DRD gold mine photo supplied

Johannesburg - JSE-listed DRDGold produced and sold less gold in the quarter to March after experiencing metallurgical problems at its new floatation and fine grind circuit.

DRDGold’s output dropped 14 percent quarter on quarter to 30 126 ounces, it said in a statement yesterday.

The lower gold production and weaker rand led to a 25 percent increase in cash operating unit costs to R413 562 a kilogram. All-in sustaining costs were 24 percent higher at R463 823 a kilogram.

The circuits were suspended early last month to enable the operational team to determine the factors that could be affecting carbon efficiencies.

Among these was the availability of thickeners which caused problems that were exacerbated by the heavy rain experienced in the middle of the commissioning process.

“The rain was uninterrupted for almost three weeks. It started raining at 4am every morning, stopped raining at 10pm every evening, and it did so for three weeks uninterrupted,” chief executive Niel Pretorius said.

“Our focus and efforts, therefore, remain to find a way to take advantage of this technology without compromising the ‘bread-and-butter’ part of the operations.”

The DRDGold share price dropped 2.81 percent to close at R3.11 yesterday.

Operating profit dropped 39 percent quarter on quarter to R51.3 million after accounting for a 3 percent rise in net operating costs to R376.1m.

Earnings before interest, tax, depreciation and amortisation slid from R46.3m to R16m.

The company posted a headline loss a share of 7c compared with breaking even in the previous quarter.

“These are anything but happy trends and it’s because of what we were witnessing here that we took the decisions that we took with regards to the timeout on the floatation and fine-grind. And that is why we are implementing the measures that we are currently implementing,” Pretorius said during a telephone conference.

He added that these were numbers that the company was comfortable with.

“I think these are numbers that the mining investor community has become accustomed to.”

Capital expenditure was 51 percent lower due to the completion of the floatation and fine grind circuit.

The cash operating margin weakened to 9 percent from 20 percent, and the all-in sustaining costs margin fell to minus 2 percent from 9 percent in the previous quarter.

Revenue dropped 5 percent to R427.4m, with the effect of lower gold production and sales somewhat offset by a 10 percent increase in the average rand gold price received to R456 161 a kilogram.

In February, DRDGold announced that it had reached agreement with its black economic empowerment (BEE) partners, Khumo Gold special purpose vehicle and the DRD SA Empowerment Trust, to substitute a new arrangement for the BEE structure that had been in place since 2005.