Good day, ladies and gentlemen, and welcome to the AngloGold Ashanti Obuasi Update. All participants will be in listen only mode. There will be an opportunity to ask questions later during the conference. Please note that this call is being recorded. I would now like to hand the conference over to Stuart Bailey.
Please go ahead, sir.
Thanks, Irene, and thanks everybody for joining us at such short notice today. And I would direct you all on our website is a very short presentation under the presentation section just with the Schematic that Graeme may refer to during the call, Safe Harbor statement in it, which covers some forward looking information and other important information that you should please look at. I'm going to hand over to Christine for some Just some opening remarks and then to Graham to talk through the detail of the release that we put out today and then to take your questions. It could be a very brief presentation
Christine? Thanks, Stuart, and good day, everybody, and thank you for taking the time to join us on the call. Unfortunately, we've had to announce that the mining operations at Apuwati have been suspended Due to a fall of ground incident that occurred on the 18th May, our top priorities right now Our research for our missing colleague and we are providing support to his family. So due to the nature of the incident, we took the decision to voluntarily suspend all mining activities. And Graham will take you through the incident shortly.
At this point, we are prioritizing the safety And well-being of our employees at the mine, while effectively managing the efforts on business continuity. And so with that, I'll hand over Graeme will provide some details of the incident.
Thank you, Christine. Firstly, I might just refer to the slide presentation. Some of you will have seen this before or probably most of you have It's a long section of the Obuasi mine. To the left of the slide is the southern part of The mine operating footprint and to the right is the northern area. The area that we commenced Mining in the redevelopment project is to the left or the south and that is around The KRS shaft and it's associated with the new Obuasi Decline that you can see sketched on that diagram.
This incident occurred in A narrow hanging wall ore body in the hanging wall of Block 8 Lower. We commenced mining in the Sansu area to the extreme left on that diagram. And then we commenced mining down in Block 8 lower area. So the incident I described is in is a narrow ore body, which is in the hanging wall of the main Block 8 Lower ore body. They night shift in the early hours of the morning.
There was a crew of 3 and a IT operator were carrying out QA QC work on the 2,901 level. Two operators were in the IT basket and they were tensioning Cable bolts or ground support bolts. The leading hand, our colleague, he was in front of the loader directing The work, as the crew were working, the ground below the Our missing employee gave way and collapsed. And our colleague was drawn into That collapse. Early indications are that the incident was likely caused by the failure of the Sil Pillar.
It is in one of the smaller mining areas and the Sil Pillar was about 7.5 meters thick And it was a pillar between the 2,901 level and the level below or the 2,900 level. Christine spoke briefly about the significant rescue effort that is underway and continues to be underway As we speak. In the meantime, we have constituted a cross functional Our team of disciplined experts and have commenced a thorough investigation into the incident. At this stage, we're gathering data and all the circumstances surrounding the incident and In order to really kick start this investigation, when the incident occurred, we voluntarily suspended all underground Mining operations. However, the infrastructure construction associated with Phase 2 of the project Is continuing.
Underground development activities, they'll recommence once we've cleared Everything to that everything is safe and ready to commence. But given the nature of this incident, We will pause and we will review. We'll undertake an in-depth area by areas and that assessment will go into the mine design and the mine schedule and the ground management plans Before we progressively release mining areas back into production and continue with the ramp up of Obuasi. Thank you. And I'll hand back to Christine.
Thanks, Graeme. And at this point, I'd like to reiterate That the safety and well-being of our employees is our top priority. And as Greg mentioned, As the investigation progresses and the assessment of working places advances, We certainly would expect to provide additional detail on the estimated impact on this year's production And the ramp up of the project to the market in due course. And so with that, We'll open up the call for questions. And apart from Graham, who's on the call, We also have a member of the Exco team and our Head of Safety Global Safety, George Fitzia, who is actually also on the call as well.
Thank you.
Thanks, Christine. Irene, we're ready to take questions.
Thank you,
sir.
Our first question is from Shulan Modi of UBS.
Good afternoon, everyone. Sorry to be engaging. I had such a tragic time. Unfortunately, a few questions from my side. Will you be conducting a review of the safety Mechanisms at the mine and what sort of review does that entail?
