storage facilities (TSF). However, a significant portion of production lost due to the stoppage was recovered by re-planning mining operations and achieving designed plant throughput.

Total cash costs increased by 29% from the previous year to $666/oz, due primarily to higher fuel and power prices as well as increased employee and maintenance related costs.

The launch of Project ONE in August 2010 has improved overall mill throughput, which reached a record of 423,000t in December 2010, in line with the upgraded plant design specification.

Capital expenditure for the year was $17m, including $9m for the new TSF, $5m for the water treatment plant upgrade and $3m for other stay-in-business capital. Owing to the operational stoppage between February and April 2010 and based on a review of capital spend, the initial amount of $31m budgeted for the Ajopa project and other projects was deferred.

Growth prospects

While the mine has limited growth prospects on surface, the higher gold price led to renewed interest in evaluating the considerable low-grade Mineral Resources in the Tarkwaian conglomerates that extend below the economic limits of the existing pits. Work is planned in 2011 to determine if there is an economic resource sufficient to support underground mining.

In addition, the Ajopa project, which was anticipated to start in 2010, is to be developed over the next two to three years. Ajopa contains an estimated Ore Reserve of 5.2Mt at a grade of 1.83g/t, equivalent to around 341,000oz of gold. This project is expected to yield approximately 324,000oz over 24 months. The change in projected Ajopa ounces is due to change in planning parameters leading to increased volume to be mined.

Outlook for 2011

Gold production at Iduapriem in 2011 is expected to increase between 188,000oz and 199,000oz. Total cash costs are estimated to range between $773/oz and $802/oz.

Capital expenditure of $51m is planned primarily for the completion of the greenfield TSF $42m, stay-in-business projects $7m and other projects $2m.

Sustainability

Safety

The all injury frequency rate of 9.73 per million hours worked improved from 12.26 reported in 2009.

Reducing the number of safety-related incidents remains a key focus for management, with a number of interventions already in place. These include hazard identification and risk assessment; incident reporting and investigation; employee engagement and communication; contractor safety management; and more visible leadership inspections by management.

Iduapriem maintained its OHSAS 18001 certification.

Environmental

Permitting issues had a significant impact on operations in 2010, following a shut-down while Block 2 and TSF 3 were closed and the interim TSF built with permission from the Ghana Environmental Protection Agency. In the meantime, construction of a TSF to cater for life of mine tailings deposition is in progress. It is anticipated that tailings deposition in the new facility will start in the first half of 2011.

In addition to this shut-down, four reportable environmental incidents, all related to pipeline failures, took place in 2010.

The online Sustainability Report 2010: Supplementary Information provides details of these incidents and the corrective action taken.

In 2009, the mine applied for temporary withdrawal from the certification to the cyanide code due to the non-compliance of its existing cyanide mixing and storage facility. Construction of the new cyanide storage facility is in progress and a new application will be made to the International Cyanide Management Institute (ICMI) during 2011. During 2010, the original water treatment plant installed in 2009 was upgraded. This work was undertaken to ensure full treatment of contaminants in process water in order to achieve the discharge standard for release of excess water from the operations.

Iduapriem achieved its ISO 14001 certification following a surveillance audit completed in November 2010.

Community

Iduapriem’s alternative livelihood programme continued in 2010, with strong support from the communities, local chiefs and local authorities. The programme includes crop, fish and palm farming and processing. In addition, a mushroom farming project is being piloted as part of a broader economic development strategy. Women from local communities will operate the mushroom farms as standalone businesses, selling and marketing their produce in and around the Tarkwa region.

Key outstanding issues from previous years, in particular cracks in houses in Teberebie village, were addressed in 2010. Work is still in progress to finalise land-for-land compensation. This would improve an already strong relationship with the mine’s surrounding communities.

Obuasi

Key statistics

Obuasi   2010 2009 2008
Pay limits*  (oz/t)  0.19 0.21 0.29
(g/t)  6.60 7.26 9.35
Recovered grade*  (oz/t)  0.150 0.151 0.127
(g/t)  5.16 5.18 4.37
Gold production  (000oz)  317 381 357
Total cash costs  ($/oz)  744 630 633
Total production costs  ($/oz)  945 796 834
Capital expenditure  ($m)  109 94 112
Total number of employees  5,722 5,759 5,722
Employees  4,225 4,408 4,259
Contractors  1,497 1,351 1,463
All injury frequency rate  (per million hours worked)  2.86 4.73 6.36

* Underground operation

Outlook for 2011
Production (000oz)     302 – 312
Total cash costs ($/oz)     790 – 820
Capital expenditure ($m)     125

Gold production
(000oz)

Gold production (000oz) Obuasi

Capital expenditure
($m)

Capital expenditure ($m) Obuasi

Total cash cost
($/oz)

Total cash cost ($/oz) Obuasi

Total number of employees*

Total number of employees* Obuasi

Description

Obuasi is located in the Ashanti Region of southern Ghana, approximately 60km south of Kumasi. It is primarily an underground mine operating at depths of up to 1.5km, though some surface mining in the form of open pit and tailings reclamation occurs. Two treatment plants processed ore this year: the South Treatment Plant, which is a Float-BIOX-CIL plant for treating hard rock sulphides and tailings; and a tailings treatment plant using CIL to treat only tailings. The tailings treatment plant was shut down in October. Tailings will be treated through the South Treatment Plant to increase gold recovery.

Operating performance

Gold production decreased by 17% to 317,000oz in 2010. The reduced gold production was mainly attributable to underground tonnages declining by 8% as a result of reduced flexibility in developed Ore Reserves. Total development metres were 19% lower, due largely to the poorer-than-expected performance of the contractor.

