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Mining Weekly Editor Martin Creamer discusses mechanical cutting technology being positive for Master Drilling; developments at Gold Fields's South Deep mine; and Electra Mining Africa 2024 being billed the grandest in its 52-year history.

The development of the hydrogen economy and the latent potential offtake for platinum group metals (PGMS) is a key underpin to the long-term view of future demand and the role PGMs will play in a changing world, Implats group executive: refining & marketing Sifiso Sibiya stated on Thursday.

Despite major economies implementing national hydrogen strategies with associated subsidies and incentives in place, the more recent pace of advancement has been slower than previously anticipated. (Also watch attached Creamer Media video.)

"This reaffirms our view that industry alignment, collaboration and advocacy are essential to supporting the future demand potential of PGMS, Sibiya stated in a pre-recorded webcast released by Implats to coincide with the publication of its financial results for the 12 months to June 30. (Also watch attached Creamer Media video.)

In response to Mining Weekly during the Implats media round table, Sibiya elaborated on the focus of the Johannesburg Stock Exchange Implats within the green hydrogen space. "We're keen in two aspects, one, to become a dominant supplier of PGMS into that market for the electrolysers, as well as for the fuel cells themselves."

Electrolysers powered by renewable energy generate green hydrogen and fuel cells convert the green hydrogen to clean electricity for mobile and stationary power.

While Sibiya was responding, two related news items were reaching Mining Weekly, one on electrolysers and the other on fuel cells.

In India, a second hydrogen electrolyser manufacturing subsidy auction involving 1.5 GW of annual capacity was being awarded from a tender that had been oversubscribed by nearly 2.8 GW of bid capacity.

Also coming through to our newsdesk was a media release stating that Toyota and BMW were upgrading their fuel cell alliance as part of a plan to build and sell mass-produced fuel cell electric vehicles (FCEVs). The expanded tie-up is aimed at standardising components and bringing down the cost of FCEVs, which are seen as helping to achieve carbon neutrality. BMW already had a hydrogen refuelling station in Midrand for the fleet of FCEVs it is putting through its paces in South Africa.

"As far as consumption of green hydrogen is concerned, it can be pointed out that we've been consuming grey hydrogen for many years in our direct reduction processes at the refineries," Sibiya noted.

"To the extent that we're able to have that converted by the supplier to green hydrogen, we will then have green hydrogen. However, it will not have a significant impact in our green credentials as far as carbon footprint is concerned," he added.

Meanwhile, Implats has completed a bankable feasibility study for the establishment of a 140 MW renewable energy facility to provide clear energy to its Rustenburg PGM complex.

Renewables and green hydrogen are closely linked. "We've just commissioned a $37-million renewables project generating 35 MW at Zimplats, right at next to our processing facilities. At the same time, we've signed an offtake agreement for hydropower, which is also green, coming out of Zesco.

"That combination helps us to lift our renewable energy consumption, not only for Zimplats, but for group as well," Sibiya revealed.

Impala Canada is already consuming 100% renewable electricity.

"For South Africa, the strategies are the same. We're looking at behind-the-meter solutions, and we've done the studies, and we're also looking at strategic contracts or offtakes.

"We've gone through a process, we've looked at bilaterals in the South African space. Fortunately, there has been an emergence of traders where we could look at the more flexible contracting mechanisms, and that's what we are now busy assessing for offtake into particularly our refineries."

PGMS MARKET

Implats achieved lower average palladium, rhodium and nickel pricing in FY 2024 with relative outperformance by platinum, the minor PGMS and chrome.

Rand depreciation provided only a marginal buffer to revenue, while the d...

Amid an operating environment constrained by macroeconomic headwinds and low prices for platinum group metals (PGMs), Implats delivered guided production volume and cost control in the 12 months to June 30.

PGM pricing was impacted by industrial destocking and uncertain geopolitical landscape.

Lower palladium and rhodium pricing negated higher sales volumes, compressing operating margins and free cash flow.

Group six element (6E) production increased 13% to 3.65-million ounces and saleable 6E refined production rose 14% to 3.38-million ounces.

Sixteen-percent-higher 6E sales volumes totalled 3.44-million ounces but dollar revenue per 6E ounce fell 34% to $1 350 on materially lower rhodium and palladium pricing. Rand revenue per 6E ounce was down 30% at R25 257 per 6E ounce.

