DRDGold wants to join forces with other gold mining companies to the west of Johannesburg to construct a vast tailings retreatment and area clean-up.
CEO Niël Pretorius, whose company is embarking on a R300m first phase of a tailings processing project, said on Wednesday the creation of a mega tailings retreatment facility would bring cost and environmental benefits to the historical mining area.
DRDGold counts Sibanye-Stillwater as a 38% shareholder after the gold and platinum group metals miner folded gold-bearing tailings into the retreatment specialist, giving DRDGold’s reserves an 82% boost to nearly 6-million ounces and opening a new operating area that could be the start of the consolidation of mine dumps west of Johannesburg.
While Pretorius conceded he had yet to talk to Harmony Gold and AngloGold Ashanti about his vision, he sees the retreatment plan for millions of tons of old dumps near Carletonville as the catalyst that could spark a clean-up of old dumps sited on porous dolomitic rock that lead to contaminated ground water.
DRDGold has access to an enormous tailings deposition facility on competent rock that can take all the material it acquired from Sibanye, plus that company’s uranium and gold-bearing dumps that did not form part of the deal as well as dumps held by other companies, Pretorius said.
The first phase, which will process up to 600,000 tons a month, will deliver gold from June 2019, adding up to 120kg or 3,800oz of gold a month to DRDGold, which will spend the next two years studying a much larger plant capable of processing 1.2-million tons a month.
"It’s going to cost a lot of money. It’s a big plant. We will want to look around a bit and see if we can hold hands with other operators with equally large reserves and resources," Pretorius said, adding those talks would happen during the next 24 months.
DRDGold reported operating profit for the year to end-June rising 38% to R355m from the previous year, with revenue increasing 6% to R2.49bn.
Post-tax profit, however, fell to R6.5m from R13.7m on higher tax payments. Pretax profit was R32.4m from a loss of R37m the year before. Gold output for the year was 10% higher at 150,423oz at an all-in sustaining cost of R505,622/kg against a received price of R534,344/kg.
DRDGold has put in place forward gold sales or a hedge book to secure the loan in case of a fall in the rand gold price.
It has locked in sales of 50,000oz of gold at prices between R565,000/kg and R609,000/kg for nine months.
Meanwhile, the legal battle with Ekurhuleni continues, with an application against the tariff imposed by the municipality on Eskom-supplied electricity to DRDGold’s Ergo plant expected to be heard in December 2018.
The dispute started in 2014 when DRDGold objected to a 40% levy the Ekurhuleni municipality slapped on the company’s electricity charges and it wanted a refund of the excess charges it had already paid.
Pretorius said Ergo’s legal team was "confident about the prospects of success" because they would "demonstrate that the municipality does not supply electricity to Ergo or in any manner add value to Eskom’s supply of electricity to Ergo".