Olympic Dam Copper-Uranium Mine, Adelaide, Australia

The Olympic Dam copper-uranium mine and plant is situated in South Australia, 580km north-west of Adelaide. Opened in 1988, Olympic Dam is wholly owned and operated by WMC Resources, which discovered the deposit in 1975. A A$1,940m expansion programme was completed in 1999, raising its capacity to 200,000t/y of copper and 4,300t/y of uranium, plus gold and silver. In mid-2005, BHP Billiton gained control of WMC Resources in an A$9.2bn takeover.

In 2007 BHP Billiton announced that it would undertake a A$6bn–A$7bn expansion of the Olympic Dam mine. The company says that annual ore production will increase up to 70 million tonnes, a seven-fold increase if the expansion proceeds. Copper production will increase from approximately 180, 000t a year to approximately 730,000t.

This would include 500,000oz of gold, 500,000t of copper and 15,000t of yellowcake. Existing average gold production is 80,000oz pa. The additional proven reserves of uranium now make Olympic Dam one of the most promising uranium mines in the world.

Intierra's Minmet data base puts current Olympic Dam proven-probable reserves at 756 million tonnes grading 1.5% copper, 0.5kg/t U308, 0.5 g/t gold and 3.1g/t silver. The measured to inferred resources were 3.214 billion tonnes at 1.025% copper, 0.337kg/t U308, 0.442g/t gold and 2.144g/t silver. On these figures, without improved grades or increased tonnage, Olympic Dam has proven reserves of a contained 12.153Moz gold and contained resources of 45.62Moz.

The results of the study ended much speculation within the mining and investment communities, which were especially abuzz about the potential upgrade of gold reserves.

Once fully complete, the expansion would make Olympic Dam the biggest mine in the world. Concerns have naturally been voiced about how the necessary infrastructure will be funded and deployed. Finding skilled labour will be another challenge.

GEOLOGY AND RESERVES

The deposit occurs in the basement rocks of the Stuart Shelf geological province in the north of South Australia, west of Lake Torrens. Mineralisation consists of medium-grained chalcopyrite, bornite and chalcocite, fine-grained disseminated pitchblende, gold, silver and rare earth minerals that occur in a magnetic hydrothermal breccia complex beneath 350m of overburden. The ore occurs in distinct zones that determine the mine access and layout.

As of September 2008, the total ore reserves at Olympic Dam stood at 473Mt, up from 399Mt in 2007, grading 1.86% copper and 0.6kg/t U3O8..

MINING

The current scope and logistical demands of the mine will be increased by a few orders of magnitude once the expansion gets into full swing. The mine will gradually be transformed from an underground operation to open pit.

Three vertical shafts and a decline access the orebody, which is worked using a variation of sublevel open stoping. Each stope may contain 300,000t of ore. Drill drives are driven on the stope centre line and blastholes drilled in vertical rings. These are charged with ANFO and detonated with shock tube detonators. The drilling fleet comprises Atlas Copco and Tamrock production rigs, with development being carried out using two Tamrock (now Sandvik) jumbos. Atlas Copco has supplied two modified Simba H4356S production drilling rigs.

Stopes are backfilled with cemented aggregate of crushed 'mullock' (waste rock), deslimed mill tailings, cement and pulverised fuel ash (PFA). Automation has done much to reduce production costs at Olympic Dam. Innovations include the automated underground haulage system and the 'smart' loader, a robotics-driven, decision-making underground ore carrier.

ORE PROCESSING

Processing facilities consist of a copper concentrator, hydrometallurgical plant, copper smelter, sulphuric acid plant, copper and gold/silver refineries. Recent expansions included a Svedala autogenous mill, additions to the flotation sections, two counter-current decantation thickeners, an electric slag-cleaning furnace, a new anode furnace gas-cleaning plant and additional electro-refining cells.

Copper is recovered primarily by copper sulphide flotation from slurry before the copper concentrate is smelted and electro-refined to high-purity copper.

Wastes generated during electro-refining are treated to recover gold and silver. After treatment by flotation, the finely-crushed ore is leached with sulphuric acid to dissolve uranium and any remaining copper. The leach liquor is processed in the solvent extraction plant to separate the residual copper and uranium streams. Copper is recovered by electrowinning and uranium converted to yellowcake and calcined uranium oxide.

Installation of two pulsed columns has increased uranium recovery from solution from 90% to about 97%. These columns use an air pulse to mix the acidic and organic solutions, providing better contact for the chemical reaction involved in transferring the uranium from one to the other.

