Resources Editor
GOLD producer DRDGold had potentially interested buyers lined up for its 20% stake in Porgera mine in Papua New Guinea and its Vatukoula mine in Fiji, CEO John Sayers said on a conference call yesterday.
DRDGold’s Australasian operations are held through its 78,7% stake in Australian-listed Emperor Mines. Emperor is considering restructuring options, including selling assets or finding a merger partner.
The group reported earlier this year that it had put Vatukoula on care and maintenance after a review showed mining was no longer economically viable. But its latest quarterly results also show production problems at Porgera and Tolukuma, also in Papua New Guinea.
However, analysts questioned why Porgera would be sold when it contributed significantly to DRDGold’s valuation, despite short-term problems. Sayers said the cheapest reserves and resources were those that were 100% owned. New opportunities had opened up in SA, DRDGold did not control cash flows at Porgera and, although it was a good asset, it would require heavy capex shortly for a deepening project on which DRDGold questioned whether it would earn an appropriate return.
The group’s attributable gold production fell 12% to 132125oz in the December quarter compared with the September quarter and cash operating costs rose 6% to $558/oz. The gold price received fell 1% to $617/oz.
The biggest contributor to the fall in production was Vatukoula, not only from the cessation of operations but also because of an earlier skip accident.
In SA, the Crown recovery operations improved output and Blyvoor maintained production but ERPM was affected by underground faulting, which reduced volumes and grade. Sayers said rumours that DRDGold might sell Blyvoor or put ERPM into liquidation were untrue. The South African operations were core to the group, he said.
DRDGold has received an exploration licence for the ERPM Extension 2 project, where there is believed to be between seven and 11-million ounces of gold resource, supporting a mine with a 15-year life.
The board had also approved spending R10,5m to reclaim the 3L2 slimes dam which would act as an interim measure while DRDGold waited for the outcome of its application to mine the Top Star dump in Johannesburg.
