JOHANNESBURG (miningweekly.com) – JSE-listed DRDGold’s financial performance was expected to improve over the next quarter as the commissioning of the new flotation/fine-grind circuit at the Brakpan plant of its Ergo operation was completed and the company moved toward stable operations, DRDGold CEO Niël Pretorius said on Tuesday.

The gold miner reported a headline loss of R12.5-million, or 3c a share, for the three months ended September 30, compared with headline earnings of R77.2-million, or 20c a share, for the quarter ended September 2012, stating that reduced operating efficiencies, owing mainly to the ongoing commissioning and integration of the new flotation/fine-grind circuit had affected the company’s financial performance for the first quarter of the 2014 financial year.

Speaking at a presentation of the company’s results, DRDGold CFO Craig Barnes said that this impact on the quarter’s financial results was expected.

The gold miner reported a 76% year-on-year decline in earnings before interest, tax, depreciation and amortisation to R27.6-million, and a 59% decline in operating profit to R72-million, for the quarter, owing to lower gold production, higher costs and a lower average rand gold price.

Revenue for the quarter was 8% lower at R484-million, owing to lower gold production, a 4% decline in gold sold to 36 394 oz, and a decline in the average rand gold price received to R427 604/kg.

“While throughput was solid – 9% higher at 6.1-million tons compared with the first quarter of the 2013 financial year – and while the flotation section of the new circuit performed well, the mills in the fine-grind section were slow to get going,” Pretorius said.

He explained that this created a bottleneck of rich concentrate, resulting in high unit costs and a 6% decline in gold production to 33 597 oz, compared with 37 905 oz produced in the prior comparative period.

“While some impact on production in the second quarter is expected, this should be less substantial than in the first quarter, in part because the performance of the mills has stabilised,” Pretorius said.

He added that the company was expected to be in a stable operational position at the end of the second quarter and should start seeing the financial benefits from the operation of the new flotation/fine-grind circuit from the third quarter onwards. 

Meanwhile, Barnes noted that, despite the weak quarterly performance, the company was still in a healthy cash position, of R331.3-million, which would see it through the transition phase of the commissioning of the fine-grind and flotation plant.

Early morning trade saw DRDGold’s share price drop by 7.29% to R4.96 a share, compared with Monday’s close of R5.35 a share.