DRDGold continues to reward shareholders as profitability doubles
JOHANNESBURG - DRDGOLD declared its 14th consecutive dividend during the six months ended in December as profitability doubled and cash flows surged on climbing gold prices.
The group, which mines old gold dumps in and around Johannesburg, declared a 40 cents out of income reserves payable to its shareholders next month.
DRDGold said the payout was for shareholders exempt from dividend withholding tax while for those liable the net local dividend was 32c an ordinary share.
The miner, which is majority owned by Sibanye-Stillwater and is an unhedged gold producer, meaning it generally does not enter into forward gold sales contracts to reduce its exposure to market fluctuations in the dollar gold price, cashed in on the surge in the gold price.
The bullion has accelerated 42 percent to R988 998 a kilogram during the period resulted in a 41 percent increase in revenue to R2.97 billion. DRDGold said operating profit doubled to R1.44bn from R719.6 million while headline earnings surged 185 percent to R949.2m from R332.7m a year earlier.
Chief executive Niël Pretorius said the group had demonstrated financial and operational resilience.
“We are, despite the challenges of Covid-19, an erratic Eskom and some fierce weather comfortably tracking toward the upper range of our 2021 financial year's production guidance of 185 000 ounces and well within the cash operating cost guidance of approximately R535 000 a kilogram,” said Pretorius
However, overall gold production fell 2 percent to 2 984 kilograms mainly due to the 6 percent lower production of 715kg at Far West Gold Recoveries (FWGR). The lower production at FWGR was due to reclamation Driefontein No 5 dump.
Pretorius said the gold price outlook and the performance of the business made it possible to take a bolder view on the design parameters of Phase 2 of the FWGR in terms of volume throughput and deposition capacity, to position it strongly for regional consolidation.
“With the gold price where it is and some of the signals coming through internationally, the prospects for gold look really attractive and we can start pushing the boundaries and our thinking in terms of design and thinking beyond our own resources to say how can we accommodate everything on the Far West Rand,” said Pretorius.
Group cash operating unit costs rose 11 percent to R510 845 a kg. Cash operating unit costs at Ergo increased 8 percent to R581 402 a kg due to both the decrease in yield and to the complexity of the new mix of material, which required the use of more reagents.
Unit costs at FWGR jumped 26 percent, to R282 676 a kg as higher winter tariffs and the added costs of milling, coupled with a 6 percent drop in gold output, resulted in cash unit costs increasing.
DRDGold shares declined 5.62 percent on the JSE yesterday to close at R14.78.