DRDGold could axe 1,800 workers

Gold producer DRDGold [JSE:DRD] could cut up to 1,800 jobs when it stops mining two shafts at the embattled Blyvoor operation, it said today

DRDGold “has resolved to suspend all further mining at Blyvoor’s low-grade number four and six shafts with immediate effect,” the company said in a statement.

This was at the recommendation of Blyvoor’s board of directors. DRDGold owns a 74% stake in the Blyvoor gold mine, south of Carletonville, in Gauteng.

Blyvoor had given notice in terms of section 189(3) of the Labour Relations Act to trade unions the National Union of Mineworkers and Uasa. The unions and Blyvoor would begin a 60-day process to try and seek consensus on job cuts.

“These measures follow a decline since April 2011 in recovery grades to below cut-off at the two shafts, which are used mainly to pump water from underground to surface and into Blyvoor’s surface recovery circuit,” DRDGold said.

“Both shafts failed to respond to turnaround efforts since the introduction of business rescue proceedings in the second half of last year.”

Blyvoor had undergone business rescue proceedings in terms the new Companies Act since June after DRDGold said it would no longer finance Blyvoor, which had needed about R80m to keep going until the end of 2011.

In November, DRDGold announced it had accepted an expression of interest from mining company Village to buy its stake in Blyvoor for R150m.

DRDGold said it had told Village about the decision to stop mining the two shafts and was “of the view that the proposed sale will not be negatively affected by it”.

DRDGold said the pumping of underground water from the two shafts would not be affected by the cutbacks for the time being.

“Production from Blyvoor’s surface recycling circuit and at its principal number five production shaft, from which it plans to access an additional 400 000 ounces it is seeking to acquire from the AngloGold Ashanti [JSE:ANG] Savuka Mine, are also not affected by the decision,” the company said.