DRDGOLD reported a 19% decline in adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) to R386.4m for the September (first) quarter owing to an R84m insurance payout to the company in the comparative period. Generally speaking the quarter was solid for the gold dumps and tailings company amid a high inflationary environment. Shareholders will also be heartened that the chances of the firm paying an interim dividend in February were considered “favourable”.
DRDGOLD Ltd (NYSE:DRD, JSE:DRD, OTC:DRDGF) CEO Niël Pretorius says the company achieved production towards the higher end of its guidance in its 2022 financial year, despite a number of challenges over the course of the year.
Pretorius was commenting in the firm’s annual results ended June 30 in which DRDGOLD posted R1.12bn in profit compared to R1.44bn for the previous 12-month period. At R1.12bn, headline earnings for the 2022 financial year were 22% lower year-on-year.
Overall, I think that FY22 was a challenging year for DRDGold due to inflationary pressures and electricity supply issues and that the company managed to achieve production and financial results. DRDGold has a market valuation of $525.1 million as of the time of writing which I think seems low considering the life of mine is about three decades and cash reserves are over $120 million.
Gold production was stable in 2022 at 5,720 kilograms (kg), while group operating profit was 22% lower at R1 685.1 million after accounting for cash operating cost, which was 13% higher at R3 463.8 million. The firm said R871.6 million of free cash flow was generated for the year.
“There’s a direct line from this into the board, so there’s no sugar-coating of information,” DRDGold CEO CEO Niël Pretorius disclosed on Wednesday, when the company reported a solid set of results and paid dividends for 15 years in a row.
In FY2022, DRDGOLD’s gold production was stable at 5 720kg. Group operating profit was 22% lower at R1 685.1 million after accounting for cash operating cost, 13% higher at R3 463.8 million. Notwithstanding, Group cash and cash equivalents were 16% higher at R2 525.6 million, after paying cash dividends of R513.3 million. The Group remains free of bank debt as at the end of the year under review.
The company, which specialises in the production of gold from the retreatment of surface tailings, reported on Wednesday that headline earnings were down 22% to R1.1bn to end-June and operating profit decreased by a similar margin.
Production totalled 183 902 ounces, little changed from 183 999 ounces a year earlier, but all-in sustaining costs (AISC) rose 15%. Increases in the prices of diesel, chemicals and steel drove costs higher, DRDGold said.
“In practice this means that, for many years, we have deliberately invested in capital and developing a system to increase business resilience and robustness. This approach has carried us through,” said Pretorius.
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Swiss Mining Institute (SMI) European Mining Investment 24 May 2023 (PDF - 4.54MB)
Results for the six months ended 31 December 2022 (PDF - 0.36 MB)