DRDGold set to venture into PGM sector
The proposed venture into PGM comes as DRDGold demonstrated resilience during the six months to December 2019, thanks to its recently acquired Far West Gold Recoveries (FWGR) operation, which boosted output.
DRDGold reported a 69percent surge in group revenue to R2.1billion, due to higher gold production and gold sold, coupled with a 26percent increase in the average rand gold price received to R697125 a kilogram.
The solid performance was despite the group being hit by load shedding and crime, which resulted in the murder of a senior, long-serving security official, Bart Coetzee, in an armed robbery at the Ergo plant last October.
DRD chief executive, Nië* Pretorius, said the group’s new majority owner Sibanye-Gold would open up doors.
“It is our intention to also ‘start the conversation’ on our moving into the reprocessing of PGM dumps,” Pretorius told investors yesterday.
Pretorius was echoing comments that were made by Sibanye-Stillwater chief executive Neal Froneman, who indicated last week that the group had planned to expand DRDGold’s footprint.
“We hope to expand DRDGold’s operation into the PGM sector, into other minerals and internationally. Our US operations are asking whether DRD will come with opportunities for our Stillwater operation,” Froneman told the Investing in African Mining Indaba in Cape Town last week.
DRDGold rewarded its shareholders yesterday by declaring an interim cash dividend of 25cents a share out of income reserves.
It reported headline earnings of R332.7million, or 48.4c per share, compared with a headline loss of R46.3m or 7.2c a share in the previous period.
The group said operating profit was 604percent higher at R719.6m despite the 18percent increase in total cash operating costs to R1.3bn, largely as a result of the inclusion of a full six months of FWGR cash operating costs.
“We look forward to building on the solid performance from both Ergo and FWGR, and to further enhance our resilience to poor service delivery and crime. We are on track to meet the upper range of our 2020 guidance for the group as a whole and we will work hard to keep up the momentum,” Pretorius said.
DRDGold acquired FWGR from Sibanye-Stillwater last year, helping it lift its reserves and resources by 80percent. Thanks to FWGR, gold production jumped 33percent to 3037kg, reflecting a 16percent improvement in group throughput to 14million tons.
Gold production at the Ergo plant was 2percent higher at 2274kg on the back of an 11percent improvement in average yield to 0.209grams a ton, reflecting the introduction of higher grade sand to the Ergo plant. FWGR produced 763kg of gold, with 3.1million ore milled at an average yield of 0.248grams a ton. Group cash operating unit costs were 10percent lower at R460251/kg, reflecting FWGR’s substantially lower cash operating unit costs of R224059/kg.
DRDGold's share price closed 2.26percent lower at R9.10 on the JSE yesterday.