DRDGOLD confirms production in at lower end of guidance after Covid-19 disruption

DRDGOLD reported full year gold production at the lower end of its guided number owing to Covid-19 interruptions, but its costs were kept in check.

Commenting in a production update today, the company said production for the 12 months ended June was 174,385 ounces, some 9% higher than in 2019 as a result of new production from Far West Gold Recoveries (FWGR). The assets that constitute FWGR were bought from Sibanye-Stillwater in return for shares.

The company had previously guided to full-year production of 175,000 to 190,000 oz. Cash operating costs per kilogram were expected to be in line with the guidance provided of R490,000/kg, however.

In terms of its balance sheet, DRDGOLD is in good shape after Sibanye-Stillwater exercised in January its option to take its stake in the firm to 50.1% from 38.5% for R1bn. DRDGOLD’s cash and cash equivalents as at June 30 was R1.72bn after paying a cash dividend of R213.8m in June 2020. The company is free of bank debt.

With the gold price providing a strong tailwind, DRDGOLD is positioned to benefit. It said in February that it was “full steam ahead” on the second phase of FWGR, although that was before the onset of the Covid-19 pandemic.

Whether the improved market will result in a dividend increase remains to be seen. The company said in February during its interim results announcement that it had entered “… a new phase of pursuing high growth projects which will require specific amounts of capital expenditure”.

DRDGOLD is due to report its full year operating and financial figures on September 1.