As DRDGold yesterday reported an increase in its half-year profit its CEO lashed out at the government’s monopoly on electricity supply as well as the slow pace of transition of the country’s energy footprint to reliable, renewable power.
DRDGold said due to power utility Eskom’s struggles to supply enough electricity, it had processed less ore due to power cuts.
DRDGold CEO Niël Pretorius said for some time, neglect and corruption had eroded delivery at key state-owned entities, Transnet and Eskom in particular.
“It seems as though certain elements within the ruling party – desperate to cling to the state’s monopoly on electricity supply – are frustrating efforts to decentralise and privatise power generation."
He said very little progress had been made to transition to reliable, renewable power for no reason other than the fact that the requisite licences were simply not being issued at the requisite rate.
Pretorius said although its volume trends were improving and should stabilise by the end of March 2023, the availability and cost of electricity remained among the miner's biggest longer-term risks.
“The solution to this is to reduce our reliance on Eskom, and to this end, work on our own solar plant is progressing well – the installation of the two 22KV lines that integrate Ergo and the Brakpan/Withok Tailings Storage Facility (TSF) into a dual Eskom and solar grid is about to be finished, as is the Medium Voltage substation at Brakpan/Withok TSF through which ultimately, surplus power will be delivered back into the grid.
“Civils on the 20MW first phase of the solar farm, comprising roughly 44 000 solar panels, has started, and we hope to have this up and running by financial year-end,” he said.
The South African last week declared the ongoing energy crisis as a national state of disaster and will be appointing a new minister of electricity dedicated to ending load shedding.
In its interim results for the six months ended December 31, 2022, released yesterday, the company which mines gold dumps around Johannesburg, reported a growth in the group’s revenue to R2.6 billion, mainly as a result of an 11% increase in the average rand gold price received, to R961 022/kg.
DRDGold, which is majority owned by Sibanye-Stillwater, flagged that headline earnings per share were 62.3 cents, and free cash flow of R215.4 million was generated for the period, allowing the company to declare an interim cash dividend of 20 cents per ordinary share.
“The 2023 financial year will be the 16th consecutive year that DRDGold will have paid a dividend,” it said.
DRDGold said despite the drop in volume throughput, Ergo Mining still finished well up in terms of net cash flow, an Far West Gold Recoveries also finished strongly.
"We are trending toward the mid-range of our production guidance of between 160 000 and 180 000 ounces. With the gold price hovering close to the R1 000 000 per kg mark," Pretorius said.
Ergo mine gold production decreased by 5% to 1 996kg, as a result of a 14% decrease in tonnages to 9.8 million tonnes (Mt).
“The decrease in tonnages was due to unprecedented load shedding at the tail end of the current reporting cycle,” it said.
Far West Gold recoveries Gold production decreased by 7% to 735kg due to a 3% decrease in tonnages from 3.1Mt in the first half of the 2022 financial year to 3.0Mt, and a reduction in yield.
“The yield reduced by 5% to 0.245g/t, as a result of the material being processed from the lower grade areas of Driefontein 5 and the mills not being fully operational throughout the period due to load shedding,' the group said.
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