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Namibia: Navachab Gears for Growth
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New Era (Windhoek)
2 May 2008
Posted to the web 2 May 2008
Catherine Sasman
Windhoek
First envisaged to mine until 2004, the Navachab Gold Mine outside Karibib is planning a longer and more expanded lifecycle until 2020, New Era reports.
With the gold price at an all-time high, the Navachab Gold Mine is conducting a pre-feasibility study to see how it can expand its operations.
Gold deposits were discovered in the area as early as 1884, but not because prospectors were looking for gold as in those years, the mineral most sought after was copper. In 1989, the mine opened to excavate primarily for gold, with four exploration and processing licences obtained on the 3652.2 hectares farm, with a total mining area of 500 hectares.
Exploration drilling started in 1985 with an appraisal done in 1986, after which a decision was taken to proceed with the development of the mine, and production commenced at a cost of N$85 million.
The open-pit mine is wholly owned by AngloGold Namibia, which is 100 percent owned by South African-based AngloGold, the world's largest gold producer.
This company took ownership of the Navachab Mine in 2005 after the consolidation of Anglo American Corporation's gold assets into one gold company.
The global AngloGold Ashanti Group owns open-pit and underground operations - of which there are 20 in total in 10 countries on four continents - Australia, North and South America and Africa.
The Navachab Mine produces low-grade gold and makes up 1.5 percent of the group's production at 80000 ounces of gold per year.
Last year, the AngloGold Ashanti Group produced 5.5 million ounces of gold, which translates to a three percent decline in gold production compared to the previous year.
The Navachab Mine's production in 2006 was 86000 ounces of gold; in 2007 it recorded an annual yield of 80000 ounces of gold sold to Rand Refinery in South Africa.
According to the Managing Director of the Navachab Mine, Gerry Arnat, the price of gold at the start of the mining operations was US$289 per ounce. Now the price has soared to US$940 per ounce.
The value of gold, said the company, is not only for its desirability like jewellery and as a monetary equivalent, but it is also in demand for its unique properties.
Gold is considered the most malleable and ductile of metals, alloyed to increase its strength. It is a good conductor of electricity and heat, and is also used in space technologies.
Gold price has hit record highs due to strong investor and speculator interest. Also contributing to the increase in gold price was the uncertainty due to credit concerns worldwide and the impact of the sub-prime mortgage crisis in the United States that is still dogging the global financial climate. Equally, higher inflation driven by the blistering increases in food, oil and commodity prices also played a role.
Towards the end of last year, the average spot gold price was US$697 per ounce, a 15 percent increase from 2006. The total gold income for the AngloGold Ashanti group worldwide last year was US$3280 million.
Arnat said the mine is conducting a pre-feasibility study, expected to be completed by September, to see how it can expand not only its production capacity, but also increase its lifespan.
The mine was first intended to operate for 14 years, until 2004, but its lifespan has since increased to 2016.
The pre-feasibility study, said the Navachab Mine Mineral Resource Manager, Graham Bell, may indicate an increased lifespan of up to 2020.
"The current favourable exchange rate and improved economics for gold presents the potential to go further," said Bell.
The mine has already embarked on exploration in new locations - the Anomaly 16 area with low-grade gold deposits, Grit A and Gecho - while it is still mining in the main open-pit.
Bell said it might look into the underground mining potential, which Arnat said is generally a very expensive undertaking, affordable to high-grade gold deposit areas such as the Witwatersrand in South Africa.
"It all depends on the economy," said Arnat, venturing into saying that the gold price is likely to remain high in the foreseeable future.
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The expansion plans envisage an increase in production of potentially up to 200 000 ounces of gold annually, which Arnat said could mean a doubling of its current 300 staff. The company is also making use of 100 contractors.
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