DRDGold, one of the world’s largest gold tailings retreatment companies and affectionately known as “the Roodepoort Rocket” among gold bulls, has advised shareholders to expect a modest bump in half-year earnings.
The 128-year old company, founded as Durban Roodepoort Deep in 1895, said in a trading update on Friday that it expects earnings per share (EPS) and headline earnings per share (heps) of 59.5c-68.1c for the six months to end-December 2022. That compares with EPS and heps of 58c per share for the corresponding period the previous year.
DRDGold also said revenue rose 6% to R2.654bn in the six-month period, up from R2.498bn in the previous half year. The impact of the increase in revenue on earnings and headline earnings was moderated by a 10% rise in cash operating costs to R1.84bn driven by double-digit inflationary increases in the cost of reagents, steel-related products, electricity and transportation.
Revenue of the group’s Ergo Mining, a surface gold tailings retreatment operation that extends from central Johannesburg to Ekurhuleni, rose R153.8m to R1.959bn, mainly due to a rise in the rand price of bullion and improved yields. Yet, volume throughput decreased 14%, mainly due to unprecedented load-shedding and excessive rain that negatively affected its operations.
The revenue of Far West Gold Recoveries, the group’s operations near Westonaria, remained stable at R695.8m as the higher rand-denominated gold price was offset by lower sales. Volume throughput decreased 3% mainly due to severe weather causing damage to the reclamation drawdown point at Driefontein 5, which resulted in four days’ lost tonnages.
Yields decreased 5% due to the processing of a lower-grade part of the Driefontein No 5 dump and the suspension of milling during load-shedding.
DRDGold said that at December 31 2022 it held R2.392bn in cash and cash equivalents, down slightly from the R2.523bn reported at end-June. The group also remains free of any bank debt as at end-December.
The gold producer is scheduled to publish its results for the six months to end-December on or about February 15.
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