Copper cathode sheets are transported by truck within Australia and to Port Adelaide for export. All uranium oxide produced at Olympic Dam is exported. The gold plant became fully operational in 2000. A fire in 2002 at the solvent extraction / electrowinning plant cost over A$300m to repair, while WMC also spent A$127m on renovating the copper smelter during 2003.

EXPANSION

At the end of October 2008, BHP Billiton announced that it expects to complete the first of the mine's five-stage expansion by 2013, boosting annual production capacity to 200,000t of copper, 4,500t of uranium and 120,000oz of gold. Up to the end of the business year on 30 June 2008, Olympic Dam produced 169,000t of copper cathode, 4,144t of uranium and 80,517oz of gold.

The expansion will be followed by a staged development of an open pit, with an eventual target output of 730,000t of copper and 19,000t of uranium. The company also said it is looking at shipping copper concentrate directly to smelters in China, which will cut the cost of producing cathodes at the mine.

ENVIRONMENT

Olympic Dam maintains storage facilities for all waste products. The plant has been designed so that any spillage of ore, concentrate or process slurries can readily be returned to the process circuit. The plant also includes comprehensive air pollution control equipment and both air emissions and noise are monitored. Extensive radiation monitoring of personnel and the environment is ongoing.

The Australian and South Australian Governments jointly determined that the proposed Olympic Dam expansion must be formally assessed through an Environmental Impact Statement (EIS).

Sunrise Dam, Australia

The Sunrise Dam gold mine lies on the eastern shore of Lake Carey in the northern goldfields of Western Australia, some 770km north-east of Perth, 220km north/north-east of Kalgoorlie and 55km south of Laverton. It is 100% owned by AngloGold Ashanti.

Formerly just an open cut mine, the operation comprises of both a large open pit and an underground mine. Each commenced operations in 1997 and 2003 respectively.

The mine achieved record production of 600,000 oz for 2007, largely due to the GQ zone in the open pit. Just under 80,000 oz was sourced from the underground mine.


The conversion of the mine’s diesel power station to liquefied natural gas (LNG) went according to plan in 2007 and the new LNG facility will start operating in the second quarter of 2008. AngloGold says that this will lead to drastically reduced energy costs as well as reduced greenhouse emissions.

Capital expenditure for the year amounted to A$35m (US $30m), and was spent mostly on the underground operation. Major items of expenditure included capitalised underground development in the Cosmo lode and the Sunrise Shear Zone decline, as well as costs relating to the north wall cutback and the expansion of the village.

Some 360 people are employed at the mine, 255 of whom are contractors.



Geology and reserves

Gold ore at Sunrise Dam is structurally and lithologically controlled within gently dipping high-strain shear zones (for example, Sunrise Shear) and steeply dipping brittle-ductile low-strain shear zones (for example, Western Shear). Host rocks include andesitic volcanic rocks, volcanogenic sediments and magnetic shales.

Total ore reserves as of the end of 2007 were 552,000 oz (underground), 1.1m oz (open pit). Total mineral resources were 3.078 m oz Au.



Mining and processing

The mine comprises a large open pit, which is now in its 11th year of operation, and an underground mine, which began production in 2003. All the mining is carried out by contractors and ore is treated in a conventional gravity and carbon-in-leach (CIL) processing plant which is owner-managed.



Production and costs

Production for 2007 rose by an expected 29% to hit a record 600,000oz, compared to 465,000oz for 2006.


The GQ zone in the open pit provided the anticipated large volumes of high-grade ore, which accounted for the increase in annual gold production. Some 80,000oz of gold came from the underground mine. Progress was made in developing access to the Cosmo, Dolly and Watu lodes, and 2,000m of underground capital development and 6,100m of operational development were completed. A total of 67,400m of diamond drilling was also completed.

Processing plant throughput in 2007 was 3.8Mt, slightly lower than the record throughput of 3.9Mt in 2006. Total cash costs fell by 8% to A$364/oz (up by 3% in US dollar terms to $306/oz).

Despite rising costs, the greater volume of ore mined, and the high value of the Australian dollar, the increase in production, due primarily to the higher grade of ore mined, resulted in the decrease in cash costs, year-on-year.

Munali Nickel Project, Zambia

The Munali project sits about 60km south of Lusaka in southern Zambia. It is wholly owned by Australian company Albidon Ltd, and currently consists of two deposits – Enterprise, also known as Munali Phase 1, and Voyager. Although it is billed as a nickel project, Munali also contains commercial quantities of copper, cobalt and platinum group metals (PGMs).

Development began in September 2006 following a positive feasibility study and gaining the necessary government permits and approvals. Production of ore for the ten-year project started in March 2008, with first concentrate being processed for stockpiling in late June 2008.

