In the media
Ergo increases production and grows further
26 April 2012
DRDGOLD Limited has reported a 3% increase in gold production to 34 947oz from its newly consolidated Ergo and Crown surface retreatment operations for the quarter ended 31 March 2012. This has resulted in an operating profit of R162.2 million.
Revealing this in a statement released here, DRDGOLD also emphasised that Ergo’s cash operating costs had been contained to a 1% increase at R267,044/kg.
CEO Niël Pretorius says Ergo’s improved production performance is particularly pleasing as it was achieved notwithstanding various ongoing, potentially disruptive events – completion of the 50km Crown/Ergo pipeline; upgrading of Ergo’s Brakpan plant; de-commissioning of two reclamation sites and commissioning of two new sites; and the phasing out of production at both the Crown and City Deep plants.
He points out that the R300 million capital investment in the Crown/Ergo pipeline to consolidate the Ergo and Crown operations was achieved without any dilution to shareholders.
“In fact, we repurchased 5.4 million shares on the open market during February and March 2012, which we hold in treasury to offset the potential dilution of employees exercising share options,” Pretorius adds.
Looking ahead to the next chapter of Ergo’s growth and development, Pretorius says construction has begun on a R250 million flotation/fine-grind circuit at the Brakpan plant, which is expected to increase gold production by 16 to 20%.
“We ended the quarter with cash and cash equivalents of R379.8 million and therefore believe we can also implement this project without any dilution to shareholders,” he adds.
The flotation/fine-grind 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 says, assuming production of 11tpm and a uranium spot price of US$50/lb.
A feasibility study is under way to verify these assumptions and, among other things, the estimated capital cost of R150 million.