AngloGold Plans Trial to Access $118 Billion of 3-Mile-Deep Gold Deposits

AngloGold Ashanti Ltd. (ANG), which owns the world’s deepest mine, will within two years trial new mining methods in South Africa to access almost $118 billion worth of gold lying more than three miles underground as it expects gold prices to keep rising from this year’s record.

The world’s third-largest gold producer wants to gain access to an estimated 70 million ounces of gold more than 3.1 miles below the surface to extend the lives of its South African mines. The metal is worth $117.6 billion at current prices.

“We’ve got a pretty good shape in our heads of what this could look like, which is different to what’s been done anywhere previously,” Chief Executive Officer Mark Cutifani said in an interview in Johannesburg yesterday. The company, which is based in Johannesburg, will undertake the trials at Kopanang mine 106 miles southwest of the city, he said.

AngloGold and its rivals are trying to boost production to benefit from prices of the metal. Gold has had its longest streak of gains in 20 years, rising for each of at least the past ten consecutive quarters, to a record of about $1,684.70 an ounce in London yesterday and traded at $1,657.75 as of 8:24 a.m. The price could “easily” exceed $2,500 an ounce in three years, Cutifani said today.

Extracting gold becomes more difficult, costly, and dangerous as depth increases.

Safety Concerns

Currently gold resources below 3.1 miles are “unlikely to be developed because they’re either below the grade required to cover costs, or locked up in areas that are difficult to get to, or you may have concerns about safety,” Cutifani said. The company, which mined 4.52 million ounces last year, extracts gold from as deep as 2.4 miles at its Mponeng mine southwest of Johannesburg.

AngloGold could combine existing technologies to boost the ratio of waste rock versus gold-bearing rock extracted, Cutifani said.

AngloGold’s initial spend on the trials would be “in the low tens of millions” of dollars, Cutifani said.

The capital risk “relative to the size of the prize is small,” he said. “It really is about the future. If we don’t do something on this then you don’t have a future without it here” in South Africa.

While more than 30 percent of all the gold ever mined was extracted in South Africa, according to Rand Refinery, the country’s main processing plant, 31,000 tons of the metal, or three tenths of world reserves, still lie underground, according to Johannesburg’s Chamber of Mines.

The country’s proportion of world gold production has halved to about 8 percent from 16 percent in 2000 as the depth of the remaining deposits discourage new mines.

To contact the reporter on this story: Carli Lourens in Johannesburg at clourens@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net