[miningmx.com] – DRDGOLD, a company that extracts gold from surface dumps, skipped the interim dividend owing to the higher cost and longer commissioning time for its flotation fine grind technology (FFG).
The FFG, which has been installed at the company’s flagship Ergo operation on the east Rand of Johannesburg, is crucial to integrating DRDGold’s activities. It will also lift gold production and lower costs.
Teething problems, however, combined with a lower gold price and a decline in production (and resultant increase in costs) during the period led the company into a R11.9m interim headline loss compared to a R170m headline profit year-on-year.
This, in turn, hit the company’s cash reserves as it spent money – R55.6m during the quarter – to complete the FFG. Cash and equivalents consequently fell R133m to R199.4m during the December quarter alone.
Said Niel Pretorius, CEO of DRDGold: “The fact of the matter, however, is that it [FFG] took us longer and cost us more to build it than what we planned”.
He added there was no room to consider a cash distribution to shareholders which is normally based on 30% of free cash flow. “The board has therefore decided not to declare an interim dividend,” said Pretorius.
The company would work on rebuilding its cash buffer and would be conservative with expenditure, he said.
The issue with the FFG is that the company realised it had to bring a third thickener online if it was to maintain adequate volume throughput of the float circuit.
“Now, with each component of the new circuit up and running, our objective over the next few months will be to further synchronise the operation of all the components of our plant,” said Pretorius.
“A simple leach and elution process now has an added four layers. These components all interact and need to be co-ordinated to achieve and maintain steady state. We are confident that this is within reach and we will provide regular updates on progress,” he said.
Operating figures for the December quarter, however, suggest DRDGold has the ability to rebuild production as planned.
The FFG circuit contributed ‘marginally’ to a 9% improvement in yield taking gold production 4% higher in the December quarter, the company said.
The gold price received was lower but the improved production took cash operating costs 11% lower. All-in sustaining costs were 14% lower at R375 246/kg during the December quarter.
