Gold Fields Develops Ghanian Super Mine and Looks for Black Empowerment Partners in South Africa

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). A $160 million upgrading and expansion plan being put in place for Gold Fields (JSE,NYSE:GFI) (Johannesburg, South Africa), the world's fourth largest gold mining company, at Ghana's Tarkwa will see an opencast gold mine enter the "super mine" league.

The company will spend $85 million on a new carbon-in-leach plant (CIL) to treat deep lying gold ore and improve recoveries to around 95% from the previous levels of about 60%. It will enable the mine to attack deeper ores and the mills and CIL plant predictability, which cannot be attained with heap leaching methods, said senior vice president of international operations John Munroe.

$75 million will purchase a fleet of trucks and diggers for the mine to facilitate the shift from contract to owner mining. "That way we can get the margin, which is not insubstantial. Gold Fields has developed the expertise to operate the mine itself and we hope to keep most of the existing contract staff when we take over in June next year," says Munroe.

The "super league" move will secure a 10-year life for the project and a seven million ounce reserve. By the end of 2004, when the new mine is commissioned, Tarkwa will begin to ramp up to production levels of between 650,000 oz and 700,000 oz per annum at around the current cash costs of $202/oz. The mine is expected to produce around 540,000 oz in 2003. Munroe said that without the expansion they would have seen the slow creep in costs of the last year persisting as stripping ratios increases and recoveries declined.

Gold Fields holds 71% of Tarkwa. IAMGold (AMEX:IAG) (Toronto, Canada) holds 18.9% and the Ghanian government holds the balance. The company's Ghanian mines, which include Tarkwa and Damang, provide about 22% of the company's gold production. Once the current expansion has been settled in, Gold Fields will start an aggressive prospecting program around the Damang property to the north, where it is believed that a similar mineralization to that at Tarkwa occurs.

Meanwhile, Gold Fields is looking hard for a black empowerment partner to fit it for the newly mandated profile of South Africa's mining industry, and is said to be in discussions with potential partners. It is also one of the companies to be targeted by reparations lawyer Ed Fagan who is threatening multi-billion dollar lawsuits on behalf of black workers who suffered various violations under the apartheid regime working conditions.

Goldfields chief executive, Ian Cockerill has taken a robust stance in the matter and says, "We're concerned with his tactics and his motives are somewhat suspicious. There is no reason for shareholders to be alarmed. We're watching the situation carefully and if we establish the company or the shareholders' interests are being prejudiced, we will not hesitate to exercise our own legal rights."

To date the $5 billion dollar company has not seen its share price affected by the threatened action.

President Thabo Mbeki and trade and industry minister Alec Erwin, have both attacked Fagan, who earns a healthy commission on his clients' reparations, for his pursuit of large settlements from South African business. His choice of the US courts as the vehicle for his action has earned harsh censure from the SA government politicians who are quoted in a statement, "It is an abuse to use the law, unsound law at that, of another land to undermine our sovereign right to settle our past and build our future as we see fit. South Africans involved in this (action) break that indefinable collectivist identity that was the origin of our strength. The government rejects the actions of legal practitioners in the USA to exploit our history and will not allow any judgement made in the USA or elsewhere to be carried out in South Africa."

This is a strong official warning for international ambulance chasers to stay away from the country. Various internal measures are ongoing to correct and compensate for the skews and violations of the past. The support for these measures has the broadly based support of all sections of the population and discussions are ongoing to provide real material and social equity in their execution without damaging the country's industrial progress and civil fabric.

Other major mining and industrial groups are present in Fagan's sights.