DRDGold posts improved financial, production results

DRDGOLD, South Africa’s oldest gold tailings re-treatment company, is planning to cut costs and to improve business performance, it said yesterday, as it posted improved production and financial results for the six months ended December 2017.

DRDGold chief executive Niël Pretorius said over the next few months the company planned to put the new zinc precipitation circuit into operation, to commission two new ball mills at the Ergo plant 50km outside of Johannesburg and to start reclamation of the 4L50 dump.

The company received the green light from the competition to acquire some assets of Sibanye-Stillwater’s West Rand Tailings Retreatment Project (WRTRP).

“We are also firing on all cylinders to get the circular relating to the WRTRP transaction out, and intend to follow that up with information sessions to put colour to the key features. We are very excited about this project and believe the market will share in our excitement once the details are clear,” Pretorius said.

The transaction will see Sibanye-Stillwater selling selected gold surface-processing assets and tailings-storage facilities for a 38 percent stake in DRDGold.

Sibanye-Stillwater has option to increase equity ownership in DRDGold to 50.1 percent within two years.

Sibonginkosi Nyanga, an analyst at Johannesburg Momentum Securities, said that improved production had lifted the numbers.

“If you can increase production, you impact costs positively. DRDGold increased production in the period under review, and this resulted in costs coming down,” he said.

Nyanga also said that previously Ergo had been impacted by heavy rainfalls. However, there were no heavy rainfalls in the half year under review.

The stock strengthened almost 4 percent on the JSE in early trade on news that it had boosted operating profit, increased production and had reined-in costs during the six months to December 2017. The share price closed 5.65 percent higher on the JSE at R3.74 yesterday.

Operating profit increased 27 percent to R219.9 million from R172.6m in the six months to December 2016.

It paid a dividend of 5c a share for the first six months to December 2017. Revenue was 6 percent higher at R1 254.8m due to higher gold production and gold sold.

Gold production rose by 11 percent to 2 341kg, reflecting a 15 percent improvement in the average yield to 0.191 grams a ton. Total throughput was, however, 3 percent lower at 12 253 000 tons. Gold production was significantly higher due to a healthy improvement in the average yield on the back of an improved performance at its Ergo plant.