South African government issues mining directive

The South African Department of Water Affairs and Forestry has directed South African miners DRDGOLD (DROOY-N), Harmony Gold Mining (HMY-N) and AngloGold Ashanti (AU-N) to share the costs of pumping water from the Stillfontein and Buffelsfontein gold mines, in the Vaal River area.

This is an interim solution to a threat by DRDGOLD to stop pumping water from its North West mines. DRDGOLD closed the mines in March and applied to liquidate the properties.

The Harmony and Anglogold mines are downdip of DRDGOLD’s mines, and if pumping were to stop, underground water would flow into these mines and flood them. The pumping is expected to cost R51.6-85 million (US$8.3-13.6 million) per year.

AngloGold maintains that DRDGOLD is legally obliged to continue pumping.

AngloGold says the solution, with costs split three ways, is an emergency measure, and that is will work at finding a long-term solution.