The project is said to be one of very few new nickel sulphide developments planned worldwide in the next few years, and is expected to have a final direct cash operating cost of about US$3 per pound of nickel in concentrate.

Munali is costing $125m in capital and about $25m in working capital and mine development, and has been funded by a mix of debt financing and equity.

Up to $80m of senior debt has been provided by Barclays Capital and the European Investment Bank as joint lead arrangers for the project; the Jinchuan Group, of China, has provided an extra $20m in subordinated debt.

The equity funding consists of $40m raised from Albidon shareholders, $15m from the Jinchuan Group and $10m from ZCCM Investment Holdings plc. The Jinchuan Group has a life-of-mine offtake agreement with Albidon for Munali, and its share of the funding is part of the agreement.

Geology

The deposit is of the "gabbro-hosted" class of nickel sulphide deposits and, as such, the geology and style of mineralisation are broadly similar to that of other gabbro deposits such as Tati in Botswana and Sally Malay in Australia.

Albidon's geologists believe that the mineralisation is associated with mafic to ultramafic intrusions that have been emplaced along major regional faults, with the type example being the Munali Gabbro intruded along the Munali Fault.

Resources

The latest total indicated and inferred resources for the deposits, at a cut-off grade of 0.6% nickel, are 10.3Mt at 1.2% nickel, 0.2% copper, 0.07% cobalt, 0.6g/t palladium and 0.3g/t platinum. This amounts to a current metal inventory at Munali of 123,500t of Ni and 246,800oz of PGMs.

Production

Following an initial ramp-up period through 2008, annual production is scheduled to reach full capacity by early 2009, when it will consist of 10,000–10,500t of nickel, 1,650t of copper, more than 480t of cobalt and 18,000oz of PGM from the 1.2Mt/annum underground Enterprise mining operation.

The ore is processed through a conventional flotation concentrator that consists of a simple crushing and grinding circuit, rougher, scavenger and cleaner flotation cells, followed by concentrate and tailings thickeners. The end product is a nickel-copper-cobalt-PGM concentrate which is sold to Jinchuan Group for smelting. Albidon recorded its first revenue from the sale of Munali concentrate in October 2008.

The water supply for the project comes partly from an onsite borefield. Also, groundwater inflow into the mine is pumped to the surface storage system for use in the processing plant, and water used to pump tails to the tailing storage facility is returned back to the processing plant for reuse.

Albidon has agreed a ten-year power supply deal with Zambian utility Zesco, in which a 25km, 33kV overhead power line has been built from the hydroelectric substation in Kafue. The average running load for the plant and the mine is estimated at 5MVA.

The principal mining contractor was Byrnecut Mining International Ltd, of Australia.

Blue Ridge PGE Project, South Africa

Ridge Mining's Blue Ridge project is situated on the Blaauwbank farm, about 30km south-east of Groblersdal, on the eastern limb of the Bushveld Igneous Complex (BIC), South Africa.

Ridge Mining started exploration work on the project in 2001 and completed a feasibility study at the end of 2005. Mine development, estimated to cost $170m, began in January 2007.

The project is a 50:50 joint venture between Ridge Mining and BEE partner Imbani, which had invested more than $100m of equity by December 2008. In December 2007, project finance agreements were signed with a consortium of banks consisting of the Development Bank of Southern Africa, the Industrial Development Corporation of South Africa, Standard Bank and Investec Bank for R715m, giving full finance through to first production, which is set for the end of 2008.

The cash operating cost assumption for Blue Ridge is $660/oz to produce platinum, palladium, rhodium and gold, giving an expected payback period of five years.

Geology

The eastern limb of the BIC, like the rest of the complex, consists of distinct rock strata, including three PGE-bearing layers known as reefs, with one being the UG2 chromitite reef.

The PGEs in the UG2 chromitite occur primarily in discrete mineral phases, varying from sulphide assemblages (predominantly cooperite, braggite, malanite and laurite) to those consisting of a significant component of alloys (such as Pt-Fe alloy) or various telluride, bismuthinide, bismuthotelluride, arsenide and sulpharsenide phases.

Resources

Total Measured, Indicated and Inferred resources are put at 89.9Mt, which includes 38.7Mt of Indicated resources from the neighbouring Millennium area, acquired by Ridge in March 2008, giving a contained 4PGE figure of 9.2Moz at an average grade of 3.2g/t. Total Proved and Probable reserves are nearly 22Mt to give a contained 4PGE figure of nearly 2.3Moz at 3.3g/t.

Production

The mine development is based on two decline shafts; a 700m-long belt decline, which will be used for transporting ore, and an 850m-long truck decline. During 2008 work focused on opening up production levels and faces in readiness for mining to begin in earnest. The plan is to mine only the higher grade portion of the reef, using a method called "Efficient Cut".