And then Is there a risk that some of the mining areas get sterilized through this process? So and what sort of I mean, based on the diagram, it doesn't it looks like probably a third of the mine can be impacted, but like give us an idea of what sort of Are you potentially impacted by the reviews you're going to be doing in the next while? I'm assuming that this could take a few months. Hopefully, you can give us some indicator of what sort of period of time we're looking at, even if it's a rough indicator. And then maybe can you also Tell us about the government and community response to your approach I think you've taken quite a proactive approach.
And maybe if we can just get some color on other people's Other stakeholders' impressions? Thanks.
Graham? Thank you, Sheila. I didn't expect that I'd be talking to everybody so soon after our results. Clearly, we need to make sure you're fully briefed on what has happened at Obuasi and understand how we're handling the situation. In regard to your first question regarding conducting a review of safety, clearly safety, as Christine iterates regularly, is our first value.
So this incident is a significant incident and that is a real disappointment to us And not only to the impacted colleague, but also the progress of the Obuasi redevelopment project, which As I've reported, it's been going rather well. Yes, we will pause to undertake a full review. In the feasibility study, we did rework the entire resource model. We did rework the entire Mine design, we did take account of the history of mining at Obuasi. And we designed the mining, The mine plan, mining methods, mining schedule and the ground management plans In recognition of the reality of Obuasi.
To that effect, We included new technologies, not new to industry, but certainly a bit more advanced than Obawasi used to do In terms of the mine operation. So in terms of development, jumbo development with full Shotcrete support in all the major drives, including the operating development, the use of cable bolting machines, Updating and upgrading the level of ground support, and we also incorporated construction of a pace fill plant, which will be used for cemented backfill instead of prior practice of using rock and hydro fill. And then as the mine was being brought in the operational readiness phase, we deliberately went through the mine operating system. We leveraged off good systems out of our Sunrise Dam operation and worked through all the processes that We needed from the geological model through right through the long term, short medium term mine design and right down to how we design excavations And all the various disciplines that go into that design and how that work is then communicated for execution to the mining contractor. So that was quite deliberate work over a good 18 months period as part of the operational readiness.
Now the purpose of that was to make sure and to build in safety systems. This incident It's in a small area, it's a hanging wall of Block 8, but it is a structural failure of a horizontal sill pillar. The nature of that causes us to think that we should Understand the circumstances of this incident and the causal effects and then review The approach that we have for the mining areas, our plan is To do that on an area by area basis, the detail of that and the team that will undertake that It's something that we're working on currently and that approach we're formulating, But I assure you it will be thorough. And the reason it needs to be thorough is that we're building a mine here for the long And we want to be successful for the long term. And out of this incident, there may be things that we do need to We may need to review our mining sequence.
We may need to revise Our ground support, we may need to change the way we gather information that goes into the whole design. So, we will do that. In terms of timing, For the investigation, difficult to say. It could be as short as 2 weeks, could be 2 months. It depends on what we find as we get into the investigation.
But in parallel with that, we'll also do the in-depth review Covering the mine design, mine schedule and the ground management plan. And we will do that area by area. And then as we do that, we'll release those areas To production. I think your general sense that it will take us some time to do that is correct. I don't want to speculate on how long at this point, but we're not going to rush.
We're going to do it carefully. In terms of your question about sterilizing, I don't think so. I think it will be more a matter of adapting our mining process and the way we go about Managing the mining process as opposed to at this stage making some call that some areas are going to be sterilized. And I'd emphasize again that this incident was in a small area in a hanging wall structure to the main ore body. But it certainly is prudent to go back and review what we've designed and the systems that we've put in place.
In terms of the government, when the incident occurred, the Inspector of Mines visited site. He instructed us to suspend work in the area that was impacted, but he We've subsequently had This is from the Principal Inspector of Mines and the Chief Inspector of Mines in the course of the last week. They have visited the site. They've given no further instructions, but they certainly noted that we've been proactive and have suspended mining activity. We have notified our responsible minister, the Minister for Lands and Natural Resources and appraised him of the So from a government point of view, we are getting support.