The South Treatment Plant was stopped twice during 2010 – for five days in March and 12 days in October, due to excess water on the TSF at Sansu. The tailings treatment plant was then shut down permanently in October as capacity on the Pompora tailings dam had been exhausted.

The mine also suffered blocked and collapsed ore passes and delays in ore-pass relocation. In order to increase the overall efficiency of the operation in the long term, the number of mining areas at Obuasi was consolidated from 13 to nine as planned. Changes to the mining method included elimination of certain waste footwall drives used for access, definition drilling in all newly designed narrow reef stopes and an increase in stope length to 150m. The transverse open stoping mining method will be applied to widen sections of the reef.

AngloGold Ashanti has appointed a high-level, multidisciplinary taskforce to address the operating problems at Obuasi. This team, comprising senior management, will analyse the recent underperformance and design a turnaround plan that will touch all aspects of the operation, from mining and processing to a holistic approach in addressing legacy sustainability issues resulting from a century of mining. Peter Anderton, a seasoned engineer with several years' experience, will lead the rapid turnaround effort; Toby Bradbury will lead the sustainability effort; and Keith Faulkner, the former AngloGold Ashanti (Ghana) managing director, will oversee the planning of Obuasi’s long-term future. This team will report its findings to the board and table a detailed plan for Obuasi’s sustained turnaround.

Total cash costs increased by 18% to $744/oz from $630/oz in 2009. The increase was mainly attributable to the decline in production, an increase in the power tariff and the once-off settlement of historical worker claims. These negative factors were partially offset by a reduction in the cost of consumables, which were sourced via a focused procurement strategy.

The Sulphide Treatment Plant metallurgical recovery rate was 86% against the target of 82% set during 2009.

Capital expenditure amounted to $109m for the year. Of this $11m was spent on projects; $36m on Ore Reserve development, and $62m on stay-in-business activities.

Growth prospects

Ore production from underground activity is planned at 1.82Mt in 2011, compared to 1.85Mt achieved in 2010.

Obuasi has a Mineral Resource base of approximately 30Moz. Within the task force structure implemented to manage the mine, one of the three elements is to identify the level and methods of production best suited to exploiting the deposit at Obuasi, given advances made in modern mining technology.

Development at Obuasi Deeps on level 50 for both the Kwesi Mensah Shaft and Brown Sub-Vertical Shaft, as well as exploration drilling on the level 50 platform, were suspended because of flooding in July 2009. Development was restarted in the fourth quarter of 2010 and exploration drilling is planned from the first quarter of 2011.

Outlook for 2011

Production at Obuasi in 2011 is projected to be between 302,000oz and 312,000oz, at an estimated total cash cost ranging from $790/oz to $820/oz as the taskforce undertakes planning for the mine’s future.

Planned capital expenditure is expected to be approximately $125m, with $10m allocated to projects, $80m to stay-in business activities and $35m to Ore Reserve development.

Sustainability

Safety

The safety performance at Obuasi improved significantly compared to 2009 with an all injury frequency rate of 2.86 per million hours worked recorded in 2010 compared with 4.73 per million hours worked in 2009. There were no fatalities during the year.

The safety strategy drawn up in 2009 and implemented in 2010 contributed significantly to this performance. It focused on four interlinked goals: processes that assign accountability and drive performance; effective employee dialogue and engagement; improving health and safety systems and establishing a health and safety support function that suits the operation’s needs.

Community

The implementation of the recommendations of the 2009 Social Study report on Obuasi communities continues to receive attention.

The mine site continued to engage with surrounding communities including the Artisanal Miners Association. There was an increase in the number of communities covered under the stakeholder engagement plan from 48 in 2009 to 58 in 2010.

On legacy issues, farms impacted by mining activities have been assessed and some compensation paid. Grievances have been investigated and documented, and proactive engagement through regular meetings with communities has been instituted.

Regarding economic development, three projects are being piloted at Obuasi to create employment opportunities for the communities, namely a piggery, aqua culture and a garment factory.

AngloGold Ashanti’s staffing needs in the community and social development spheres have been expanded and training is being provided to environment and community staff. Implementation of management standards to prevent or avoid the creation of additional legacy issues has commenced.

The occasional chemical treatment of process water for discharge in positive water balance situations to streams and rivers has been curtailed and rehabilitation of mined-out pits has commenced at Adubriem and Sansu. The road to Sansu village is being resurfaced by the company.

The mine continued to fund and operate its Malaria Control Programme, which has successfully reduced the incidence of malaria in the community, of more than 250,000 people, by more than 75%. The programme is a world benchmark and has been selected by the United Nation’s Global Fund with AngloGold Ashanti as the principal recipient to expand the Obuasi model to 40 districts around Ghana. Funding of $130m will be provided over five years at which time the Obuasi programme will be included in the Global Fund programme. The programme awaits government tax exemption on the Global Fund donor funds, which should be forthcoming in 2011.

In addition, Obuasi continues its support of the municipality on waste and hygiene management, education, HIV/Aids awareness and treatment.

Environment

Six reportable environmental incidents, two of which were related to tailings management, took place in 2010. Details of the incidents and the corrective action taken are available in the online Sustainability Report 2010: Supplementary Information.

A tailings retreatment project is under way to retreat tailings in the facilities at the northern end of the mine and simultaneously address stability and drainage issues as part of Obuasi’s mine closure obligations.

Construction of two process water treatment plants to mitigate the positive water balances to the north and south of the mine is scheduled for completion by the second quarter of 2011.

Permitting processes are also under way ahead of the construction of a return water dam to be commissioned by 2012, to enhance the stability of the south tailings storage facility.

The mine underwent its ISO 14001 surveillance audit in November after successfully completing a certification audit in December 2009.

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