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Strategically positioning for growth - Group revenue and operating profit rises by 14% - 17th consecutive year of paying dividends

Details

Published: Wednesday, 21 August 2024 08:01

Johannesburg, South Africa. 21 August 2024. DRDGOLD Limited (JSE: DRD, A2X, NYSE: DRD) reported revenue of R6 239.7 million (FY2023: R5 496.3 million), total operating profit of R 2 081.3 million and total headline earnings of R1 327.2 million (FY2023: R1 274.1 million) for the financial year ended 30 June 2024.

Gold production decreased by 5% to 5 002kg (FY2023: 5 282kg) on the back of a 3% decline in throughput to 22.3Mt (FY2023: 23.0Mt) and a 2% decrease in the average yield to 0.225g/t (FY2023: 0.229g/t). All-in sustaining costs rose by 15% to R946 848/kg (FY2023: R827 148/kg), with the all-in sustaining cost margin at 24%.

Capital expenditure of R2 985.7.9 million (FY2023: R1 145.2 million) the majority of which relates to growth capital.

The Group declared a final cash dividend of 20 SA cents per share for FY2024, marking the 17th consecutive year of dividend payments to shareholders.

Positioning for growth

Commenting on what he describes as an ‘eventful year’, and a ‘mixed bag of outcomes and results’, CEO Niël Pretorius noted that this year’s performance ‘should be seen in a context of work done to position our Company for its next phase to extend life-of-mine’.

“Our purpose is at the heart of what we do: Rolling back the environmental legacy of mining, adding to quality of life. With this longer-term value creation journey in mind, our performance this year should be seen in the context of the transition that DRDGOLD is currently undergoing to reposition for the future.
“We are now positioning to bring on stream by FY2028 a combination of reclamation sites designed to lift tonnage throughput to 3 million tonnes per month, and gold production to just over 6 tonnes per annum.”

Niël notes that the four Ergo sites where commissioning was delayed are now in steady-state, and this, together with the commissioning of a fifth site in June 2024, have restored volume capacity to enable the Company to deliver in line with its guided throughput target.

Progress at Far West Gold Recoveries Proprietary Limited (FWGR) Phase II, and the establishment of the Regional Tailings Storage Facility (RTSF), continues. Once commissioned, the RTSF will not only be large enough to receive the operation’s entire remaining resource in this region but will offer a complete solution to the ongoing impact of tailings storage facilities built over environmentally sensitive aquifers in the region. The breaking of ground at this complex on 5 June 2024 follows the appointment of a leading contractor to construct the RTSF and the receipt of the requisite permits.

Ergo’s solar photovoltaic (PV) plant operational

A key milestone achieved in FY2024 is the substantial completion of the 60MW solar PV power plant at Ergo, 20MW of which is now operational, and the addition of the 160MWh currently underway battery energy storage system. The facility generated 13 113 650kWh of energy during FY2024 amounting to 10% of Ergo’s consumption.

This PV facility has been tied into the Eskom grid, and the infrastructure developed to facilitate this has been handed over to Eskom, enabling the wheeling of excess energy generated at Ergo into the national grid, which will help to offset power consumption in the rest of the business.

Niël commented: “The transition to renewable energy use is an integral part of our approach to decreasing our environmental footprint and impact. Our decarbonisation strategy will see the proportion of renewable energy used rising to around 14 000MWh/month or approximately half of Ergo's overall energy consumption by Q2 of FY2025, resulting in a significant reduction in our Scope 2 emissions”. 

Making an impact beyond mining

DRDGOLD’s model for value creation means that environmental, social and governance (ESG) factors are central to the business and not simply add-ons. Every tonne processed supports environmental regeneration and resource renewal, every kilogram produced creates jobs, supports communities and pays taxes. While DRDGOLD’s ethos – doing more with less, and with less impact – makes good business sense, it also has a substantial positive environmental and social impact.

DRDGOLD employed 893 people in FY2024, paying salaries and benefits of R734.9 million (FY2023: 927 people and R663.4 million respectively). The Group paid R72.5 million (FY2023: R314.8 million) in income tax, while PAYE collected and paid to the fiscus amounted to R208.3 million (FY2023: R183.1 million).

DRDGOLD takes an integrated ecosystem-based approach to climate change, that not only seeks to transition to renewable energy but also addresses water usage and biodiversity. A significant way in which the Company makes its impact, is through the pursuit of environmental regeneration and social renewal, through recovery, processing and rehabilitation, making usable land available for people and reducing historical environmental impacts. Over the past 12 years, DRDGOLD has removed and reprocessed more than 138 mine dumps, clearing and restoring around 700 hectares of previously sterile land for productive use.

Looking ahead

Niël concludes: “Ergo’s near and medium-term outlook, with its newly commissioned reclamation sites and the added benefit of 60MW of renewable power, is positive and it is well positioned to deliver on its strategy to add, at a capital cost of approximately R3.1 billion, funded substantially from ongoing operations, potentially another 14 years of production.

While the buoyant gold price is welcome, the construct of our cost profile is changing to offer better resilience should the cycle turn. Key drivers in this regard include decreasing the complexity of our operations by systematically reducing the Ergo operating footprint from 15 sites to 5, lower energy costs from the solar plant and a reduction in mechanised lifting and haulage of reclamation material.

At FWGR, we anticipate capital investment of some R7 billion over the next five years, with beneficial occupation of the RTSF targeted for the second half of the 2027 calendar year. A monthly throughput capacity of 1.2 million tonnes at the Driefontein 2 plant is planned for the second half of the 2027 calendar year. This could potentially add 25 years to FWGR life of mine.”

The Company guides output for FY2025 of between 155 000 ounces and 165 000 ounces of gold (depending by and large on volume throughput) and cash operating costs at approximately R870 000/kg. Planned total capital investment for the year is approximately R3.5 billion. 

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