In the media

DRDGOLD to sell majority stake in its Blyvoor mine

[miningweekly.com] -- South African gold-miner DRDGOLD on Tuesday said that it would sell a majority stake in its Blyvoor operation near Carletonville, where production fell by 6% in the March quarter.

JOHANNESBURG - South African gold-miner DRDGOLD on Tuesday said that it would sell a majority stake in its Blyvoor operation near Carletonville, where production fell by 6% in the March quarter.

The Blyvoor mine produced 30 511 oz of gold in the three months, while costs rose to R279 929/kg and cash operating profit fell to R25-million, primarily reflecting lower production from the underground operation.

DRDGOLD said in a statement that the lower production and higher costs were mainly owing to the time taken by the company to reestablish safety and environment standards following the two-week Christmas break, safety precautions taken to manage increased seismicity during March and a one-day shut-down in memory of eight workers who died in a bus accident on March 18.

Investigations into the cause of the accident, in which 26 others were injured, are still ongoing.

CEO Niël Pretorius said that Blyvoor no longer fitted into DRDGOLD’s core strategic focus and that its majority shareholding in Blyvoor should be offered for sale.

The JSE-listed miner had appointed Royal Bank of Canada and Beijing Axis to advise it on the disposal of the Blyvoor interest.

The group’s top performer for the reporting quarter was the Ergo surface retreatment operation which increased gold production by 8% to 12 506 oz and reduced cash operating costs by 6% to deliver a 40% increase in cash operating profit to R48,5-million.

At the group’s other surface retreatment-only operation, Crown, gold production was lower as recovery of the Top Star dump in Johannesburg started to wind down, costs were higher and cash operating profit lower.

Pretorius said that decommissioning of the Top Star site would begin in the coming months, with reclamation starting from two other sites.

Overall, lower production and higher costs reduced operating profit by 4% to R145,1-million.

However, the Ergo, Crown and Blyvoor surface operations collectively delivered a 37% margin for the quarter.

This, together with lower taxation and a 3% increase in average rand-gold prices, resulted in DRDGOLD reporting a 42% increase in net profit to R59,1-million and a 44% increase in headline earnings a share to 12,5c for the quarter ended 31 March 2011.

Pretorius said that DRDGOLD’s focus would remain on the construction of the Crown/Ergo pipeline and the Ergo plant upgrade.

Further work on the integration of the Crown Central and City Deep plants into Ergo would also get under way.

The group had also approved R37-million for a three-year exploration project at its East Rand Proprietary Mines properties to further define the estimated 18-million ounces resource.