The century-old deep level gold mine located on the Witwatersrand Basin at Boksburg – East Rand Proprietary Mines (ERPM) – has been managed by Durban Roodepoort Deep (DRD) since it was purchased by Crown Gold Recoveries (CGR), held 60% by Khumo Bathong Holdings (KBH) and 40% by DRD, in November 2002.

    As the driving force behind DRD’s empowerment arm – KBH – CGR treats surface assets, known collectively as Crown Central. For CGR, the year under review was dominated by the purchase of the entity by KBH. Throughout this period, CGR has put in a solid performance, with improvements in gold production, from 4 312 kilograms (138 634 ounces) during FY2002 to 4 389 kilograms (141 109 ounces) in FY2003. Working profit after capex rose by 14%, despite an increase in working cost of 16%. Costs were severely influenced by the depreciation of the Rand.

    Explains Grant Dempsey, divisional director: Crown JV, “For ERPM, the period under review can only be described as 'challenging'. Not only was the mine’s ownership and management team changed in October 2002, but the operation experienced labour unrest in the form of the Cosatu strike in October 2002 and an underground fire which continued for over a month in February 2003. Despite total production losses of around 130 kilograms (4 180 ounces) of gold and a total cost to the company of R15 million (US$1.83 million) after the fire, a return to steady state production was achieved ahead of schedule in June 2003.”

    With a purchase price tag of R100 million, ERPM was anticipated to provide a particularly cheap source of new gold for DRD, with costs of $12 per reserve ounce and $3 per resource ounce. And admittedly, there have been many challenges in achieving, let alone maintaining, these. As one of the oldest operating mines in South Africa (production started in 1891), it is also one of the deepest at some 3 000 metres below surface.

    Currently the only mine pumping the West Wits Basin, ERPM is burdened with high pumping costs – a direct result of pumping old, defunct mines. Combine that with the high maintenance costs associated with old shaft infrastructure and economically challenging times on a global scale and it isn’t surprising ERPM has been struggling over the last decade to survive (the company was liquidated by the previous owners in 1999).

    Says Dempsey, “But kudos must be given where kudos is due. ERPM has been – and is – doing everything in its power to not only survive but deliver on the performance it is capable of.” With its actively involved empowerment partner – KBH – CGR saw the potential that ERPM had to offer, namely:

	A substantial ore reserve;
	Plenty of gold in situ;
	The fact that DRD’s Argonaut reserve is only accessible from ERPM; and
	The opportunity to purchase contiguous ground on ERPM’s western perimeter which represents further sound reserves.

    “Much of this potential is already being realised. The company has made major inroads with regard to cost control and productivity improvements,” adds Dempsey. Where previous productivity statistics revealed an average of around 10 tons per total employee costed (tec), current levels are in the region of 18 tons per tec. These improvements are largely the result of the right sizing process earlier in 2003, which saw a 38% reduction in the labour force. Understandably, infrastructure upgrades further contributed to the improvements aimed at sustaining production at ERPM.

    In an effort to meet scorecard criteria, ERPM is actively seeking to employ previously disadvantaged members of society; currently the mine employs two women with blasting certificates and a full programme intended to develop historically disadvantaged South Africans (HDSAs) within various disciplines including geology, engineering, and communication and environment, is currently being developed.

    Of utmost importance are the surface synergies which exist between CGR and ERPM. The Cason Dump is a case in point. Bringing its reprocessing expertise to the table, and the sharing of management functions, CGR can assist ERPM in turning the Cason Dump to account.

    On the topic of management, a new team has been specifically chosen to turn the ERPM operation around, with the back-up and support of an experienced group of mentors at DRD.

    Going forward, the primary focus will be on maintaining production such that sustainable profits become a reality. But the management team realises that to do this it will need a focused, integrated and motivated workforce, and surrounding communities that want to work with rather than against the mine.