DRDGOLD enters “perfect storm” as share is biggest gainer on FTSE/JSE this year

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

DRDGOLD CEO, Niël Pretorius, likened the company’s top performing share price this year to “a perfect storm”.

“Everybody is flocking to the arms of gold,” Pretorius told Bloomberg News on Tuesday. “And because our company does provide exceptional gearing to the gold price, and it is traded at a multiple to movement of the gold price, it is always a favourite pick.”

DRDGOLD was the best-performing stock on the MSCI ACWI Select Gold Miners Investable Market Index this year, said Bloomberg News. The company, which recovers gold from mine dumps near Johannesburg, has surged 277% in 2020 making it the biggest gainer on South Africa’s FTSE/JSE Africa all share benchmark, said Bloomberg.

DRDGOLD said on Tuesday that cash and cash equivalents as at June 30 totalled 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 Far West Gold Recoveries (FWGR) project, although that was before the onset of the Covid-19 pandemic. FWGR was bought from Sibanye-Stillwater using shares such that the latter now has a 50.1% stake in DRDGold.

Pretorius said that unless there was a significant shift in the dollar gold price, the share market in gold companies could be in for correction.

“If gold prices stay at current levels, I would be surprised to see very significant increases in the share prices,” he told the newswire. “If the sentiment turns against gold, there could be some big losses.”