Chief executive Mike Prinsloo said the cessation of joint-venture benefits with Randfontein after its hostile take-over by Harmony in January, coupled with the negative operational effects and additional pumping costs caused by the heaviest rains in memory, had necessitated the closure/mothballing of all marginal underground operations at Durban Deep and West Wits. The majority of retrenchments and other closure costs are reflected in the group's results for the March quarter.
The quarter also saw the Hartebeestfontein Mine's new mine plan implemented and restructuring of the operations completed. This resulted in the cash operating profit of R50 million for this operation with production increasing by 4% and cash costs decreasing by 3% to R43 432/kg (US$215/oz). Another milestone was the holing on 34/33 level between Blyvoor and Doornfontein, successfully effected on 3 March 2000, on schedule and within budget. This is a major step forward in the Blyvoor 2000 project, which will double underground production in the next 14 months, at a targeted cost of below R45 000/kg (US$212/oz). Hoisting is due to start in May this year.
The quarter also saw the completion of the major capital expenditure programmes at the Crown Complex. Knights phase II was completed in March and the CMR pre-concentration plant commissioned in April. The West Wits pre-concentration plant was successfully commissioned in January 2000. DRD spent R34.8 million (US$5.5 million) on its capital projects during the quarter.
In the course of the quarter DRD lodged an offer for all of the ordinary shares in the Papua New Guinea gold producer, Dome Resources NL. As of 17 April, there was a 71% acceptance of this offer. The Group's Australasian growth strategy, to produce 500 000oz per annum in this region, remains on track.
DRD took advantage of the gold price volatility during the quarter to improve its hedge position by delivering and closing out more than 500 000 ounces.
The combined Group results for the third quarter reflected the disruption of the excessive rainfall, closure/mothballing of the six shafts at Durban Deep/West Wits as well as ending production at the flooded Browns Creek mine in Australia. Seismic events and an underground fire affected production at Buffels. This resulted in the Group gold production decreasing by 7% in March to 9 076kg (291 795oz) with cash operating cost increasing by 7% to R52 994/kg (5% to US$262/oz).
Prinsloo said that the last three years has been a long difficult journey to get the different operations to this stage, following set backs experienced and the low gold price. DRD is now positioned to look forward to strong results emerging from these capital and restructuring programmes.