GOLD producer DRDGOLD had concluded its purchase of the Top Star property in central Johannesburg, it said yesterday.
The landmark mine dump, which was the site of one of Johannesburg's last drive-ins, was sold by AngloGold Ashanti. The purchase price was not disclosed.
DRDGOLD plans to process the dump for gold, which was not extracted in the past, when it was uneconomic to do so. It is estimated to contain 5,1-million tons of material at an average grade of 0,78 grams a ton.
CE Mark Wellesley-Wood said last month that in the medium term, the group's subsidiary Crown Mines' future would depend on receiving approval for its application to mine the dump.
A company spokesman said details of the application were being finalised with the minerals and energy department.
The group's results for the year to June, released yesterday a month after management discussed the operational performance, showed that the revenue contribution from South African operations overtook that from the Australasian operations. This was partly because of improved production from the South African mines and a decline in production at Australasian mines and partly because of the restructuring of the group's holdings. It now owns 85% of DRDGOLD SA and 79% of Australian Stock Exchange-listed Emperor Mines.
Total revenue from continuing operations rose to R1,6bn from R1,15bn. DRDGOLD earned 62% of gold and silver revenue from SA and 38% from Australasia, against 37% from SA and 63% from Australasia last year. In the latest period, the South African operations returned to a cash operating profit from a loss last year while cash operating profits from Australasia halved.
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In Australasia, there was remedial work at the west wall of the Porgera Mine in Papua New Guinea, bad weather and underground flooding at Tolukuma in Papua New Guinea, and a planned shutdown at Vatukoula in Fiji as the mine was reorganised.
Bloomberg quoted Wellesley-Wood as saying yesterday the group planned to raise production by a third this year, with a 50% increase in Australasian operations and a 25% increase in SA.
The group increased its headline loss to 108,4c a share from last year's loss of 70c a share. It held R488,6m in cash at end-June against R241,2m a year ago.
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DeMerchant - Sunday, September 24, 2006, 4:23:51pm
GOLD producer DRDGold had potentially interested buyers lined up for its 20% stake in Porgera mine in Papua New Guinea and its Vatukoula mine in Fiji, CEO John Sayers said on a conference call yesterday.
DRDGold’s Australasian operations are held through its 78,7% stake in Australian-listed Emperor Mines. Emperor is considering restructuring options, including selling assets or finding a merger partner.
The group reported earlier this year that it had put Vatukoula on care and maintenance after a review showed mining was no longer economically viable. But its latest quarterly results also show production problems at Porgera and Tolukuma, also in Papua New Guinea.
However, analysts questioned why Porgera would be sold when it contributed significantly to DRDGold’s valuation, despite short-term problems. Sayers said the cheapest reserves and resources were those that were 100% owned. New opportunities had opened up in SA, DRDGold did not control cash flows at Porgera and, although it was a good asset, it would require heavy capex shortly for a deepening project on which DRDGold questioned whether it would earn an appropriate return.
The group’s attributable gold production fell 12% to 132125oz in the December quarter compared with the September quarter and cash operating costs rose 6% to $558/oz. The gold price received fell 1% to $617/oz.
The biggest contributor to the fall in production was Vatukoula, not only from the cessation of operations but also because of an earlier skip accident.
In SA, the Crown recovery operations improved output and Blyvoor maintained production but ERPM was affected by underground faulting, which reduced volumes and grade. Sayers said rumours that DRDGold might sell Blyvoor or put ERPM into liquidation were untrue. The South African operations were core to the group, he said.
DRDGold has received an exploration licence for the ERPM Extension 2 project, where there is believed to be between seven and 11-million ounces of gold resource, supporting a mine with a 15-year life.
The board had also approved spending R10,5m to reclaim the 3L2 slimes dam which would act as an interim measure while DRDGold waited for the outcome of its application to mine the Top Star dump in Johannesburg.
DRDGOLD, South Africa's fourth largest gold producer, said it would consolidate its share in order to continue trading on Nasdaq.
"We could extend the deadline given to us by Nasdaq but a share consolidation eliminates the problem," said John Sayers in an interview with Miningmx.
In January, Nasdaq gave DRDGOLD about 180 days to get its share trading above $1/share, the minimum level required by the US exchange. Although the deadline could always be extended, DRDGOLD said at the time clarity on its future strategy would bring investors back into the share price.
However, the sale of key assets in its 79%-held Emperor Mines Ltd, listed in Australia, did not improve the share price which is still around 81 US cents/share at the time of writing. DRDGOLD was trading at $1.15/share in December.
"We're the seventh most heavily traded share on Nasdaq so demand is there. But we'll go this route," Sayers said. No shareholder support is required for the share consolidation in which shareholders' shares are replaced with a smaller amount of shares but with a higher par value.
JOHANNESBURG, Oct 23 (Reuters) - DRDGOLD <DRDJ.J> has sold its majority stake in Emperor Mines Ltd <EMP.AX> to 26 institutional investors for 56 million Australian dollars ($50 million), it said on Tuesday.
South Africa's fourth-largest gold producer said it would use the cash to improve efficiency at its existing mines in South Africa, expand its surface treatment operations and develop its uranium and exploration potential.
The firm has previously said it wanted to refocus on its home operations after problems with mines abroad. After the sale of its 78.7 percent stake in Emperor it is now a purely South African player.
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