VALUE FROM OLD MINES

John Chadwick considers one of the world’ s largest goldfrom-tailings recovery operations and some of the technologies available

DRDGOLD CEO Niël Pretorius says the proposed transaction with Sibanye-Stillwater, based on the latter’ s West Rand Tailings Retreatment Project( WRTRP)“ is well within DRDGOLD’ s capacity to execute, and is capable of delivering both short-term value and longterm optionality”.

In November last year, DRDGOLD and Sibanye-Stillwater announced the proposed transaction, in terms of which DRDGOLD would acquire portions of Sibanye-Stillwater’ s WRTRP in exchange for some 38 % of DRDGOLD’ s ordinary share capital. In addition, there is an option agreement in terms of which Sibanye- Stillwater can increase its shareholding in DRDGOLD to 50.1 % for cash during the 24 months following implementation of the acquisition.

Pretorius says that, in assessing the deal, the company was mindful of execution risk and dilution.“ While the doubling of reserves in a resource with a higher average gold grade is clearly value-accretive, our objective remains to avoid or limit dilution of earnings by doing our best to ensure that the 38 % dilution in equity is either offset or, ideally, altogether avoided by earnings from the project from a very early stage.”

DRDGOLD’ s proposed phased approach,

Pretorius says, is intended to“ bring this goal within range”.

The selected surface assets comprise part of the WRTRP, a large-scale, long-life project to reclaim gold and uranium from historical tailings deposits situated in the greater Carletonville / Randfontein area. These assets include the following: n Operating surface gold processing plants

( DP2, DP3 and WRTRP pilot plant)

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Driefontein 4

Driefontein 5

Driefontein 3

Driefontein 1 / 2

Leeudoorn

Kloof 2

Venterspost North Venterspost South

Kloof 1

Libanon

RTSF

n An active tailings storage facility( TSF), Driefontein4 n Land required for future development of WRTRP, Central Processing Plant( CPP) and Regional Tailings Storage Facility( RTSF) n TSFs as indicated in this map below.

Among DRDGOLD’ s reasons for the transaction are: n Increase of about 91 % in gold reserves: 2.99

Moz to 5.71 Moz n Acquisition of surface assets capable of providing cash flows in short term with low initial capital expenditure and to support future growth and development of the project n Potential to increase production, revenue n Increase DRDGOLD ' s reserve base which extends life of mine n Reduction in overhead unit costs through increased production n RTSF large enough to receive most of

Regional West Rand tailings n Securing significant long-term growth in a new operating region n Opportunity to leverage proven experience to optimally develop the WRTRP Phase 1, including both early-stage production as well as design and planning, will involve the upgrading of the Driefontein 2 and 3 plants to process tailings from the Driefontein 5 dump at a rate of between 400,000 and 600,000 t / month and depositing the residue on the Driefontein 4 tailings dam.

Targeted for commissioning within 12 months of implementation of the acquisition, it is expected to be cash-generative with a“ modest” upfront capital investment of ZAR288 million. Assuming this initial capital outlay, its NPV is estimated at around ZAR1.3 billion.

“ We believe the information we gain from Phase 1 test work will enable us to refine the original WRTRP process and engineering design, as well as financial and capital models for Phase 2,” Pretorius says.

Surface plants

Historical tailings

Current deposition facility Sibanye-Stillwater lease area Neighbouring mines Regional tailings storage facility( RTSF)

MAY 2018 | International Mining 47