DRDGold declares cash dividend

The Johannesburg- and New York-listed DRDGold, headed by CEO Niël Pretorius, said in a stock exchange news service (SENS) announcement that the dividend had been declared out of income reserves.

Distributing free cash net of a small working capital buffer and capital requirements is company policy.

Free cashflow – cash from operating activities less cash from investing activities –was R422.8-million in the quarter to March 31, and the board deemed it appropriate to release some of these funds into the economy through a dividend, considering the impact of Covid-19 on economic activity and liquidity, as well as on the fiscus, the company stated in the SENS announcement.

In determining the quantum of the dividend, the board considered the potential impact that ongoing lockdown restrictions could have on company costs.

Assuming an exchange rate of R18.50 to the dollar, the dividend payable on an American depositary receipt was equivalent to $0.14 for shareholders liable for dividend withholding tax; the actual rate of payment would, however, depend on the exchange rate on the date for currency conversion.

The net local dividend amount, taking into account the local dividend withholding tax rate of 20%, was 20c a share for those liable for dividend withholding tax, the company said in the SENS announcement.

Earlier this month, DRDGold reported an 18% quarter-on-quarter increase in adjusted earnings to R389.3-million for the three months to March 31 and stated that the 13% earnings increase was supported by an average gold price of R785 581/kg.

An interim dividend totalling R213.6-million was paid during the quarter.

In an operating update for the quarter, DRDGold reported 4% lower throughput at 6 560 000 t, which followed its Ergo and Far West Gold Recoveries operations being temporarily halted towards the end of the March quarter owing to the national Covid-19 lockdown.

The yield was also 9% down at 0.205 g/t, resulting in a 13% decline in gold production to 1 346 kg, the company stated.

In anticipation of the national lockdown, inventory was sold down resulting in gold sales for the quarter being only 3% lower at 1 462 kg.

The cash operating cost per ton milled was stable at R101/t in spite of the cash operating cost per kilogram sold rising by 6% to R489 193/kg.

All-in sustaining cost was higher at R577 633/kg and all-in cost also at a higher R588 235/kg owing mainly to an increase in capital expenditure.

Cash and cash equivalents increased by R1 291-million to R1 834.4-million, reflecting free operational cash flow of R422.8-million and proceeds of R1 085.6-million from Sibanye-Stillwater’s share subscription.

Gold production, initially guided for the year to June 30 at between 175 000 oz and 190 000 oz, is expected to track the lower end of that guidance and not the higher end, as previously advised, owing to the impact of Covid-19 to date and continuing uncertainty surrounding the pandemic.