JV Partners Get Approval for Tropicana Gold Project

The AngloGold Ashanti/Independence Group NL Tropicana gold joint venture, in combination with
AngloGold’s Sunrise Dam operations, shown here at night, will raise the company’s
annual Australian gold production to 600,000 oz/y by 2014. (Photo courtesy AngloGold Ashanti).
AngloGold Ashanti reported on November 11 the Tropicana gold project in Western Australia has been approved by the boards of AngloGold Ashanti and Independence Group NL. AngloGold Ashanti has a 70% interest in the project, which is located 330 km east-northeast of Kalgoorlie in WA, and Independence Group has 30%.

The approved project will produce 3.45 million oz of gold over a 10 year mine life at a cash cost of A$710–$730/oz (US$696/oz–$715/oz). In the first three years of operation, gold production will be between 470,000–490,000 oz/y at a cash cost of A$580/oz–$600/oz (US$568/oz– $588/oz).

Capital expenditure, including pre-production operating costs, is estimated at A$725-$775 million including escalation (US$711–$760 million.) The JV partners said a higher production rate in the first three years will contribute to accelerated payback.

Discovered in a remote, barely explored area not previously thought prospective for gold, the project partners note Tropicana is the most significant gold discovery in Australia for more than a decade—and the joint venture’s ‘first mover’ advantage has enabled it to stake the bulk of what is now recognized as a major new gold field. Construction will begin in June 2011 and first gold is anticipated late in 2013.

“Tropicana is the first of AngloGold Ashanti’s major gold discoveries to move into production,” said CEO Mark Cutifani. “We’re delighted to give the green light to its development. This is a clear demonstration of the impact an innovative, resultsdriven exploration program can have on organic growth. It’s gratifying to be developing our own projects at a time when so many majors are forced to pay huge premiums to fill their project pipelines.”

The decision to commit to development follows the successful outcome of a Bankable Feasibility Study (BFS) based on open-cut mining of the Tropicana and Havana deposits. AngloGold Ashanti said the BFS does not take into account possible production from the Boston Shaker or Havana Deeps deposits.

The approved project will utilize conventional drill and blast, truck and excavator open-cut mining methods carried out by a mining contractor. A 5.8-million-mt/y capacity (fresh ore) process plant has been designed for water and energy efficiency, with the comminution circuit comprising two-stage crushing, high pressure grinding rolls and ball milling, followed by a carbonin- leach circuit for gold recovery.

The BFS was based on a Proved and Probable Reserve of 48 million mt grading 2.2 g/t for 3.4 million oz of gold. The BFS mining inventory totaled 59 million mt grading 2 g/t for 3.8 million oz.

While the initial mine life is estimated at 10 years, the joint venture partners said they are confident it can be extended. Step-out exploration drilling in late 2009 returned significant results from the Boston Shaker prospect, which lies approximately 360 m north of the Tropicana resource. Drilling to date has identified the faulted offset of Tropicana mineralization over an 850 m strike length and the mineralization remains open at depth.

An open-pit scoping study based on data available to July 2010 has been completed on Boston Shaker and indicates an expansion to the current BFS open-pit resource is highly likely. Boston Shaker progressed into full feasibility study in September 2010, with completion targeted for the first half of 2011.

Significant results were also received from the Havana Deeps prospect, which represents extensions of the Havana mineralized system external to the Havana open-pit. The recently completed Havana Deeps scoping study, based on drilling data to the end of July 2010, indicates the potential viability of underground mining at Havana Deeps.

The joint venture partners said although it is too early to determine the scale or timing of underground mining, it could commence in parallel with open-pit mining, once a suitable portal position is available in the open-pit. It is anticipated Havana Deeps will progress into a pre-feasibility study in early 2011.

The potential of Havana Deeps has been highlighted by a recent deep step-out exploration drill hole, which intersected the mineralized package at 1 km depth, in excess of 2.1 km down plunge of the Havana open-pit design. Assay results are awaited. Work was in progress to incorporate the results of the Boston Shaker and Havana Deeps scoping studies, along with subsequent drilling results, into a revised resource estimate by year-end.

In addition to the upside in the immediate mine area, the joint venture has more than 30 exploration targets within trucking distance of the mine, along with numerous anomalies on its 16,000-km2 tenement holding in the highly prospective Tropicana Belt.

Graham Ehm, executive vice president Australasia, said Tropicana would add to production from the 100% owned Sunrise Dam mine to lift AngloGold Ashanti’s Australian gold output to 600,000 oz/y by 2014. “Tropicana will rank as the fifth largest contributor to the company’s global production in its first three years and will double the operating cash surplus generated by the Australian region,” Ehm said.

He said the project would employ up to 550 people during construction, and up to 450 people during operations, as well as contributing an estimated A$836 million to the WA economy during construction and a further A$825 million during operations. Infrastructure will include 220 km of new road from Pinjin to the site, a sealed all-weather airstrip and development of a borefield 50 km from the mine site for water supply. The mine will operate on a fly-in, fly-out basis.

As featured in Womp 2010 Vol 10 - www.womp-int.com