Regional review – Australia

“There is significant potential to unlock known extensions of mineralisation beneath the Tropicana and Havana open pits as well as extensions at depth in the Boston Shaker underground.”

A more detailed description and discussion of each of these operations can be found in the individual <OP> .

AngloGold Ashanti has two operations in its Australia region, Sunrise Dam and Tropicana, both of which are in the north-eastern goldfields of the state of Western Australia.

Our Australia operations are:

Sunrise Dam, wholly-owned by AngloGold Ashanti, is located 220km northeast of Kalgoorlie and 55km south of Laverton. Underground mining, carried out by a contract mining company, is now the primary source of ore, following the cessation of mining in the open pit in 2014.

Tropicana, a joint venture in which AngloGold Ashanti has a 70% holding and which it manages with 30% held by IGO Ltd, is located 200km east of Sunrise Dam and 330km east-northeast of Kalgoorlie. The operation is a large open pit operation with mining carried out by a contractor.

Australia: Contribution to regional production [chart]

Contribution to group production*

18%

* For 2020, group production includes the
South African operations to September 2020

Australia: Attributable production (Moz) [chart]

Australia: Total cash costs and all-in sustaining costs [chart]

Operational performance

Production

The Australia region produced 554,000oz in 2020 compared to 614,000oz in 2019, as the completion of grade streaming and a lower proportion of open pit ore in the mill feed resulted in a 17% drop in year-on-year attributable production at Tropicana, in line with the mine plan.

At Sunrise Dam production was steady at 256,000oz as the mine focused on a strategy to fill the mill with the best quality ore through a programme of underground exploration and development to build orebody knowledge and add to the Ore Reserve.

The strategy involves maximising the extraction of the Vogue orebody, which is currently the primary source of underground ore, and providing mining flexibility by developing an alternate mining area. Vogue will contribute 80% of underground ore over the next two years, with multiple ore sources making up the remaining 20% of mill feed.

Mill throughput remained consistent at 4.0Mt for 2020 and metallurgical recovery is benefiting from the float ultra-fine grind circuit that was implemented in 2018.

Pre-stripping of the Golden Delicious open pit, 12km from the Sunrise Dam processing plant, began in the December quarter 2020. Ore production from Golden Delicious is scheduled to begin in the June quarter of 2021 and the open pit is expected to deliver approximately 136,000oz over a 2.7-year life of mine. From the second half of 2021, Golden Delicious ore will totally displace the low-grade stockpile mill feed, enabling grade streaming to be applied through 2022.

Tropicana produced 298,000oz for the year compared to 360,000oz in 2019. Production was lower year-on-year as planned. Up until June 2020, ore production from the open pits exceeded plant capacity, allowing higher-grade ore to be preferentially treated, while lower-grade ore was accumulated on stockpiles. With the completion of the Tropicana pit and stage one of the Havana pit (Havana cutbacks 1, 2 and 3) mid-way through the year, this grade streaming process ceased, in line with the mine plan.

The Boston Shaker underground mine started commercial production on time and on budget in September 2020. When the underground mine reaches its full production rate of 1.1Mtpa in the second half of 2021, it will contribute 100,000oz annually to gold production. The mine will achieve payback in three years.

Waste stripping for stage 2 of the Havana pit began in the second half of 2020 and while waste stripping is underway, mill feed will be made up of ore from the Boston Shaker underground mine, the Boston Shaker open pit and stockpiles.

The Tropicana processing plant continued to perform well in 2020, with throughput and metallurgical recoveries higher than the previous year. Further efficiency improvements are planned for 2021 to increase throughput from 8.8Mtpa to 9Mtpa in the second half.

Costs

The region’s all-in sustaining cost was $1,225/oz in 2020 compared to $990/oz in 2019. This was largely due to a 40% increase in all-in sustaining cost at Tropicana where lower production and unfavourable inventory movement had a negative impact.

The all-in sustaining cost at Sunrise Dam increased by 6% due mainly to costs related to a higher volume of ore purchases from external sources (298,000t compared to 71,000t in 2019) in 2020.

Costs were also impacted by additional unbudgeted COVID-19 expenditure.

Capital expenditure

The region’s capital expenditure of $143 million in 2020 remained in line with 2019 capital expenditure of $149 million. A total of $90 million was spent at Tropicana including $25 million of growth capital to complete the Boston Shaker underground project on time and on budget. Deferred waste and capitalised pre-stripping, representing 52% of the total in 2020, remains the focus at Tropicana.

At Sunrise Dam a total of $53 million was spent during 2020, which includes $3 million spent on the commencement of the Golden Delicious growth project. Golden Delicious will reach commercial production in Q3 2021. Ore Reserve development capital expenditure at 50% of the total in 2020 remains the focus at Sunrise Dam to unlock future gold production.

Growth and improvement

At Sunrise Dam the substantial underground diamond-drilling programme that began in 2019 is generating encouraging results, discovering the Frankie orebody during 2020 and extending the Vogue and Carey Shear ore zones. Multiple ore zones remain open along strike and at depth.

Two major steep lodes have been defined at Frankie spanning in strike length and 400m in height. Frankie is close to existing underground infrastructure and based on results to date this area has the potential to deliver approximately 500,000t of ore per annum over a five-year period from 2023. A dedicated diamond drilling platform was established in early 2021 to better drill out this zone, and three diamond drill rigs were drilling from existing drives for strike extensions to the north and south.

Regional exploration continues to seek additional satellite ore sources within trucking distance of the Sunrise Dam processing plant. The aim is to deliver annual ore production of 3Mtpa to displace lower grade surface stockpiles.

The company holds 880 square kilometres of tenements in this highly prospective district, some in the Butcher Well joint venture with Northern Star and some in its own right. Drilling will continue in 2021.

There is significant potential to unlock known extensions of mineralisation beneath the Tropicana and Havana open pits as well as extensions at depth in the Boston Shaker underground.

A study to look at the trade-off between mining deeper Havana mineralisation via a third cutback or by underground methods was initiated in 2020. This study will be completed in the first half of 2021.

Development of a 500m underground drill drive from the Boston Shaker decline to test beneath the Tropicana open pit was completed in 2020 and diamond drilling was underway early in 2021. The drill drive is well-positioned to provide production access to Tropicana underground mineralisation, should an Ore Reserve be defined. This drive could also be extended to cost-effectively explore the mineralised system beneath the open pits to the south and ultimately access the Havana underground mineralisation in the future.

Near-mine exploration continues to focus on understanding the geology to the north and south of Tropicana, seeking strike extensions and offsets to the Tropicana orebody.

Satellite open pit opportunities are being assessed along the mineralised corridor to the north of the mine at Springbok and Angel Eyes, to the south at Rusty Nail and further south at Madras and New Zebra.