DRDGold warns of lower interim earnings

Aim-listed DRDGold expects to report earnings per share (EPS) and headline earnings per share (HEPS) of between 52.5c and 63.6c for the six months ended December 31, which represents a decrease of 43% to 53% from the EPS and HEPS of 111c reported for the six months ended December 31, 2020.

A number of items contributed to the lower EPS and HEPS, including a 16% year-on-year decrease in revenue to R2.50-billion.

Ergo Mining’s revenue decreased by 20% year-on-year to R1.8-billion, owing mainly to a 13% decrease in the rand gold price received, as well as a 9% decrease in gold sold to 2 090 kg.

Volume throughput increased by 1%.

Yield decreased by 9% to 0.184 g/t as a result of the bulk of the higher-grade reserves in the Knights area reaching the end of its life-of-mine.

Far West Gold Recoveries’ (FWGR’s) revenue decreased by 2% to R693.8-million, despite a 13% increase in gold sold to 801 kg, owing to a 13% decrease in the rand gold price received.

Volume throughput remained stable.

Yield increased by 11% to 0.257 g/t owing to higher-grade material being reclaimed from Driefontein 5 and improved gold bullion purities resulting from the implementation of the copper elution circuit.

Meanwhile, cash operating costs increased by 11% year-on-year to R1.68-billion.

At Ergo, cash operating costs increased by 12% to R1.47-billion, owing to the 1% increase in volume throughput, an increase in the use of reagents as a result of the increase in volume throughput together with a change in the minerology of new mining sites, and above consumer price index increases in steel and reagents.

At FWGR, cash operating costs increased by 3% to R208.4-million.

As at December 31, DRDGold’s cash and cash equivalents was R2.24-billion, with a revolving credit facility with Absa Bank of R200-million available, if needed.

During the interim period, DRDGold generated free cash flow of R406.9-million and paid cash dividends of R345.5-million.

The group remains free of any bank debt at period end.

DRDGold expects to publish its results for the period on or about February 16.