DRD takes on other people’s problem mines, Murray says philosophically, and it would be naïve to think they could be turned around quickly and easily.

    Notwithstanding resolute abandonment of inherited stereotypes that haven’t worked and courageous application of lateral thinking from the company’s energetic young management, the rapid and unanticipated strengthening of the Rand in the second half of the year was a particularly cruel blow.

    “If we look at the operations one by one, though, we’ve had a ‘mixed bag’ of performances,” he says.

    While Blyvoor has gone from strength to strength, Tolukuma’s re-engineering has started to produce acceptable results and Crown’s surface operations have been going well, the North West Operations and ERPM have “sopped up” valuable cash and management time.

    Murray equates managing DRD’s mines with running an ER.

    “These are assets that need managers who can focus on short interval controls.” Take your eye off the ball, and you are headed for trouble.

    When DRD took over management at ERPM mid-year, the first unexpected round of challenges to be met in the wake of strike action by a disaffected contractor-based workforce included rapid recruitment of the mine’s own right-sized workforce and restoration of sound labour relations; the second included putting out the fire at the mine’s Far East Vertical Shaft, dealing with community fall-out over consequent environmental issues and re-establishing productive working face.

    At the North West Operations problems could be seen approaching from a bit further off but it took the effects of the stronger Rand in the third quarter for all to see that these were collectively a 1 000 kilogram a month producer – not the 1 600 kilogram a month producer previously envisaged – and that prompt and radical right-sizing surgery was needed.

    “We are often forced to make decisions quickly that others tend to defer as unpalatable – on matters such as job reductions for example. But when you are able to offer a simple choice, say, of 10 000 jobs for 18 months or 8 000 jobs for five years, unpleasant decisions do become easier to take.”

   Management restructuring towards the end of the year is expected to provide greater focus, Murray says. The wholly-owned South African operations have been re-grouped under one management team, the 40%-owned Crown and ERPM operations under another and the Australasian interests and growth-through-acquisitions initiative under a third.

    Murray was – and remains – unrepentant about the flack the company took on its decision to buy back its hedge book.

    “We’re a niche player,” he says. “We have a strong reserve and resource position that gives our shareholders share price upside in a strengthening spot gold price scenario but our hedge book detracted from the full value of this.”

    In terms of buying back the hedge book, he says, the company’s timing could not have been better; it coincided almost precisely with the marked rally in the spot gold price beyond the US$300 psychological barrier.

    “The US$120 million opportunity cost caused some of our critics to cringe but we saw our market capitalisation increase from US$177 million to US$464 million in a 24-month timeframe.”

    Another smart move during the year, in Murray’s view, was the company’s decision to raise the capital it needs for its Project Boost growth initiative via a convertible bond issue.

    “Pure debt would not have been an option. Without a strong balance sheet and with banks so notoriously risk-averse, we would have been forced to re-instate our hedge book which we had just diligently eliminated.

    “An equity issue would have meant dilution and our shareholders would have taken a bath as we would have had to issue those shares at a discount to the prevailing share price.

    “The convertible bond issue meant we could raise the required debt without the hedge, with no additional dilution and at a conversion price 20% greater than the prevailing share price.”