DRDGold is a rare company in SA in the prevailing economic environment. It is rapidly coming to a point where it will trigger a multihundred-million rand project. And it has the cash to do it.
DRDGold is one of those low-key companies that gets things done without a lot of fuss and arm waving that attracts attention. It is effectively a listed subsidiary of Sibanye-Stillwater, the world’s largest supplier of platinum group metals.
Investors have noticed DRDGold. Its shares have nearly tripled so far this year. Its business is far from glamorous. It’s a bulk earthmoving operation, taking millions of tonnes of old gold dumps around Johannesburg and extracting minuscule amounts of gold out of each tonne. Move enough tonnes and you get a lot of gold. And make a lot of money.
DRDGold has R2bn in cash. It has knocked its newly acquired tailings assets from Sibanye out of the park. It has built and commissioned the first phase of the new division called Far West Gold Recoveries and quickly repaid the R330m in debt incurred to build the first leg to monetise the Sibanye tailings.
The next phase has a bunch of moving parts and considerations, most importantly Eskom’s electricity prices and supply as well as long-term costing models. These will determine whether phase two is a big-bang approach or a more considered project.
What investors can rest assured in knowing is that if there is one company to bring a big new project into commission on time and budget with the least possible fuss, it is DRDGold. And the company is pumping so much cash at the moment that it has flagged an interim dividend in February despite the big capital budget on the horizon.
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