DRDGold in state of balance
• Miner near ‘sweet spot’ where price, volumes, costs and extractions meet
At the existing gold price of R533,914/kg DRDGold is close to the “sweet spot” where price, volumes, costs and extraction efficiencies converge, CEO Niël Pretorius said on Wednesday.
At a presentation on the sidelines of the Investing in African Mining Indaba, Pretorius said the group was guiding production of about 136,000oz-140,000oz of gold in the year to June as first-half yields were slightly lower than expected.
Above-normal costs were incurred in cleaning up two old sites on the West Rand, the Crown plant and C-slimes area.
He said the rate and consistency of DRDGold’s processing was expected to return to normal from March.
In the year ahead, DRDGold would focus on turning its current eight-year mine plan into a 15-year plan and do more work on improving plant efficiency, he said. It has just commissioned two new reclamation sites on old slimes dams and will commission a third in the next few weeks.
The share price, which soared to R12.62 on the JSE after the UK voted to exit the EU, has since returned to about 837c, which Pretorius said was a closer reflection of the delivery potential of the business. It had added about 4.23% by midday on Wednesday.
DRDGold treats about 25million tonnes a year of discarded mining material in old sand dumps and slimes dams around Johannesburg to extract gold at an average yield of about 0.18g/tonne. This year, it is moving the focus of its operations to the Central Rand and East Rand, with the Grootvlei-Marievale tailings as its next target.
Last week, it published a revised mineral reserves and resources statement that showed a substantially higher mineral reserve, at 312.6-million tonnes of tailings, up from 170.9-million tonnes, containing 3-million ounces of gold, up from 1.8-million ounces.
It would cost about R507.7m to access its East Rand tailings and dumps, it said.
Pretorius said DRDGold was in a unique position among tailings retreatment operators because Joburg not only had hundreds of millions of tonnes of old mine dumps but also sufficient power, water and new deposition sites to treat them.
Since Eskom’s loadshedding phase of a few years ago, the national power supply has stabilised but there have been local outages around DRDGold’s treatment plant caused largely by weather events. Power trips are costly so DRDGold installed backup power a few years ago and has since avoided powerrelated interruption.
Pretorius said DRDGold’s primary objective was to make money for shareholders by mining as much of its resource as possible at the best margins, which necessitated using the best technologies. It also aims to improve the environment through cleaning up old dumps and has spent about R800m over the past eight years on controlling dust emissions.
It rehabilitates old mine sites to the point where they are used mainly for light industrial or commercial development. It is one of the largest property owners around Johannesburg although it does not value the property on its balance sheet.