The troubled deep-level ERPM gold mine was “very close” to break even after eliminating water pumping costs and laying off 239 people, DRDGold CEO-designate Niel Pretorius said on Thursday.

Pretorius said that the age-old Boksburg gold mine had succeeded in a government-backed water-plugging project that would save the company R49-million a year.

ERPM had succeeded in isolating its orebody from the rest of the Central Rand Basin in the last quarter, after bearing water-pumping costs since its inception.

But ERPM now no longer needed to pump underground water, which represented a saving of some R2-million a month, on top of a similar monthly saving on reduced wages.

The DRDGold company would not abandon its pumping infrastructure altogether, however, as nearby Ergo, which DRDGold’s Crown would begin turning to account from October, wanted ERPM water for its own future use.

As ERPM had been reluctant to flood its neighbouring mines further upstream, which were investing capital in orebody development, it had come to an interim cost-sharing arrangement with “various interested parties” while thrashing out a permanent agreement.

The neighbouring mining companies involved included Central Rand Gold, which was about to resume mining under Johannesburg, the Australian-owned West Wits, which had taken over the old Durban Deep workings, and Ergo.

DRDGold was currently also participating in an offshore-funded structure that would treat West Rand mine water for on-sale to bulk users.

Government, which last year contributed R12-million to ERPM’s water-pumping costs, also contributed towards its water-plugging costs, while the cost of laying off 239 had amounted to more than R5-million.

The R4-million-a-month cost reduction had placed ERPM “very close to breakeven after capex”, which would be allowed to persist while the company completed a study into the economic feasibility of the East Decline Project, which had the potential to revive the ERPM to the level of its associate mine, DRDGold’s Blyvoor on the West Rand, which was doing well.

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