TANZANIA’S GOLD BOOM CONTINUESSpeaking at the Cape Town Mining...

TANZANIA’S GOLD BOOM CONTINUES

Speaking at the Cape Town Mining Indabain February, Tanzania’s Minister of Mines &Energy, Daniel Yona, said that since 1999the country had seen a new mine come intoproduction every year. He attributed thegrowth in the country’s mining sector, whichis dominated by gold production, to theintroduction of a new fiscal region forinvestors in 1997 and a new liberalisedmining act in 1998.Almost all the new mines referred to by MinisterYona are gold mines, with the exception ofAfgem’s tanzanite mine near Mount Kilimanjaro.The focus of activity is the Lake VictoriaGoldfields and the total capital investment inthe five new gold mines (excluding theexploration costs) is in the region of US$600million. Prospects for the expansion of existingmines or the development of further new mineslook good although, as the Minister pointed outat the Indaba “finding and developing second-generation deposits require more effort”.Part of the attraction of Tanzania, apart from its attractive geology, is the fact that it is ademocracy – a multiparty system was introduced in 1992 – and ranks as one of the moststable countries in Africa. Under the late President Nyerere, the country’s economy nosedivedbut the political and economic reforms of the 1990s have resulted in a turnaround. Accordingto a recent report by the Economist Intelligence Unit, real GDP grew by 5,6 % in 2001. TheUnit says it is estimating overall real GDP growth of 5,2 % in 2002, rising to 5,4 % in 2003 and5,5 % in 2004, driven by growth in both mining and agriculture. Inflation remains under controlat around 4,5 %. Mining’s contribution to GDP was still under 3 % in 2001, but this figure isincreasing rapidly and the Tanzanian government believes that a 6 % contribution by miningis attainable by 2005, rising to at least 10 % by 2025 .Despite its many pluses, Tanzania is not without its downside as a mining destination. Particularconcerns are poor infrastructure – the national grid is unreliable while large sections of theroad network require upgrading – and the aggressive behaviour of artisanal miners, who feelsidelined by the country’s mining boom. But these problems are manageable and have certainlynot deterred mining companies from operating in the country.With the dramatic expansion of gold mining activity, Tanzania has emerged as one of the topgold producers in Africa, vying with Mali for the number three spot after South Africa andGhana. Production in 2003 will certainly be over 1,3 million ounces and possibly as high as1,45 million ounces. This is a far cry from the historical position. Although reliable statisticsare hard to come by, it seems that official gold production peaked in 1960 at about 106 000ounces. Thereafter a decline set in as mines such as Mukwamba, Geita, Kiabakari andBuhemba successively closed down and by the early 1970s production was under 100 000ounces.
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Processing plant at vermiculite mineUS vermiculite property - Mica PeakNamekara vermiculite mine pitThe turning point came in 1998, with the opening of Golden Pride, the first of the new generationmines. Located about 200 km south of Lake Victoria and owned by Resolute Mining of Australiathrough its Tanzanian subsidiary, Resolute (Tanzania) Ltd, the mine was constructed in just12 months, starting in November 1997, and was completed on time and within budget (US$48million) despite the construction period coinciding with the most severe wet season experiencedin Tanzania for 100 years.During 2002, subsequent to a significant increase in measured and indicated resources withinand adjacent to the existing pit, an upgrade was undertaken to increase throughput to 2,6 Mt/a to maximise the return on these additional reserves. The additional reserves effectivelydoubled the remaining mine life at that time.The upgrade included a new tails dam, additional standby power generating sets, installationof a second-hand and refurbished Kidston ball mill, and pebble crushing and cyclone circuits.The capital cost for the upgrade was US$10,2 million and it was completed under budget andprogressively commissioned in September and October last year.The project life has now been extended with the current mine designed to produceapproximately 170 000 ounces of gold per annum at a cash cost of US$220 per ounce overa six year mine life.The Golden Pride mine has to date produced 720 000 ounces of gold since commissioning.In 2002 the Golden Pride Mine participated in the inaugural Presidential EnvironmentalExcellence and Leadership Award for the mining operation that goes beyond mere complianceto environmental standards and regulations. At a ceremony on 12 September 2002, PresidentBenjamin Mkapa presented Resolute with this prestigious award.On the exploration front, Resolute has been active over the past two years on a regionalstudy of the Archaean of Tanzania and ground follow-up of selected targets. As part of thisstudy a number of areas were selected for acquisition or joint venture (JV). Out of this workthe Nyakafuru region was identified as a key area. In 2002 Resolute entered into joint ventureswith Spinifex Gold and Sub-Sahara Resources, both of which hold strategic parcels of groundin this region.Similarly, additional tenure in the Golden Pride – Kahama area was targeted for JV, as therewere indications of potential small tonnage satellite deposits that could be trucked to GoldenPride for processing. Several prospects were pegged directly by Resolute and a numberacquired via the Sub-Sahara Kahama JV and the Austan JV (Canuck). Ongoing explorationof these is aimed at delineating resources capable of being trucked to Golden Pride fortreatment.The next modern mine to be commissioned after Golden Pride was Geita, which was officiallyopened on 3 August 2000 by President Mkapa. Originally an Ashanti project, AngloGoldbought a half share in the mine about three months before it entered production. The minewas built in about 13 months – three months less than anticipated – at a cost of US$165million. As we relate in a story on page xx of this issue, the mine is now Tanzania’s biggestgold producer with its output for 2003 predicted to be in excess of 600 000 ounces – makingit one of the great gold mines of Africa.