We've had support from the inspectorate. We've had support from the local community. In terms of the local community, we have communicated We've provided direct care to our colleagues' family. Bawasi is a sizable community, but it's a tight community. So our people are working and Supporting the family.
The other thing that we need to be cognizant of is that Obuasi is very important To the community of Obuasi, we've been employing up to 4,500 people and many people Rely on Obuasi. So our approach, nevertheless, is to be safe about our operation, but to progressively Resume the operation. We haven't made any decision to suspend anybody's work or to stand anybody down. In fact, what we will do is Use the time at hand to train, to do maintenance, to review, To check all our safety systems and deploy people as much as we can into productive and useful work. Thanks, Sheldon.
Thanks very much for that. Good luck in this difficult time. I'll pass to you the next person
Our next question is from Adrian Hammond of SPG Securities.
Good afternoon, everyone. This is a question just as a real really as a follow-up I'll pass for Graham and just listening to what you're saying Graham. Is it fair to say that your review of the mine And the scheduling puts the steady state outlook for Abu I see under review as well?
I don't think so, Adrian. I think it is a matter of the ramp up. Certainly, this is going to impact our ramp up schedule. And just the fact that we pause and review is going to put some time into that ramp up schedule. But I have no reason to think why A resumption is going to put some sort of cap or reduction into what the mine production Outlook is, we've communicated 350,000 to 450,000 ounces a year, lower in the first 10, higher in the next 10 years.
The nature of this incident, I don't think it would give me cause to think that, that Is at risk, but it may well change the way we do things. The level of ground support, the approach, the sequencing and so on, I don't think in terms of the Scale of Obuasi should be in question, but it's more the how.
Thanks, Graham. I have a second question for the team. And I think just standing back and looking at your safety, which had Improved quite dramatically since the exit out of the South African business, but has since deteriorated again and Surprisingly happening at mechanized operations at your overseas businesses, which can be happening. Is this do you think all just in freak accidents or do you expect that safety discipline is lacking?
George, do you want to comment on that? I think what I'd like to say is that the incidents that have happened This year, we did have a fall of ground incident at Cerro Grande Mine in the Q1 of this year. And this is the 2nd sort of Fall of Brown incident here and our focus was To focus on some of these critical control failures, so low frequency, high impact incidents, and that A big focus of our revitalized safety review. And so George here is on the call. We can give you more insight into that.
But I think clearly what I'd like to say categorically, it's definitely The strong focus on safety, of course, the areas that we're going to need to reinforce Our discipline in Lightroom sees the way we do things, but I certainly don't think that this is an indication of of a slacking or from a disciplined perspective on safety. Thanks. George?
Thank you, Christine, and thank you for that question. Yes. We acknowledge that we have had a setback in recent times since the exit of South Africa. But certainly, we don't see these as rig accidents. We've always had a very robust safety strategy.
And Prior to these incidents, we were busy with the process as we do on a continuous basis. We review our safety strategy on a 2 to 3 year interval period. And we were looking at a revitalized safety strategy, realizing that our portfolio risk portfolio is changing With the exit out of South Africa. So we have conducted a very detailed review of our strategy, revitalized it as Christine has said, and we're busy rolling that out. A very important piece of the strategy is to distinguish Between what we call these high consequence events, which these events are normally rare.
They're not that frequent. And the mechanisms of failure to them are very different to these low consequence events. So we are focusing really hard on a 2 pronged approach to address these high consequence events, and that's where the strategy is focused at. In parallel with that, maintaining the organizational safety culture to the desired level is critical for us, and we're also doing work In parallel to address that. So I don't think it's mechanization is something that we are introducing.
Obuasi mine In the longer term, we'll be a totally different operation than what it was historically. And we are busy and factoring that into the plan when the appropriate Technologies will come in, which will reduce the risk of Human error or administrative failure, and we're convinced that with our controls at a high level, we will be able to address this. But our strategy is very comprehensive. We will learn from this investigation. As Graham has indicated, it's too early to say What went wrong?
