JOHANNESBURG (miningweekly.com) – Surface gold mining company DRDGold is expecting half-year earnings a share to rocket nearly sevenfold.

In a trading statement released on Wednesday, the company, headed by CEO Niël Pretorius, indicated earnings a share of 82.5c for the financial year to June 30, compared with 11.8c for the previous corresponding period.

As reported by Bloomberg earlier this month, DRDGold was this year's best-performing stock on the MSCI ACWI Select Gold Miners Investable Market Index. Specialising in recovering gold from mine dumps in and around Johannesburg and now also on the West Rand, the JSE-listed gold producer was also the biggest gainer on South Africa’s FTSE/JSE Africa all share benchmark.

“Everybody is flocking into the arms of gold,” Pretorius was quoted by Bloomberg as saying. In retreatment surface tailings, DRDGold has a solid track record of technology-driven processing.

Precious metals company Sibanye-Stillwater has secured a majority 50.1% equity holding in DRDGold, in an acquisition described as being key to DRDGold’s surface operations strategy, which involves leveraging existing surface operations and infrastructure and developing a strong, long-life surface business by exploiting the low risk and relatively high margin characteristics of Sibanye’s West Rand surface resources. Recovering gold from dumps also has important environmental, safety and property benefits.

DRDGold’s headline earnings a share are also poised to soar to 82.4c a share, compared with 10.9c a share for the previous corresponding period.

The earnings increases are owing mainly to DRDGold group revenue increasing by 52% to R4 185-million, the result of a R486.8-million increase in the revenue of East Rand Gold Operations (ERGO) to R3 064.3-million, and a R936.1-million increase in the revenue of Far West Gold Recoveries (FWGR) to R1 120.7-million.

At ERGO, a 33% increase in gold price received offset an 11% reduction in gold sold, the result of a three-million-tonne decrease in throughput to 20.2-million tonnes. The decrease was mainly the result of the Covid-19 lockdown and interruptions in power supply from State electricity utility Eskom and the City of Ekurhuleni. FWGR reported its first full financial year of Phase I production in the period.

The impact of the increase in revenue on earnings was moderated by an 8% increase in cash operating costs to R2 626-million on mainly the inclusion of FWGR’s cash operating costs for the full financial year.

The increase of 8% in cash operating costs is also reflective of the total volume throughput increasing by 8%. Cash operating costs per unit were stable at R100/t.

Earnings increased in spite of the issuance of 168 158 944 shares to Sibanye-Stillwater for R1 085 590 116, which resulted in the DRDGold ordinary shares in issue increasing by 24% to 864 588 711 shares.