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DRDGOLD says increased operating costs and Rand gold price fall have hit earnings in first half

Published: 09:11 03 Feb 2022 EST

Gold bars
The company said it expects to report earnings per share (EPS) and headline earnings per share (HEPS) of between 52.5 cents (US$0.03) and 63.6 cents (US$0.04) for the six months to December 31

DRDGOLD Ltd (NYSE:DRD, JSE:DRD), the mine tailings retreatment specialist, has reported that increased operating costs and a fall in the Rand gold price hit its earnings in the six months to end-December, 2021.

The South Africa-focused firm is majority-owned by Sibanye-Stillwater, the major platinum group metals (PGMs) and gold producer. It operates the Ergo Mining Operations (EMO) business on the eastern Witwatersrand, and also the Far West Gold Recoveries (FWGR) project.

It said it expects to report earnings per share (EPS) and headline earnings per share (HEPS) of between 52.5 cents (US$0.03) and 63.6 cents (US$0.04) for the six months to December 31,  a decrease of 43% and 53% respectively on the corresponding prior-year period.

READ: DRDGOLD’s Ergo and Wits University to spearhead the way to increased gold recovery

This is mainly due to the 13% decrease in Rand gold price and an 11% increase in cash operating costs to R1,680.2 million (US$109,783) compared to R1,518.8 million in 2020 (US$99,230), said the resource firm.

In the six months, Ergo’s revenue decreased by 20% to R1,804.6 million (US$118,028) compared to R2,268.7 million (US$148,407) in 2020.

Far West Gold Recoveries’ (FWGR’s) revenue decreased by 2% to R693.8 million (US$45.4 million) versus R708.7 million (US$46.34 million) in 2020, despite a 13% increase in gold sold to 801Kg (2020:710Kg),

During the interim period to December 31 last year, DRDGOLD also generated free cash flow (cash inflow from operating activities less cash outflow from investing activities) of R406.9 million (US$26.6 million) compared to R759.6 million (US$49.6 million) in 2020 and paid cash dividends of R345.5 million (US$22.5 million) versus a dividend of R299.1 million (US$19.5 million) in 2020.

The group remains free of any bank debt as at 31 December 2021 (30 June 2021: nil), it added.

The group's consolidated interim results for the six months ended 31 December 2021 are expected to be published on or around February 16 this year.

Contact the author at giles@proactiveinvestors.com

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