Johannesburg, South Africa. 24 August 2022. DRDGOLD Limited (JSE: DRD, NYSE: DRD) has declared a final dividend – its 15th financial year of declaring a dividend consecutively – of 40 SA cents per share for the financial year ended 30 June 2022 (FY2022), making a total distribution of 60 SA cents per share for the year.
CEO Niël Pretorius, in a commentary accompanying the Company’s operating and financial results for the year released today, says DRDGOLD generated R871.6 million in free cash flow for the year, supported by a gold price off recent highs but still robust.
He bluntly portrays a year for the Company, South Africa and the world characterised by a ‘litany’ of challenges less to do with COVID-19 and more to do, in South Africa with the likes of:
On a global scale, Pretorius cites the challenges posed by climate change and war.
Against this background, he says DRDGOLD has held its own in FY2022.
“One of the core principles that informs our strategic thinking is that, to thrive well, you need to survive well. 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.”
Looking ahead, Pretorius says, DRDGOLD remains committed to investing in the sustainability and growth of its business, growing capital investment from R584.1 million in FY2022 to approximately R700 million in FY2023.
Referring to the latest Fraser Institute report that flags South Africa as the fourth-worst mining jurisdiction out of 185 surveyed internationally, he says: “This does not mean that it is impossible to thrive in this jurisdiction – it simply means that the standard of political governance is not such that it enables and promotes business.”
“To do well in South Africa requires that businesses face up to the reality of their environment, ‘make a plan’ and build internal capacity and redundancy.”
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.
Turning to guidance for FY2023, Pretorius says DRDGOLD expects production to be lower, due to lower expected yield, at between 160 000 and 180 000oz. Throughput, he says, will remain a determining factor. Cash operating costs are expected to be approximately R685 000/kg. Long-term and sustaining capital investment of approximately R1 400 million is planned.
“We remain mindful of the logic that drives our ESG efforts and our responsibilities in terms of these. We cannot hope to maintain a sustainable business in an environment that is unstable, if life for major proportions of our stakeholders is, at best deeply unpleasant, and at worst, intolerable,” Pretorius concludes.
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