Name of the Project
Far West Gold Recoveries (FWGR) project.

Location
Gauteng, South Africa.

Project Owner/s
DRDGold's acquisition of Sibanye's FWGR assets was finalised on July 31, 2018.

Following the successful implementation of the transaction between the two companies, Sibanye-Stillwater now owns 38.05% of the issued share capital of DRDGold.

Under the terms of the transaction, entered into in November 2017, Sibanye agreed to exchange selected surface-gold processing assets and tailings storage facilities (TSFs) for shares in DRDGold.

Sibanye also has an option to subscribe for further shares in DRDGold, enabling it to potentially hold up to 50.1% of DRDGold within 24 months at a 10% discount.

Project Description
The FWGR will be rolled out in a phased approach.

According to DRDGold, the first phase, including early-stage production, design and planning over a 24-month period, will involve upgrading the Driefontein 2 and 3 plants to process tailings from the Driefontein 5 dump at between 400 000 t a month and 600 000 t a month, depositing the residue on the Driefontein 4 tailings dam.

Phase 2 envisages the construction of a high-volume central processing plant capable of processing 1.2-million tonnes a month and the development of a new regional TSF.

In this phase, reclamation will initially be from the Driefontein 3, Libanon and Kloof 1 dumps, and then from the Ventersdorp North and South dumps. The scale of the infrastructure established in this phase will allow for reclamation from other sources in the region.

Phase 2 is expected to extend the life of the operation from five years to 20 years.

As an alternative to Phase 2, or if Phase 2 is delayed, Phase 1 can be extended by blending in material from the Driefontein 3 dump. Envisaged is the treatment of 77.7-million tonnes from the Driefontein 3 and 5 dumps, and a further upgrade of the Driefontein 4 tailings dam.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
DRDGold estimates the net present value (NPV) of the entire FWGR at R2.1-billion.

The estimated NPV of the alternative option is R2.7-billion, assuming a capital outlay of R397-million, in addition to the initial Phase 1 capital outlay.

Capital Expenditure
DRDGold invested R330-million on Phase 1.
 

The cost of Phase 2 will depend on whether DRDGold chooses to build a second plant and TSF or if it expands the existing plant and TSF capacity.

Planned Start/End Date
The miner reached commercial production of Phase 1 in April 2019.

Phase 2 is planned to be completed in 2024/5.

Latest Developments
DRDGold achieved planned throughput of 500 000 t/m at Phase 1 during the first quarter of the 2020 financial year.

It is now progressing the studies required to realise Phase 2 of FWGR.

Meanwhile, DRDGold is considering restarting operations at the project in consultation with government and organised labour.

DRDGold CEO Niël Pretorius has stated on the company’s website that, following the shutdown of operations on March 26 in response to South Africa’s Covid-19 national lockdown, DRDGold has considered various options to restart limited operations to sustain infrastructure and soften the impact of the stoppage without exposing employees to increased risk.

Key considerations are the maintenance of hygiene, physical distancing, screening capacity and the ability to provide medical assistance and isolation in the event of infections.

“It is said that South Africa is lagging international infection trends by approximately two weeks. Hence, exposure to close-proximity situations – for example, commuting by way of public transport – is at this stage among the most important challenges informing the decision to start up at sites located in and around the Johannesburg metropolis,” Pretorious has stated.

At FWGR, however, physical distancing associated with the commute is not nearly as complex.

“It’s a much smaller footprint, with employees living much closer to the operations. This situation, coupled with all the other preventative protocols in place, means the Far West Gold Recoveries working environment poses a considerably lower risk of infection than, for example, the workspace of those involved in retail and public transport,” he states.

Chapter 2, Section 11A, and Annexure B, Section B 22, of the Disaster Management Act Regulations issued by the Department of Cooperative Governance and Traditional Affairs define gold mining and refining as essential services, exempt from the restrictions imposed by the lockdown announcement.

“However, to move simply on a technical interpretation of the Act would be folly and for management to assume exclusive responsibility for the sustaining of health, jobs, social capital, the environment and the economy would be inappropriate in these circumstances,” Pretorius notes.

“This situation poses a challenge unlike anything any of us has ever experienced. Taking hard decisions is the essence of management, and invariably requires the weighing up of conflicting interests and finding a compromise of sorts. This time, there is no balancing act – this situation requires that we defy the laws of physics in that it forbids any compromise on the side of health and safety.

DRDGold has studied the guidelines to reduce the risk of infection and it has implemented protocols in terms of hygiene and physical distancing, which will enable the company to responsibly conduct limited production at FWGR.

“We have briefed our employees of the situation and have called for volunteers to resume work. We are encouraged that there are more volunteers than required at this stage – only 60% of the typical shift complement will be deployed at any given point in time.”

Pretorius says the situation and its implications pose a burden beyond that which management could reasonably be expected to carry by itself.

The State, as the representative will of the people of the country, and organised labour, as the voice of its members, share this responsibility.

Consequently, DRDGold has written to the Department of Mineral Resources and Energy, explaining the situation and requesting its endorsement. This has paved the way for the limited resumption of reclamation activities.

Pretorius has said that DRDGold has also written to organised labour, the National Union of Mineworkers and the Association of Mineworkers and Construction Union, and has invited their nominated representatives to attend a presentation on the details of the deployment of staff, the risk protocols that are in place and the support offered to employees who present with symptoms of infection. DRDGold has also offered to take them on a site tour at FWGR to show what has been put in place to manage the risk of infection.

“We are confident that, in the spirit of collaboration and solidarity called for by South Africa’s President, we will receive the support we have requested,” he has noted.

Pretorius has also flagged the importance of DRDGold’s preserving its business by carefully and intelligently managing the impacts of Covid-19.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
R&A Strategic Communications James Duncan, on behalf of DRDGold, tel +27 11 880 3924, fax +27 11 880 or email james@rasc.co.za.