A pre-feasibility study of the Kloof Eastern Boundary Area project, Kloof Gold Mine

Abstract

The ore reserves of the Kloof Sub Vertical Shaft operations are coming to an end and as such, the Eastern Boundary Area mining operations, which will extract the Ventersdorp Contact Reef ("VCR"), must be commissioned to replace the diminishing reserves. Although feasibility studies have been carried out on the eastern portion of the Kloof Gold Mine lease area, none have been undertaken to investigate the potential benefits of including the new mineral rights recently acquired from JCI. This project report is a prefeasibility study into the potential value to Kloof of accessing and extracting the resources of the Eastern Boundary Area. This project report shows, using DCF analysis, that the Eastern Boundary Area has potential to economically generate the additional reserves that will be required to supplement Kloof s diminishing Three Shaft reserves. An NPV and IRR are calculated for the project, the results of which support the commissioning of further investigative work in order to obtain a better understanding of the orebody and to generate results that are more accurate. Despite its popularity, traditional DCF analysis has fundamental shortcomings, as do the commonly associated measures of NPV and IRR. This project report identifies and reviews these shortfalls and comments on methods to overcome these as far as practically possible.