Before the plant was commissioned, Ridge Mining stockpiled more than 200,000t of ore – about two months’ worth of throughput for the plant in full production – allowing enough ore to be processed through the concentrator plant while the underground workings continue the ramp-up to full capacity, which is planned for the middle of 2009.

Annually the mine is forecast to produce about 75,000oz of platinum, 35,000oz of palladium, 22,000oz of ruthenium, 13,000oz of rhodium, 2,500oz of iridium and 1,500oz of gold over its initial 18-year life.

Processing

The ore will be processed using crushing, milling and flotation, then milling and flotation again to produce a concentrate. The ore will be fed through a primary ball mill and into primary roughers and cleaners, from where some of the feed will go to a care thickener and the rest to a secondary ball mill and roughers and cleaners, then on to tails thickeners. The concentrator plant is next to the entrance to the main decline shaft, which has a conveyor belt to bring the ore to the surface. Processing testwork show recoveries into concentrate of 82%-86%.

Once the mine has achieved steady-state production, Ridge Mining plans to boost its performance by re-treating the tailings and processing ore from Millennium, which it acquired from Lonmin in March 2008 for an undisclosed amount. Millennium has raised the original resources at Blue Ridge by more than 70% and allows the company to mine at a higher rate because it gives a greater strike length. An offtake agreement has been signed with Impala Refining Services for all the production from the mine.

Water will come from a combination of boreholes and the nearby Loskop Dam.

For electrical power, Ridge Mining signed up with state utility Eskom before the moratorium on new supply contracts. The first power line, which will supply about 70% of the mine’s requirements of 17MVA at full production, was installed in November 2008, with the rest due in 2009. To cater for any shortfall in the interim and for any unforeseen outages, however, Ridge Mining has back-up diesel generators that can provide all the mine’s power, albeit at higher cost.

The process plant, which will be operated by Minopex, was built by Bateman Engineering; Murray & Roberts Cementation are responsible for the underground mine development.

Boddington Gold Mine, Perth, Australia

The Boddington Gold Mine (BGM) is about 130km south-east of Perth in Western Australia. The largest undeveloped gold mine in the country, it is poised to become the highest producing mine once production ramps up over the next few years.

The $2.4bn project was initially a three-way joint venture between Newmont Mining, AngloGold Ashanti and Newcrest Mining. In 2006 Newmont bought Newcrest’s 22.22% share, bringing its interest to 66.67% and ending any Australian ownership. AngloGold owns the remaining 33.33%.
The original, mainly oxide open-pit mine was closed at the end of 2001.

Recent exploration has identified an extensive 19.57Moz gold bedrock resource, the basis of the Boddington Gold Mine Expansion Project. Approved in 2006, this will involve mining the hard gold/copper ore that lies beneath depleted oxide pits at Boddington’s original mine site.

The project has an attributable capital budget of between A$0.8bn and A$0.9bn. At year-end, the overall project was approximately 65% complete, with engineering and procurement activities nearing completion. Construction of the treatment plant was approximately 32% complete. At its peak the project is expected to employ some 2,000 workers. Once production begins it is expected that around 650 full-time staff will be required.

Based on the current plan, mine life is estimated to be more than 20 years, with attributable life-of-mine gold production expected to be greater than 5.7Moz.

Newmont and Anglo have focussed their exploration activities on the poorly explored areas of the greenstone belt outside the already identified Boddington Expansion resource. The exploration strategy is to identify the resource potential of the remainder of the greenstone belt, with the emphasis on high-grade lode-type deposits.

Geology and reserves

The BGM is located within the Saddleback Greenstone Belt (SGB), a fault-bounded sliver of Archaean volcanic and shallow level intrusive rocks, surrounded by granitic and gneissic rocks. The SGB produced over 6Moz of gold and is a highly prospective exploration area for further gold mineralisation in both large tonnage stock-work gold resources and high-grade lode-type gold resources.

As of the end of 2007, proven ore reserves at Boddington were 1.618Moz. Total mineral resources (measured, indicated and inferred) were 10.3Moz.

Mining

Built on the footprint of the original Boddington Gold Mine, the operation involves open cut mining from two large pits and is expected to produce an average 850,000oz of gold and 30,000t of copper a year for more than 20 years.

Production is due to commence in late 2008/early 2009 under the management of the Boddington Gold Mine Management Company, a 100% Newmont-owned company.

Production

Average attributable gold production in the first five years will be between 320,000oz and 350,000oz a year, while on an average life-of-mine basis, attributable production is estimated to be between 250,000oz and 270,000oz a year. Copper production, which will be sold as concentrate, is expected to be around 30,000t per year.