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Geita was followed within a year byBulyanhulu, opened in July 2001 and ownedby Kahama Mining Corporation, which in turnis a subsidiary of Canada’s Barrick Gold.Barrick acquired Bulyanhulu as an advancedstage exploration project in March 1999 whenit purchased Sutton Resources. The mine,brought on stream for US$280 million, is anunderground operation and in 2002 produced356 319 ounces of gold at a cash cost ofUS$198 per ounce. In 2003 Barrick expectsBulyanhulu to increase its production to 415000 ounces and to decrease cash cost toUS$175 per ounce, reflecting a full year ofbetter grades and recovery rates. Barrick isplanning to increase the annual productionrate to between 430 000 and 570 000 ouncesat an average total cash cost of US$151 perounce over the 21 years of the mine’s life. Atthe end of 2002, Bulyanhulu had 11,7 millionounces of gold reserves, up 224 % fromSeptember last year saw the official opening of the North Mara gold mine, to the east ofMusoma and close to the Kenyan border. The mine is owned by East African Gold Mines(EAGM), an Australian company headed by Geoff Stewart in which, interestingly, AngloGoldhas an 8,3 % share. The actual operating company is EAGM’s subsidiary, Afrika MasharikiGold Mines. The North Mara gold processing plant utilises conventional Carbon In Pulp (CIP)technology. The plant is capable of treating hard and abrasive ore from the Nyabirama golddeposit at the rate of 2 Mt/a. The processing plant is located adjacent to the Nyabiramadeposit, and 7,5 km from the satellite deposits to be mined at Nyabigena and possibly Gokona.The North Mara ores exhibit relatively fast leaching kinetics, and are only mildly refractory;therefore conventional cyanidation was chosen for the process route.Run of mine ore is first crushed in a single stage jaw crusher onto a crushed ore stockpile.Reclaim feeders beneath the stockpile allow the ore to be conveyed into the grinding circuit,which consists of a SAG mill, a recycle pebble crusher, and a ball mill. The ore is ground to atarget grind size of 80 % passing 106 microns before entering the leach and adsorption train.A gravity circuit consisting of a Knelson concentrator and Gemini shaking table concentratescoarse gold extracted from the grinding circuit and removes this product ahead of the CIPcircuit.The Nyabirama deposit is being mined by open pit methods while start up at the Nyabigenasatellite pit is scheduled for second half of 2003. The contract mining is being undertaken byPW Group with its fleet consisting of O&K RH120 and RH40 excavators loading into sixCaterpillar 777Ds. Production is in the region of 12 000 bank cubic metres a day.
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Although the exploration effort in Tanzania dipped in 2000 and 2001, it seems to be recovering– if anecdotal evidence can be trusted – on the back of a better gold price. Among the juniorexplorers operating in the country are African Eagle (see page xx), Tan Range (see page xx), Spinifex (which is being taken over by Gallery Gold) and Sub-Sahara Resources. Mostexploration is centred on the Lake Victoria Goldfields although Barrick has reportedly recentlyentered a joint venture with Shield Resources, a Tanzanian company operating in the historicLupa goldfields further south in the country. Much exploration, of course, is concentrated onexisting mine properties, with AngloGold/Ashanti and Barrick being particularly successful inpushing up resources and reserves at Geita and Bulyanhulu respectivelyFinally, what are the prospects of any new mines in the near term? The best prospect seemsto be Tulawaka, a deposit in which Barrick, through its subsidiary Pangea Goldfields, is injoint venture with Northern Mining Explorations, a Canadian explorer. Located about 200 kmto the west of Bulyanhulu and 160 km south-west of Mwanza, gold mineralisation wasdiscovered on the property (which had no history of artisanal activity) in September 1998 bydrilling soil geochemical anomalies outlined over the area in the previous year.A feasibility study on the high grade East Zone resource at Tulawaka, which hosts indicatedresources of 1,71 Mt averaging 14,9 g/t, is currently at an advanced stage. Met-Chem Canadahas been retained to carry out open-pit mine design while Ausenco of Australia has beenretained to prepare a conventional gravity and CIL process design for a 1 000 t/day plant. Thecost of the proposed mine is put at around US$31 million. Micon International, a Torontoconsulting firm, has been retained to consolidate the work done for the feasibility study andproduce a final report.No time frame has been released for the project but it certainly seems possible that work onthe mine could start this year and, indeed when African Mining, was in Tanzania recently itheard that tenders had already been invited from open-pit mining contractors. If Tulawakadoes get the go ahead, it will be Tanzania’s sixth new gold mine and confirm the country’sstatus as one of the world’s fastest developing gold mining regions.Report by Arthur Tassell