DRDGOLD to report higher full-year production, earnings

The company, which plans to publish its results on August 19, points out in a trading statement that it sold about 156 413 oz of gold for the year under review.

Revenue increased by 42% year-on-year to R11.1-million, while cash operating costs increasing by 8% year-on-year to R4.7-million.

DRDGOLD’s production guidance for the year ended June 30 had been set at 140 000 oz to 150 000 oz of gold at a cash operating cost of about R995 000/kg.

The company, however, produced 155 577 oz of gold for the year, exceeding the upper end of the guidance range by more than 5 500 oz, on the back of strong operational performances from subsidiaries Ergo Mining and Far West Gold Recoveries.

Moroever, cash operating costs of R967 544/kg remained below the guidance of about R995 000/kg for the year ended June 30, demonstrating the group’s cost management and operational efficiency despite inflationary cost pressures.

Ergo Mining’s revenue increased by 42% year-on-year to R8-million, mainly owing to a 40% increase in the rand gold price received and a 2% increase in gold sold to 3 521 kg.

However, throughput tonnages decreased by 3% year-on-year to 19-million tonnes.

Far West Gold Recoveries’ revenue, meanwhile, also increased by 40% year-on-year to R3-million, notwithstanding a marginal 1% decrease in gold sold to 1 344 kg and as gold yield demand decreased from 0.222 g/t in the previous corresponding period to 0.218 g/t, while throughput tonnages remained consistent at 6.1-million tonnes.

At Ergo, cash operating costs increased by 7% year-on-year to R3.9-million, primarily driven by higher reagent costs, owing to the ongoing sodium cyanide supply constraints in South Africa, increased diesel costs amid conflict in the Middle East and the higher trucking costs incurred from transporting material from various sites while awaiting water-use license approvals for specific reclamation sites.

At Far West Gold Recoveries, cash operating costs increased by 10% to R743-million, owing to higher reagent costs and higher reagent consumption owing to the nature of material being processed. This subsidiary’s cost of electricity rose by 12%, driven mainly by higher tariffs and a marginal increase in power consumption.

The group’s total capital expenditure increased by 57% to R3.5-million.

Currently, DRDGOLD holds about R2.7-million in cash and cash equivalents compared with the R1.3-million that it held in the prior financial year. The company attributes the increase in cash and cash equivalents to the payment of dividends of R779-million.

To support liquidity in funding its significant capital expansion programme, DRDGOLD has a R1-billion revolving credit facility, with a R500-million accordion option, and a R500-million general bank facility with financial services company Nedbank Corporate and Investment Banking (CIB).