DRDGold says it is to prospect for deposits that only recently might best have been described as fanciful. An announcement in today’s Moneyweb Business declared DRD’s intention to prospect at its deep-level Argonaut lease areas south of Johannesburg.
DRDGold already has a right to prospect over a 10 square kilometre area south of Johannesburg. It has applied for a further 40 square kilometres. The enlarged area will make more economic sense, says CEO Mark Wellesley-Wood, and will border on DRDGold’s ageing ERPM mine.
DRDGold – budgeted $1.4 million for explorations
DRDGold has budgeted R10 million ($1.4 million) for exploration. Wellesley-Wood says should DRDGold mine Argonaut, it would do it as part of a consortium. “We will not carry this on our balance sheet,” he says. Asked if a possible partner had been identified, Wellesley-Wood replied that Argonaut needs to be “dressed up for the party first to find out whether it is as attractive as we think it is.”
The Argonaut project has been on DRDGold’s books for more than ten years. The original project covered a much larger area, but this changed after the introduction of the Minerals & Petroleum Resource Development Act, which required owners of prospecting rights to reapply for them.
DRDGold says that should the Argonaut project proceed as a consequence of successful prospecting, a conducive economic climate and other factors, it is likely to “revolutionise gold mining in the South African context.”
Speaking on Mineweb Radio in February Wellesley-Wood estimated that the project might be economical at a rand gold price of R140 000 a kilogram. At the time this target appeared distant, with the gold price at about R110 000. Today’s rand gold price is more than R140 000.
“I think six months ago if you had have said that SA gold miners would get R150 000 a kilogram, you would have been laughed at,” says Wellesley-Wood. “That has happened.” Certainly Wits Gold (a recently-listed deep-level gold hopeful) had a very good reception on the Johannesburg bourse, he argues.
The depth of the Argonaut project will present some technical challenges, but none that cannot be overcome with today’s technology, says Wellesley-Wood. The company’s ERPM mine extends to a depth of 3 000 metres, and this is where Argonaut’s deposits begin. If the mine goes ahead it could be one of the deepest in the world, ranking alongside AngloGold Ashanti’s Mponeng and South Deep. That has some great implications on your gold IRA rollover accounts.
Wellesley-Wood believes that a possible mine could employ ice-cooling and underground crushing and processing technologies. However, he says that this technology does not push the envelope, and that the project’s feasibility is simply a matter of economics.