Johannesburg, South Africa. 06 February 2024. DRDGOLD Limited (JSE: DRD, A2X, NYSE: DRD) in a voluntary trading statement and trading update released today, reported a revenue of R2 974.2 million and cash operating costs of R2 097.1 million for the six months ended 31 December 2023 (HY1 FY2024).
DRDGOLD’s condensed consolidated unaudited interim results for HY1 FY2024 are expected to be published on SENS on or about 14 February 2024. The Company expects to announce earnings per share (EPS) and headline earnings per share (HEPS) of between 65.3 cents and 71.5 cents compared to EPS and HEPS of 62.3 cents for the six months ended 31 December 2022 (HY1 FY2023), being an increase of between 5% and 15%.
The expected increases in EPS and HEPS for HY1 FY2024 compared to HY1 FY2023 are mainly due to movements in the following:
An increase of R319.9 million (12%) in Group revenue to R2 974.2 million (HY1 FY2023: R2 654.3 million).
Ergo’s revenue increased by R234.5 million to R2 193.0 million (HY1 FY2023: R1 958.5 million), mainly due to a 22% increase in the Rand gold price to make up for the 8% decrease in gold sold to 1 872kg (HY1 FY2023: 2 040kg). Gold production decreased as a result of a decrease in throughput tonnages to 8.1Mt (HY1 FY2023: 9.8Mt) due to ongoing delays in the regulatory approval for 4L3 and community interference in respect of 5L27, as well as Ergo having to rely on legacy and clean-up sites to make up tonnes. The impact of the decrease in throughput tonnage was offset by a 15% increase in yield to 0.233g/t from 0.203g/t in HY1 FY2023.
Far West Gold Recoveries' (FWGR) revenue increased by R85.4 million to R781.2 million (HY1 FY2023: R695.8 million). The 8% decrease in gold sold to 663kg (HY1 FY2023: 722kg) was offset by a 22% increase in the Rand gold price received. The decreased gold sold was as a result of a lower head grade from the new Driefontein 3 site than that of the depleted Driefontein 5 site, resulting in a 12% decrease in yield to 0.215g/t (HY1 FY2023: 0.245g/t).
Cash operating costs
The impact of the increase in revenue on earnings and headline earnings was moderated by a 14% increase in Group cash operating costs of R257.5 million to R2 097.1 million (HY1 FY2023: R1 839.5 million).
At Ergo, cash operating costs increased by R197.8 million (12%) to R1 792.0 million (HY1 FY2023: R1 594.2 million) due to double digit increases in machine hire costs and contract reclamation costs driven by the reclamation of remnant material on legacy and clean-up sites and increased diesel prices.
At FWGR, cash operating costs increased by R59.8 million (24%) to R305.1 million (HY1 FY2023: R245.3 million) due to increases mainly in reagent usage, in particular lime and steel balls, in response to the increased acidity and coarser material reclaimed from Driefontein 3. Electricity costs also increased as a result of the reclamation of Driefontein 3 and the installation of a high shear agitator at the Driefontein 2 plant to release more gold. Machine hire costs were higher due to the continued clean-up of Driefontein 5 and increased diesel prices.
Cash expenditure on capital projects increased by R687.4 million (177%) to R1 074.7 million (HY1 FY2023: R387.3 million). The significant increase was due to the establishment of the solar power plant at Ergo which is scheduled for substantial completion in March 2024, with battery storage facilities scheduled to be completed by October 2024.
As at 31 December 2023, DRDGOLD held R1 529.4 million in cash and cash equivalents compared to R2 392.2 million as at 31 December 2022 (30 June 2023: R2 471.4 million). During HY1 FY2024, DRDGOLD had a free cash outflow (cash inflow from operating activities less cash outflow from investing activities) of R370.8 million (HY1 FY2023: free cash inflow of R215.4 million) after a R685.7 million increase to R1 107.2 million in investing activities (HY1 FY2023: R421.5 million) and paying cash dividends of R559.4 million (HY1 FY2023: R342.5 million).
The Group remains free of any bank debt as at 31 December 2023 (FY2023: Rnil).
Production and cash operating cost per unit guidance
In DRDGOLD’s integrated annual report 2023 published on 30 October 2023, the Company issued a production guidance for the year ended 30 June 2024 of between 165 000 ounces and 175 000 ounces, with the new reclamation sites now in operation at Ergo. DRDGOLD expects to remain within range albeit to the lower end. Although we expect the cost pressures experienced in the first half of the financial year to ease going forward, the Group has increased its cash operating unit cost guidance from R770 000/kg to R800 000/kg.
At Ergo, the construction of the solar power plant remains on track with 14MW currently being drawn by the Ergo plant.
Specialist studies required for the environmental and water use license authorisation for the expansion of the Brakpan/Withok Tailings Storage Facility are ongoing, and the Company expects the design to be submitted to the Department of Water and Sanitation by the end of FY2024.
At FWGR, Phase II is underway to double the capacity at the Driefontein 2 Plant and build the 800Mt Regional Tailings Storage Facility (RTSF). DRDGOLD expects the regulatory approvals required to start construction of the RTSF are imminent.
The financial information contained in this announcement is the responsibility of the directors of DRDGOLD, and such information has not been reviewed or reported on by the Company’s auditors.
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