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DRDGOLD reports 44% jump in earnings

[www.businesslive.co.za] -- South African gold miner DRDGOLD has reported a 44% increase in quarterly headline earnings per share for the March quarter.

Headline earnings were 12.5c a share compared to the December quarter’s 8.7c and the 0.4c reported for the March quarter last year.

Production in the three months to end March dropped 3% to 67,387 ounces from 69,446 ounces in the December quarter. Production was, however, 8% higher than the 62,404 ounces reported in the corresponding quarter last year.

Ergo recovered 8% more ounces but lower production from its Blyvoor and Crown operations pulled the total production number down.

Revenue at R655.9 million was virtually unchanged and reflected how the 3% increase in the average Rand gold price received to R312,913/kg offset the lower gold production. A 2% increase in cash operating costs to R506.4 million, however, resulted in a 4% decline in operating profit to R145.1 million.

Deferred taxation was substantially lower at R5.5 million, leaving net profit 42% higher at R59.1 million. Net cash generated by operations up 53% to R120.4 million and EBITDA of R100.7 million was reported.

Also reporting its nine month figures, DRDGOLD said production was 13% higher at 202,100 ounces from the 179,562 ounces produced in the nine months to end March 2010. Net profit of R92.5 million for the nine months showed a turnaround from the net loss of R44.6 million reported for the corresponding period the year before. Headline earnings for the nine months came to 20.4c, compared to a headline loss of 11.2c a share previously.

Looking ahead, DRDGOLD CEO Niel Pretorius said that operationally the company’s focus would remain the construction of the Crown/Ergo pipeline and Ergo plant upgrade. The Crown/Ergo pipeline project on schedule and within budget, the company said.

In the coming months the company will also be decommissioning the Topstar site and commencing reclamation from two other sites, while work on the integration of the Crown Central and City Deep plants into Ergo, will also get underway.

The board has approved a R37 million three year exploration project in relation to the ERPM Extension 1 and 2 exploration tenements in order to further define the estimated resource of 18 million ounces.

"Further to our announcement in the previous quarter regarding the separation of assets, the board has now concluded that Blyvoor no longer fits the core strategic focus of the company. It has therefore resolved to sell the mine and has appointed Royal Bank of Canada as well as Beijing Axis to advise on the transaction," said Pretorius.