The 14% margin earnings before interest tax depreciation and amortisation were R12.4 billion compared with the 34%-margined R36-billion of the corresponding 12 months in 2023.

Headline earnings of R2.4 billion were 87% lower and basic earnings declined to a loss of R17.3 billion.

Financial metrics were impacted by impairments resulting from lower PGM pricing, once-off charges arising from the conclusion of the Royal Bafokeng Platinum transaction, as well as the labour restructuring initiated during the period.

The labour-restructured Implats has been set up to deliver free cash flow in financial year 2025 (FY2025), when the Johannesburg Stock Exchange-listed company will be able to draw down previously accumulated inventory and release cash to the group.

PGM markets are likely to remain in fundamental deficits in 2024 when automotive production growth is expected to moderate, industrial demand is expected to be marginally lower as capacity expansions ease, and supply is expected to stage a modest recovery on improved auto catalyst scrap collections.

However, the pricing impact of continued industrial and automotive original equipment manufacturer destocking will continue to influence physical market tightness and pricing over the remainder of the calendar year, as will the trajectory of monetary policy and interest rates in major developed economies.

"Implats has benefitted from past investment into our people and assets, which underpinned the strong operational delivery at our key mining and processing assets during the year and provided the flexibility to take measured action in response to soft metal pricing," Implats CEO Nico Muller stated in a release to Mining Weekly.

"Key strategic projects at our mining and processing operations were successfully advanced and the construction of our flagship renewable energy project - the largest solar power plant in Zimbabwe - was completed.

"Together with the water security and community investment initiatives progressed, we continued to demonstrate our commitment to environmental stewardship and long-term sustainability," Muller added.

The journey to zero harm suffered a significant set-back, with the groups' safety performance dominated by the devastating 11 Shaft tragedy at Impala Rustenburg in the first half of the year.

The 50-year-old, 70 000-employee Implats' eight operations are in the Bushveld Complex in South Africa, the Great Dyke in Zimbabwe and the Canadian Shield in North America.

GUIDANCE

Group production in FY2025 will be supported by operating momentum at Impala Rustenburg, Zimplats and Mimosa.

Performance at Two Rivers is expected to stabilise as the Merensky project is placed on care-and-maintenance and upper group two production is prioritised.

Production at Styldrift will be consolidated at a lower labour complement, while third-party receipts reflect expected volumes from pre-existing contracts.

Refined volumes will benefit from the partial release of previously accumulated excess inventory and 6E refined and saleable production is expected to be between 3.45-million ounces and 3.65-million ounces.

Group unit costs are forecast to rise by up to 5% to be between R21 000 and R22 000/ 6E ounc...

The provision of more renewable energy at the South Deep gold mine 50 km south-west of Johannesburg is under intense scrutiny by Gold Fields, which describes the mine's two-year-old 50 MW solar plant as a major plus.

"One of the biggest economic advantages for us in our portfolio is further renewable energy at South Deep and so we've been studying that very heavily," Gold Fields CEO Mike Fraser said in response to Mining Weekly during a media roundtable.

Globally, Gold Fields has been deploying renewable energy across all its mine sites, with one of the big priorities being the establishment of a microgrid at the long-life St Ives gold mine in Western Australia, where its Granny Smith mine is expanding its solar farm and where the Gruyere joint venture (JV) and Agnew are renewables users. Moreover, in Peru, the group's Cerro Corona is 100% hydro-powered

Meanwhile, South Deep's 50 MW Khanyisa - meaning Light Up in Setswana - has been "a great contributor", Fraser said of the solar plant, which provides around 23% of the energy needs of South Deep, a long-life mechanised operation.

Now, the prospect of more solar energy capacity is a frontrunner, while the generation of wind energy is at an advanced stage of investigation.

"The extension of solar may be even more beneficial in the near term than wind. We'll continue to do those trade-offs. But the one thing we do know is that more renewable energy at South Deep is definitely on the cards, and we'll deliver on that," Fraser outlined.

South Deep currently consumes around 494 GWh of electricity a year, which represents 10% of the mine's annual costs and 93% of its carbon emissions.

GOLD PRICE

In response to Mining Weekly's question on the likelihood of the gold price having rebased at a higher level, Fraser described the gold industry as being "in a really great place right now".

