No, says chairman and CEO Mark Wellesley- Wood, and he points to the planned investment of some R235 million in Project Boost ventures intended to extend the economic lives of the company’s South African operations.

    But, he adds, there is no doubt that the cost of doing mining business in South Africa has risen in the wake of new legislation, not least of which is the Mining Charter. More recently, the stronger Rand – specifically, its impact on the margins of South African mines – has become another factor to consider.

    It is sensible, when you run a capital-intensive business in a risk-averse investing environment, he says, to diversify. And in mining it is sensible, when you are looking to diversify, to focus on a specific region and on a specific type or types of orebody, not least because of the opportunities provided to exploit synergies.

    “Australasia, and more specifically the so-called Rim of Fire geological region with its epithermal gold deposition, is a sensible growth target for DRD.”

    Epithermal orebodies, Wellesley-Wood says, are typically large and flat, with big reserve positions.

    “They are the nearest you can get to South Africa’s Witwatersrand-type reef deposits and our experience of deep-level panel mining in South Africa stands us in good stead as gold mining in the Rim of Fire region goes deeper.”

   Also, he says countries in the Rim of Fire region are typically emerging market economies, unlike Australia. “The values per reserve ounce reflect this and we don’t have to pay premiums, at a dilution to our shareholders’ investment.”

    Wellesley-Wood is pleased with the turnaround the company has managed to achieve at its Tolukuma operation in Papua New Guinea and feels it now provides a sound platform for further growth in the Australasian region.

    “It has taken time to get things right at Tolukuma. We’ve had to improve our understanding of geological structures and are confident we now have a multi-million ounce orebody. We’ve had to redesign our mining layouts, acquire new, mobile mining equipment and train a workforce that is now 50% local. On top of all of this, there have been community and social issues to resolve.”

    During the year, Oxfam lent its support to claims by some community leaders that Tolukuma was polluting local watercourses, with consequent impacts on the health and well being of people living in surrounding villages.

    “While we have engaged with Oxfam on the issues, we are reluctant, as a rule, to align ourselves with politically based non-governmental organisations. It has proved more beneficial for all concerned to communicate directly with the PNG Government and the communities on the steps we are taking to reduce the volume of solids discharged by the Tolukuma plant and to improve monitoring.”

    Improved communication, Wellesley-Wood says, has led to new levels of interaction between the mine, the government and communities on health, education and crime prevention, as well as on a range of economic matters such as the export of locally produced coffee and vegetables.

    DRD acquired a 14% stake in Australian-based Emperor Mines in November last year and has subsequently increased this to 19.81%, the maximum permissible in terms of Australian corporations law before a bid to all minorities becomes mandatory. Wellesley-Wood and DRD non-executive director David Baker both have seats on Emperor’s board.

    Already, Emperor’s Vatukoula mine in Fiji is benefiting from synergies with Tolukuma on the one hand and DRD’s South African operations on the other. Supplies and purchasing, geology, engineering services, refrigeration and training are among the areas being tapped for value-add.

    DRD has renewed the exploration licence on its Daylesford prospect in Australia’s state of Victoria and some A$1 million has been voted for a “moderate” drilling programme.

    “We’ve kissed a few frogs in our search for new acquisitions; our next ‘prince’ is out there somewhere,” says Wellesley-Wood.