DRDGold declares 60%-higher dividend on soaring earnings

The operating profits of the Johannesburg- and New York-listed company, headed by CEO Niël Pretorius, rose by 100% to R1.4-billion in the six months to the end of December.

Headline earnings a share rose 129% and the interim dividend of 40c a share is 60% up on the corresponding period in 2019. Revenue rose 41% to within a hair’s breadth of R3-billion.

The higher gold price received substantially offset the impact of a 2% decline in overall gold production, attributable mainly to a 6% lower production of 715 kg at Far West Gold Recoveries (FWGR). This was due to reclamation taking place by and large in the lower-grade central portion of the Driefontein No 5 dump.

Increased capital expenditure on projects at the Ergo, on the East Rand, and FWGR operations, accounted partly for higher all-in sustaining costs (AISC) at both – 14% up to R650 915/kg at Ergo and 40% up to R365 070/kg at FWGR.

At Ergo, reclamation began from the 4L30 dump, a fourth residue line to the Brakpan tailings storage facility (TSF) was installed and smaller, more manoeuvrable cyclones at the Brakpan TSF were added. At FWGR, the upper compartment of the Driefontein No 4 TSF was converted to cyclone deposition and irrigation infrastructure for dust-inhibiting vegetation of the TSF was completed.

Work on a definitive feasibility study and planning for the FWGR Phase 2 project continued apace in the period under review. The amended design for the regional TSF was submitted to the Department of Water and Sanitation in November 2020.

Commenting on the first six months of the 2021 financial year, Pretorius said: “We are, despite the challenges of Covid-19, an erratic Eskom and some fierce weather comfortably tracking toward the upper range of our FY2021 production guidance of 185 000 oz and well within the cash operating cost guidance of approximately R535 000/kg.”

“Further, we have managed – in particular with FWGR – to continue our growth trajectory. The gold price outlook and the performance of the business allow us to take a bolder view on the design parameters of Phase 2 in terms of volume throughput and deposition capacity, to position it strongly for regional consolidation. At Ergo, planning work on increasing deposition capacity is well advanced,” Pretorius said.

“Much about the pandemic’s passage – in South Africa and the world – remains uncertain. All of our capital investment strategies, therefore, are viewed with due regard to the potential volatility and risk associated with this,” he added.