DRDGold aims for platinum recovery

• Profits roar ahead 600%, and CEO says the plane is ready for take-off

DRDGold, a world leader in recovering gold from tailings, aims to expand into platinum with the help of its majority shareholder, SibanyeStillwater.

DRDGold, a world leader in recovering gold from tailings, aims to expand into platinum with the help of its majority shareholder, Sibanye-Stillwater.

In DRDGold’s interim results presentation on Wednesday, CEO Niël Pretorius said the company plans to “start the conversation” on moving into the reprocessing of platinum group metals (PGM) dumps.

The processing of dumps is a commercially savvy way to tackle environmental liabilities, which pose a big challenge to SA mines. DRDGold settles these liabilities as it mines, making its business model attractive to investors concerned about the environmental, social and governance impact of companies.

Pretorius said processing of Sibanye-Stillwater’s PGM tailings would unlock value for the company while improving its impact on the environment.

DRDGold delivered stellar results for the six months ended in December 2019, partly because of 33% higher gold production due to its Far West Gold Recoveries, a tailing treatment project, coming online in the period.

The operation was acquired from Sibanye-Stillwater, with a processing plant, in 2018 in return for a 38% stake in DRDGold. In January Sibanye-Stillwater exercised its options to take a majority stake of 50.1% in the company.

Pretorius said DRDGold’s opportunities to go into platinum will be limited to those arising from its relationship with Sibanye-Stillwater. He said the company understands how to transfer its skills in recovering gold into PGMs, though extra expertise would have to be brought into the company.

DRDGold, which also recovers gold at its Ergo operations in Brakpan, announced on Wednesday that profits increased 604% to R719m, compared with R102m a year earlier.

Gold production increased 33% to 3,037kg, while headline earnings came in 816% higher at R332m, or 48c a share, compared with a headline loss of R46.3m, or 7.2c a share, in the previous period.

The company declared a 25c dividend, which marks the 13th consecutive financial year in which at least one dividend has been paid out to shareholders.

“Our philosophy has always been that we don’t sit on free cash,” Pretorius said at the results briefing. The company sets cash aside for near-term capital commitments, as well as a buffer, and the balance goes to shareholders, he said.

With good reason, too. Given that many of its shareholders are outside the country, and the rand being as volatile as it is, Pretorius said DRDGold does not want to sit on cash and have it diminish in value.

While the gold price has been “unbelievably exceptional”, Pretorius said DRDGold has also positioned itself well to take advantage of it.

While Eskom’s inability to meet power demand had some effect on the business, Pretorius said it was not as profound as for some other mining companies.

Pretorius said the R1.1bn injected into the company through Sibanye exercising its right will help accelerate the development of the business, which includes realising the second phase of the Far West operation.

“The plane is serviced and ready for take-off,” he said, adding that a lower gold price will not halt that.

“When the gold price goes go down ... we have systems in place to ensure we can cut through that cycle and again take advantage of the next bull cycle as and when it takes place.”