"We don't plan for those higher prices, we plan conservatively, but as long as the gold prices hold, clearly, that's really good for the gold mines."

On what is driving the gold price, he said: "Firstly, there's a lot of central bank buying, particularly out of Asia. I think part of that is the long-term geopolitical unwinding and tension, particularly between the superpowers, and a moving away from the reliance on the US dollar as the global functional currency.

"Secondly, if you think one of the other major contributors to demand is also jewellery buying, particularly out of India.

"What we've seen driving India demand is there's been a reduction in duties payable, which is providing some support, but also what you've got is massive latent demand as increasing wealth emerges in India, and you should see continued strong demand on that."

A third driver is demand for micro exchange-traded funds in China and a fourth element is the foreseen lowering of interest rates, which puts the cost of holding gold in more attractive light.

"So, there are a lot of positive attributes that we should see supporting gold and certainly a lot of people are saying that the risk is more to the upside than the downside.

"Seeing a major reset to, say, below $2 000 oz is probably less likely than additional upside, which we think, over the coming years, will certainly be good for gold producers.

"If you look at Gold Fields profile going forward, I think we're well placed to take advantage," Fraser added, amid the company planning second-half gold production for around 1.2 million ounces, up on the first-half's 918 000 oz.

Meanwhile, because of the slower end-September restart at Salares Norte in Chile, and the slower recovery at South Deep, output has been guided down by 150 000 oz.

Encouragingly, South Deep's redesigned mining methodologies are setting the mine up for success, amid backfill leakage slowing stope turnaround and stope development.

"We've opted for taking a conservative approach in getting this right. There are products that have been tested that will help us solve the leakage challenge, and once through that, ...

In the six months to June 30, cash from the operating activities of Master Drilling soared 119.8% to $27.7-million.

The revenue pipeline of this Johannesburg Stock Exchange-listed tech-savvy company based in Fochville burgeoned to a record $599.6-million and committed orders for its adaptive drilling solution services from the mining, infrastructure and energy sectors in 29 countries hit the $271.4-million mark.

"We had a pretty good run," an upbeat Master Drilling CEO Danie Pretorius commented during the company's presentation of half-year results covered by Mining Weekly. (Also watch attached Creamer Media video.)

"Returns pretty much hit the key performance indicators, cash flows were okay, and the pipeline well filled. Everything's well positioned for the next six months and maybe into 2025," Pretorius added.

With engineering support ensuring a safer working environment for the workforce of 2 940, a record five-million fatality-free shifts were reported.

The half-year revenue was up 17.3% to $127-million and the progress made on the mechanical cutting front for the benefit of the mining sector was elevated high as the main achievement. "Great work done in mechanical cutting tech and that's going to move the needle for this business going forward," Pretorius forecast, while ascribing the biggest-ever work pipeline to the transition to the green economy plus geopolitical uncertainties that are supporting precious metals.

"If you look at the order book, the company is well positioned to benefit from this transition."

With raise-boring still the flagship offering of the 38-year-old company, a close eye is always kept on the growth prospects in that technology. "I still believe there's room for more consolidation in raise boring."

The number two and number three competitors have joined forces and the possibility for some of the juniors to do the same is something Master Drilling has on its radar amid pursuing organic growth by possibly expanding its raise-boring fleet.

On the slim-drilling front, an advance from being a slim-drilling exploration company to becoming more of a data provider is being mooted, along with the adoption of a slim-drilling integrated model, similar to the successful raise-boring model of the past 30 to 40 years, which involves design, manufacture and operation.

But helping miners to get to orebodies in record time is seemingly top-of-mind.

"Ten years ago, it was all about cost and efficiencies. Today, the discussion is about how we can help mining companies to fast-track access to orebodies, a very interesting discussion.

"If you look, see and get a feel of the requirement from the clients, I probably think we'll keep ourselves busy with something that can really move the needle," was how Pretorius described the likely go-forward outlook.

He also revealed that acquired digitiser A&R Engineering & Mining Supplies is operating at 120% of capacity, which is why building blocks are being put in place prior to its internationalization, which was promised but not achieved. "We do have some contracts in Mexico which we try to expand on, but it's probably going to be slower going forward."

Strategy and work pillars have two common keywords - disruptive technology, which span four divisions.

