DRDGold, one of the few companies unscathed by labour unrest in the local mining sector, improved gold output for the quarter and year to June.
The improvement came as the company was in wage talks with unions, chief executive Niel Pretorius said on Friday.
Gold output increased by 8 percent to 146 381 ounces in the year to June and by 10 percent to 35 559 ounces for the fourth quarter from the third.
DRDGold is conducting wage talks with the National Union of Mineworkers and Uasa, which are expected to continue for up to six weeks.
The militant Association of Mineworkers and Construction Union is not represented at the company. DRDGold is not part of centralised bargaining in the gold sector that is being led by the Chamber of Mines, as it negotiates with unions directly.
Richard Samuels, Uasa’s operations manager, said DRDGold had tabled a final offer of a 7 percent increase to employees on Thursday. “The offer on the table is one of the best in the mining sector,” he said.
Pretorius said that in the past two years, employees had benefited from basic increases of 8 percent a year and they could earn up to 15 percent more depending on the company’s profit. “They have been earning double-digit [increases]. It is not far-fetched that a similar scenario will play out in the future.”
DRDGold sold its 74 percent stake in Blyvooruitzicht mine in Carletonville to Village Main Reef last year, but the mine was placed into provisional liquidation earlier this month.
Asked whether there was a possibility of legal action as a result of the shutdown, Pretorius said: “It depends on the pressure applied. [There may be a] legal dispute if [the] pressure point is pushed hard enough. The employees are anxious about whether or not they are going to get paid.”
Pretorius said an employee trust was established in which R6 million was distributed. “Some of the Blyvoor employees are entitled. There is a legitimate expectation.”
Village pulled the plug on Blyvoor after running into financial difficulties and booking a R469m impairment because of the falling gold price and operational challenges.
Stanlib analyst Kobus Nell said rehabilitation costs were a point of contention. The share price fell as much as 5.9 percent on the JSE on Friday as DRDGold reported a slight incline in grade, Nell added. “Volume is very sensitive to variability in this factor.”
The stock recovered to close 0.17 percent lower at R5.75.
It reported that grade recovery increased slightly from 0.195g a ton to 0.196g a ton.
Headline earnings increased 11 percent to R259m, or 68c a share, for the year, up from 61c a share a year earlier.
However, the dollar price of gold in the quarter to June weighed heavily on earnings, as headline earnings a share dropped to 9c from 22c in the previous quarter. The gold price was R429 115 a kilogram compared with R474 482 a kilogram in the March quarter.
DRDGold declared a 28c a share dividend for the year, a 180 percent annual increase.
Pretorius said DRDGold would commission its flotation plant and aimed for stable production by the end of December. The plant would improve inefficiencies in the tailings of residue. “In the 2014 financial year, there will be increased focus on achieving sustainable profits and we will seek to deliver into the targets set for reducing potable water usage and dust emission.” - Business Report