DRDGold records higher Q3 profit, production and sales

23rd April 2015 By: Ilan Solomons - Creamer Media Staff Writer

DRDGold records higher Q3 profit, production and sales

JOHANNESBURG (miningweekly.com) – JSE- and NYSE-listed surface gold miner DRDGold’s operating profit increased by 16% quarter-on-quarter to R97.6-million for the quarter ended March 31, reflecting higher gold production and sales, as well as a stronger average rand gold price.

Gold production for the third quarter of the 2015 financial year was up 2% to 36 877 oz, compared with the 36 010 oz produced in the second quarter of the financial year, while ounces sold had also increased by 2% quarter-on-quarter.

The average gold price received was 2% higher quarter-on-quarter at $1 224/oz, compared with $1 203/oz in the prior quarter.

Speaking at a presentation of DRDGold’s quarterly results, in Sandton, Johannesburg, on Thursday, CFO Riaan Davel noted that higher gold output and a marginal increase in the gold price for the nine months to March 31, had pushed the company’s revenue up 13% to R1.55-billion, compared with R1.36-billion in the nine months to March 31, 2014. 

Cash operating costs for the nine-month period had increased by 12% year-on-year to R1.2-billion, resulting in operating profit being 26% higher year-on-year at R261.7-million. 

The company’s operating margin improved to 16.9% from 15.2% in the nine months to March 2014, mainly as a result of higher gold production – a consequence of the increase in average yield.

“This, together with the decline in capital expenditures boosted the all-in sustaining cost margin to 5.8%. Earnings before interest, taxes, depreciation and amortisation benefited from the higher operating profit, lower corporate costs and the sale of noncore land, rising by 111% to R189.5-million,” said Davel.

He highlighted that headline earnings of R8.2-million were achieved in the nine months to March 31, a significant turnaround from the headline loss of R36.7-million in the comparative period the year before.

Meanwhile, CEO Niël Pretorius discussed the completion of testwork on the Ergo plant’s flotation/fine-grind circuit, saying that the second and third sets of float cells were started up in January and became fully operational late in February.

“Although some desorption occurring in the carbon-in-pulp (CIP) circuit caused carbon adsorption efficiencies to settle at a level marginally lower than the design parameters of the plant, the overall target to reduce residue grade by 0.03 g/t was achieved, resulting in record gold production for the month of March,” he stated, adding that the average, overall yield was stable at 0.197 g/t.

Pretorius said the load-reduction arrangement reached with State-owned power utility Eskom meant that reductions in throughput owing to power supply constraints were “negligible”.

He added that back-up generators installed in the second half of 2014 had kept the circuit stable on the few occasions that power to the Ergo plant had been cut.

Nonetheless, despite these power challenges, total plant throughput was 3% higher at 5.8-million tons, compared with the 5.6-million tons produced in the second quarter of the year.

“Total cash operating costs were 7% higher at R436.5-million owing to higher throughput,” noted Pretorius.

Looking ahead for the next few months, Pretorius said the company would be overhauling the asset maintenance system to avoid “unnecessary” interruption to production owing to breakdowns and to coordinate maintenance over the entire circuit.

“We will also complete a number of operational projects, including the refurbishment of the remaining five carbon-in-leach (CIL) tanks at Ergo to raise volume capacity by 300 000 t/m and start reclamation operations from the Van Dyk site.

“Additionally, we aim to complete the construction of the Rondebult water plant and pipeline to supplement water supply to the operations and the conversion of the high-grade CIP circuit to CIL to improve leaching and adsorption in the high-grade circuit,” he concluded.