[miningmx.com] – EXTRACTING gold from Johannesburg’s dumps is an exact science that makes DRDGold, one of the principal operators in this sliver of the South African mining market, more of a technology company than miner.
Take for instance the fact that retrieving an improved 0.26 to 0.29 grams per tonne of rock re-mined means the company can lock in reserves of 10 to 15 years where they previously didn’t exist when the yield was 0.18 grams per tonne.
These are tiny margins that mean DRDGold CEO, Niel Pretorius, has to make sure the company’s main processing plant in Brakpan, near the site of historic East Rand gold mining operations, runs without a hitch.
In order to improve efficiencies, the company embarked on a R650m technology programme in 2013 – a project that didn’t at first work out leading the company to suspend the new technology whilst it worked on what went wrong.
“In retrospect, we should have been more modular about installing the flotation fine-grind system. Instead, we commissioned everything in one flick of the switch, so when things went wrong, we couldn’t figure out where the problem was,” Pretorius said.
He acknowledged some complacency crept into the company’s practices after several years of successfully converting DRDGold to a surface re-miner from its traditional activity of deep, marginal, underground gold mining.
Now, however, the new fine-grind technology – essentially a circuit that allows DRDGold improved recoveries – is humming along pretty well, helping the company to a R38.7m headline profit for its 2015 financial year from R700,000 in the previous year.
The improved returns mean that the company could step back from a bid for new resources on the far West Rand of Johannesburg and focus on now mineable reserves “just beyond our garden gate’. Existing reserves are also extended owing to the improved recoveries.
For all these fine margins, however, DRDGold remains very much a gold stock; at least, that’s the way the market views the company as evidenced by the 28% decline in its share price from mid-July to mid-August which was in line with liquidations in other South African gold stocks in the same time period.
“The maket doesn’t think about the company in specifics as so much as the technical analysis about the sector,” said Pretorius. “It is caught up in the trend [about the gold market,” he said.
The operational turnaround of the past two years, however, has swayed Pretorius to put off resigning from the business.
He still harbours an ambition of returning to private practice as an advocate – he’s a qualified attorney – but for now he’s bound to DRDGold after signing a new three-year contract.
