Share price: 226c JSE code: DRD
BUY DRDGOLD — PREVIOUSLY KNOWN AS the “Roodepoort Rocket” by enthusiastic punters in marginal gold mines — is plugging away at its business of treating gold-bearing tailings dumps around Johannesburg. And it’s starting to make a tidy sum of money each month doing so.
Tailings retreatment, reprocessing material from which other companies have already extracted what gold they could with the technology of the time, is a tricky business. It involves extracting parts per hundred million and moving vast amounts of material. The latest addition to its Ergo plant near Brakpan is a fine grind and flotation circuit. The feed material is ground down finer than face powder, unlocking an extra 0.03g per tonne that will bump up total recoveries to 16g of gold for every 100 tonnes treated, which is about half the contained gold going into the plant.
The additional circuit pushed Ergo’s monthly production in March to the highest since DRDGold restarted the plant in 2008.
DRDGold is the largest tailings treatment company in SA, moving about 2-million tonnes of material a month. It has unlocked valuable property south of downtown Johannesburg removing, in some cases, iconic landmarks.
It is targeting output of 154,325oz of gold a year. It had a fairly high all-in sustaining cost of about R420,000/kg in Q1. It has minimal debt and a healthy cash balance of R286m, which should start flowing to shareholders provided doesn’t it add many more circuits or run into problems with its existing processes.