In the media
DRDGOLD shares up as Ergo shines
26 April 2012
[Miningmx.com] -- THE consolidated Ergo surface operations has put in a strong performance for DRDGOLD during the first quarter for 2012, with promises of further upside as construction on another project starts.
DRDGOLD on Thursday posted a 3% increase in gold production for the March-quarter, resulting in an operating profit of R162.2m. It spent R41.2m on capital, the last for the consolidation of Ergo and Crown.
Cash operating costs came in 1% higher at R267,044/kg.
Over the past 12 months the company constructed a 50km pipeline as part of a R300m capital project which linked the Crown operations in Roodepoort to Ergo in the East Rand. It also upgraded the capacity of Ergo to receive a total of 1.8 million tonnes (Mt) of material a month.
It decommissioned two reclamation sites, commissioned two new sites and phased out production at both the Crown Central and City Deep Plants.
“In the past, we’ve experienced volatilities in recoveries and production every time we have begun work on a new mine dump,” said CEO Niel Pretorius.
“In the mega-volume environment in which we operate, we have learned that, in spite of thorough test-work, throughput results are the most critical measure,” adding that the increase in production was for this reason much more pleasing.
The company has now started construction of a R250m flotation/find-grind circuit at the Brakpan plant, a project expected to increase gold production by 16% to 20%.
“We ended the quarter with cash and cash equivalents of R379.8m and therefore believe we can also implement this project without any dilution to shareholders,” he said. This new circuit may also bring uranium recovery within Ergo’s reach and effect a by-product credit reduction in gold production costs of between 5% and 8%, Pretorius said, assuming production of 11 tonnes per year and a uranium spot price of $50/lb.
A feasibility study is under way to verify these assumptions and the estimated capital cost of R150m.
Pretorius said two conditions remained outstanding before the sale of Blyvoor to Village Main Reef was finalised.
These involved the approval of the transaction by the Competition Commission and finalising the terms of the acquisition of a portion of Savuka from AngloGold Ashanti.
“While it is not possible to predict how the Competition Commission process will develop, we can confirm that the filing does not contain anything controversial or out of the ordinary,” said Pretorius.
“In addition, our discussions with AngloGold and Village have been encouraging. I am comfortable reporting that it is highly likely that we will have completed this condition by the due date of May 30, 2012.”
DRDGOLD’s shares closed 3.74% higher on Thursday at R5.27.