DRDGold pays its 14th consecutive dividend on higher gold prices
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DRDGOLD, which mines old gold dumps around Johannesburg, yesterday said that it expected slightly lower production and higher operating costs in 2022 as it declared its 14th consecutive financial year of dividends during the year ended June 2021 on higher gold prices and sales.
DRDGold, which operates Ergo and the Far West Gold Recoveries (FWGR), declared a final dividend of 40 cents per share, with group operating profit increasing by 39 percent to R2.2 billion.
DRDGold, for whose primary shareholder is precious metals group giant Sibanye-Stillwater, said because of marginally lower yield it expected to produce slightly less gold in 2022 than in 2021 to between 160 000 ounces and 180 000 ounces. Cash operating costs were likely to be R600 000kg while capital investment would hit R600 million, said the group.
Speaking during a virtual results presentation, chief executive Niël Pretorius said the group wanted to start investing into the future to become an economically robust environmental solution to the area.
“We want to make sure while we plan big, considering our immediate circumstances we are going to be circumspect in execution. So plan big and execute incrementally, that is part and parcel of doing what you need to in order to maintain our production rate without closing the door to the opportunity to expand,” he said.
Revenue rose by 26 percent to R5.3 billion due to the rise in gold production and sales, and the 19 percent increase in the average rand gold price received to R917 996 a kg. Headline earnings were 127 percent higher at R1.4bn representing 168.4 cents per share, up from R634.5m representing 82.4 cents per share a year earlier.
“By producing and selling more gold at a substantially higher average rand gold price and containing working cost increases reasonably well, we recorded a much higher operating profit,” said Pretorius.
Pretorius said the company came within striking distance of achieving the upper limit of its production guidance of 185 000 ounces and exceeded its cash operating cost guidance of R535 000 a kg by just 1 percent.
“Year-on-year, we increased production by treating more material and, as a consequence, cleared more land for rehabilitation and sustainable land use, delivering on our promise to help reverse the environmental impacts of mining,” he said.
Gold production for the group as a whole rose by 6 percent to 5 723kg and gold sold by 5 percent to 5 734kg. The increase in production reflected an 11 percent increase in throughput to 29.1Mt. The average yield was down 4 percent to 0.197grams a ton.
However, cash operating unit costs climbed by 12 percent to R540 338 kg.
“The key drivers of the increase were the decrease in yield at Ergo, a 15 percent tariff increase by power utility Eskom, which came into effect in April 202, and the first full year of milling at FWGR,” said Pretorius.
A total of R105mwas spent on environmental activities, including R97.5m spent at Ergo and R7.5m at FWGR.
Commenting on the latest Quarterly Labour Force Survey released on Tuesday, Pretorius said those were devastatingly morbid numbers.
‘’It is time to roll up our sleeves and assist in building alternative economic structures and new ways of doing things. We are not going to accommodate all people into the economy. The informal economy is vibrant and we can leverage that,” he said.
DRDGold closed 4.32 percent lower at R13.30 on the JSE yesterday.