Higher gold production pushed DRDGold firmly into an interim profit, marking a turn in the company’s fortunes as it embarks on a big growth project with Sibanye-Stillwater.
DRDGold, a specialist in extracting gold from old tailings dumps around Johannesburg, said its earnings per share would be between 14.16 cents and 14.64 cents for the six months to end-December compared to 0.6 cents per share before.
An 11% increase in gold production compared to the same six months a year earlier offset a 4% decline in the rand price DRDGold achieved for its sales. A year earlier, DRDGold produced 67,508oz of gold for an all-in sustaining cost of R490,531/kg.
Headline earnings per share shot up to between 14.06 cents and 14.54 cents per share compared to a headline loss of 2.4 cents per share.
DRDGold said full-year production would be between 147,000oz and 153,000oz at a cash operating cost of about R475,000/kg.
DRDGold produced 137,114oz during its 2017 financial year to end-June at a cost cost of R489,549/kg. Its all-in sustaining cost that year was R530,930/kg compared to a received price of R548,268/kg.
The full-year forecast for financial 2018 puts the company back at the level of production it had in 2016 when it generated 143,457oz of gold.
DRDGold is in the throes of a company-transforming deal with Sibanye-Stillwater, which has agreed to vend tailings dumps and assets into the smaller company in exchange for a 38% shareholding.
The value of the transaction announced late in 2017 was valued at R1.3-billion.
The assets included a range of gold-bearing dumps near Carletonville west of Johannesburg, as well as three processing plants, transforming DRDGold at a stroke and giving it a platform from which to grow aggressively into Africa and other commodities, said Sibanye CE Neal Froneman and the more circumspect DRDGold CE Niel Pretorius.​