JOHANNESBURG - DRDGOLD expects profit to skyrocket by more than 600 percent during the year ended June buoyed by the record gold price environment, the company said in a trading statement.
DRDGOLD which mines old mine dumps around Johannesburg also increased its cash and cash equivalents by over 500 percent to R1.71 billion from R279.5 million a year earlier as it rode the wave of the price.
The group expects to report a surge in headline earnings a share to 82.4 cents a share compared to 10.9 cents per share a year earlier.
The company told investors that earnings a share were likely to jump 600 percent to 82.5 cents a share compared with 11.8 cents per share a year earlier.
The record gold price environment resulted in a 52 percent increase in revenue to R4.18 billion compared to R2.76bn a year earlier thanks to strong revenues from the Ergo plant and Far West Gold Recoveries (FWGR).
DRDGOLD said that FWGR’s revenue surged to R1.12bn from R1.84 million a year earlier and revenue from the Ergo plant increased to R3.06bn compared to R2.57bn last year.
The group said it had produced 5 424 kilograms of gold compared with 4 826kg a year earlier, and sold 5 437kg up from 4 783kg a year earlier.
“At Ergo the 33 percent increase in the rand gold price received offset an 11 percent decrease in gold sold, which was as a result of a 3 million ton decline in volume throughput to 20.2 million ton, due mainly to the Covid-19 national lockdown in South Africa and interruptions in power supply from Eskom and the City of Ekurhuleni,” said DRDGOLD.
DRDGOLD said FWGR enjoyed its first full financial year of Phase I production, taking full advantage of the higher gold price.
The DRDGOLD share price has climbed 206 percent in the year to date on gold’s lustre to investors. The gold price is up almost 30 percent since January after investors dumped risky assets for gold amid the global economic fallout resulting from the Covid-19 pandemic.
However, the group's cash operating costs increased by R203.1 million to R2.62bn up from R2.42bn a year earlier largely due to the inclusion of the additional cash operating costs of FWGR for the full financial year.
DRDGOLD said that the increase of 8 percent in cash operating costs was a reflection of the 8 percent increase in the total volume throughput with the cash operating costs per unit being stable at R100 a ton.
DRDGOLD is scheduled to publish its financial results on Tuesday.
BUSINESS REPORT ONLINE