Mining Forum Americas: Gold Fields CEO preps Canadian giant Windfall for output

Gold Fields (NYSE, JSE: GFI) is approaching the production start of its Windfall underground mine in Quebec, the core of the South African miner’s strategy to focus on tier one assets.

Gold Fields, which bought Windfall in a C$2.2-billion acquisition of Osisko Mining last year, aims to bring the mine into production by the end of next year or early 2027, after permitting and about 18 months of construction. Windfall is located in the Urban-Barry Greenstone belt, about 700 km north of Montreal in the Eeyou Istchee James Bay region.

“Probably once Windfall comes into production, about 80% of our production will be in tier one jurisdictions,” Gold Fields CEO Mike Fraser told The Northern Miner on Tuesday at the Mining Forum Americas in Colorado. “We’ve migrated a lot of our production into high-quality jurisdictions.”

Gold Fields CEO Mike Fraser at the Precious Metals Summit. Credit: Henry Lazenby

 

Windfall’s production start combines one of the world’s top 10 gold majors by output ounces and Canada’s second-largest undeveloped gold mine by value. 

Gold Fields’ shares traded for $37.98 (C$52.31) apiece when markets opened on Thursday in New York, for a market capitalization of $33.96 billion. The stock has traded in a 12-month range of $12.98 to $39.04.

Second-highest NPV

The project has a post-tax net present value (at a 5% discount rate) of $1.2 billion, at a base case gold price of US$1,600 per oz., and a 34% internal rate of return at a payback period of two years, according to a 2022 feasibility study.

Windfall could produce 3.2 million oz. over a 10-year life at average annual output of 306,000 ounces. Initial capital costs are pegged at C$788.6 million and sustaining capital over the mine’s life is C$587.6 million.

The project’s NPV puts it in second place in Canada after Skeena Resources’ (TSX: SKE) Eskay Creek project in British Columbia, which has an NPV of $2 billion.

Highest reserve grade

Windfall hosts proven and probable reserves totalling 12 million tonnes at 8.1 grams gold per tonne for 3.2 million oz. of contained gold. That ranks it third in Canada by contained ounces, behind STILLR Gold’s (TSX: STLR; US-OTC: STLRF) Tower project in Ontario with 6.3 million oz. and Snowline Gold’s (TSXV: SGD; OTCQB: SNWGF) Valley in Yukon with 5.95 million ounces. By reserve grade, it’s number one in Canada, ahead of Eskay Creek with 2.6 grams gold per tonne.

Further exploration could extend the project’s life, which is why Fraser is looking at more than just Windfall’s 3.2-million-oz. potential.

“[There’s] extensive optionality on the whole land package…for other projects,” he said. “We certainly saw ourselves being able to add value to this total acquisition.”

Though Gold Fields doesn’t plan more primary exploration at Windfall, greenfield drilling will happen outside the project as part of an attempt to identify further targets.

Permit work

Before construction can start, the company must complete its Environmental Impact Assessment (EIA). It has so far completed two rounds of questions with Quebec’s COMEX (Comité d’examen des répercussions sur l’environnement et le milieu social) agency and Fraser hopes it will make a recommendation to approve Windfall in next year’s first quarter. 

Gold Fields is also working with the Cree First Nation of Waswanipi on an impact and benefits agreement. The aim is to align its completion with the EIA. A final investment decision would precede construction.

Tier-one qualities

Even though Gold Fields also has operations in countries as varied as Ghana, Australia and Peru, its focus on “tier one” isn’t necessarily about geography, Fraser says.

“South Deep [in South Africa] fits our profile because it’s a highly mechanized, long-life high-quality asset, similarly in Ghana with our Tarkwa [mine],” he said. “You could argue they’re not in tier one mining jurisdictions, [but] they are still high-quality assets and they fit our profile.”

That profile is about assets with multi-decade potential, the ability to improve the cost standing as gold is mined and the option to cut carbon intensity.

Windfall meets those criteria, Fraser said, adding that the mine would be supplied by hydro power in Quebec.

“It’s going to be a very green mine,” he said. “The benefit of being in a very high-quality mining jurisdiction certainly helps as well.”

With less than two years to go until Windfall becomes Gold Fields’ next major producing mine, Fraser said the company’s purpose of measuring itself by its positive social and environmental impact will continue to guide it.

“We’ve been around for close to 140 years,” he said. “The only way we’re going to be around for another 140 years is not just focusing on our internal business, but focusing on how we are making an impact in the communities and environment around us.”