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Ailing DRDGOLD battered in tough quarter Posted: Thu, 26 Apr 2007 [miningmx.com] -- DRDGOLD posted quarterly results on Thursday reflecting yet another difficult quarter which exacerbated the company’s poor financial health. DRDGOLD’s current liabilities of R1.24bn are higher than its current assets of R1.17bn, which include R885m worth of assets held for sale. DRDGOLD was in a similar situation in December and in March last year. On a nine month view to end-March, DRDGOLD’S net loss is slightly more than a billion rand from a R250m loss in the same period a year ago. The net loss for the quarter was R1.5m from a R921.5m loss in the December period. DRDGOLD’s 78% subsidiary Emperor Mines has sold the Vatukoula gold mine in Fiji and has agreed in principal to sell its 20% stake in the Porgera mine in Papua New Guinea for $250m to Barrick Gold, the owner and operator of the mine. It was another tough quarter for the JSE- and NASDAQ-listed company, and one in which costs continued an unrelenting upward march at its South African mines because of labour disputes, poor infrastructure and underground faulting. Underground cash operating costs at its Blyvoor mine shot up to $714/oz, well beyond the spot price of gold. Underground gold output fell 24% to 22,538 oz from the December quarter because of a five-day strike. The residual impact of an underground fire in the December quarter was also blamed. The surface operations at Blyvoor came to the rescue, with increased output and lower costs in the March quarter, giving the operation a cash operating profit, albeit reduced by 18%, of R20.9m. At the second underground mine, the century old ERPM, below-surface costs also breached $700 to hit $711/oz as development and infrastructure proved to be inadequate as mining moved east. “While this was the primary cause of reduced volume, fault negotiation below 70 level and steps taken to reduce seismicity above 70 level were also contributors,” CEO John Sayers said. Improved infrastructure has led to improved volumes, but the outlook is still not rosy. “Grade was, and will continue to be, affected for at least the next 12 months by the occurrence of a fault that runs the entire length of the eastern longwall,” he said. Again, the surface operations with improved volumes and costs helped keep the operating loss steady at R5m compared to December. The dedicated dump treatment operation Crown had a 40% drop in operating profit to R27.5m because of depleted high-grade sands going through the plant. Fresh material should become available at the end of April. The remaining asset in Emperor, which has not yet been sold, Tolukuma in Papua New Guinea, turned in a poor quarter, with cash operating costs a staggering $922/oz compared to $827 in the December quarter because of increased helicopter and aircraft costs. Lower head grades and poor infrastructure pulled production down 21% to 9,483oz. At Porgera, costs leapt 51% to $596/oz because of power disruptions, repairs to a lightning damaged power station and increased use of diesel-fired generators.
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