Once we have concluded the investigation, we will have a detailed a more detailed review and adjust as appropriate. Thank you.
Thanks. Wishing you all the best to getting back on track.
Thank you very much.
Thanks, Ajay. Irene, next.
Our next question is from Arnold Van Haren of Nedbank.
Yes. Thanks for taking my question. Question for Graeme. Two questions. The first one, Graeme, was there any similar incidents like this And then the previous mine.
In other words, was this something that was identified and carried over from a risk perspective? And then my second question, Graham, you talk about a multidisciplinary team that will be conducting this review and investigation. So the question Would COVID related travel restrictions result in a much longer timeframe for doing this review and coming to the conclusion Then what it would be without that? Because normally in a review like this, You scramble teams across the globe, consultants across the globe and bring them in. And obviously, with COVID now, that could add to that timeline.
Thanks, Arnold. In regard to a similar incident in the previous Mine, I'm not aware of 1. And I've followed the feasibility study in Minivol with Obuasi Through that whole period from 2014, and I'd have to say that in the course of the study, We're aware of failures and we're aware of the ground conditions and but an incident in Obuasi's history like this, I am not aware of 1. If I will investigate and If that is the case, I'll let you know, Arnold. There certainly were issues around ground support and falls of ground At Obuasi, the and hence, in the design of the redevelopment, we've certainly Lifted the standards substantially and back up to what we would normally expect for a mechanized mine in terms of the ground support And the technologies and systems associated with it.
So we've certainly done that. But in terms of a specific incident, I Can't say. Your question about a multi pulling together a multidisciplinary group, That group will include the geology people, our geotechnical team, Our mining team will bring in expertise, particularly around the geotechnical area, given that this is a SIL Pillar failure. So we're gathering all of the information on-site. George and the lead is already directing the work from S.
A. Within Africa, the travel Is achievable. And so one can't move around Africa. The entry into Ghana requires a prior COVID test and then a test on arrival. In fact, I've just returned from Obuasi.
I'm here in Australia in quarantine for 14 days. So travel into Ghana is quite feasible and then travel to the mine is there's no to that. We have COVID protocols in sight for anybody getting to site, where we test them again before allowing people on the site. So We've got all that in control and that logistics does provide some delay, but it's clearly that's what one has to do In COVID times, but it does slow things down a little bit, but not to the point that I it's going to hamper the investigation. The other aspect of the work we've got to do is a review Area by area and working on how that will be done and how we will gain some Support in doing that.
We'll talk to competent and experienced mining consultants to assist With that work, we'll do some of that work with our site technical team and also with AngloGold's technical team, Who are based in various parts of the world. So there'll be travel logistics associated with that, but we'll do our best to work around that. So it doesn't sort of detract From the pace at which we can do the work, it will have some impact. I can't say how much.
Thank you, Graham. All the best. That's it from me.
Thanks.
Thanks, Ronald.
Thank you. Our next question is from Leroyam Goony of HSBC.
Good afternoon, guys. Graham, I've got 2 questions, please. The one is Just to understand how uniform the pillar design and specifications are Across the whole mine. So if you find that Block 8 is a structural issue, what are the chances that The same issue would apply to some of the other blocks. And then maybe just for my understanding, what is the split In production from the 3 shafts that we see on the diagram in terms of contribution to overall steady state volumes.
Thank you. In terms of how uniform are the pillar designs, Each mining area will have its own characteristics Based on the geology and based on the rock mechanics in that specific area, The Obuasi mineralization fits within the Obuasi Shear and the Shear is It's a wide area of shearing. It's not just a single fold. And that shear Bends and twists and in a long strike and downtick. And so as we look at each and it's really that Shear that controls all of the mineralization.
Then the other factor will be The deepening of the mine and the natural ground pressures that increase as one moves deeper. So this Incident happened at about 900 meters below surface. The mine will progress down to in our current plan about 1500 meters So, and the pillars, be they still will be they vertical pillars and We'll design specifically to the ore body geometry and the ground conditions by area. So I wouldn't Say that everything is uniform, it's got to be uniquely designed. So an area like Block 8, We will mine out primary stopes and then we'll backfill those with submitted fill and then we'll take out the secondary stopes and then we'll design the access development Into that area.
