DRDGold flies after surprise third quarter 38c payout

Niël Pretorius. CEO, DRDGold. Pic: Martin Rhodes © Martin Rhodes

SHARES in DRDGold were up nearly 12% in early trade on the Johannesburg Stock Exchange after the company paid out a third quarter dividend after seeing cash push past R400m.

The 38 cents per share payout takes distributions to shareholders in DRDGold’s financial year to 50 cents which includes the 12 cents dividend declared on February 16.

Niël Pretorius, CEO of DRDGold, said the payout “underscores the board of directors’ position not to sit on surplus cash”. This is the first time the company has paid a third quarter dividend and means DRDGold has an uninterrupted nine-year dividend run. It paid out 10 cents/share last year.

“The very significant weakening of the rand, coupled with higher production and stable costs, pushed our net cash and cash equivalent position up at the end of the third quarter to beyond R410m,” said Pretorius in a statement.

“We do not have any large near-term capital projects to fund and can do this distribution without cutting into our cash buffer,” he added.

The improvement in the share price today means the company has put more than R1.5bn on its market capitalisation since the beginning of the year – a more than doubling in value.

Pretorius said in February that DRDGold was entering a period of providing “aggressive returns” to shareholders. “We are looking at a project to extend the life of mine at DRDGold beyond the current seven year estimate to 20 years, but that’s some considerable distance into the future,” he said at the time.

“It’s a conceptual study at this stage. So that means we will have more money to distribute to shareholders,” he added.

Asked about the inevitable increase in costs as South African inflation caught up to the higher gold revenues Pretorius said he believed this was not likely to be as marked as in the past because of changes in the pricing of consumable materials like cyanide and steel to an ‘export parity’ pricing system as opposed to the previous ‘import parity’ arrangement.

The company said earlier this month that it had increased March quarter production 4% quarter-on-quarter producing 1,187kg. This was despite a 7% drop in throughput to 5.896 million tonnes due to inclement weather and electricity supply interruptions.