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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (35851)	4/21/2009 2:08:01 PM
From: LoneClone	Respond to of 193348

DRDGOLD less risky by September '09 Allan Seccombe Posted: Mon, 20 Apr 2009 miningmx.com [miningmx.com] --DRDGOLD is ramping up gold output from surface and underground operations as it looks for project-level acquisitions to grow the company, an issue further down on its list of priorities. “We are not a one big-deal company. If something is for sale that fits a profile of making money or is close to making money that is not ultra-deep, or a company killer, like we used to own at Buffelsfontein, then we would look at buying it,” DRDGOLD CEO Niel Pretorius said. “We would look to grow our production by way of small, intelligent acquisitions, maybe at project level and not so much at corporate level,” he told Miningmx in a recent interview. However, acquisitions are not top of mind at the moment, with management preferring to focus on bringing its Ergo surface treatment operation into steady state production from September, keeping output disruptions at its Crown and City Deep operations at a minimum and working on ramping up tonnages from its Blyvoor mine. DRDGOLD’s output is drawn equally from surface and tailings operations. That will change when Ergo hits its stride, with two-thirds of the group’s gold coming from a cheaper, safer surface project. Ergo is forecast to produce 75,000 ounces/year at $550/oz. Crown produced 87,400 oz in financial 2008, at a cost of $553/oz. “With a larger percentage of ounces coming in below $600/oz, it will soften the impact of those months when underground costs spiral,” Pretorius said. “Not only that, but having more surface ounces significantly de-risks the company.” Management wants infrastructure in place to pump material from its Crown and City Deep projects once the deposition sites they are using are full. “What we want to look at once we achieve steady state production is how quickly we can link Central Rand to the far East Rand in order to perpetuate life of Crown and City Deep,” Pretorius said. “We're in the hands of the contractor there and it depends how nervous they get. We’ve enough time to finish Top Star, but that might change tomorrow,” he said. “We have enough deposition space on the East Rand to provide for Ergo and Central Rand,” he said. “I want to get running sooner rather than later on linking Central Rand to Ergo, because I don’t want to see an interruption to any of our production.” NO IMMEDIATE TAILINGS PURCHASES He ruled out any more immediate tailings purchases from other mining firms, citing the need for deposition space - something that is extremely difficult to secure - as the starting point for any growth in the dump re-treatment business. AngloGold Ashanti has tailings up for sale, but Pretorius said DRDGOLD was not in talks with the major. At Blyvoor, DRDGOLD’s sole operating underground asset, the company is slowly stepping up mining of the Main Reef as it increases tonnes, albeit at a slightly lower grade, over the next three years. Reef tonnes hauled to surface will rise to 90,000 tonnes/month from 60,000 tonnes. The grade from the Carbon Leader Reef is 5.2 grams/tonne, but forecast to drop to 4.8g/t. DRDGOLD has already included Main Reef in its mining mix, lifting it from a 70:30 ratio two or three years ago to 55:45 now. It is spending R1m/month out of cash flows to fund development of the Main Reef to reduce Blyvoor’s exposure to Five Shaft. “If Five Shaft stands, then Blyvoor doesn’t make money. If you have a larger area that you can mine it dilutes the negative impact of Five Shaft when it doesn’t produce,” Pretorius said. DRDGOLD did not secure any acceptable offers for its mothballed ERPM underground mine and will hold onto it. Its tailings will be fed into the Ergo plant over the next decade. “We’ve decided to hang onto ERPM for a while and see where the gold price goes. I don’t think we’ll ever re-commission it,” Pretorius said, adding that the cooling system needed a complete redesign and re-installation. Besides which, ERPM would only be viable if the contiguous Sallies 1 ground could be accessed, he said. The thinking was that Sallies 1 could be accessed by putting in a decline shaft from ERPM infrastructure. This decline would hit a 65 metre down-throw fault after five years, making the plan unworkable, he said. Sallies 1 needs its own shaft and at 2.5km deep, that will require a lot of money. “My view is that we keep the ERPM ore body alive and don’t compromise access. If the gold price shoots through the ceiling, we might dilute out a bit and get someone go out on risk on the capex to restart it,” said Pretorius.