Media releases

DRD turnaround continues apace

Details

Published: Thursday, 18 October 2001 02:00

Durban Roodepoort Deep, Limited (DRD) today (18.10.01) reported further improvements in operating and financial performance for the quarter ended 30 September 2001, underpinning the positive turnaround in the company’s fortunes in the previous quarter. 034/01-jmd

Profits up, costs contained

Highlights

• Cash operating profit up 29% (23% in US$)
• Corporate and financing costs drop by R34.4 m (US$4.4 m)
• Headline earnings per share of 15 SA cents (2 US cents)
• Elimination of ‘long purchases’ brought forward
• Black Reef open pit production starts at Harties
• Blyvoor Expansion Programme delivers 10% gold production increase
• Tolukuma on target and drilling programme begins

Durban Roodepoort Deep, Limited (DRD) today (18.10.01) reported further improvements in operating and financial performance for the quarter ended 30 September 2001, underpinning the positive turnaround in the company’s fortunes in the previous quarter.

Cash operating profit rose 29%, reflecting continued good cost containment and the stronger gold price, said Chairman and CEO Mark Wellesley-Wood.

“Significant” reductions in both corporate and financing costs led to a R35.0 million (US$4.1 million) increase in profits before tax, to R33.2 million (US$3.9 million).

Despite the impact of an 8% wage increase effective from 1 July, unit cash operating costs were well contained to a 3.6% rise in local currency terms.

DRD was now performing well against its peer group in total operating cost terms (including capital expenditure), Wellesley-Wood said, recording R62 498 per kilogram (US$232 per ounce) for the quarter.

Headline earnings per share were 15 SA cents (2 US cents), compared with 4 cents in the previous quarter.

The company’s cash operating margin continued its improving trend, reaching 16% in the quarter under review.

The generation of the improved cash flow had led to the interest-bearing debt : equity ratio decreasing from 54% to 50% and the current ratio improving from 78% to 95%, Wellesley-Wood said.

Cash and equivalents on hand at the end of the quarter totalled R134.8 million (US$15.0 million).

On the company’s hedging programme, Wellesley-Wood said elimination of the “long gold” positions would be effected by December, three months earlier than expected. The results for the September quarter provided further evidence of DRD’s improving ability to deliver, both operationally and financially, Wellesley-Wood said.

“Our recent track record and our resolve to continue the drive for high-grade, low-cost ounces of production make the outlook for the December quarter promising, with a continuing improvement in the gold price a welcome bonus.”

Blyvooruitzicht

Blyvoor’s improvement in performance, embarked upon in February 2001 with the launch of the expansion programme, has continued and the mine delivered an excellent 10% improvement in production.

Ore is now being delivered from the Main Reef, in line with the Blyvoor Expansion Programme rollout.

North West Operations

Open pit mining of the Black Reef at Harties has begun and will replace lower grade surface resources. Drilling results on the Race Track outcrop have been encouraging.

In the September quarter the North West Operations’ production was affected by the earlier than planned depletion of payable ore from the No 7 rock dump. Also, the Buffelsfontein operation was affected by the COSATU-led industrial action on 29 and 30 August.

Tolukuma

Tolukuma has returned to target levels.

Work on the new main haulage has been completed and a new open pit at the Joe Kunda vein will start production in the coming quarter. The depth extension of these high grade outcrops will now be tested by a drilling campaign.

At the new Saki prospect a further 30 trenches were excavated and the average grade of 341 assays taken was 9.1 grams per tonne.

Crown

In accordance with its mining plan, Crown mined through lower grade material during the quarter but is back on track for the December quarter.

Queries:

James Duncan
27 11 880 3924 (o)
27 82 892 8052 (mobile)

Janice Dempsey
27 11 880 3924 (o)
082 376 23 27 (mobile)

Charmane Russell
27 11 880 3924 (o)
082 372 5816 (mobile)