The similar sort of approach using long hole stoping right through the mine in this area that the incident occurred in We were basically doing longitudinal retreat mining because it's quite narrow And it's not transverse starting like you'd use in some of the bigger areas. So the ground support regime is really specific to the area You're mining and the geometry of the ore body at the time. And it was on that basis that we designed what we call the MOS or the mine operating systems And the means by which you design the work and that you sign off the work and issue work instructions for the execution of the excavations, so not unique across the board. In terms of your question about the shafts, The mine operation for the first really 4, 5 years is to the left of that diagram around the KRS shaft. So movement out of the mine will be through the KRS shaft, Which is a capacity of about 3,500 tonnes per day.
And it would be decline haulage Of another 3,000 tonnes per day being that's about 6,500, but 4,000 of ore and 2,500 Waste. As the mine deepens in the center of operation moves to the north around the KMS shaft, 23. In the current plan, we don't move any further north. So the KMS and the KRS shaft would be the hoisting systems as well as the decline. It's only way in the future that we get into the Cadore area, which is right in the north.
But That would be an area where we're mining into the quartz veins initially in the shallow areas, but that will be by decline access. In the longer term of the future of the mine, as you see the general plunge of the ore body, It moves below the 50 level down to 60 and 70. And then you're starting to move to the northern part of the mine. But that's not Part of the redevelopment scope, that's really the big opportunity in the future. Hope that answers your question.
Yes, it does. It's very clear. Thank you. Good luck guys.
Thank you, everyone.
Our next question is from
My question was quite brilliant. Can you think about ramping up production at any other assets in order to reach the Full year guidance even if Abu Dhabi production is lower for this year? Thank you.
Thanks, Nina. So I just want to make sure that I've heard you clearly. You said are we changing production on any other assets? Is that was that your question?
Yes, so it can continue so well. So the question is, if you can ramp up or add more production than you initially expect Any other assets that you have in your portfolio in order to reach full year output, both are output Remind it beginning of the year expectations, just talking about the year of what year, unneeded production.
Yes. Thanks for the question. So Nina, what we've actually put out is we've ring fenced AguaSie's estimated contribution that was included in the 2021 guidance. And what was included in the 20 1 guidance was 300,000 to 350,000 ounces. And so I think what we're actually saying is by rethinking that, We really are keeping the production guidance from relating To the remainder of the operations intact.
So clearly, our view is not to sweep the other assets To make up for this and certainly what we will do is as the investigation progresses And we can provide more detail on the estimated impact on this year's production and ramp up Relating to Abu Dhabi, then we'll certainly keep you informed.
Our next question is from Scott McDonald of Scotiabank.
Everyone, thank you for the update. A few questions for Graham. Just a couple of quick ones to start. Are there any stockpiles at That's Edebwasi that you could generate some production from while mining is suspended?
They're very limited, Scott. We're in ramp up phase. We're Building and the mill was commissioned, as I've explained, early in the year. So stockpiles are very limited. So It will only probably this week that we won't have ore supply to keep the mill moving.
So it's a pretty abrupt stop. There's a small In the process of the redevelopment, we had to clean out some ponds and we did that and there's maybe 5000, 10000 ounces or so, which requires a direct CIL treatment. It's not something that the plant is permanently set up to do, but we do have a CIL circuit. So we're going to have a look at that and see if we can treat that direct Leachable material, which probably leads into, if you don't mind, I'll segue into another comment is that We have a biOX plant. And when we were building up in Phase 1, we were growing that bacteria and building it up to commercial scale over a period of time.
So we're putting in place plans to basically keep all of that bacteria culture Alive, that's a living organism, it needs to be fed. We do have concentrates, that way we can do that And keep the bacteria in a healthy condition, so that when the plant resumes, we're able To bring that back up as we have done previously.
Okay, got it. Thank you. And What mining rate were you averaging in the underground in the month of May prior to the incident?
