South-east vertical
shaft headgear at
DRDGOLD’s ailing
ERPM mine
 
Johannesburg, South Africa — MININGREVIEW.COM — 09 May 2008 – DRDGOLD Limited – a medium-sized gold producer with operations and exploration activities in South Africa – reported a 199% increase in cash operating profit to R142.2 million for the quarter ended 31 March 2008, reflecting a 32% increase in the average gold price received to R228 836/kg.

A media release issued here this morning pointed out, however, that gold production was 9% lower at 70 378oz, due both to the negative impact of power utility Eskom’s power cuts at the underground operations in January, and to a significant drop in underground grade at ERPM.

Cash operating unit costs increased by 2% to R162 806/kg.

CEO John Sayers said it was estimated that, had it not been for the power cuts, the company’s operations would have produced an additional 3 000oz. “For so long as South Africa’s current power dilemma continues, it will be difficult to anticipate operational performance going forward,” he said.

“However, provided that Eskom is able to continue to supply power at 95% of its previous level, and to continue to give notice of impending cuts, we remain optimistic that – all other operational factors remaining stable – we will be able to maintain current production levels,” Sayers continued.

He said the decline in underground grade at ERPM was “an unfortunate reversal,” but the pattern of declining production and rising costs over a number of quarters could not be allowed to continue.

“Management anticipates a re-organisation and re-sizing of ERPM’s underground operations,” Sayers added, “and as a consequence, has entered into a 60-day, facilitated process of formal consultation with representative unions, as required by the Labour Relations Act.”

He said that, while it was fortuitous that the power and ERPM situations came at a time of gold price buoyancy, “we are conscious that we cannot fall into complacency, and that our drive to return our operations to sustainable stability must continue apace. Further, we must continue to pursue growth in terms of both our various brownfields underground projects and surface retreatment”.

Regarding Crown Gold Recoveries’ application for a mining licence to mine the Top Star dump, south of Johannesburg’s Central Business District, Sayers said: “In our view we have complied with all of the requirements…. We enquire weekly regarding the progress of our application, and still await a positive response from the Department of Minerals and Energy.”

Referring to the Ergo JV with Mintails, Sayers said, Phase 1 refurbishment of the Brakpan plant was on track, the site establishment plan for recovery of the Benoni dump had been finalised, preparations for the installation of the necessary pipelines had begun, and the rehabilitation contract for the Brakpan tailings facility had been awarded.

“In respect of Ergo Phase 2, a specialist process engineer has been appointed in an overseeing capacity, consultants have been appointed to conduct uranium and sulphuric acid feasibility studies, and dump evaluation continues,” he concluded.