African Mining Conference draws masses

Cape Town, South Africa On strong commodity prices and a sustained bull market the 12th annual Mining Indaba conference attracted more than 4,000 delegates in its opening day to hear the on-goings of explorers and miners active in Africa.

Official welcome came from South Africa’s Minister of Mines Ms. Buyelwa Sonjica just as the country’s National Treasury’s Tax Policy Unit announced it is studying implementing a flow-through share concept to stimulate further exploration activity. The department acknowledges has been studying the Canadian model.

Next on the presenter’s role came the majors with the African divisions of Anglo American (AAUK-Q, AAL-L, AGL-J), Rio Tinto (RTP-N, RIO-L), Barrick Gold (ABX-T, ABX-N), Newmont Mining (NMC-T, NEM-N), AngloGold Ashanti (AU-N, AGD-L, ANG-J), Gold Fields (GFI-N, GOF-L, GFI-J), Harmony Gold Mining (HMY-N, HRM-L, HAR-J) and Randgold Resources (GOLD-Q, RRS-L) reviewing projects and exploration activity on the continent.

Barrick highlighted operations at its North Mara, Bulyanhulu and Tulawaka gold mines in Tanzania and also touched on its Sedibelo platinum project in South Africa’s Bushveld complex.

Jeffrey Huspeni, Newmont’s vice-president of worldwide explorations, touched on the major’s gold mines in Ghana (Ahafo and Akyem) calling them “a cornerstone of growth” for the company. A common theme amongst the group of senior gold producers was reserve replacement as mine output is push at ever increasing rates.

AngloGold Ashanti’s CEO Bobby Godsell touched on his company’s base in Africa with a majority of its 21 mines located on the continent as well as about 90% of its workforce. He also discussed the challenges to remain profitable as the company hunts for about 6 million oz. of gold annually for reserve replacement.

Next came Ian Cockerill, Gold Fields’ CEO, offering similar themes in the senior philosophy of streamlining costs and hunting for ounces. “The addition of South Deeps elevates Gold Fields to the top tier” commented the company’s top officer.

The South Deeps acquisition came at a cost of US$104 per gold oz. to add about 30.7 million oz. of reserves and 67 million oz. of resource, boosting the company’s tally by 47% and 37% respectively. With advanced development the mine is expected to contribute about 800,000 oz. of gold annually in 6-to-7 year’s time and is forecast to be a low cash cost producer.

Cockerill went on further outlining the idea of “managing risk rather than risk aversion” as the seniors watch the rapid decay curves in their reserve base.

The presentation by Randgold’s CEO Mark Bristow touched on whether companies are “exploiting market opportunities or building profitable businesses”. He reviewed gold’s price rise from the US$252.80-per-oz.-level in 1999 to its current spot price around US$650, albeit at much higher cash costs chipping away at the producers’ margins.

Bristow bestowed Randgold’s organic growth strategy, rather than jumping on the mergers and acquisition train, as its path to deliver profit on a longer term basis.

Rounding out the top tier club was Bernard Swanpoel, Harmony Gold’s CEO, reiterating the viewpoint of growing assets through an organic path of exploration. While its South African mines are its “anchor producers”, it sees significant growth potential in four Papua New Guinea projects being advanced.

As the first African head of state to address the Indaba conference, Tanzanian President Jakaya Mrisho Kikwete’s keynote presentation reviewed the successes realized following changes in the country’s investment climate since the mid-1980s. President Kikwete talked on his numerous past marketing missions to the world’s key mining centres to sell the virtues of mineral exploration in Tanzania.

The message was obviously well received with the country now Africa’s third largest gold producer with about 50 tonnes (1.6 million oz.) annually along with significant amounts of coal, iron and industrial minerals plus gemstones including diamonds and tanzanite.

Mining is now Tanzania’s second largest employer after agriculture and accounts for 42% of the country’s exports and is rising.