We were starting to push towards 3,000 tonne a day. The other factors that We needed to sort of lift that with some of the infrastructure things that I talked about, primarily getting the major vent fan underway and the commissioning of that fan is in progress right now. 2 big That fan is in progress right now, 2 big fans on top of that new vent shaft. That was going to give ventilation To the deeper parts of Block 8 and allow us to better get productivity and machinery and logistics into that area. We were commissioning the ore power systems and the Grizzly systems, rock breaker systems feeding on to the main shaft and that was all Tracking along, so we were tracking to 3,000 and then needed to push ourselves up to 4.
And We indicated the results that, that was going to take us the rest of this quarter and then into quarter 3. But clearly, this now pushes that timetable out.
And Would you say it's sort of like a one for one impact on the delay to the ramp up schedule, like for every day that underground operations are Suspended, that will be one day of delay to that schedule or is there some ability to catch up, do you think, once you resume operations?
A little difficult for me to forecast, Scott. Probably the way to answer the question is To say that we'll do an area by area review, and we will bring areas in Step wise, as we've done the review, we'll commence production and then we'll move on to the next area. So it means that one doesn't immediately jump to where we were in May. It means that we will It will be a bit flatter again. So we'll, for example, bring on Block 8 South and then we'll move to Block 8 North and then we'll move to Sansu.
So I think that's the better way to do it. And rather than Jumping immediately back to the same level that we're at. To be realistic, it is going to be a flatter ramp up to get there'll be a period of time To get back to where we were in May and then to continue on the ramp up.
Right. Okay. Any preliminary thoughts on the extent to which maybe this incident might impact the mining method you apply in Certain areas and maybe the amount of backfill required?
A bit early to tell, Scott. Certainly, there will be lessons to learn from the incident. It Not only from the lessons learned from the incident, but it's worthwhile just reviewing our approach. As I explained before, we a method that's methodical and well structured In terms of the way we execute work, but with the results of the investigation, It does cause reason to go and have a look again and make sure we've got that right. So there may be changes.
We may change sequences. We may change ground support regimes. We had already included pace fill as Being the means of fill for all secondary stopes as opposed to hydro fill and rock fill, so that won't change. But there may be some adaptation to the sequencing and the mine schedule. It's difficult to say at this point other than to say when one learns from incidents, then those incident those learnings Need to be understood and built back into your operating systems and designs.
I'll update you on that As we predict, Scott.
Okay. And thanks for that. And one last one, if I may. Just is there any Possibility that historic illegal mining activity that perhaps you're not fully aware of could have had Any impact on the geotechnical conditions here or perhaps even in other areas of the line?
From a historical illegal mining activity down in the mine, And I saw all of this firsthand in sort of 2013 and then saw what was done up in the North in 2016, clearly, and then that was well away from the area that we're working now. I think it's improbable. The nature of The illegal mining, the scale of it is much, much smaller. So I doubt that it will have had an impact, but we'll have Investigation.
Okay. Thanks for that, Graham. Much appreciated and best of luck With the recovery efforts and the investigation.
Thank you.
Thanks, Scott. Irene?
Thank you, sir. We have no further questions on the lines. Would you like to make any closing comments?
Yes. Thanks, Irene. I'm going to Just hand over to Christine for a couple of comments and just to thank everyone for joining us.
Thanks everyone for joining us on the call Today, the focus right now is on the risk commission and our thoughts and prayers do remain with our colleagues, family, During this very difficult time, we're very comfortable that the long term value proposition of Abu RC remains intact. It's a 20 year plus life of mine, 30,000,000 ounces mineral resource. And you've heard from Graham today that He's progressing the investigation in a very methodical way. And certainly, as we Obtain additional information and are able to estimate the impact on this year's production and ramp up of the project To the market, we'll make the necessary disclosure. I think just one other comment before I close off To provide a bit more context is that we have always said that our production is weighted to the second half of the year.
And so I think certainly be that in mind for the other assets as well. In particular, this is a transition year for us. We're in the middle of a reinvestment program. And so clearly, we are expecting this to benefit The assets across the portfolio, but in particular, the assets we key assets where we are progressing And so with that, I would like to thank you for joining us today, And I wish you all the best in the next time. Thank you.
Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect