JOHANNESBURG (miningweekly.com) – With the gold price expected to be stronger for longer, hopes are high that South Africa’s five main remaining gold mining companies will maximise gold production and avoid repeating the gold sector’s big past mistake of closing operations too soon.

“We simply can no longer allow gold mines to close prematurely because so much value gets lost,” is the view of DRDGOLD CEO Niël Pretorius, who was speaking to Mining Weekly on the sidelines of the 130th anniversary of the listing of the resilient DRDGOLD on the Johannesburg Stock Exchange (JSE). (Also watch attached Creamer Media video.)

Since its listing on the JSE on the 25 April in 1895, DRDGOLD has lived through major adversities that include two Anglo Boer Wars, two World Wars, two far-reaching pandemics, the 1922 Strike, the Great Depression, and a considerable list of other major global and domestic difficulties and downs.

“So many gold mines closed prematurely. Hopefully we'll see the South African gold companies that are still involved make sure that at least this generation fully optimises the potential of gold orebodies,” noted Pretorius, who is hoping that the gold price windfall and fundamentals that point to the gold price being stronger for longer result in mine recapitalisation that further extends current gold operations.

DRDGOLD itself has a R10-billion Vision 2028 capital expansion programme at Far West Rand Gold Recoveries on the West Rand and at its reinvented Ergo gold mainstay on the East Rand, where it is systematically implementing 40 community self-empowerment initiatives that range from how to bring a healthy baby into this world and making sure that children are school ready to improving the quality of life for the elderly.

While the large Far West regional tailings storage facility (RTSF) will be able to process between 1.8-million and 2.4-million tons of gold-bearing tailings a month once it is up-and-running, steps are being taken to recommission the Withok tailings storage facility on the East Rand, amid the current gold price being sufficiently high to render viable retreating the Crown dumps, near Nasrec, west of Johannesburg.

At the current gold price, Crown’s viability threshold has been breached, so those gold-bearing tailings could find their way through the reprocessing circuit as well, Pretorius pointed out. Interestingly, once Crown’s dams have been removed, more than 500 ha of prime DRDGOLD-owned land will be cleared for potential near-city-centre redevelopment.

Mining Weekly: What do you see as the highlight of DRDGOLD’s 130 years?

Pretorius: The highlight for me is that we’re not just still around, but that we’re probably as stable as ever. The work that the team's done over the last few years involves setting up a second project, capitalising both projects to extend life-of-mine, setting up the business in such a way that it can survive through the lean times, which it has done several times, but then also taking advantage of the good times. In this period of exceptionally high gold price, it's wonderful to be around. Fifteen years ago, when we started moving away from deep-level underground mining and focusing on surface retreatment, there were ten relatively small gold mining companies in South Africa, and I don't think there was a lot of confidence in the future of DRDGOLD, but the team pulled through. They built on the legacy, not giving up, which carried Durban Roodepoort Deep through so many different phases. Durban Roodepoort Deep was hardly established and there was an armed conflict in South Africa with the first Anglo Boer War, and then there was the second Anglo Boer War. Then there was the Rebellion and the First World War. There was the big ‘Flu pandemic of 1918-1919, the 1922 Strike, the Great Depression, the urbanisation of the Afrikaners after the Rinderpest epidemic and prolonged drought, coupled with economic depression, the Second World War, Afrikaner nationalism, Democracy, and COVID. DRDGOLD came through all those things.

What sort of latitude does the current high gold price give to DRDGOLD?

Well, remember, Ergo would have closed three years ago. The initial orebody on which capital investment was premised was getting to the end of its life and we really should have gone into the decommissioning of that business. But with the gold price having started to change for the better even then, it became apparent that it was premature to do that. Ergo is now basically reinventing itself. While it sets up infrastructure and establishes a network of access into resources for another 15-odd years, Far West Gold Recoveries is going to go from 500 000 t a month to initially 1.2-million tons a month and then further down the line to 1.8-million tons a month. It’s on the way to becoming a mega operation in the truest sense of the word, and that also requires a lot of capital expenditure. The gold price is helping us to avoid having to dip into the finance facilities that we've established to fund the Far West Gold Recoveries expansion – and still have a little bit of cash left after investing in infrastructure. We’re really pushing hard to get this done as soon as possible, because the gold price could turn eventually and by then we want to have this all set up. The gold price is helping and I'm hoping that in 20 years from now, somebody else will be celebrating DRDGOLD’s 150th anniversary. Certainly, the tailings dam infrastructure that's being built now at Far West has a capacity that is four times bigger than our remaining resource. It can accommodate all the tailings in that area and it could reprocess all the tailings built on the dolomites, put them on to the RTSF and provide a permanent environmental solution, while generating value and wealth for the company, the shareholders and its stakeholders.