More geographic diversification is also a want-to-have. "If we look back the last 40 years, geographic diversification has stood us in good state, and there's no reason why we should not proceed to diversify the business into new geographies and to expand the 28 or 29 countries, adding one or two every year."

Last year an office was set up in Saudi Arabia and Indonesia may become a next kid on the block going forward,

Regarding exploration, robotic manipulation of materials as a big safety initiative is being implemented.

Getting quality, accurate exploration information to decision-makers quicker is high on the agenda, Master Drilling technical director Koos Jordaan outlined, ahead of describing the current mining need a...

South African gold mining major Harmony Gold has been elevated to new heights owing to sustained operational excellence, high recovered grades and record gold prices.

In the 12 months to June 30, the Johannesburg Stock Exchange-listed Harmony has delivered what the company describes as exceptional combined performance across all operations.

"This achievement was the result of clear strategic intent and successful execution, enabling us to deliver ahead of plan and capitalise on higher gold prices," the company stated in a trading statement.

Harmony's aim is to be consistent and excel at what it does amid exceeding its upward revised production guidance of 1 550 000 oz (48 210 kg) with the all-in-sustaining costs (AISC ) coming in below R920 000/kg.

Underground recovered grades in financial year (FY) 2024 are also forecast to be higher than the guided 6 g/t.

Group production for this reporting period increased by 6% to 48 578 kg (1 561 815 oz) from 45 651 kg (1 467 715 oz) in FY23, owing mainly to higher recovered grades at Mponeng gold mine, the world's deepest, and Mine Waste Solutions surface mining operations in South Africa and Hidden Valley in Papua New Guinea.

Recovered grades at the South African underground operations increased by 6% to 6.11 g/t from 5.78 g/t in the previous reporting period, driven by high-grade Mponeng and Moab Khotsong.

Recovered grades at Hidden Valley increased by 33% to 1.52 g/t from 1.14 g/t and Mine Waste Solutions delivered a 36% increase in recovered grade of 0.166 g/t in this financial year from 0.122 g/t.

AISC increased by 1% to R901 550/kg ($1 500/oz) from R889 766/kg ($1 558/oz).

Most project capital is continuing to be allocated to higher-grade, higher-quality, and lower-risk assets, aligned with the strategy of producing safe, profitable ounces and improving margins through operational excellence and value-accretive acquisitions.

By growing higher-grade gold mines, expanding surface retreatment business, and international gold and copper assets, Harmony expects to continue to transform and derisk Harmony as it goes from strength to strength, CEO Peter Steenkamp commented in the release Mining Weekly.

A reasonable degree of certainty exists that basic earnings will be higher than for FY23 on an increased gross profit. In addition to higher grades, gold production and average gold price, an increase in the production and prices of silver and uranium at the Hidden Valley and Moab Khotsong operations will also contribute to a better performance.

TARGET NORTH DRILLING

The new geological model following recent exploration drilling at Harmony's Target North asset in the Free State is described as being more robust and differs from previous interpretations as a result of the new information obtained.

The application of modern industry best practice estimation techniques on the updated geological model resulted in a preliminary mineral resource estimate of 13.8-million ounces from58.8-million tonnes at 7.29 g/t) in the inferred category.

The focus was on a portion of the orebody and indicates reduced ounces at a higher grade than the previous estimate amid the new estimates being reviewed by external mining consultants.

On current available information, the new resource estimate indicates a recoverable amount of R888-million for Target North and a resulting impairment of R2 793-million.

In May 2004, Harmony concluded the acquisition of Avgold, which included the Target 1 mine as well as the exploration programme at Target North, which was estimated to have a resource base of 67 million ounces, with the Oribi exploration area included.

In 2007, when Harmony was capital constrained, a strategic review led to the suspension of Target North, as well as its exclusion from reported mineral resources.

RESULTS DELAY

Following the transition of external auditors from Ernst & Young, a delay in the calculation of Target North's valuation has resulted in a postponement of the FY24 financial results prese...

Johannesburg- and New York-listed Gold Fields said on Friday that it is taking steps to set up its big South Deep gold mine on Gauteng's West Rand for the long-term production of quality gold ounces at a time of strong gold prices.

With its significant long-life resource endowment, it has often been said of South Deep that it will be the last major gold mine in South Africa to turn its lights off.

