Johannesburg, South Africa. Tuesday, 2 September 2014. DRDGOLD Limited (DRDGOLD; JSE, NYSE: DRD) recorded a 13% increase in gold production to 34 143oz and a 5% rise in revenue to R447.4 million for the quarter ended 30 June 2014, offsetting the impact of a 4% drop in the average Rand gold price received to R437 770/kg. A quarter on quarter increase in cash and cash equivalents allowed DRDGOLD, despite a very challenging third quarter, to declare a dividend of 2 South African cents per share (SA cps). This is the seventh consecutive year that DRDGOLD has declared a dividend.
Key to improved operating and financial performance in the quarter under review was the decision towards the end of the previous quarter to declare ‘timeout’ for the new High Grade Section at Ergo’s Brakpan plant; in effect, to suspend operation of the High Grade Section in order to both stabilise operation of the established Low Grade Section and to prepare the High Grade Section for further test work.
Higher gold production resulted from a 5% increase in throughput to 6 131 000t, a consequence of fewer power- and weather-related disruptions, and a 7% rise in the average yield to 0.173g/t, due mainly to improvement in loaded carbon efficiency.
Cash operating costs were 8% lower at R379 039/kg, reflecting the increase in gold production, and all-in sustaining cash costs were 27% lower at R339 315/kg.
Operating profit was 3% higher at R52.6 million and the cash operating margin improved by 44% to 13%. Earnings before interest, taxes, depreciation and amortisation (EBITDA) strengthened substantially to R114.1 million from R16.0 million and headline earnings of 10 SA cps were recorded compared with a headline loss of 7 SA cps.
On the High Grade Section, DRDGOLD CEO Niël Pretorius says test work began in mid-August – ahead of schedule, due to the June quarter’s improved production and cash flow – and will continue at least until calendar year-end. Information from this test work will inform the rate at which material passing through the High and Low Grade Sections will be built up.
Ergo is now also successfully processing higher grade material sourced ‘over the fence’ from an independent operator, Pretorius says, and similar co-operative ventures, and acquisitions, will be considered to take full advantage of its considerable infrastructure.
Results for FY2014 reflect the negative impact of problems during the year relating to the integration of the High and Low Grade Sections, Pretorius says.
James Duncan, Russell and Associates
+27 11 880 3924 (office)
Investor and Media Relations
Phil Dexter, St James’s Corporate Services
+44 (0) 20 7796 8644 (office)
+44 (0) 779 863 4398 (mobile)
For more information, please visit www.drdgold.com
Many factors could cause the actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, adverse changes or uncertainties in general economic conditions in the markets we serve, a drop in the gold price, a sustained strengthening of the Rand against the Dollar, regulatory developments adverse to DRDGOLD or difficulties in maintaining necessary licenses or other governmental approvals, changes in DRDGOLD’s competitive position, changes in business strategy, any major disruption in production at key facilities or adverse changes in foreign exchange rates and various other factors. These risks include, without limitation, those described in the section entitled “Risk Factors” included in our annual report for the fiscal year ended 30 June 2013, which we filed with the United States Securities and Exchange Commission on 25 October 2013 on Form 20-F. You should not place undue reliance on these forward-looking statements, which speak only as of the date thereof. We do not undertake any obligation to publicly update or revise these forward-looking statements to reflect events or circumstances after the date of this report or to the occurrence of unanticipated events. Any forward-looking statement included in this report have not been reviewed and reported on by DRDGOLD’s auditors.