Cerro Vanguardia Gold Mine | quarry, mining

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Description:

AngloGold Ashanti has an interest of 92.5% in Cerro Vanguardia and the province of Santa Cruz, 7.5%. The mine is situated to the north-west of Puerto San Julián in the province of Santa Cruz.

Mining and processing:

Mining operations consist of multiple small open pits with high stripping ratios. The orebodies comprise a series of hydrothermal vein deposits containing vast quantities of silver, which isproduced as a by-product. Ore is processed at a metallurgical plant located at the mine which has a capacity of 2,800t per day and includes a cyanide recovery plant. Technology at the plant is based on carbon-in-leach (CIL) processes with the tailings dam incorporated in a closed circuit with plant process so that there is no final discharge.

Geology:

The oldest rocks in this part of Patagonia are of Precambrian-Cambrian age. These are overlain by Permian and Triassic continental clastic rocks which have been faulted into a series of horsts and grabens, and are associated with both limited basaltic sills and dykes and with calc-alkaline granite and granodiorite intrusions. Thick andesite flows of Lower Jurassic age occur above these sedimentary units. A large volume of rhyolitic ignimbrites was emplaced during the Middle and Upper Jurassic age over an area of approximately 100,000km.

These volcanic rocks include the Chon Aike formation ignimbrite units that host the gold-bearing veins at Cerro Vanguardia. Post-mineral units include Cretaceous and Tertiary rocks of both marine and continental origin, the Quaternary La Avenida formation, the Patagonia gravel and the overlying La Angelita basalt flows. These flows do not cover the area of the Cerro Vanguardia veins.
Gold and silver mineralisation at Cerro Vanguardia occurs within a vertical range of about 150m to 200m
in a series of narrow, banded quartz veins that occupy structures within the Chon Aike ignimbrites. These
veins form a typical structural pattern related to major north-south (Concepcion) and east-west
(Vanguardia) shears. Two sets of veins have formed in response to this shearing: one set strikes about
N40W and generally dips 65º to 90° to the east; while the other set strikes about N75W and the veins dip
60º to 80° to the south.

They are typical of epithermal low-temperature, adularia-sericite character and consist primarily of quartz
in several forms as massive quartz, banded chalcedonic quartz and quartz-cemented breccias. Dark
bands in the quartz are due to finely disseminated pyrite, now oxidised to limonite. The veins show sharp
contacts with the surrounding ignimbrite, which hosts narrow stockwork zones that are weakly mineralised,
and appear to have been cut by a sequence of north-east trending faults that have southerly movement
with no appreciable lateral displacement.

Operating review:

Attributable production decreased in line with expectations to 204,000oz for the year, mostly as a result of the lower grade mined in the first three quarters of the year. The highlights for the year were the higher stripping ratio achieved with the extraction of 1.5Mt of additional waste, and the increase in silver production to 420,000oz. The recovered grade decreased year-on-year from 7.29g/t in 2006 to 6.88g/t as a result of the lower-grade material supplied to the plant.

Total cash costs rose by 16% to $261/oz (2006: $225/oz). Increases in the cost of mining supplies, a
function of the inflationary impact of higher commodity prices and higher maintenance costs (due to an
extension to the useful life of some mine equipment), as well as an increase in workforce and contractor
costs, were partially offset by higher silver by-product revenue. Adjusted gross profit for the year rose by 29% to $45 million, mainly as a result of the higher prices received for both gold and silver which offset the rise in costs. Capital expenditure for the year amounted to $18 million, spent largely on mine equipment and mine and
plant infrastructure.

Growth prospects:

The four-year brownfields exploration programme entered its second year in 2007. The focus of the programme is to determine the extent of, and to delineate, the shallow, high-grade mineral resources. During 2007, 350,000oz of gold were added to the mineral resources.

Outlook:

Attributable gold production for 2008 is projected to be maintained at a level similar to that of 2007 – between 200,000oz and 205,000oz – at a total cash cost of between $329/oz and $339/oz. The recovered grade is also predicted to be similar to the corresponding value achieved in 2007. Attributable capital expenditure of $22 million is scheduled for 2008, to be spent mostly on the construction of mine and plant infrastructure.

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The Cerro Vanguardia Mine is a gold and silver mine located 150km north west of Puerto San Julián, in the Santa Cruz province of Argentina. It is majority-owned and operated by AngloGold Ashanti, which holds a 92.5% interest in the mine. The remaining 7.5% are owned by Formicruz (Fomento Minero de Santa Cruz Sociedad del Estado), a company owned by the province of Santa Cruz.

In 2008, the mine contributed 3% to the company's annual production and employes in excess of 1,000 people. The Cerro Vanguardia mine consists of a number of small open pits.

The gold deposit at Cerro Vanguardia was first discovered in 1976 and, in 1987, mining group Pérez Companc S.A. formed a mineral exploration joint venture with AMSA, Anglo American’s South American holding company.

AngloGold, predecessor of AngloGold Ashanti, acquired a 46.23% interest in the project in 1998-99, and an additional 46.25%, the Pérez Companc stake, in July 2002, doubling its interest to 92.5%. AngloGold Ashanti owns the right to exploit the deposit for 40 years based on the Usufruct Agreement, signed in December 1996. Cerro Vanguardia, which was constructed at a total cost of US$ 270 million, was commissioned in late 1998.

The mine suffered a difficult year in 2008, when production fell by 25% while the cash cost more than doubled. The company did however manage to improve production in 2009 and lower the cash cost again. In 2009, the mine was also fatality-free for the seventh consecutive year.

Future mining plans at Cerro Vanguardia include an underground operation, from 2010, and a heap leach operation.

Cerro Vanguardia is mining the 17 structures by means of separate open pits, with three to five of these working at any one time in order to achieve an optimal blend for processing. Average stripping ratio over the 15-year mine life should be 15:1. Mining is conventional drill-and-blast, with a load-haul fleet of medium-sized equipment including Caterpillar 988 wheel loaders. Despite the harsh semi-desert climate, with –20°C winters, Cerro Vanguardia mines around the clock, all year.

Reference for information:
www.anglogold.co.za/NR/rdonlyres/41FA9F13-0F0C-4D8C-824...