Against that backdrop, sustainability-focused improvement measures are being implemented amid South Deep's below par performance of 117 000 oz in the six months to June 30.

Blamed for the half-year output being below the 152 000 oz that yielded in the last year's comparative half-year period are backfill rehandling challenges and poor ground conditions at this bulk mechanised mining operation located in the Witwatersrand Basin, near Westonaria, 50 km south-west of Johannesburg.

Backfill seepage constrained access to stopes, while the backfill rehandling added complexity to the planning and mining process. Stope turnaround and delayed access to the higher-grade areas of the mine resulted from these impacts.

"We are making progress accelerating backfill placement to address the historic backfill leakage," Gold Fields stated in a release to Mining Weekly, in which it added that various solutions to minimise backfill leakages going forward.

Other recovery activities are focused on improving long-hole stope drilling and overall productivity.

To set up the mine for an improved 2025 performance, 2024 production guidance has been reduced to the range of 250 000 oz and 264 000 oz, with 2024 all-in sustaining costs (AISC) guidance lifted to $1 980/oz. Higher volumes are forecast to lower AISC in the six months to December 31.

Group gold mines that stood out in a period of half-year profit falling from the $458-million to $389-million were Granny Smith and Agnew in Australia and Tarkwa and Damang in Ghana and a gross interim dividend of R3 a share is payable on September 16.

In Australia, Gruyere's mining and processing operations were suspended for six weeks following a significant rainfall event, and St Ives' planned lower first-half production was further impacted by a delay in the development of two new opencast operations, Swiftsure and Invincible Footwall South.

In Peru, Cerro Corona's inclement first-quarter weather affecting the stability of the north wall of the pit, resulting in a resequencing of mining to lower grade areas, resulting in the copper-gold price ratio also impacting the gold-equivalent production performance.

In Chile, the early onset of winter resulted in a slower-than-planned ramp-up at Salares Norte.

Regarding the Tarkwa/Iduapriem joint venture announced in March last year by Gold Fields and AngloGold Ashanti, what is described as "significant progress" has been made, Gold Fields CEO Mike Fraser reported.

Tragically, Gold Fields suffered two fatalities.

Mining Weekly Editor Martin Creamer talks about Menar's plans to revive the Metalloys smelter and sell ferromanganese to the world; gold miner DRDGold's renewable energy infrastructure; and the fifth annual Marikana memorial lecture.

South Africa's small-end diamond producers are battling to survive in a diamond situation in South Africa which is under severe pressure, South African Diamond Producers Organisation (Sadpo) reported on Thursday.

Sadpo chairperson Gert van Niekerk and vice-chairperson Lyndon De Meillon painted a dire picture of the current situation during a Zoom interview with Mining Weekly in which reference was made to blood being on the streets of small South African towns as a result of the global diamond crisis. (Also watch attached Creamer Media video.)

"To ensure that natural diamonds regain their shine, the industry needs to aggressively and cleverly advertise diamonds to the younger generation to embrace the natural source, age and amazing creational history of natural diamonds," De Meillon urged.

"This means that branding and traceability will become more important as today's consumer is much more conscious of the impact mining has on the environment and on the communities where diamonds are being mined."

Sadpo was founded 23 years ago to streamline the alluvial diamond industry and to speak on behalf of the smaller end of South Africa's diamond business.

De Meillon put South Africa's current drastic carat reduction situation mainly down to price.

"To understand this, we need to go and look at it in a bit more detail," he pointed out.

This is because the current price crisis in the diamond industry as a whole is partly the industry's own doing, and partly due to external circumstances, unfortunately both combining at the same time to create the perfect storm, driving prices down, probably for the longest period since the Great Depression of the 1930s.

In the early 2000s, De Beers stepped back from its role as curator of the industry, to ensure that it was no longer seen as a monopoly. Then, when it went completely into the Anglo American fold in 2011, the focus on aggressive advertising fell away, "most likely because of the loss of the key experience of the Oppenheimer family", De Meillon commented.

Other role players in the industry did not step in to fill up the advertising void, even though diamonds are luxury items and consumers have to be continually reminded about why they need them.

At the same time, technological advances meant that larger and better quality laboratory-grown diamonds could be produced.

Initially, consumers were hesitant to accept lab-grown diamonds for emotional privileges like engagements and weddings, but then a couple of things changed.

