JOHANNESBURG- Gold producer DRDGold said on Wednesday that it had lost around 49kg of gold production in the first half of 2019 financial year as a direct consequence of power supply disruptions.
DRDGold chief executive Niël Pretorius said that while the company avoided the labour- and safety-related issues impacting other producers, it was not spared the challenges of distressed power utility Eskom.
Pretorius was reporting on the operating and financial results for the six months ended December 31, 2018.
Although the results showed that first phase of the new Far West Gold Recoveries (FWGR) project got off to a "flying start" during the six months, overall gold production was down three percent at 2,280kg.
At FWGR, where commissioning began early in December 2018 just four months from the start of construction, throughput was 140,000 tonnes.
But at Ergo throughput was down three percent due to power outages experienced during the second quarter.
Ergo’s lower throughput was a consequence mainly of major power interruptions experienced over 11 days during the second quarter caused by a fire at an Eskom sub-station, a lightning strike on the Brakpan tailings complex transformer yard, and loadshedding by the City of Joburg.
"Sadly, the once mighty Eskom is now Ergo’s single biggest risk factor," the company said in its results statement.
Pretorius said internal back-up generation capacity assisted in getting production going immediately after power was restored, containing losses to an extent.
While a higher rand gold price received helped to offset the impact of lower gold production and sales, resulting in total revenue being virtually unchanged at R1.25 billion, total cash operating costs were nine percent higher at R1.16 billion, leaving operating profit 54 percent down at R102.2 million.
Looking ahead, Pretorius said all indications are that FWGR Phase 1 will be fully commissioned during the first half of calendar 2019 with the benefit of its contribution showing in the second half of the financial year.
The group's guidance for 2019 financial year has been revised to between 157,000 and 165,000 ounces, at a cash operating cost of approximately R500,000/kg.
- African News Agency (ANA)