JOHANNESBURG (miningweekly.com) – JSE-listed gold-miner DRDGold was likely to produce its first gold at the Ergo joint-venture (JV) project, on the East Rand, by the end of February, six months ahead of schedule, CEO Niel Pretorius said on Friday.

He reported that the Brakpan plant would treat ore from the Benoni tailings dam, while the company’s Elsburg tailings complex was likely to be commissioned by May.

The Elsburg project was likely to be in full production by the first quarter of the next financial year, which was just after July.

Pretorius told a results presentation, in Johannesburg, that the company was pleased with the progress achieved on Phase 1 of the Ergo JV project, in which Australia’s Mintails owned a 50% stake.

He said that the commissioning of the first carbon-in-leach (CIL) circuit at the Brakpan plant had begun on schedule, during December.

The acquisition of the 15-million ton Benoni tailings dam also gave DRDGold the opportunity to start production six months ahead of schedule.

The carbon treatment plant was nearing completion, and Pretorius stated that although the CIL plant could be accelerated to accommodate the early commissioning of the Benoni tailings dam, the same could not be said for the carbon treatment plan.

“I need to emphasise that the timing around this plant was coordinated and scheduled with the coming-on-line of the Elsberg tailings dam, and it was not coordinated with the Benoni tailings. The Benoni project accelerated the carbon-in-leach circuit, but not the carbon treatment plan.”

The project was set to achieve the planned 600 000 t/m throughput in April this year.

Ergo’s Phase 1 would treat up to 1,2-million tons a month at steady state production, and unit costs were averaged at about R23,24 /t. Pretorius stated on Friday that as Ergo was coming to fruition during this stage in the commodities cycle, the project would benefit from higher gold prices.

ELSBERG JV SALE

DRDGold in December announced that it would acquire Mintails’ remaining 35% stake in the Elsburg JV for R177-million, thereby getting full management control over the operation.

Pretorius said that full ownership of Elsburg would ensure that for the 12 years tailings life, DRDGold would be the only beneficiary of the revenue stream created by Elsburg.

At the time of the announcement, DRDGold said acquiring control over the Elsburg JV would accelerate the advancement of the project, and would allow for greater flexibility and optimisation of all dump retreatment operations by the group.

“During these times of steeply rising underground production costs, coupled with the safety concerns associated with deep-level mining, the acquisition of low-cost surface dump retreatment assets and operations in South Africa is seen as having significant strategic advantages to the DRDGold group.”.

The Elsburg venture was established in June 2007 as a 50:50 JV to process tailings on the East Rand to recover gold. In November 2007, the two companies formed the larger Ergo JV, which contains up to 1,7-billion tons of surface gold, uranium and sulphur bearing tailings from the East and Central Rand goldfields of South Africa.

In October 2008, DRDGold raised its stake in Elsburg to 65% by buying a 15% stake in the venture for R100-million.

At the time, Mintails granted DRDGold a conditional option to acquire a further 11,4% interest in the Elsburg JV. If this option was exercised first, the purchase price of R177-million would be reduced by some R23,8-million, to recognise funds already advanced under the option agreement.

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