With operations focussed upon Papua New Guinea and South Africa, Harmony’s sole original mine has developed into a portfolio comprising nine underground mines, one open-pit mine and several surface operations across the two countries. The company’s 50% interest in the Morobe Mining Joint Ventures in Papua New Guinea include among them the important Wafi-Golpu project, as well as extensive exploration tenements.
Mining has long been a central feature of the burgeoning economic development currently underway in South Africa, with over 130 years of influence from the trade transforming it into the most industrialised country in all of Africa. Mining as a whole accounts for almost one fifth of the economy and over 1.3 million jobs, which support a total of more than 13 million people. Work linked to the gold sector alone employs over 142 000 people, with a further 1.4 million dependant also benefitting. The remarkable contribution it makes to the whole of society spans across the community, enterprise and skills development, and sees significant investments made in infrastructure.
Harmony Gold Mining Company Limited is a major gold-mining and exploration company, the overwhelming majority of whose 35 000 employees are based in its South African operations. Here, the Company’s efforts are focused on the Witwatersrand Basin and the Kraaipan Greenstone Belt, while in Papua New Guinea it forms part of a 50% joint venture with Newcrest Mining Limited.
Papua New Guinea is widely recognised as one of the world’s foremost emerging gold mining regions, and the joint venture includes within it such prospects as Hidden Valley, an open-pit gold and silver mine, and the Wafi-Golpu project, among the best gold copper porphyries in South East Asia. Alongside its joint ventures in Papua New Guinea, Harmony’s own fully owned exploration portfolio focuses principally on highly prospective areas in the country, where the resource base now represents 30% of Harmony’s total gold resources, in line with its strategy to increase geographic diversification.
Harmony was first incorporated and registered as a public company in South Africa in August of 1950, later becoming a company managed by Rangold operating out of the single mine lease it held at the time. The winding up in 1995 of Randgold saw Harmony reborn as an entirely separate entity, one whose operations have grown significantly in scope since this important milestone. Now it is an independent, world-class gold producer, having continually been awarded additional mining rights throughout its short history in the Free State, Mpumalanga, Gauteng and North West province in South Africa. These have all been achieved through acquisitions, beginning with Lydex in 1997, followed by Evander in 1998, Kalgold in 1999, Randfontein in 2000, ARMgold in 2003 and most recently Avgold, in 2004. As well as its existing sites Harmony Gold is continually striving to develop world class mines in both South Africa and Papua New Guinea, and as such acquire a diverse risk portfolio with exposure in both countries via both gold and copper.
The development of the Wafi-Golpu exploration project, located in the Morobe Province of Papua New Guinea approximately 65 kilometres south-west of the port city of Lae, PNG’s industrial hub and second largest city, forms a central aspect of Harmony’s plans for growth. It is a significant resource, containing an orebody measuring approximately five times the height of the Empire State building, and comprising 20.2 millions ounces of gold and 9.4 millions tonnes of copper. Owned by the Wafi-Golpu Joint Venture, it represents one of three unincorporated joint ventures between subsidiaries of Newcrest and Harmony Gold, a collective formed in 2008 and referred to as the Morobe Mining Joint Ventures (MMJV).
Mining in Papua New Guinea plays a similarly central role in life in the country as in South Africa, bringing about 15% of the entire GDP and up to two thirds of export earnings. It is also incredibly important to technical training in PNG, the largest proportion of which stems from the mining and petroleum sectors, while formal employment in the sector exceeds 30 000. Currently, the Wafi-Golpu project includes the Golpu copper-gold porphyry deposit, the Nambonga copper-gold porphyry deposit and the Wafi high sulfidation epithermal gold deposit.
A world class porphyry deposit at Wafi-Golpu, known as the Golpu deposit, was unearthed via the deep drilling which has been conducted by the WGJV since 2008. Crucially, the deposit is suited to the bulk underground mining techniques such as those being employed by Newcrest at Cadia Valley Operations, one of Australia’s largest gold mining operations. Golpu is just one of several porphyry ore bodies which have been identified along the 25 kilometre long Wafi-Transfer, a highly prospective terrain which Harmony and Newcrest are now actively exploring in the quest for additional deposits.
December 2014 brought the announcement that Newcrest and Harmony had given the go ahead to stage one of the Golpu project to proceed to its feasibility study, following the completion of an updated 2012 pre-feasibility study. This updated PFS proposes a smaller, lower capital cost development of around US$2.3 billion for stage one of Golpu, with production expected to begin in the 2020 calendar year.
Stage 1 of the Golpu development targets the upper, higher value, section of the orebody, while work will continue on optimising a second stage to encompass the rest of the ore reserves. The feasibility study for the first stage, alongside the updated prefeasibility study for the second stage of the project, are both scheduled to be completed by the end of this year. Graham Briggs, Harmony CEO, detailed the findings of these extensive studies. “The updated prefeasibility study supports our view that Golpu is a spectacular ore body with a large copper component, affordable and mineable. Key objectives of the study have been achieved by reducing the capital of the project, lowering operating costs and improving the rate of return.” Also noted is that the development of the Golpu Project is exactly in line with Harmony’s strategy of profitable, low-cost operations: “The conclusion of the updated PFS is a major project milestone and has demonstrated the significant potential of this world-class orebody.”
With the twin aims of rehabilitating and cleaning up impacted land, and returning it to an agricultural state, Harmony is implementing a R47-million bioenergy pilot-scale project involving the growing of bio crops on mine-impacted land and tailings in the Free State. While renewable-energy applications in mining have been seen before, the combination of renewables with bioenergy and land rehabilitation serves to make this project unique. The bio crops, namely giant king grass and sugarbeet, will be used as feedstock to generate natural gas, to be used in turn as a substitute for fossil fuels in the company’s Harmony 1 metallurgical plant, in place of polyfuel in the gold elution circuits.
Phase 1 of the project looks to deliver 71 000 GJ within the initial 18 month period, to increase to 187 000 GJ within the first 36 months. Graham Briggs summed up the project’s principal goals: “This project aims to turn mine-impacted land to account by creating a value-added use for it and, in so doing, promote skills development and job creation for communities and ensure a sustainable legacy in the Free State.”Among the chief benefits of this project is the reduction in the mine’s carbon footprint, thus reducing carbon taxes that the mine may incur.
Production for Harmony in 2014 stood at 1.17Moz of gold, placing it as its third largest producer in South Africa and the eleventh largest in the world. Not willing to merely enjoy these notable successes, Harmony is instead continuing to restructure its operations in order to secure long-term profitability. One arm of this is Harmony’s life-of-mine optimisation process, completed during the December 2014 quarter, which has resulted in a greater focus on mining the more profitable and higher grade areas of its South African operations, while removing lower grade and unprofitable areas from the mine plan.“We have responded to a lower gold price,”said Graham Briggs, “first by rationalising our assets and then restructuring our portfolio –cutting costs, reducing labour numbers and focusing on mining only safe, profitable ounces. We are assessing ways of funding Golpu and unlocking the true value of each of our assets, which will ensure shareholder returns in the long term.”This decision to restructure and optimise its operations will be central to ensuring that Harmony remains ever more profitable in its future operations, and diversification globally.