In the media

Ergo a winner for DRDGOLD

[miningmx] - DRDGOLD is focusing on gold production from the Ergo project near Springs, and has ruled out plans to expand into uranium because of current low prices for that commodity.

[miningmx.com] -- DRDGOLD is focusing on gold production from the Ergo project near Springs, and has ruled out plans to expand into uranium because of current low prices for that commodity.

The company announced on Tuesday it would invest R300m to build a 50km-long pipeline linking its Crown and City Deep surface operations to Ergo, and also to double treatment capacity at the Ergo plant.

These operations reclaim gold by recovering and retreating material from surface slimes dams situated across the East Rand. These consist of waste material from the operations of former underground gold mines in the region.

Despite the expansion of capacity at Ergo, the group’s overall gold production will stay largely unchanged because falling gold grades at Crown and City will offset the greater throughput of material treated.

The 600,000 tonne per month capacity pipeline will be completed by August next year. It will link the Crown and City Deep plants in the west with Ergo in the east.

DRDGOLD operations executive Charles Symons said the pipeline would keep the two plants in operation because it provided access to the Brakpan tailings deposition site south of Ergo.

The surface dump material the plants treat has to be deposited again at approved sites. The existing Nasrec deposition site near Soccer City used by the Crown and City Deep plants is rapidly being filled up.

Crown was forced to cut back on its production throughput from 2008 because of the rate at which the Nasrec site was being filled up.

“The biggest challenge in this business is finding somewhere to put the retreated material. Without access to Ergo’s tailings deposition facilities, both these plants would have been forced to close down,” Symons said.

He added the Ergo plant was now close to achieving its Phase One target throughput of 1.2 million tonnes per month (mt/month) and was producing gold at a cost of R198,000/kg, yielding a profit margin of close to R100,000/kg of gold produced.

While the plant was performing better on costs than expected, it had yet to achieve the forecast gold yield of 0.14g/t.

“We’re stuck at 0.1g/t and there’s still a bit of work to be done here,” Symons said.

Ergo was originally a joint venture with ASX-listed Mintails in which DRDGOLD was the junior partner. DRDGOLD built up its stake as Mintails got into financial difficulties, and eventually took full control of the project.

The original Ergo operation was set up by Anglo American in 1977 to recover gold, uranium and sulphuric acid and operated until 2005, during which time it produced 8.19m oz of gold.

The DRDGOLD/Mintails JV was set up to re-establish Ergo in 2007, and initial planning looked at refurbishing the former uranium plant as well as the gold plant.

Symons said that was no longer being considered, with current uranium prices sitting at around $45 per pound.

He said: “We calculated that we needed a uranium price of $113/lb to make it worth investing the capital to re-establish uranium operations at Ergo.

“We checked the uranium resource numbers and we checked the treatment system previously used by Anglo American, and concluded that Anglo had it right. We would have to use the same system and $113/lb was the number we came up with.

“Uranium is clearly not feasible for us at current prices, but it’s an option should uranium prices ever get that high in the future.”

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