DRDGOLD has delayed plans to build a massive R1bn tailings facility as part of the expansion of its Far West Gold Recoveries (FWGR) opting instead to build a lower capex interim facility using existing infrastructure at Driefontein 2 mine.
This was after the Department of Water and Sanitation rejected its technical proposal for tailings facilities without composite linings. “I am convinced a lining would fail over time, be it 15 or 20 years,” said Nïel Pretorius, CEO of DRDGOLD.
DRDGOLD’s solution is to use a sophisticated system of drainage at the proposed dam, balancing pressures between surface water and the stacks of sand. The sand is the waste that comes from DRDGOLD’s remining of surface ore to extract gold.
Pretorius said the department has opposed DRDGOLD’s proposal because it fell outside of its licensing regime, but he added that government was also sticking to a philosophical line that had most likely frustrated other ore retreatment companies in South Africa.
Construction of interim facilities at Driefontein 2 would allow DRDGOLD to upgrade throughput at FWGR to one million tons monthly as originally planned in its second phase expansion – representing a doubling in throughput – for a five to eight year period.
This would give DRDGOLD enough time to have its plans for the new tailings facility pursued through a tribunal or – failing an outcome – to take the matter through the courts, said Pretorius.
“There is no room for dynamic or scientifice thinking at the department,” said Pretorius of the Department of Water and Sanitation. “It is not even considering our proposal. When we get them together for a meeting, it’s for them to say ‘no’.”
The proposed tailings facility would have a capacity of 800 million tons, far in excess of the 250 million ton resource at FWGR. This was to cater for regional demand as it was necessary to move other tailings facilities off their current location which was over dolomitic structures that host caverns where water supply is pooled.
Pretorius was commenting following the publication of DRDGOLD’s half year results ended December in which the company posted a 48% decline in headline earnings to 58 South African cents per share (2021: 111c/share). The year-on-year deterioration in earnings was a result of a lower gold price and “exceptional production and gold prices” in the previous six month period, said Pretorius.
DRDGOLD subsequently halved the dividend year-on-year to 20c/share. The company ended the interim period with cash of R2.24bn after paying a R345.5m final dividend in September.
DRDGOLD also announced that it would press ahead with the construction of a solar power plant and power storage facility at its Ergo operations, east of Johannesburg. Pretorius was hesitant to disclose the capital required but said the construction of the supply line upgrade could be funded directly by DRDGOLD.
“We can’t get the solar plant installed quickly enough,” said Pretorius who added that electricity tariff inflation was dispropotionate with all other cost inflation