DRDGold publicly threw open its doors on Tuesday to all parties that had gold tailings to either sell them or enter joint ventures to exploit these assets, positioning the tailings retreatment specialist for growth.
In a market in which gold producers are protecting balance sheets or looking abroad for growth, the opportunity appears ripe for DRDGold to flag itself as the partner of choice to reprocess tailings, generating revenue and clearing up environmental liabilities.
“We could be a realistic and attractive joint venture partner to put up infrastructure and manage technology, or to be a buyer of tailing assets that are no longer core, considering most South African gold mining companies are looking elsewhere to grow their footprint,” said DRDGold CEO Niel Pretorius.
“We don’t have the same risks in our business that are typical of deep-level mining in SA, so the things that scare other people away from SA and invest capital here don’t really apply to us,” said Pretorius.
“It could be an opportunity for assets that are attractive in our environment and not core for other companies to unlock some value,” he said.
DRDGold declared a 5c per share final dividend despite experiencing a difficult year as it grappled with rehabilitation of an old site and moved its reclamation operations closer to its Ergo processing plant.
DRDGold, which processes old gold tailings dumps to extract residual gold, reported profit of R13.7m for the year to end-June compared with profit of R61.9m a year earlier.
Gold sales fell 4%, to 137,211oz for the year as grades of processed material dropped by 5%, partly because of the high water content diluting the feedstock coming from the rehabilitated Crown site.
The all-in sustaining costs increased 6%, to R530,930/kg compared to a received gold price of R548,268/kg, which was almost unchanged from the average price a year earlier.
Looking ahead, the company said it expected to produce 138,000oz to 145,000oz of gold during its 2018 financial year at a cost of about R480,000/kg.
By switching its focus to the east and central dumps near Johannesburg, bringing operations closer to its Ergo processing plant, DRDGold will move two mills from the western operations to the plant.
That will give it the ability to process gold-bearing sand dumps that have a higher gold grade on average than other tailings material.
DRDGold is buying about 100,000 tonnes a month of sand material, which has up to 0.8g of gold a tonne compared with the 0.3g/tonne average it extracts from its own material.
With the mills installed by June 2018, the company can process more of this material, which Pretorius said would provide “many years” of supply.