In the media

DRD can't beat 'best ever' quarter

26 April 2012

DRDGOLD’s third quarter net profit and headline earnings per share at the end of March fell 61% compared to the December quarter mainly due to the closure of its four and six shafts at the Blyvoor mine.

Net profit for the quarter of R64 million was recorded compared to R165 million for the prior period. Headline earnings per share for the total operations came in at 13c per share for the total operations in comparison to 33c per share.

Blyvoor’s net profit on its own was R6.9 million compared with a much larger profit of R92 million for the prior quarter.

The decision taken to suspend operations in February at the two Blyvoor shafts has caused a 15% decline in underground production and one-off retrenchment costs of R42 million.

The decision to close the shafts was based on a decline in recovery grades to below cut-off levels. Suspending the lower grade material supply from the two shafts showed immediately in the grade results for the quarter from Blyvoor’s underground operation that has jumped to 4.55g/t from 3.76g/t in the previous quarter.

CEO Niël Pretorius said the December 2011 quarter was most likely the best in the company’s history, with a rising rand gold price, which made it a difficult quarter to beat.

The lower results for the quarter do not detract from the substantial increase in profits for the nine month period where net profit is up 238% year on year to  R313 million. Headline earnings per share for the nine months was also up 225% to 65c per share.

The sale of Blyvoor to Village Main Reef, announced in February, is still under way with Competition Commission approval and the conclusion of a deal with AngloGold Ashanti to acquire a block of ore yet to be completed.

With the pipeline linking the company’s operations on the West Rand with its Brakpan plant in the east already complete and operational, plans are to move on to the next phase of optimisation which includes building a R250 million flotation and fine grind circuit.

The circuit is expected to increase gold recovered by between 16% and 20% and is due to start commissioning in January 2013.

The tailings retreatment company is always likely to be on the lookout for new dumps to expand its portfolio and, with the joint liquidators of the Pamodzi Gold assets looking for a buyer for the Grootvlei dumps, it would seem to be a natural fit.

Pretorius confirmed that applications had been submitted for the  dumps but that it would be attractive only if it passed the company’s strict return on investment criteria.

Indicative of an ongoing haggling process with the liquidators, Pretorius said there had been some success with its applications but that there had been some push-back.

“We’re not writing a cheque for the dumps just yet,” he said, after explaining that people were often disillusioned over the amount of money dumps brought in.

He was much more bullish on the Evander tailings dumps.

DRDGOLD  climbed 3.35% yesterday and was at R5.25 in afternoon trade.