DRDGold, SA’s biggest producer of gold from tailings dumps, expects headline profit to roughly halve in its six months to end-December, weighed down by lower selling prices and higher input costs, including chemicals.
Headline earnings per share is expected to fall by between 43% and 53% in the miner’s first half, from 111c in the prior comparative period, when the group generated a headline profit of R949.2m.
Revenue fell 16% to R2.5bn in the six months to end-December 2021, DRDGold said in an update on Thursday, amid a 13% fall in the rand price of gold received and an 11% rise in operating costs.
DRDGold comprises two subsidiaries — Ergo, about 50km east of Johannesburg in Brakpan, and Far West Gold Recoveries, near Carletonville, west of Johannesburg.
The company uses chemical processes to recover residue metal from the retreatment of surface tailings left over from mining, processing vast quantities of material. The group said on Thursday it had grappled with above-inflation increases in steel and reagents, the latter a chemical mix used in separating material.
Ergo’s revenue decreased 20% to R1.8bn, partly due to the bulk of higher-grade reserves in one area reaching the end of life.
Far West Gold Recoveries’ revenue decreased 2% to R693.8m, receiving a lift in yields partly due to higher-grade material being reclaimed, but also due to a new R12m circuit that has helped improve gold purity by dealing with the high levels of copper in the material.
The miner remains debt-free and had cash of R2.24bn at the end of December, from R2.17bn in the prior year period, and from R2.18bn at the end of June.
In early trade on Thursday, DRDGold’s shares were down 1.87% to R12.08, having fallen about 8.5% so far in 2022, but having risen by more than a quarter over the past two years.
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