THE benefits of increased gold sales and the improved rand gold price made their presence felt in DRDGold’s first quarter numbers as pre-tax earnings doubled year-on-year.
Earnings before interest, tax, depreciation and amortisation came in at R326m for the three month period on the back of a 15% higher rand gold price and 6% more gold sold. There was also a 5% bump in gold output to 1,493kg
This was in large part owing to the contribution of Far West Gold Recoveries (FWGR) which reached its first phase capacity of 500,000 tons per month of waste material. Total material treated was 7.15 million tons for the quarter. Overall yield was 1% higher at 0.209 grams per ton due mainly to improved head grade at the Ergo operation.
Shares in DRDGold fell back 4% on the Johannesburg Stock Exchange, however, having peaked at R7.66/share earlier in October, the highest valuation in nearly three years.
The increase in production resulted in a 3% decrease in cash operating cost per kilogram of gold sold to R459,868/kg and a 2% decrease in cash operating cost per ton of material processed to R97/t, the company said.
All-in sustaining costs per kilogram were 11% higher at R517,219/kg and all-in costs per kilogram 9% higher at R528 344/kg due to the positive impact of the change in estimate of environmental rehabilitation recognised in profit or loss, lowering the comparative unit costs of the previous quarter.
The solid operating results were reflected in the company’s cash position. Cash and cash equivalents increased to R333.6m from R279.5m after paying a R136.4m dividend for the firm’s 2019 financial year. There was also a working capital lockup of R133.9m in the first quarter, the company said.
DRDGold said it would consider the payment of a dividend once the half-year results for the six months ended December 31 had been finalised.
The financial and production results were scant relief from tragic news reported by DRDGold last week after an armed gang attacked the Ergo plant resulting in the death of one of the firm’s security managers.
An estimated 17kg of gold was stolen from the premises during the raid, condemned by DRDGold management. “We are outraged by this callous and cowardly attack,” said CEO, Niël Pretorius.
Commenting on DRDGold’s prospects in September, Pretorius said the company had market conditions had “never been so good” and were likely to be sustained.
“We’ve had some good politics for a little while and a turnaround in political leadership, but there’s a lot been of concern about the pace of reform and Eskom. So I think the rand is as strong as it’s going to get,” he said.
“We’re now probably looking at quite a stable rand,” said Pretorius.
