Niël Pretorius, CEO, DRDGOLD (SA)
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DRDGOLD loses $10m worth of gold
Allan Seccombe
Posted: Wed, 05 Dec 2007

[miningmx.com] -- DRDGOLD will shed R70m ($10m) worth of gold output or 13,374 oz of metal in the December quarter because of a broken winder at its ERPM mine and a temporary shut down of its Blyvoor mine in South Africa due to a fatal accident, the company said on Wednesday.

A winder used to move workers underground at ERPM burnt out during the weekend and DRDGOLD has decided to send workers at lower-grade areas home to focus its remaining workforce on higher grade areas.

It will use a materials winder to hoist workers into the mine. This will reduce ore haulage to 400 tonnes a day from the normal 900 tonnes.
This is very disappointing
A small surface stockpile of ore to see the mine through the year-end holidays will now be put through the plant, said Niel Pretorius, CEO of DRDGOLD’s South African operations.

It will take 10 days to repair the winder and return ore haulage to 900 tonnes/day.

This incident together with the loss of seven shifts when the Department of Minerals and Energy temporarily closed the Blyvooruitzicht mine after a fatality there during the quarter will reduce gold output by 15% during the December quarter compared to the 89,157 oz in the September quarter, Pretorius said.

At current prices of $794/oz and an exchange rate of R6.77/dollar, the 13,374 ounces of lost output is worth about R72m.

The ERPM incident will play hell with the total underground cash cost at the mine, which were R154,824/kg in the September quarter because of the lost output.

There is no way to make up the lost production in the group, Pretorius said. “These mines are running at full capacity, so we’ll never really catch up. You just hope you can go into normal production at some point in time.”

The sharp reduction in the December quarter output forecast and the impact on costs comes as a blow to the company, which has undergone an extremely difficult patch in recent years.

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It has shed its Australasian assets and turned its focus to its three South African operations, which include the Crown tailings treatment business.

Production at the South Africa underground operations in the September period was up 11% quarter-on-quarter and costs down a percent.

“We were seeing stability coming from the underground operations. This is very disappointing,” Pretorius said. “The December quarter is traditionally a bad one because of the Christmas break, but now it’s been aggravated by the lost shifts and diminished capacity for 10 days.”

DRDGOLD was unaffected by the industry-wide strike called by the 240,000-strong National Union of Mineworkers to protest the poor safety record on South Africa’s mines.

The JSE-listed shares ended the session down 1.3% on small volumes at R5.45 each. On NASDAQ the shares were up a percent.