‘Disciplined approach to future growth’: CEO
06 February 2009
65% INCREASE IN OPERATING PROFIT
Johannesburg, South Africa. 6 February, 2009. DRDGOLD Limited (JSE:DRD; NASDAQ:DROO) today reported a 65% increase in operating profit to R94.3 million and a 30% rise in headline earnings per share to 13.6 South African cents for the quarter ended 31 December 2008.
An 18% increase in the average gold price received to R255 213 per kg and a 2% decrease in cash operating costs to R406.9 million offset the impact of a 15% decline in gold production to 60 057 oz.
Lower gold production was mainly due to a 45% drop in production at ERPM, the result of a decision to suspend underground mining with effect from the end of October 2008.
At Blyvoor, overall underground and surface milling rates and grades were largely unchanged. However, underground production was affected by a slower than expected return to normal operations following the September quarter’s operational safety closures. This was largely offset by improved grades of surface material as processing moved to the lower levels of the main tailings dam where grades are characteristically higher.
Crown’s average grade remained unchanged at 0.36 g/t. Throughput was reduced by 26% to 1 531 000 t, mainly as a result of the diminished capacity of the Crown tailings complex and a one-month delay in starting up the Top Star reclamation site.
Newly appointed CEO Niel Pretorius, commenting on the Ergo JV, said: “We are very pleased with the progress achieved on Phase 1. Commissioning of the first carbon in leach circuit at the Brakpan plant began on schedule during the December quarter and the project is thus well placed to achieve the 600 000 tpm throughput planned by April 2009.”
He added: “None of our key operating assumptions in respect of Ergo has to date proven flawed.”
Pointing to world economic conditions, Pretorius said: “These uncertain times may continue to provide the ‘safe haven’ attraction of gold.”
Looking ahead, he said: “Ergo is coming to fruition now and should therefore benefit from the higher gold price. We are also pleased that the Top Star project is finally up and running, to take advantage of the current gold price trend.”
He said: “With the global liquidity squeeze, we will remain cautious of long lead capital projects, and avoid projects that we cannot fully cover with the cash and facilities that we have at hand.”
DRDGOLD will be taking a “very disciplined approach to growth”, Pretorius concluded.
James Duncan, Russell & Associates
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Kay Breakstone, Breakstone Group International
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Phil Dexter, St James's Corporate Services
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Many factors could cause the actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, adverse changes or uncertainties in general economic conditions in the markets we serve, a drop in the gold price, a continuing strengthening of the rand against the dollar, regulatory developments adverse to DRDGOLD or difficulties in maintaining necessary licences or other governmental approvals, changes in DRDGOLD's competitive position, changes in business strategy, any major disruption in production at key facilities or adverse changes in foreign exchange rates and various other factors.
These risks include, without limitation, those described in the section entitled "Risk Factors" included in our annual report for the fiscal year ended 30 June 2008, which we filed with the United States Securities and Exchange Commission on 12 December 2008 on Form 20-F. You should not place undue reliance on these forward-looking statements, which speak only as of the date thereof. We do not undertake any obligation to publicly update or revise these forward-looking statements to reflect events or circumstances after the date of this report or to the occurrence of unanticipated events.