DRDGold lifts profit on higher output

Higher gold production pushed DRDGold firmly into an interim profit, marking a turn in the company’s fortunes as it embarks on a big growth project with Sibanye-Stillwater.

In a brief note on Sens, DRDGold, a specialist in extracting gold from old tailings dumps around Johannesburg, said its earnings per share would be 14.16c-14.64c for the six months to end-December compared with 0.6c per share before.

An 11% increase in gold production compared with the same six months a year earlier offset a 4% decline in the rand price DRDGold achieved for its sales. A year earlier, the company produced 67,508oz of gold for an all-in sustaining cost of R490,531/kg.

Headline earnings per share shot up to 14.06c-14.54c per share compared with a headline loss of 2.4c per share.

DRDGold said full-year production would be 147,000oz 153,000oz at a cash operating cost of about R475,000/kg.

DRDGold produced 137,114oz during its 2017 financial year to end-June at a cost of R489,549/kg. Its all-in sustaining cost that year was R530,930/kg compared with a received price of R548,268/kg.

The full-year forecast for financial 2018 puts the company back at the level of production it had in 2016 when it generated 143,457oz of gold.

DRDGold is in the throes of a company-transforming deal with Sibanye-Stillwater, which has agreed to vend tailings dumps and assets into the smaller company in exchange for a 38% shareholding.

The value of the transaction announced late in 2017 was R1.3bn. The assets included gold-bearing dumps near Carletonville west of Johannesburg, and three processing plants.