DRDGOLD declares 12cps interim dividend
16 February 2016
Johannesburg, South Africa. 16 February, 2016. DRDGOLD Limited (DRDGOLD; JSE, NYSE: DRD) has declared an interim dividend of 12 cents per share for the six months ended 31 December 2015, CEO Niël Pretorius citing as enabling factors “settling of the operating performance of the Ergo plant”; receipt of most of an outstanding VAT re-imbursement; and a strong increase in the Rand gold price.
Gold production was 1% lower at 72 436oz as a result of a reduction in overall head grade, lost production due to unscheduled maintenance at the Knights plant, and inventory build-up in five new carbon in leach (CIL) tanks and a new high grade CIL circuit. These were off-set by an 11% increase in throughput to 12 835 000 metric tonnes.
Pretorius says that – towards the latter half of the reporting period – production had increased, reflecting the attainment of the desired 0.03g/t drop in residue grade from the completed flotation/fine-grind circuit and steady state operation of the Ergo plant.
Revenue increased by 11% to R1 130.6 million due mainly to a 12% increase in the average Rand gold price received to R491 993/kg. After accounting for a 15% increase in total cash operating costs, operating profit was 1% higher at R165.9 million.
Unit cash operating costs for the six months were 16% higher at R429 271/kg due to the combined effect of various factors: lower yield requiring more material to be processed to maintain production, lower production from the Knights plant due to unscheduled maintenance; increases in wages averaging 9%; and 8% increase in the cost of power; and the higher cost of various consumables such as water and reagents. In spite of “the relentless march of inflation due to Rand weakness”, Pretorius says the overall cost increase of consumables was contained to an average of below 5%.
The company’s cash position remains favourable, Pretorius reports. At the end of the period under review, there was R254 million in cash and cash equivalents, with operations contributing cash flows before working capital changes of R112 million – this, after repayment of the last of the DMTS notes of R22.5 million; payment of a cash dividend of R42.2 million; investment of R60.3 million in additions to property, plant and equipment; and the buy-back of 3.2 million shares at just over R2 per share.
The cash balance increased by a further R29.5 million after the end of the reporting period, with receipt in January of a late VAT re-imbursement. Pretorius says recent improvements in metallurgical efficiency have reduced operational risk and that throughput risk is now the most likely factor to impact production. This risk is managed through continued initiatives to improve management systems and planned maintenance. “We have a substantial gold resource that offers significant opportunity at various head grade and volume configurations. We are studying the feasibility of these scenarios with a view to growing our reserves and extending our life of mine.”
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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 sustained strengthening of the rand against the dollar, regulatory developments adverse to DRDGOLD or difficulties in maintaining necessary licenses 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 integrated report for the fiscal year ended 30 June 2015, which we filed with the United States Securities and Exchange Commission on 30 October 2015 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. Any forward-looking statements included in this release have not been reviewed and reported on by DRDGOLD’s auditors.