DRDGold less risky by Sept '09

DRDGold is ramping up gold output from surface and underground operations as it looks for project-level acquisitions to grow the company, an issue further down on its list of priorities.

"We are not a one big-deal company. If something is for sale that fits a profile of making money or is close to making money that is not ultra-deep, or a company killer, like we used to own at Buffelsfontein, we would look at buying it," said DRDGold CEO Niel Pretorius.

"We would look to grow our production by way of small, intelligent acquisitions, maybe at project level and not so much at corporate level," he told Miningmx in a recent interview.

However, acquisitions are not top of mind at the moment, with management preferring to focus on bringing its Ergo surface treatment operation into steady state production from September, keeping output disruptions at its Crown and City Deep operations at a minimum and working on ramping up tonnages from its Blyvoor mine.

DRDGold's output is drawn equally from surface and tailings operations. That will change when Ergo hits its stride, with two-thirds of the group's gold coming from a cheaper, safer surface project.

Ergo is forecast to produce 75 000 ounces/year at $550/oz. Crown produced 87 400 oz in financial 2008, at a cost of $553/oz.

"A larger percentage of ounces coming in below $600/oz will soften the impact of those months when underground costs spiral," Pretorius said. "Not only that, but having more surface ounces significantly de-risks the company."

Management wants infrastructure in place to pump material from its Crown and City Deep projects once the deposition sites they are using are full.

"What we want to look at once we achieve steady state production is how quickly we can link Central Rand to the far East Rand in order to perpetuate life of Crown and City Deep," Pretorius said.

"We are in the hands of the contractor there and it depends how nervous they get. We've enough time to finish Top Star, but that might change tomorrow," he said.

"We have enough deposition space on the East Rand to provide for Ergo and Central Rand. I want to get running sooner rather than later on linking Central Rand to Ergo, because I don't want to see an interruption to any of our production."

Read more here