'Focus on reducing risk, containing costs and pursuing steady-state production at Ergo': CEO
24 April 2009
38% RISE IN OPERATING PROFIT TO R129.9 MILLION
Johannesburg, South Africa. 24 April, 2009. DRDGOLD Limited (JSE: DRD; NASDAQ: DROOY) has announced a 38% rise in operating profit to R129.9 million for the quarter ended 31 March 2009.
Higher operating profit reflects both a 19% increase in the average US$/oz gold price received for the period to US$915/oz and a 15% increase in the R/kg gold price received to R292 369/kg, as well as R/kg cash operating costs 3% lower at R211 666/kg and US$/oz cash operating costs contained at US$653/oz.
Gold production was 2% lower at 58 997 oz, due mainly to a drop of more than 50% in gold production from ERPM to 4 308 oz, a consequence of the suspension of underground mining in the December 2008 quarter.
However, the quarter saw an increase in gold production at ErgoGold (previously the Elsburg Gold Mining Joint Venture) – 1 736 oz (50%) of which was attributable to DRDGOLD. During April 2009, DRDGOLD shareholders approved DRDGOLD’s acquisition of Mintails Limited’s 50% of ErgoGold.
DRDGOLD CEO Niël Pretorius says the company will continue to tread its prescribed path of “risk reduction, cost containment, headline earnings per share accretion and capital conservatism for the foreseeable future.”
“While there is considerable comfort to be drawn from a stronger gold price, particularly if accompanied by Rand weakness, we know we cannot be complacent.”
Pretorius says the company believes global economics will continue to be characterised by considerable volatility for some time to come, and that the full impact of this macro volatility has yet to filter through fully to the South African economy.
“We favour the recently pronounced view of gold consultancy GFMS that prospects are good for gold to trade upward to the US$1 100-1 200/oz range but recent events such as the IMF gold sale and the strengthening of the Rand serve to remind us that our market and the milieu in which we operate are themselves not at all immune to volatility.”
Acquisition of 100% of ErgoGold demonstrated DRDGOLD’s continuing drive to ensure its future, Pretorius said.
Other steps likely to flow from current investigations include:
- optimising synergies between Crown and Ergo;
- securing additional tailings capacity for Crown;
- replacing the current dump truck ore haulage system at Blyvoor with a more cost-effective railway/conveyor system; and
- determining a sustainable means of managing – from ERPM – the rising water level of the Central Witwatersrand Basin.
James Duncan, Russell & Associates
+27 11 880 3924 (office)
+27 82 892 8052 (mobile)
Investor and Media Relations
Kay Breakstone, Breakstone Group International
+1 646 536 7000 (office)
Investor and Media Relations
Phil Dexter, St James's Corporate Services
+44 20 7499 3916 (office)
+44 779 863 4398 (mobile)
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.