Cripple Creek and Victor, Gold Mine, Colorado Springs, USA

The Cripple Creek and Victor gold mine (CC&V) lies southwest of Colorado Springs in the US state of Colorado. For many years the Cripple Creek Mining District was a series of underground mines. Following the start in 1994 of the CC&V Cresson Project today it is a low-grade, open-pit operation.

In March 1999 AngloGold Ashanti acquired the Pikes Peak Mining Company, and interests in the Cripple Creek & Victor Gold Mining Company (CC&V) and the Jerritt Canyon Joint Venture. The stake in the Jerritt Canyon Joint Venture was sold to Queenstake in mid-2003.

Up until mid-2008 the CC&V mine was a joint venture two-thirds owned by AngloGold Ashanti with Golden Cycle Gold Corporation owning the balance. In mid-2008 AngloGold completed a full acquisition of Golden Cycle which resulted in its taking 100% ownership of the CC&V mine.

Development drilling, engineering analysis and permitting requirements for the mine life extension project are under review. The proposed extension is to include the development of new sources of ore and an extension to the additional heap-leach facility.

AngloGold says that gold production at CC&V will increase to between 290,000oz and 300,000oz for 2008 at a total cash cost of between $298/oz and $308/oz. Operational initiatives have been taken to minimise growth in the leach-pad gold inventory in 2008.

Capital expenditure of $28m is scheduled for 2008, to be spent mostly on major mine equipment purchases and the mine life extension project. The mine currently employees 338 full-time workers and 67 contractors.

In 2007 investigators revealed that a gang of employees had stolen some $3m-worth of gold from the mine since 1999. A number of former staff are now serving time in prison.

Geology and reserves

The Cripple Creek mining district is centred on an intensely altered alkaline, tertiary-aged, diatreme-volcanic, intrusive complex, approximately circular in shape, covering 18.4km2, and surrounded by Precambrian rocks. The rocks consist of biotite gneiss, granodiorite, quartz monzonite and granite.

The intersection of these four units and regional tectonic events formed an area of regional dilation which subsequently localised the formation of the tertiary-aged volcanic complex.

Higher-grade pods of mineralisation occur at structural intersections and/or as sheeted vein zones along zones of strike deflection. High-grade gold mineralisation is associated with K-feldspar + pyrite +/- carbonate alteration and occurs adjacent to the major structural and intrusive dyke zones. The broader zones of disseminated mineralisation occur primarily as micro-fracture halos around the stronger alteration zones in the more permeable Cripple Creek Breccia wall rocks.

The average depth of oxidation is 120m and is also developed along major structural zones to even greater depths. Individual orebodies can be tabular, pipe-like, irregular or massive. Individual gold particles are generally less than 20 microns in size and occur as broad zones of low-grade gold-pyrite mineralisation or as fracture zones containing high-grade gold-silver tellurides. Gold occurs within hydrous iron and manganese oxides and as gold-silver tellurides. Silver is present but is economically unimportant. Gold mineralisation can be encapsulated by iron and manganese oxides, pyrite, K-feldspar alteration and quartz.

Proven ore reserves as at December 2007 were 118,904t at a grade of 0.028. Total mineral resources (measured, indicated and inferred) were 494,124t.

Mining and processing

Up until the 1960s The Cripple Creek Mining District was mined initially by multiple underground operations until the 1960s, after which mining activities ceased for a period. Small scale surface mining started in the 1970s until the start of large-scale surface mining in 1991, leading eventually to the start in 1994 of the CC&V Cresson Project. Today, CC&V is a low-grade, open-pit operation.

Ore processing

The ore is treated using a valley-type, heap-leach process with activated carbon used to recover the gold. The resulting doré buttons are shipped to a refinery for final processing.

Production add costs

Production at CC&V fell slightly in 2007 to 282,000oz from 283,000oz in 2006. A total of 23Mt was placed on the heap-leach pad.

AngloGold attributed the production decline to the greater distance over which the gold-bearing leach solution had to be transported from the higher stacked ore to the leach-pad liner. This decline was compounded in the third quarter by delayed production from the leach-pad stacking levels.

There was an 8% increase in cash costs for 2007 to $269/oz from $248/oz in 2006, due in larger part to higher commodity prices, especially diesel fuel. This more than absorbed savings arising from lower contractor costs, while creeping inflation in the US economy added to the burden.

The higher gold price received throughout 2007 contributed to a 222% increase in adjusted gross profit to $74m. Capital expenditure for the year amounted to $23m (2006: $13m).