Power issues impact Ergo production; Far West Gold Recoveries off to flying start

DRDGOLD Limited, in an operating update for the quarter ended 31 December 2018, reports a 5% decline in gold production, primarily as a consequence of an 8% drop in tonnage throughput.

The company’s Ergo operation recorded lower throughput, mainly as a result of major power interruptions experienced over 11 days during the second quarter, caused by a fire at an Eskom sub-station, a lightning strike on the Brakpan tailings complex transformer yard and load-shedding by the Johannesburg Metropolitan Municipality. Overall yield showed an improvement quarter on quarter of 3%.

An increase in gold price received and gold sold contributed to an increase in adjusted EBITDA for the quarter.
An 8% increase in cash operating unit costs per ton was mainly as a result of the 8% decrease in overall throughput. Cash operating costs per kilogram were stable quarter on quarter, offset by the increase in gold sold.
All-in sustaining cost and all-in costs per kilogram include both growth and sustaining capital expenditure, as well as production costs associated with the initial commissioning of the new Far West Gold Recoveries (FWGR) project.

Construction of this began in August 2018 and early-stage commissioning on 6 December 2018. FWGR is off to a flying start and the benefit of its contribution is expected in the second half of the 2019 financial year.
In a trading statement for the six months ended 31 December 2019, also released today, the company says it anticipates:

• A loss per share of between 5.8 cents and 8.6 cents per share compared to earnings of 14.4 cents per share for the previous corresponding period; and
• A headline loss per share of between 5.8 cents 8.6 cents per share compared to headline earnings of 14.3 cents per share for the previous corresponding period.

The expected decreases in earnings per share and headline earnings per share for the period compared to the previous corresponding period are primarily due to the costs associated with the commissioning and start of FWGR, as well as a 3% decrease in gold produced.

The company’s results are expected to be published on SENS and the company’s website on or about 13 February 2019.