Commodity Online
JOHANNESBURG: Whether its is in cricket or bullion, South Africa is cashing in on the conducive atmosphere in these days. Immediately after getting the opportunity to host the cash-rich Indian Premier League T20 cricket tournament, South African gold mining companies are now reaping big profits.

It is like the gold miners playing a Tewenty20 cricket match and scoring huge runs in every over or opportunity.

Gold mining companies are now cashing on the world’s new found love for gold. Even as the prices soared making yellow metal the best bet in the times of recession, gold mining companies in South Africa also gained hugely.

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An announcement by gold miner DRDGold was enough to prove this recently. DRDGold said it benefited from a 15% increase in the average rand gold price during the March quarter as production and costs remained steady.

The group, which has underground and surface recovery operations close to Johannesburg, sold its gold at an average of R292369/kg compared with R255213/kg in the December quarter, which translated into a 38% increase in operating profit to R129,9m.

Same is the case with several gold miners in South Africa.

DRDGold said it was well positioned if gold held between R250000/kg and R260000/kg. If the rand remained at current levels and forecasts by independent researchers GFMS of a gold price touching $1200/oz this year were fulfilled, DRDGold would become very attractive.

DRDGold’s shares gained 8,4% to 710c on Friday, putting it among the JSE’s top 10 gainers for the day. Gold was trading at $911/oz or R259013/kg on Tuesday as the rand strengthened below R9/dollar.

The company produced 58997oz of gold in the March quarter, which was 2% less than in the December quarter, mainly because of the closure of its ERPM underground operations late last year.

DRDGold was maintaining the infrastructure at ERPM to protect the central shaft from flooding as there were about 30-million ounces of gold resource underground which could be viable for another mining company.

Heavy summer rainfall also dragged down production from the surface operations at Blyvooruitzicht. But production from the Crown recovery operations rose 17% as the grade of gold recovered from the Top Star dump exceeded expectations at about 0,9g/ton from the 0,7g/t originally expected.

DRDGold also produced its first gold during the quarter from the ErgoGold retreatment operations, which contributed 1736oz for a 50% stake. The management’s focus over the next few months would be on bringing Ergo up to steady state output of 6400oz a month by September.

DRDGold planned to sustain plant throughput at Crown at about 400000 tons a month as its tailings facilities were reaching the end of their capacity. Management was considering alternative tailings facilities on the East Rand.

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