DRDGold to report higher interim earnings, revenue as rand gold price increases

3rd February 2023 By: Darren Parker - Creamer Media Contributing Editor Online

Gold producer DRDGold expects to report revenue of R2.65-billion for the six months ended December 31.

In a February 3 trading update to shareholders, ahead of the planned publication of its interim results on February 15, the company noted that revenue had increased by 6% year-on-year.

DRDGold subsidiary Ergo Mining achieved a R153-million year-on-year increase in revenue to R1.96-billion for the interim period, owing to an 11% increase in the rand gold price received and a 10% increase in yield to 0.203 g/t.

The subsidiary’s gold sales, however, decreased by 2% to 2 040 kg, as volume throughput decreased by 14% on the back of loadshedding, unscheduled electricity trip-outs at the Ergo plant and excessive rain.

“Volume throughput was also impacted by late phase clean-up at Ergo sites where, as the last material is lifted from the floor of the reclamation site, volumes are typically lower and head grades slightly higher,” DRDGold pointed out.

Meanwhile, DRDGold’s Far West Gold Recoveries (FWGR) subsidiary also reported stable revenue, with a slight increase of R2-million to R695-million.

Volume throughput decreased during the period by 3% mainly owing to severe weather that caused four days of lost production.

Yield therefore decreased by 0.012 g/t. DRDGold said this was partly attributable to the processing of a lower-grade part of the Driefontein No 5 dump and the suspension of milling to curtail load during periods of loadshedding.

Company-wide cash operating costs  increased by 10% year-on-year to of R1.84-billion.

Ergo’s cash operating costs increased by 8% to R1.59-billion and FWGR’s by 18% to R245.3-million.

“At both Ergo and FWGR, these increases were consistent with anticipated double-digit inflationary increases in the cost of reagents, steel-related products electricity and transportation,” DRDGold noted.

The gold producer expects to report earnings a share and headline earnings a share of between 59.5c and 68.1c, compared with 58c for the first half of the prior financial year.