DRDGold says the need for medium-term borrowings for the first-phase development of FWGR introduced some liquidity risk. Photo: Supplied
DRDGold says the need for medium-term borrowings for the first-phase development of FWGR introduced some liquidity risk. Photo: Supplied

JOHANNESBURG – Bullion producer DRDGold on Wednesday reported a 38 percent year-on-year increase in operating profit to R355.2 million, citing a rise in output and a drop in cash operating costs.

Gold production was up 10 percent to 4 679kg in the year to June, while cash operating costs fell 6 percent to R458 866/kg, notwithstanding a three percent decline in the average rand gold price.

Headline earnings a share were higher at 1.7c a share compared with 0.2c a share in the previous year.

Chief executive Niël Pretorius said the company looked forward both to improved performance from its Ergo operation in the 2019 financial year as benefits start to flow from the various projects activated, and to a material, bottom-line contribution from its Far West Gold Recoveries (FWGR) operation.

For Ergo in 2019, gold production of between 148 000 and 154 000 ounces was planned, at a cash operating cost of around R490 000/kg.

DRDGold said while its long-term strategy was to remain unhedged and to keep borrowings to a minimum – the need for medium-term borrowings for the first-phase development of FWGR introduced some liquidity risk.

To mitigate this, it had traded a zero-cost collar to provide price protection against a possible decrease in the rand gold price while borrowings were in place.

– AFRICAN NEWS AGENCY (ANA)