In the media

DRDGOLD to boost production to 400,000 oz

[Mineweb] - DRDGOLD has reported a big jump in headline earnings per share due to high gold prices, despite a drop in output. However, the firm is expecting to ramp up production to 400,000 ounces soon.

South Africa’s No. 4 gold miner, DRDGOLD, said on Thursday it aimed to produce more gold and reported a big jump in year earnings on a stronger gold price, sending its shares four percent higher.

DRDGOLD Chief Executive John Sayers also said he would hand over the reins to Niel Pretorius, the company’s managing director of its South African operations.

Sayers, whose contract expires at the end of this year, has overseen the company’s new strategy to mine only in South Africa after selling all its overseas assets to revamp its performance.

The company now aims to produce 400,000 ounces by 2011.

"From being an embattled gold miner trying unsuccessfully to make the best of a suite of mismatched assets in two vastly different geographic regions of the world, we have returned pretty much to our roots," Sayers said in a statement.

"We are once again a distinctly South African gold miner doing what we do best."

DRDGOLD’s stock rose 3.53 percent to 4.40 rand by 0929 GMT, beating a 0.26 percent rise in the gold sector index.

The company declared a final dividend of 10 cents per share.

"The company is doing well because it sold off its international assets and used that cash to get rid of its debt, and this has turned around the company’s fortunes, it’s quite a simple strategy really," T Sec analyst Nick Goodwin said.

Pretorius said his vision was to focus on organic growth rather than mergers, and sustain the company’s output growth.

"The 400,000 target is not a forecast, it’s an ambition, a statement of strategic interest," Pretorius told Reuters.

"After bringing consistency in our operations, this is the next step, this is where we want to be in 2011."

Production in the first quarter of 2009 is expected at between 70,000 to 75,000 ounces from 71,211 ounces in the fourth quarter, during which two of DRDGOLD’s three mines, Blyvoor and Crown, recovered, Pretorius said. But he was concerned about the impact of interruptions from labour strikes and safety issues.

Gold output for the year fell 33 percent to 321,432 ounces, partly as a result of the mines sold in Australasia.

Full-year adjusted headline earnings per share rose to 64.9 cents in the year to end-June versus 3.8 cents last year. Headline EPS is the main gauge of profit in South Africa, and excludes non-trading, capital and certain one-off items.

The company would decide the fate of its struggling third mine, ERPM, by December this year, Pretorius said. The mine is undergoing a feasibility study that would recommend it either be scaled down and closed or have fresh capital investment.

Pretorius saw gold rising again to around $1,000 an ounce by June next year, which he said bodes well for the firm’s plans. He said even at current prices, DRDGOLD was "in good shape" as far as the price of the metal was concerned vis-a-vis its costs.

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