DRDGOLD records R87.4 million cash operating profit
11 February 2010
Higher production, lower costs, stronger gold price
Johannesburg, South Africa. 11 February 2010. DRDGOLD Limited (JSE: DRD; Nasdaq: DROOY) has announced a 4% increase in gold production to 59 866oz for the quarter ended 31 December 2009 which, together with a higher rand gold price received and a drop in cash operating costs, resulted in a cash operating profit of R87.4 million compared with the previous quarter's R4.2 million loss.
CEO Niël Pretorius says higher gold production reflected continued production build-up at the company's ErgoGold surface retreatment operation and more ounces from its Crown and Blyvoor surface operations.
In line with strategy, surface gold production rose by 12% while gold from underground dropped by 11%. Lower-risk, lower-cost, higher-margin surface gold production now comprises more than 73% of DRDGOLD's total.
The average Rand gold price received rose by 12% to R268 302/kg. Cash operating costs were 8% lower at R223 653/kg due to the increase in gold production and the lower summer-month electricity tariff applicable.
Pretorius says "a series of recent events and transactions" - agreement with Mintails Limited on the DRDGOLD group's acquisition of Mintails' 50% interest in the Ergo Joint Venture; placing Blyvoor under judicial management; and agreement with Aurora Empowerment Systems on Aurora's acquision of 60% of Blyvoor - all contribute towards our ongoing efforts to de-risk the business of DRDGOLD.
With an eye to further growth in terms of surface retreatment, Pretorius says, the company is close to making a decision on construction of a pipeline linking the Ergo and Crown operations, in order to exploit major synergies between the two.
Further afield, DRDGOLD is looking to make an initial modest investment to establish a prospecting project in Zimbabwe's highly prospective greenstone gold mining belt, in collaboration with a local partner.
South Africa & North America
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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.