Gold producer DRDGold reported a jump in annual profit as it benefited from the higher gold price in rand despite producing and selling less gold.
The company, valued at about R15.5bn on the JSE, reported in its results for the year to end-June that profit grew 14% to R1.3bn.
Headline earnings per share (Heps), a common profit measure in SA that excludes certain items, rose 13% to R1.48, at the mid-range of its guidance of R1.40-R1.54 provided in an earlier trading statement.
DRDGold is one of the world’s largest gold-tailings retreatment companies. It re-treats existing tailings dams and mine dumps to extract gold.
Its gold production was down 8% to 5,282kg, while the amount of gold it sold declined by a similar margin to 5,273kg.
CEO Niël Pretorius said the cash-flush company would have reached the higher end of its 2023 production guidance “quite comfortably” if it were not for the red tape in obtaining a water-use licence for an emergency spillage dam at Rooikraal on the East Rand, and global supply-chain delays in importing of equipment and goods to its subsidiary, Far West Gold Recoveries.
“These dynamics delayed commissioning of these two new sites to May 2023 and July 2023, respectively, and they are only now starting to reach steady state,” he said.
Total costs, also known as all-in sustaining costs, lifted 15% to R827,148/kg, while the average gold price received jumped 16% to R1.04m.
Operating profit, generated from a company’s core operations, grew 8% to R1.8bn.
The company declared a final dividend of 65c per share, bringing the total payout to 85c for the year, a 41.7% increase year on year.
Pretorius said its experience with the department of water and sanitation over the past nine months had taught the company that it needed to improve its turnaround time in designing and licensing infrastructure, to ensure that there was enough tailings storage capacity.
“The regulations that govern water usage are extremely complex and apply in equal measure to all installations that fall within its ambit, big and small. This dispensation has caused delays in the past, and if not managed properly, can cause further delays in future,” he said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.