Revived old Joburg gold mines may begin producing earlier, from bigger resource
miningweekly.com
By: Leandi Rostoll
Published on 6th June 2008
Revived old Joburg gold mines may begin producing earlier, from bigger resource
The remining of Johannesburg – 122 years after George Harrison’s initial 1886 gold discovery – is now poised to begin sooner than expected and involve a bigger resource than originally announced, Mining Weekly understands.
The London- and Johannesburg-listed mining company, Central Rand Gold (CRG), expects to turn old Golden City workings to positive account sooner than previously expected, Mining Weekly learns.
It is understood that CRG wants trial mining to start the moment it is awarded its mining licence, which is expected within the next few months.
By the end of 2009, CRG plans to be pro- ducing at a rate of 100 000 oz/y of gold.
It wants to ratchet up to 250 000 oz/y by 2010 and then go on to a million ounces a year by 2012.
CRG CEO Greg James, a former CFO of the coal division of Glencore International who worked under legendary Glencore CEO Ivan Glasenberg, says the old operations have a remaining life of “at least 30 to 35 years”.
Although the Central Rand has already produced 247-million ounces of gold since mining began in the area more than a century ago, considerable resources remain as unmined remnants and even virgin reef.
There is a total Joint Ore Reserves Committee resource of 35,5-million ounces of gold still in the ground, 22,3-million of which are in the indicated category and 13,2-million in the inferred category.
CRG’s properties are the old Consolidated Main Reef (CMR), Crown Mines, City Deep, Village Main and Robinson Deep.
When CRG made its initial public offering (IPO), it may have presented something of a worst-case reef scenario.
The IPO’s statement was based primarily on the Main Reef and the Main Reef Leader sequences of those properties, but Mining Weekly is told that there is “much more gold” than stated at the time of the IPO, including the virgin 4-g/t to 5-g/t Bird and Kimberley reefs.
Mining Weekly learns that there may be other parallel reefs that can be mined in addition to those already announced, the consequence of fussy pioneer miners pursuing only high grades of 8 g/t plus.
Huge amounts of the Bird reef and the Kimberley reef are said to be unmined, allowing a huge resource to be potentially added to the CRG portfolio.
Uranium and silver are also unmined and will be extracted for sale as concentrate, allowing mined-out areas to be completely rehabilitated this time around.
CRG, which intends to mine at depths of 170 m and later 500 m, will use mechanised mining methods common in other parts of the world, but reconfigured to suit its requirements. It will include extra-low-profile machinery.
“Our proposed mining technique and our strategy helped to make Glencore the biggest coal producer in the world,” says James.
At least 200 workers will be needed for each mining area and local skills will be used.
CRG will mine within a renewed underground network and intends stabilising historical workings through backfilling.
Use will be made of the large subsurface water supply available in the old mine workings, in addition to sparing use of water supplied by Rand Water, which will be recycled.
Low-noise subsonic blasting techniques will be used for rock breaking so as not to disturb near-mine communities.
CURRENT ACTIVITIES
CRG has submitted its environmental management programme (EMP) to the Department of Minerals and Energy (DME). In addition, the company has updated the social and labour plan, following an extensive public participation programme.
CRG has received assay results for 75% of assays submitted to date compared with 50% when the IPO prospectus was issued late last year.
In the past 17 months, CRG has diamond-drilled and reverse circulation drilled 45 600 m.
To date, access has been gained to eight existing shafts, made safe and reopened for the underground sampling programme.
This has started on the CMR East shaft, which has been reopened down to 296 m below the surface and on the CMR shaft nine, which has been reopened down to 127 m below the surface.
“CRG is continuing its drilling programme, coupled with underground sampling, across all nine slots with the aim of further enhancing the current gold resource base,” says James.
“The complete area that will be mined consists of 280 km2 and it is all contiguous in nature, which gives us a significant advantage.
“All these areas were previously individual mines, with unmined areas in between. These mines had to go deep owing to the boundaries, but CRG has all the rights, stretching across all the boundaries. No one saw the possibilities, because they were all thinking in terms of the way it was mined before,” says CRG COO Mike Sullivan.
Formerly, because of the limited space, ore was brought up to the surface and dumped in ugly, unhealthy tailings dam areas. Most of these areas on the CRG ground have now been cleared and are available to CRG for mining.
CRG’s unconventional mining technique is decline trackless mining, which makes use of earthmoving equipment.
Sullivan adds that the mining technique is safer and more worker friendly. Mined-out areas will be backfilled.
Small satellite plants that can also be located underground will be placed near production for ore processing, which is only about 10% of the original volume of mined rock,” Sullivan adds.
POTENTIAL SPOTTED
Thoughts of mining began when the University of the Witwatersrand’s two geologist honorary professor brothers, Morris and Richard Viljoen, established, through student visits, that the old derelict mines had potential.
The mines were owned by Rand Mines, which split its mining company from its property developing company in the 1980s.
Rand Mines managers bought out the property company in the late 1990s to form iProp.
However, with the introduction of the Mineral and Petroleum Resources Development Act (MPRDA) and because the resource was economic, CRG, through its association with iProp, had an opportunity to convert unused old-order rights into new-order prospecting rights using the MPRDA’s ‘Use it or Lose it’ policy.
