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DRDGOLD eyes platinum as profit rises

29 August 2012

DRDGOLD is looking for opportunities to expand its gold reclamation business, with the possibility of venturing into platinum, the firm’s CEO Niël Pretorius said yesterday.

DRDGOLD generated strong cash flows in the financial year to end-June from its business, which apart from a final contribution from the Blyvoor underground mine sold to Village Main Reef, is focused on treating old mine dumps around Johannesburg.

It has R300m in cash. It also posted a 203% increase in net profit of R253m for the year ended June. DRDGOLD will produce about 140,000oz of gold a year at steady state.

Apart from completing the capital project to add a fine-grind and flotation circuit to its plant at Brakpan and a possible uranium plant, DRDGOLD is looking to begin harvesting its investments rather than spending on more projects, Mr Pretorius said.

"DRDGOLD has become a dividend play, a margin play. We are no longer a miner; we are really just refuse people.

"We find stuff that has been thrown away and we put it through the right technology and we make more money than most other mining companies in SA by doing that," Mr Pretorius said at a results presentation.

"There must be other products that we can access by doing the same thing," he said.

This could include other gold tailings as well as platinum-bearing tailings dumps.

Asked if DRDGOLD could look at a business similar to that of the UK’s Goldplat, which treats waste products, such as old mill liners and wood chips, from gold mines in SA and Ghana to extract gold, Mr Pretorius said this was not an immediate option because DRDGOLD specialised in handling large volumes of material.

"What we’d look at is a concentration of tailings anywhere that would justify capex, personnel and resources," he said. "This business is only five years old and it’s just getting to a steady state now so we’re in no hurry. We are looking at opportunities and more intelligent ways to re-treat and improving recoveries, and just making money for a while."

DRDGOLD’s Ergo plant is building up to treat 1.8-million tons of tailings material a month after the completion of a R350m upgrade of the facility. So far DRDGOLD has spent R40m on the fine-grind circuit and will spend R210m more in this financial year to the end of next June. Once the circuit is commissioned by next March and production ramps up to full production by the end of this month, it will make a decision on adding a uranium plant for R150m if the circuit works to plan.

The uranium circuit would generate a by-product credit that would lower the cost of producing gold by about 8%, he said.

Source: Business Day