Pandora announced that they would only be selling lab-grown diamonds in their jewellery, one reason being that it is more environment-friendly to produce diamonds in a laboratory, which is obviously debatable.

Then De Beers launched the Lightbox campaign with their own brand of lab-grown diamonds, something which has since been discontinued.

But in the eyes of the consumer, this gave credibility to lab-grown diamonds, and the sales started to pick up to a point where up to 50% of bridal sales in the US this year could well be from lab-grown stones.

The retail sector also took advantage of this because of the higher margins associated with lab-grown diamonds and actively marketed lab-grown diamonds to consumers.

Of the major external factors that impacted price lately, probably the biggest one in the past 15 years was Covid, when there was a sharp downturn in prices, which also coincided with a sharp reduction in production, as many mines closed for a period.

Then, the strong demand in the month following Covid pushed prices up sharply while supply lagged.

But when the mines stepped up supply, they over-estimated demand.

Moreover, when that production came into the market, the world was caught up in high inflation and high interest rates, combined with increased political instability, "all of which are bad for luxury items", De Meillon noted.

Also, with the advent of electronic-commerce, the diamond pipeline became considerably shorter.

So, the world is currently sittin...

The big win for surface gold recovery company DRDGOLD is the 60 MW solar farm built at Ergo in the 12 months to June 30.

"I call it a R3-billion prepaid electricity facility that will take care of about half of Ergo's requirements over the foreseeable future," DRDGOLD CEO Niël Pretorius commented to Mining Weekly. (Also watch attached Creamer Media video.)

The photovoltaic facility at Ergo generated 13 113 650 kWh of energy during the 12 months to July 30, amounting to 10% of consumption. Connection to the Eskom grid has opened the way for the wheeling of excess energy generated at Ergo into the national grid.

The transition to renewable energy use is an integral part of DRDGOLD's approach to decreasing its environmental footprint, with the proportion of renewable energy used rising resulting in significant Scope 2 emission reduction.

Simultaneously, major effort has gone into repositioning for the future. Involved is a combination of reclamation sites coming on stream by financial year 2028 to lift tonnage throughput to three-million tonnes a month and gold production to more than six tonnes a year - a rise of one tonne.

The Johannesburg- and New York-listed DRDGOLD reported revenue of R6 239.7-million and total operating profit of R 2 081.3-million for the 12 months ended June 30.

A 3% decline in throughput to 22.3-million tonnes and a 2% decrease in the average yield to 0.225g/t led to a 5% gold production decrease to 5 002 kg

All-in sustaining costs (AISC) rose by 15% to R946 848/kg, with the AISC margin at 24%, and capital expenditure of R2 985.7-million was mostly growth related.

A final cash dividend of 20 c a share for financial year 2024 marked the 17th consecutive year of dividend payments to shareholders.

POSITIONING FOR GROWTH

The four Ergo sites where commissioning was delayed are now in steady-state, which, along with the commissioning of a fifth site in June, has restored volume capacity to enable delivery in line with the guided throughput target.

Meanwhile, Far West Gold Recoveries Phase II and the establishment of the regional tailings storage facility (RTSF) is advancing.

Once commissioned, the RTSF will be large enough to receive the operation's entire remaining West Rand resource and provide a solution to the ongoing impact of tailings storage facilities built over environmentally sensitive aquifers in the region.

Groundbreaking at this complex on June 5 follows the appointment of a leading contractor to construct the RTSF.

On the record gold price, Pretorius had this to say: "While the buoyant gold price is welcome, the construct of our cost profile is changing to offer better resilience should the cycle turn."

Key drivers in this regard include decreasing operational complexity by reducing Ergo's operating sites from 15 sites to five, lower energy costs from the solar plant, and a reduction in mechanised lifting and haulage of reclamation material.

IMPACT BEYOND MINING

DRD's model for value creation means that environmental, social and governance factors are central to the business and not simply add-ons.

Every tonne processed supports environmental regeneration and resource renewal, every kilogram produced creates jobs, supports communities and pays taxes.

While DRD's ethos - doing more with less, and with less impact - makes good business sense, it also has positive environmental and social impacts.

Lower potable water usage and biodiversity are big on its agenda as it reduces historical impacts. Over the past 12 years, more than 138 mine dumps have been removed and reprocessed, and 700 ha of previously sterile land regained for productive use.