JOHANNESBURG (miningweekly.com) – Gold tailings retreatment specialist DRDGold is set to report higher earnings on higher production that cocked a snook at the lower gold price in the six months to December 31.
Earnings a share are poised to be between 14.16c and 14.64c for the six months ended December 31, compared with 0.6c for the same period in its previous financial year.
Headline earnings a share are expected to be between 14.06c and 14.54c compared with a headline loss of 2.4c for the corresponding period of the previous financial year, the JSE-listed company said in a trading statement and production update released to Creamer Media’s Mining Weekly Online on Thursday.
The expected increase in earnings a share and headline earnings is due primarily to an 11% increase in gold produced despite a 4% decrease in the rand gold price received.
The company states that it is planning gold production from its operations of 147 000 oz to 153 000 oz at cash operating costs of R475 000/kg for the financial year ending June 30.
With DRDGold’s results due out on February 15, more information is likely on the company’s tailings partnership with Sibanye-Stillwater’s West Rand Tailings Retreatment Project (WRTRP).
The transaction involves Sibanye vending selected WRTRP surface processing assets and tailings storage facilities into DRDGold for a 38% slice of the JSE-listed surface mining company’s ordinary share capital.
Cash-flush DRDGold estimates the development of the WRTRP will require R2-billion in capital, a sum it is able to finance using cash and debt and which will not require it to go to the market to raise equity capital.
“This is dust that’s turned into gold, that’s turned into money, that flows into South Africa,” DRDGold CEO Niël Pretorius commented to Mining Weekly Online about the lucrative, world-leading gold recovery technology that his company has perfected.
The WRTRP is a large-scale, long-life surface tailings retreatment that will retreat material with a 35% higher gold content than the material treated by DRDGold at its flagship Ergo metallurgical plant on the East Rand, which, with the Knights plant in Germiston, is arguably the world’s largest gold surface tailings retreatment facility.
As Sibanye is not a company that holds minority stakes in other companies, it has an option to increase its ownership of DRDGold to 50.1% within 24 months, by acquiring additional shares at a 10% discount.
The deal, which commits DRDGold to develop the WRTRP in phases, virtually doubles DRDGold’s gold reserves, gives it immediate access to facilities that can generate cash for it in a matter of months, cuts overhead unit costs through increased production and puts an end to DRDGold’s single asset operating risk.
DRDGold will be responsible for bringing the West Rand project to fruition, with the capital raise posing no shareholder dilution threat.
The deal is about Sibanye establishing a relationship with the separately listed DRDGold to benefit from its well-honed skillsets that will be used to pursue tailings retreatment opportunities in gold and other commodities in South Africa and internationally.
“The sky’s the limit in global tailings retreatment,” Sibanye-Stillwater CEO Neal Froneman said of the gold dump recycling business at a media briefing in November.