SA “too good a jurisdiction” for international investors to ignore – DRDGOLD

Niël Pretorius, CEO of DRDGold speaks during a media tour at the Ergo Mining metallurgical gold processing plant, operated by DRDGold in Brakpan, South Africa. Photographer: Waldo Swiegers/Bloomberg via Getty Images

SOUTH Africa remained “too good a jurisdiction” for international investors to ignore despite its lowly ranking in this year’s Fraser Report, said DRDGOLD in its 2022 annual report published on Friday.

Commenting in their joint overview, DRDGOLD CEO Niël Pretorius and Tim Cumming, the group’s chairman said the “potential in terms of extracting value in a responsible manner from both gold and PGM tailings is unmatched”.

The company would continue to navigate challenges in the country which included “societal instability, poor service delivery, poor standards of political governance and clumsy policy”. It also said the ruling ANC was in a “battle for the soul” of the party.

Recent arrests of former private sector and political leaders indicated that progress was being made by moderate influences in the ANC.

The Fraser Report, which annually assesses mining districts globally in terms of their ability to attract and retain international investment, ranked South Africa as among the ten least attractive mining investment destinations globally out of 84. This compares with a position of 60 out of 77 countries in 2020 and 40 out of 76 in 2019. South Africa also ranks at 12 out of 15 African jurisdictions assessed in the survey.

Cumming and Pretorius said it was also critical for DRDGOLD to “own” some of the problems in the country. It had, for instance, allocated R600m to a project installing 20MW of solar power amid an increase in rotational loadshedding by Eskom this year. The aim is to grow the solar plant to a 60MW output.

DRDGOLD has targeted capex of R1.4bn for the current financial year which compares to spend of R584m last year.

Commenting on potential growth, they described DRDGOLD as “the pilot fish” that would remain in the slipstream of its controlling shareholder Sibanye-Stillwater.

“We further believe that to expand our range to include the production (from tailings) of metals used in the generation and storage of renewable energy is an elegant solution to the dilemma of responsible sourcing of metals to drive the net zero ideal,” they said.

“For that reason, we remain fully aligned and supportive of Sibanye-Stillwater’s strategy to expand its capacity into this part of the industry.

“As the proverbial pilot fish, following it where it goes, to take up and develop tailings opportunities at its existing and new ventures, remains a compelling avenue for growth that could potentially position our company very favourably for what is likely to be an exceptionally long bull-cycle in future metals.”

For the 2022 financial year, DRDGOLD posted R1.12bn in profit compared to R1.44bn for the previous 12-month period. At R1.12bn, headline earnings for the 2022 financial year were 22% lower year-on-year.

DRDGOLD reported a 19% decline in adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) to R386.4m for the September (first) quarter owing to an R84m insurance payout to the company in the comparative period.