Australian geologist Harry Mason raised £2-million to explore the old mine workings under the name of Rand Quest Syndicate, which changed its name to CRG in 2007.
After a series of further private placements totalling £23-million, CRG listed on the JSE and the LSE in November 2007, raising the further estimated £75-million the company needed to complete additional exploration of the unmined areas and produce at an annual rate of 250 000 oz/y.
“The big thing was that we had restructured a high-profile board and team, and that is why there was confidence from investors to place a fair amount of money in the company,” he adds.
But, from a South African investor’s point of view, CRG has struggled to get the traditional mining believers to have faith in the company’s proposed mining technique and the possibility of gold in these mines.
When the company listed on the JSE it did not do as well as it had done on the LSE, delivering “very interesting” results.
The company’s share price opened at £1,44 a share on the initial entry onto the LSE, which is now trading at £1,07.
COMMUNITY IMPACT
CRG did a community roadshow to communicate that 4 000 new direct jobs and 32 000 indirect jobs are being created, James reporting that over 20 000 locals provided input, by attending the community meetings.
He says that members of the community will be employed for exploration and mining, and transport will be provided to ensure that they continue to live in their communities.
“At some meetings, we had over 1 000 people, and every person gave an opinion of what they would like to see in terms of job opportunities, and whether they would like to be contacted,” James enthuses.
“In some instances, we are planning to double up on jobs by hiring a skilled worker to train an unskilled worker on the job. We will bring skilled, unskilled and semiskilled people on to the job, and once they reach a certain level, we will send them to training schools that we plan to establish ourselves, once the company has grown to a big enough size.
“At the same time, we will address the shortage of skills within the immediate communities by developing and financing a technical college.
“We used to have technical colleges, and we want to go back to that method as it really worked and gave people the opportunity to learn the trade.
“We would like to see our employees go through the college and, in the future, see their children train through the college and thereby create a continuous upskilling structure,” James says.
CRG plans to give university graduates hands-on experience by sending them on 20-week training courses within the company, and intends building a strong female workforce.
“Its geology team has a strong women complement, but the company has been unsuccessful in attracting female engineers,” James laments.
MINING GREEN
CRG says in its EMP to the DME that it will rehabilitate as it mines, with no dumping, and has assured the Department of Water Affairs and Forestry that water will not be polluted.
CRG environmental and tenement manager Jenny Johnson says, “We are rehabilitating as we go along; we will not be leaving mine waste products on surface as all mine waste will be cleaned and used to backfill old workings or on-sold for recovery of by-products.
“We will also rehabilitate and free up land for future development, which is key for some of our local economic development projects and Johannesburg as a whole.
“We will not use any toxic chemical agents and all harmful waste will be removed from the mine sites. The tailings will be desulphurised before being used for backfill, which will prevent the creation of acid mine water.
“The satellite plants will not use any toxic chemicals at all. What usually causes a lot of acid mine drainage (AMD) is the pyrite and sulphide left in the original rock, which rusts and turns into sulphuric acid, but we are removing all of it. About 3% to 5% of sulphide can cause AMD, but when we clean it, only 0,2% sulphide is left.
“We are also not conducting cyanide leaching. We use a frothing agent, which produces bubbles, which the gold sticks to. It then goes through a gravity process and a frothing plant to remove the sulphide. It is nontoxic and completely organic,” says Sullivan.
The extracted concentrate will be sent to a central extraction plant, which will be enclosed and located in a remote area. Cyanide will be used to leach out the gold from the 10% extracted rock.
James has established a backbone for the company by ensuring that all issues are dealt with immediately, and by ensuring that a strong focus is placed on key issues that arise.
“Nothing is holding us back. This project is fairly big, and we have remained focused on what we have, and we have key focus areas that are important to address through every step we take. Up until now, we have met every challenge thrown our way.
“The community issues and the roadshow were a big project, and throughout the process we have encountered obstacles that we have dealt with head-on.
“We formed a mining rights committee that ensures that all document-ation that needs to be submitted, or issues that need to be dealt with, are taken care of. We have put plans in place to counter all obstacles that come up, as we do not want to wait for things to go wrong. We are being proactive on an ongoing basis.
“The mines are as much an asset for the citizens as [they are] for the shareholders, and if all stakeholders aren’t properly addressed, then the shareholders will be supporting a lost cause and, therefore, we are ensuring that all stakeholders are kept up to speed on all issues,” he says.
DISPROVING CRITICS
“People have been cynical and said we didn’t know what we were doing, but we do know what we are doing, and our mining technique is not something new. People have just been missing it as a viable option as they are too focused on what they are used to. European investors are a lot more open to new ideas, but in South Africa, the mining sector is very set in its ways,” says James.
He is confident that the South African investors will soon realise the company’s upside.
“Slowly but surely, the scepticism is disappearing,” he says, noting a change of attitude at this year’s Mining Indaba, in Cape Town, over last year’s.
“Last year, people were negative about our prospects, but after this year’s Indaba, they started taking us far more seriously,” James concludes. |
