Dineo Faku

DRDGold planned to invest in technology, consolidate two of its biggest tailings facilities and begin drilling at its exploration project on the East Rand, South Africa’s fourth-largest producer of gold said yesterday.

As a result of the higher rand gold prices in DRDGold’s second quarter to December, headline earnings a share increased by 65 percent quarter on quarter to 33c, and net profit nearly doubled to R165.1 million, of which R92m came from Blyvooruitzicht, which has since been sold.

Gold producers benefited as prices of the precious metal increased in 2010 and last year, driven by global demand as investors sought a safe haven in uncertain world markets. A further benefit for local producers was a decline in the rand late last year, which saw the average rand gold price rise 11 percent in the fourth quarter.

Yesterday Niël Pretorius, the chief executive at JSE- and New York Stock Exchange-listed DRDGold, said the company would pump R250m into refurbishing the Ergo flotation plant and constructing a fine grinding circuit.

The circuit will be incorporated into the Ergo mine in Brakpan, and will increase gold production by between 16 percent and 20 percent.

Pretorius said that DRDGold would link its Crown and Ergo mines over the next few months.

The company aims to grow its 11 million ounce surface resource and extend the life of the mine at Ergo.

“If we had to build a plant, capital would not be approved. The high quality dump resources are mined out, and we aim to make profit and generate revenue from our resources in this project,” Pretorius said.

DRDGold plans to invest R19m for drilling at ERPM Extension 1 and 2 exploration project on the East Rand. A report on the project is expected at the end of the month.

DRDGold has shifted from deep level mining, and is focusing on the treatment of tailings. The company has agreed to sell its 74 percent stake in Blyvooruitzicht in the North West for R150m in shares in Village Main Reef.

The jobs of up to 1 800 employees are at stake. The company is awaiting approval from the competition authorities and the Department of Mineral Resources for the sale.

DRDGold is conducting an exploration on 25 000ha of land in Zimbabwe.

DRDGold lost 3.51 percent to close at R5.50 yesterday.