don't have link for the DROOY news as i got it from my tradestation news feed. here's the contents of the bulletin:
DRD Q2 Hit By Output Wobble
RELATED SYMBOLS: (DROOY)
Apr 17, 2002 (Miningweb/All Africa Global Media via COMTEX) -- Durban
Roodepoort Deep [NASDAQ:DROOY] is set to report lower than expected earnings for
the March quarter following seismic events at Hartebeestfontein, a major
component of DRD's North West operations which accounted for 43 percent of the
company's output in the December quarter. Chief executive Mark Wellesley-Wood
said production problems were compounded by logistical difficulties associated
with opening up old parts of the company's mines, a decision motivated by the
stronger rand gold price.
One analyst said production problems at Hartebeestfontein could result in a 15
cents or 7 percent reduction in quarter-on-quarter share earnings. DRD reported
share earnings of 39.5 cents in the December quarter. DRD's share price was not
much influenced, however: it gained about 6 percent to trade at R42.20 during
the last hour on the Johannesburg Stock Exchange on Wednesday (17 April). This
was despite news that a fire had also broken out at the No 6 level in
Hartebeestfontein, one of the shafts being reopened.
Wellesley-Wood declined to specify the production loss ahead of the group's
results scheduled for April 25, but he said it was "unacceptably high". There
had been seismic movements and falls of ground related to rock mechanics which
had to be controlled properly, he said. Hartebeestfontein has sections that are
known for seismic activity owing to the relatively inelastic nature of the ore
body. Production problems were exacerbated by the reopening of the No 6 shaft
area: "We have new people in new working areas using new systems,"
Wellesley-Wood said.
These comments come amid the release of a safety strategy issued by DRD and
presented before South Africa's Minerals & Energy department. The report
identifies a lack of knowledge and inadequate supervision and leadership as key
elements of safety and production lapses. Communication, training, measurement
and discipline are four key focus points which DRD will hope will remedy its
underground production weaknesses.
DRD is also reopening a section of its Blyvooruitzicht mine, formerly known as
No 1 shaft at Doornfontein which has also become economic at the higher rand
gold price. In total, DRD had created 1,300 fresh jobs, including contractors,
in an attempt to realise a 20 to 25 percent increase in gold production during
the 2002/03 financial year. "What we are seeing are the problems related to
change management," he said.
The risks associated with reopening previously mothballed sections of South
Africa's gold operations would become an industry-wide problem, said
Wellesley-Wood. Gold Fields said earlier this week that it planned to reopen
parts of West Rand gold mines because they were now economic. The rand gold
price has doubled in the past two years as the dollar gold price has firmed, but
also because the rand, the South African currency, has depreciated heavily
against the US dollar. The rand gold price is currently standing at R107,000 per
kilogram.
DRD has scheduled a planning session this Friday (19 April) where it will decide
what additional sections of its mines can feasibly be opened.
by David Mckay
Copyright Miningweb. Distributed by All Africa Global Media(AllAfrica.com)
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KEYWORD: South Africa
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