Johannesburg is a city built on gold, but returning it to its gold mining heyday is proving quite the challenge for Central Rand Gold as South Africa Magazine discovers.

By Ian Armitage

Johannesburg is South Africa’s city of gold.

It is literally built on the stuff.

And, just over 100m below some suburban streets, gold could be mined in substantial quantities.

Central Rand Gold (CRG) is situated south of the city and operates on the central rand goldfield of the Witwatersrand basin.

It was founded on the basis that the main reef leader, which produced historical volumes of gold and ran in the region of 8 g/t, was mined out and that, below it, in the main reef, which runs at about 3- 4 g/t t, there was an opportunity to mine viably.

“The reefs, we have been mining were worked until the 1970s,” Patrick Malaza, CFO of CRG, tells South Africa Magazine. “In those days, gold was US$35 per ounce and the mining company was only interested in high grade ore, delivering up to, say, eight grams of gold per ton of ore. We are expecting to mine reefs that have an average of four grams of gold.

““Where we are working is not a new mining area,” Malaza adds. “Our aim is to bring gold mining back to Johannesburg.

“However, there are two main problems that we face,” he continues. “The most unexpected has been the discovery of undocumented voids that, frankly, we are surprised to see. Consequently, this means that we have to drill down deeper than we originally intended in order to extract the ore.”

Drilling down deeper is not as simple as it may appear. At 250m below the surface, CRG has struck not gold, but rising contaminated water – CRG is at risk of acid mine drainage (AMD) flooding. “Obviously, this prevents us from going any further down until we have pumped it out. So the immediate challenge is to get this water out so that we can begin full-scale production. Not only that, but we need to stop the water flooding into the mine in the first place - otherwise it will be an endless pumping cycle. So our intention is to put in place methods of keeping the water out, pump out the existing water, treat it and then return it to the river system.”

But this process is not as simple as it may seem. “Obviously we need to be involved with the water pumping. However, this is not 100 percent our responsibility, particularly as we are the ‘new kids on the block’ here, so to speak,” says Malaza. “The liability falls, yes, on the active miners, but also on the South African government and those companies who were mining here before us. So resolving this issue in partnership is very much our current focus as, until we have sorted it out, there can be no more mining, other than what we have going on at a small scale currently.”

He says the “rising tide of contaminated underground water” is from more than 100 years of mining activity in the three geological compartments of the Witwatersrand.

Spillage to the surface is already occurring on the East and West Rand.

“The Central Rand Basin in which we are located has, until recently, been dewatered almost on a ‘last-man-standing’ basis,” Malaza says. “Our founding premise was that this would continue under the sponsorship of a coalition of interested and affected parties, sharing capital and operating expenses into the future.”

Current development is sub-economic because of the double voids, deeper and more promising development is not possible because of lack of definition on AMD, and current stopping costs are prohibitive at present levels of dilution, Malaza says.

On 29 March 2011, CRG announced the suspension of underground mining, and an intention to conduct a three-month trial of conventional mining at its operations in Johannesburg.

The company has moved to place its underground mining operations on care and maintenance, Malaza says - the objective is to understand whether conventional handheld in-stope drilling can be done safely.

“The objective of the trial will be to understand whether conventional handheld in-stope drilling can be undertaken safely, reduce dilution and improve grade selectivity,” CRG said in an interim management statement in May.

The company is currently using a mechanised underground mining method to extract the Main Reef.

CRG continued to extract available ore before it placed its underground operations, except for the conventional trial mining, on care and maintenance, Malaza adds.

“We announced plans to halt underground mining in March and announced at the time that up to 150 people would be retrenched when we moved into the care and maintenance phase,” Malaza says.

CRG has since held several meetings with the Department of Water Affairs (DWA) to clarify and agree on the technical principles, funding allocation and timing of the implementation of an interim solution to the AMD problem, currently being experienced in the Central basin of the Witwatersrand area.

“We agreed that the DWA would take the lead role in coordinating the design and implementation of the interim solution, for which Treasury had made R225 million available, and that an implementation agent had been appointed,” Malaza says.

“Underground exploration is continuing,” he continues. “We have reduced personnel, regrettably, and developed a new business plan.”

The company expects 3.5 million euros worth of submersible pumps, with a 72 million litre a day capacity, to be delivered by August, in order to protect the 250m level and enable gradual dewatering from December.

CRG and Malaza feel that there is still insufficient clarity on key water issues, despite the South African government’s AMD report, including targeted minimum water levels, project engineering and technology, the role and responsibilities of the interested parties, cost allocation between interested and affected parties and timing to meet the degree of definition.

“While there is no doubt that this will all be resolved, everything hangs on the timing, which is disappointingly uncertain,” the company said in March.

“In the face of these uncertainties concerning depth, the obvious alternative is to increase development and mining in the upper levels,” it added.

Surface mining of up to 76,000 t of gold-bearing material will continue, probably until September, Malaza says.

To learn more about CRG visit www.crg-sa.com.