As the dust settles from Sibanye-Stillwater taking control of DRDGold, the two companies can now start talking about processing tailings containing platinum group metals (PGMs), DRDGold CEO Niël Pretorius said on Monday.
DRDGold is SA’s leading producer of gold from tailings dumps, which contain minuscule traces of the metal in processed ore. It is targeting up to 190,000oz of gold in its 2020 financial year to end-June.
It treats more than 24-million tons of tailings a year to the east of Johannesburg and has, with the Sibanye transaction, started processing 500,000 tons a month of tailings west of the historical gold mining city.
Sibanye vended gold tailings, which had no value in the opinion of analysts, into DRDGold in 2017 in exchange for a 38% stake in the tailings retreatment specialist, with an option to increase ownership to 50.1%. This it did last week at an enormously discounted R1.1bn cash.
"Before they exercised that option, we had to be careful with anything that would be price sensitive and defer any discussion of that nature. Now that the option has been exercised, we would certainly want to pick up the conversation with Sibanye as soon as possible," Pretorius told Business Day.
Sibanye is the world’s largest source of six PGMs, including gold, having bought four key assets in the space of four years. Included in its mining footprints are vast tailings containing residual PGMs and chrome.
Open new doors
The first phase of bringing the Sibanye tailings to account was to deliver the 500,000-tons-per-month project on time and on budget, with all those boxes ticked and the R330m debt raised for it already repaid.
"One of the reasons we wanted to do well with phase one is because we wanted to demonstrate to Sibanye that there is capacity within DRDGold to start these projects and complete them successfully in the hope that it will open new doors for us in other metals and on the remaining gold tailings footprint," Pretorius said.
"It’s a matter of who will be Sibanye’s partner on PGMs tailings. We wanted to put up our hand by establishing a track record and credibility so that we would be the partner of choice."
Processing PGM dumps for the six metals that make up the group, as well as chrome, would entail metallurgical processes that are different from the relatively straight-forward capturing of gold, Pretorius said.
He added that DRDGold had proven skills in the logistics of moving enormous quantities of tailings and processing them successfully each month.
The additional metallurgical skills were available in the market and could be easily added.
"Sibanye is a massive company. We’re tiny. The market doesn’t see tailings in Sibanye. It sees hard rock mining and a combination of products. Tailings are not their focus.
"The market recognises the value of tailings when they’re moved into DRDGold. We got involved with their gold tailings and we might as well do the same with PGMs," he said.
Sibanye CEO Neal Froneman said last week that the focus was now on the second phase of the Far West Gold Recoveries, as DRDGold has labelled its new business.
For DRDGold there was about 12 months of work to finalise studies and decisions on how best to unlock the
extra tailings dumps, either by building a new 1.2-million tons a month processing plant or doubling the existing plant to 1-million tons a month, with key issues like Eskom power supply a decider.
"It’s one of the key considerations. Before we make a final decision, we will want the availability and reliability of power to be at a different level from where it is now. You can’t spend so much money on a new plant and hope there will be power. You want an assurance on power," Pretorius said.
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