DRDGold seeks new mine dumps

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GoldBar111 Reuters. .

Johannesburg - DRDGold was looking for richer mine dumps around Johannesburg, chief executive Neil Pretorius told analysts at an annual results presentation yesterday.

This comes after the suspension of the flotation and fine grind circuit in April wiped out its headline earnings for the year to June.

“We are talking to land and mine dump owners on an ongoing basis. If the gold price and fine grind circuit proves successful, we will expand our reach,” Pretorius said.

DRDGold planned to structure a deal with mine dump owners that would entail transporting the tailings from the mine dumps to the company for processing.

The stock fell 3.75 percent to close at R2.82 yesterday as the mining house reported headline earnings of R700 000, or 0c a share, in the year to June compared with R249.4 million, or 66c a share, a year earlier.

Sibonginkosi Nyanga, an analyst at Imara SP Reid, attributed the decline in DRDGold’s stock to the uncertainty around and delay to the work on the fine grind circuit.

The company declared a 2c dividend for the year to June out of income reserves.

In the year to June, operating profit was 62 percent lower at R206m.

As part of cutting costs, the company has restructured its executive and senior management.

Corporate staff numbers were reduced by 26 percent which would save the company R12m a year.

Gold production in the year to June was 9 percent lower at 132 909 ounces and gold sales fell 8 percent to 134 420 ounces.

Cash operating costs in rand terms were 20 percent higher at R372 671 a kilogram, but were only 2 percent higher in dollar terms at $1 118 an ounce.

The decline in operating and financial performance were in line with expectations after DRDGold flagged challenges in the integration of Ergo’s new high-grade section and the existing low-grade circuit.

The company previously announced engineering upgrades to the high-grade section, mainly to mitigate the effect of potential power disruptions and for better water management in the event of heavy rainfall.

The company initially planned the test work for this month to avoid paying for Eskom’s winter tariffs, but had started in the June quarter as the firm took advantage of improved output and cash flow.

On a quarter-on-quarter basis for the three months to June, the company said revenue rose 5 percent to R447.4m as a 13 percent rise in gold output to 34 143 ounces offset the impact of a 4 percent drop in the average rand gold price received to R437 770 a kilogram.

DRDGold is valued at R1.1bn.


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