DRDGold details tailing facility setback as it posts its interims
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DRDGold, which mines gold dumps around Johannesburg, said yesterday it had opted to upgrade its Driefontein 2 mine instead of building a R1bn tailing facility as part of the expansion of its Far West Gold Recoveries (FWGR) near Carletonville. Photo: Supplied
DRDGOLD, which mines gold dumps around Johannesburg, said yesterday it had opted to upgrade its Driefontein 2 mine instead of building a R1bn tailing facility as part of the expansion of its Far West Gold Recoveries (FWGR) near Carletonville.
It made this decision to upgrade its existing infrastructure after the Department of Water and Sanitation rejected its technical proposal for tailings facilities without composite linings.
DRDGold chief executive Nïel Pretorius said: “We are reluctant to build a tailings storage facility (TSF) of this magnitude on a composite liner, for reasons based both on safety and efficiency, and have started a regulatory process to amend the licence conditions of the existing design.
“Pending this, we are now investigating the feasibility of an interim phase at considerably reduced capital expenditure, extend and consolidate existing deposition capacity and upgrade our existing Driefontein 2 plant to 1 million tons per month, doubling its current volume capacity,” he said.
The proposed tailing facility the company had planned would have allowed DRDGold to receive more than 800 million tons of displaced mine waste over its operating lifespan.
“Although this is far more than our 250 million ton resource, it has been designed to receive most of the tailings deposited in the region, most of which are built over dolomitic structures,” he said.
Pretorius was commenting as the mining firm posted its half-year results ended December 202.
Gold production decreased by 3 percent to 2 886kg, with the average basket price received during the period falling 13 percent to R863 108 per kg.
DRDGold’s profit fell 47.7 percent to R495.9 million in the reporting period, as the company halved its interim dividend to 20c, about a R173m payout.
This as it reported an operating cost increase of 11 percent, amounting to R1.68bn.
Pretorius said DRDGold was pleased to report a strong finish, attributable mainly to an increase in gold recoveries and a higher average gold price compared to the first three months of the period.
“These contributed to headline earnings per share of 58.0 cents and free cash inflow of R406.9 million for the half-year,” he said.
Pretorius said both DRDGold subsidiaries Far West Gold Recoveries and Ergo had steady performances.
“Steady performances resulted in gold production exceeding forecasts by just over 5 980 ounces, softening the impact of the depletion of higher-grade reserves at Ergo and setting the business up favourably to achieve full-year production guidance.”
The company said it remained free of bank debt from December 31, 2021.
In a bid to reduce its carbon footprint, as well as address the uncertainty of the supply and cost of electricity, DRDGold had decided to construct a solar power plant and a power storage facility at Ergo.
“The board has approved the capital expenditure for the first phase, comprising an upgrade to the existing supply line to the Brakpan/Withok Tailings Storage Facility to an 88KVA line, the construction of an initial 20MW PV plant and 10 power storage facilities of 10MW each.”
Umthombo Wealth Equity and ESG analyst Sandile Magagula said DRDGold seemed to be coming from a higher base looking at 2020. However, the results were disappointing from an operations perspective looking at the grades and cost inflation, way higher than peers and current inflation.
In later afternoon trade the share was up 1.4 percent at R12.35.
dieketseng.maleke@inl.co.za
BUSINESS REPORT ONLINE