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DRDGOLD to mine in Johannesburg Posted: Mon, 30 Jan 2006 [miningmx.com] -- DRDGOLD is considering mining in central Johannesburg where it hopes to recover about 4 tons of gold from a dump currently host to a drive-in cinema. DRDGOLD spokesman, Ilja Graulich, said the company had offered shares or cash, or a combination to AngloGold Ashanti, the owner of the ‘Top Star’ dump in Johannesburg environ, Selby. “We’re going through the motions now,” he said. “AngloGold has bought shares in companies before. But we can pay them cash if that’s what it wants.” Graulich declined to put an economic value on the resource estimated to contain about 5.1 million tons of material at an average grade of 0.78 grams/ton. DRDGOLD said earlier today that “... a non-binding letter of intent had been signed with AngloGold Ashanti”. A public participation process required to secure regulatory permission to mine in the inner city was also underway, it said. The ‘Top Star’ drive-in, more recently the venue for the launch of music broadcaster, MTV’s African channel, is situated on the gold discards of the closed City Deep mine. City Deep dates from when gold was first mined in Johannesburg in 1887. “It’s always been a marginal dump. But at the current gold price, you could probably get a profit,” said Nick Goodwin, a gold analyst for stockbroker T-Sec. Some 170 million tons of sand have so far been removed from the dumps around Johannesburg. According to Environment News Service, there are still 200 dumps yet to be rehabilitated to which Crown Gold Recoveries (GCR) has the rights to mine 70. DRDGOLD increased its interest in GCR, and another asset, the ERPM gold mine east of Johannesburg, last year raising its stake to 85% from 40%. In return, owner of the assets, Khumo Bathong, took a 15% stake in DRDGOLD. Retreatment of gold dumps has served DRDGOLD well in the past, but analysts were concerned at the decline in production from nearly all the company’s assets during the December quarter, the details of which were released to the market today (29 January). The company’s financial results will be reported in February. "Each (South African) mine has its own little growth project built into it," said Mark Wellesley-Wood, DRDGOLD CEO. Blyvoor's target has been set at 420kg per month underground from 313kg/month in the December quarter, which would be a 34% increase, he said, adding Top Star's grade is nearly double that being achieved at the Crown operations, which would give "a significant improvement to the Crown production profile." At ERPM, there was potential to expand into the Sallies Leases area, which would boost the life at one of the country's oldest mines. The March quarter should also be free of industrial action and infrastructure failures. "ERPM has come from nowhere. It doubled its ore reserves last year. It has the potential to do it again. It's gone from a very short-life mine to a seven-year life mine and could well reach double figures," he said. Steve Shepherd, an analyst for JP Morgan, said DRDGOLD’s decision to report 100% contributions from CGR and ERPM was unusual. “For what it is worth, we think the practice of showing 100% of production as attributable, when ownership is at 85%, to be questionable,” he said. ERPM showed a one third increase in gold output in the December quarter which including 40% ownership by DRDGOLD in October and November, and 100% ownership in December. “The reality is that ERPM production, on a like-for-like basis was down 9% at 26,460 oz,” Shepherd said.Free news alerts: click here to subscribe
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