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DRDGold bolsters income

By Nicola Mawson, IOL Business Editor Time of article published Sep 1, 2015

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Johannesburg - DRDGold has declared a final dividend of 10c a share after bolstering gold production to 150 145 oz, which boosted operating profit 48 percent to R384.3 million in the year to June.

DRDGold, which has one main operation - Ergo - a mine some 50km east of Johannesburg, notes this dividend is a five-fold increase on the one declared for the 2014 financial year.

The dual-listed company’s CEO Niël Pretorius says the improved dividend is thanks to “very satisfactory results”.

Revenue increased by 16% to R2.1 billion as the company received a slightly higher price, 4 percent up, for its gold.

Gold miners have been battling the falloff in the price in recent months and there are fears the mining sector could shed as many as 40 000 jobs. Currently, government, labour and business are seeking to ink a deal that would save jobs across the industry, which was once the mainstay of SA’s economy.

After accounting for total cash operating costs - including the negative impact of Eskom’s higher winter tariffs in the last quarter - this figure came in 13% higher at R1.7 billion.

Yield, up 14% to 0.197g/t, drove improved gold production and reflected a sharp turnaround in the performance of the Ergo plant, DRD says in a statement. This also offset slightly lower throughput, which came in at 23.75 million tons, because of the heavy rains.

Cash operating costs were stable at R372 932/kg.

Looking ahead to the next year, Pretorius says the company’s focus will be to fully integrate the new high-grade FFG and established low-grade carbon-in-leach (CIL) circuits.

In its results commentary, the company says its results for the three months to June “reflect periods of challenges both tackled and successfully resolved, and of ‘things coming together' as planned”.

Among the highlights of 2015, DRD counts weathering the impact of “extraordinarily” heavy summer rains on its reclamation activities, and agreeing with Eskom to a way to better “deal with the vicissitudes of its load-shedding”. Internally, it developed a system to continuously monitor power consumption and could, when alerted by Eskom, turn off non essential equipment.

DRD’s total attributable mineral reserves were 22% higher at 1.86 million ounces in 2015, while total attributable mineral resources were 37% higher at 50.73 million ounces. These increases came after it wrapped up its buyout of minorities with a stake in Ergo Mining Operations.

However, DRD says its year-long bid to sell out of East Rand Proprietary Mines (ERPM) is still ongoing as some regulatory approvals are outstanding. The company is hopeful the deal can be wrapped up “in due course”.

IOL

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