Trend is looking bleak for DRDGold
DRDGold kicked off the September gold quarterlies yesterday, indicating the trend will be for mines to report higher cash costs due to Eskom's tariff hike and lower revenue from a weaker gold price.
A worrying trend is higher fatalities, which may be an unintended side effect of the Department of Minerals and Energy's safety closures.
Two miners died in separate rockfalls at DRDGold's Blyvooruitzicht mine during the quarter, a mine which recorded nine fatality-free months before the accidents.
Niel Pretorius, DRDGold's designate chief operating officer, said underground seismic events seem to be happening more frequently, and he suspects stoppages due to the department's new policy of halting operations after accidents may be causing growing pent-up pressure underground.
Mines rely on regular blasting to relieve rock pressure, so the 15 days of safety-related closures at Blyvoor along with similar "Section 54" halts at neighbouring mines may be causing underground mining to be more dangerous than usual.
"You cannot fault the DME's approach, and the threat of closure has succeeded in making mine owners more focused on safety. But there may be a serious unintended side effect that needs to be investigated," Pretorius said.
Given the problems with underground mining, DRDGold is increasingly focusing on surface operations.
It ended the quarter with a cash balance of R809 million.