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Johannesburg - DRDGold, the R2.3bn junior mining firm, was hopeful it could lift production a quarter to about 400 000 ounces a year without buying fresh assets.
"If I had it my way, I'd have us producing 400 000 ounces per annum," says Niel Pretorius, CEO of DRDGold. The company is in the process of optimising its Blyvoor, Ergo and Crown operations to increase production.
DRDGold, once a million ounce a year gold producer, has been shedding assets in a strategy aimed at beefing up its balance sheet and focusing on generating positive cash flow. It sold its Australasian investments and has recently placed the century-old ERPM mine on the block.
Commenting on the sale of the mine, Pretorius says the firm expects to receive "at least two indicative bids" on Friday, and possibly a third. "But we may have more; we might be surprised," he says.
DRDGold is looking to sell the current assets of ERPM, which amounts to its "salvage value", rather than selling the mine for the potential embedded in its orebody. DRDGold paid R90m for ERPM with its then joint venture partner, Khumo Bathong, in 2002.
The mine has been a troublesome one for the group with much of its financial viability attached to a quarterly subsidy from government. The subsidy, about R8m/year, was terminated in 2008.
Pretorius is confident DRDGold is slowly attracting more investors after divesting from its Australasian assets, a development Pretorius says profoundly disappointed the group's foreign investors.
However, the company was winning back followers. "There does seem to be a growing interest in the firm. We'd like the funds back, particularly the South African ones because they sell to each other and lift liquidity."
Said Pretorius: "We're sexy now because not a single one of our current assets could kill the company."
DRDGold's share price has increased about 40% from six months ago when it was trading at below R4/share. It ended just less than a percent weaker on Thursday at R6.05/share.
DRDGold has had offers to join the Royal Bank of Canada as well as the Barnard Jacobs Mellet road shows around the US this year.
- Miningmx.com
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