Interview with Niël Pretorius, CEO of DRDGOLD Ltd.
Our previous interview: https://www.cruxinvestor.com/posts/gold-strategic-vision-vs-market-hype-how-mining-leaders-navigate-cycles-7468
Recording date: 29th October 2025
DRDGOLD represents an unusual opportunity in the gold sector—a company that has paid dividends for 18 consecutive years without interruption, maintained a debt-free balance sheet through multiple commodity cycles, and is currently funding a transformative expansion entirely from operating cash flows. For investors seeking gold exposure through operational discipline rather than exploration speculation, DRDGOLD's business model warrants serious attention.
The Johannesburg-based company, listed on both the JSE and NYSE with a market capitalization exceeding $2 billion, operates a distinctive business extracting gold from mine tailings—the waste material from historical mining operations. Current production runs between 100,000-155,000 ounces annually from two main operations: Ergo and Far West Gold. Success in this business depends entirely on processing massive volumes at the lowest possible cost, requiring relentless operational efficiency.
CEO Niël Pretorius emphasizes a critical operational philosophy: "We don't gauge our efficiency on the basis of dollar per ounce. We gauge our efficiency on the basis of rand per ton." This focus on unit costs per ton processed rather than per ounce produced enables profitable operations across wider gold price ranges. As head grades inevitably decline when mining tailings, controlling costs per ton processed becomes the only sustainable path forward. Strategic investments in renewable energy—including a solar farm and battery storage at Ergo—have reduced power costs by 9-15 rand per ton, demonstrating management's commitment to continuous efficiency gains.
DRDGOLD is currently executing Vision 2028, its most significant capital investment program. The initiative includes three major projects: extending Ergo operations with new infrastructure including the Withok tailings facility, expanding the DP2 plant to double processing capacity to 1.2 million tons monthly, and constructing an 800-hectare Regional Tailings Storage Facility—one of the largest in South Africa—capable of holding more than 800 million tons of mine residue. These projects will establish infrastructure for processing 3 million tons monthly and increase production to approximately 200,000 ounces annually by 2028-2029.
The financial execution is particularly impressive. Vision 2028 requires $100-120 million in annual capital expenditure, dramatically higher than the company's typical sustaining capital of approximately 5% of cash operating costs. When designed, management anticipated requiring debt financing during peak capital periods. However, the gold price rally enabled funding the entire program from cash flows while maintaining the debt-free balance sheet and even doubling recent dividend payments. Upon completion, sustaining capital requirements will return to historical levels, substantially improving free cash flow generation.
Beyond current operations, DRDGOLD is positioning for two growth opportunities: regional consolidation of nearby tailings operations leveraging existing infrastructure, and environmental restoration services for global mining companies. The restoration concept involves reprocessing mine tailings and depositing material into exhausted open pits, addressing the industry's escalating mine closure challenge while potentially generating economic returns. Management is actively engaging with operators of mature open-pit projects worldwide.
Pretorius articulated the company's value proposition candidly: "Our value proposition is one of asset optimization. So we have a very large asset base. We can process at a particular rate, and our efforts are towards putting in the infrastructure to do that for as long as we possibly can and
Published on 4 days, 12 hours ago
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