What can South Africa as a whole do to capitalise on this great gold price? Could South Africa reopen some closed gold mines?

So many gold mines closed prematurely. If you're involved in gold mining, I consider one of the single biggest objectives is to prevent the premature closure of an operation and to fully optimise resources, especially in deep-level underground mining, because once you pull out, it's very hard to go back in again. Deep-level underground mines fill up with water and infrastructure gets dismantled, so it's very expensive and near to impossible to go back into to mine. So, with this sudden gold-price windfall and fundamentals that very much support a higher gold price for a much longer period, I'm hoping that some of that benefit will find its way back into the recapitalisation of existing operations and extend the life of these operations still further. We simply can no longer allow mines to close prematurely because so much value gets lost, and ultimately it just ends up being the place where we have massive social challenges of illegal mining. The fact that there are thousands upon thousands of zama zamas mining closed and discarded mines tells you that there's still a lot of gold left in these mines, that these mines closed too soon, and they closed too soon because it no longer made economic sense to continue capitalising them. So, hopefully we'll see the gold companies still involved – Sibanye-Stillwater, Gold Fields, Harmony, Pan African, and ourselves – take full advantage to further bolster their operations and establish better resilience to take these assets further into the future and make sure that at least this generation fully optimises the potential of its gold orebodies.

Coming back to DRDGOLD, is there still a long way to go beyond what you're doing at Ergo and the Far West Gold Recoveries? Is there more to do, and should now be the time to do it?

Absolutely. Look, you can only mine at a particular rate. Your throughput rate is determined by the amount of material that you can put on to your tailings disposal facility. When up and running, RTSF will be able to do between 1.8-million and 2.4-million tons per month, so the period over which you will be processing tailings will be determined by the rate at which you can process tailings. If you look at that entire footprint, what that basically means is that once we've mined through our entire remaining resource of about 200-million tons, there'll be plenty of space for other resources to also then find their way on to that tailings dam, and the same applies to the East Rand in respect of Crown tailings, next to Nasrec. At the current gold price, those tailings could find their way through the reprocessing circuit as well. So, there's plenty opportunity that we can exploit going forward. The simple reality is that if you compare the ratio of gold in proportion to currency issued 20 years ago and what's happened since the big fiscal collapse of 2008, and the amount of currency that's been pushed into markets that's been created for no reason other than somebody said, ’let there be money’, and money found its way into the markets. The amount of gold in proportion to the amount of issued fiat currency is now far healthier from a gold perspective than from a fiat currency perspective. Even if there is a measure of recovery in international markets, and we move out of this period of uncertainty, which seems to be coming from every conceivable direction, that doesn't change. You still have these mountains of cheap, fake money relative to the amount of gold that's finding its way into the market. That hasn't changed. One of the other gold executives used the term ‘gold is re-based’ and certainly in terms of that relationship alone, there's a good case to argue that gold’s certainly re-based. There are just too many dollars out there relative to the amount of gold units that are out there. So, hopefully this will further support the gold industry going forward, provided we manage our costs and we keep inflation under control.

What could gold recovery out of the Crown tailings and restoring the area potentially do for people living in, say, Soweto, for example? Could it mean they would be able to reside closer to Johannesburg and Sandton and have less distance to commute?

Absolutely, there's no reason why it shouldn't, because the three tailings storage facilities that are there could potentially be mined by the next generation of management. Once those dams have been removed, more than 500 ha of prime land, which incidentally belongs to DRDGOLD and which is registered in our name, would have been cleared. That could be developed, and that could just change the dynamics of the commute by so much. Instead of taking taxis from Soweto into Sandton, you walk across the road and you're right there. I think our President spoke about a smart city many years ago, that could be the place where one could build a world-class commercial hub for real economic activity. That space will be available for that.