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DRDGOLD reports increased revenue and earnings in fiscal year as investors turn to the yellow metal

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DRDGOLD Limited (NYSE:DRD) (JSE:DRD) reported higher revenue, earnings and margin in its financial year ended June 2020 as investors turned to gold amid the global pandemic.

Despite the problems caused by the coronavirus (COVID-19), the South Africa mine tailings retreatment specialist said its revenue for the 12 months had increased by 52% to R4,185 million (US$251.5 million).

READ: DRDGold expecting near sevenfold increase in earnings per share for its fiscal year

This was down to higher gold production from the firm and the amount it sold of the yellow metal, coupled with a whopping 33% rise in the average rand gold price received to R768,675 per kilogram (kg) (US$46,207).

The group’s headline earnings for the year came in at R634.5 million (US$38.1 million) (82.4 SA cents per share) were reported compared with headline earnings of R72.7 million (US$4.36 million) (10.9 SA cents per share) in the same period a year ago.

DRDGold declared a final dividend of 35 SA cents per share (US$0.021) for the fiscal year, following a more than four-fold increase in the group’s operating profit to R1,562.1 million (US$93.9 million). The total dividend over the year was 85 SA cents per share (US$0.051).

“The first half was characterized by solid performance and a sense of confidence about our ability to at the least maintain this, but by the middle of the third quarter the COVID-19 pandemic was upon us all,” noted the group’s CEO Niël Pretorius.

“Amidst the fear, uncertainty and challenges since March, investors globally have turned to gold and gold stocks. This has handsomely reflected in our revenue and margin for the year. Free cashflow was R926.4 million and our market capitalisation mushroomed from R3 billion to more than R23 billion.”

Looking ahead, Pretorius said he expects the COVID-19 risk to remain for some time, and its impact on the business would need to be “continually managed and reviewed”.

“Good progress has been made in advancing Phase 2 of FWGR and we are well into the planning and permit application processes. In terms of other growth prospects, the business seeks to play a bigger role in the Sibanye-Stillwater environmental value proposition and to leverage the opportunities of other non-core surface assets in their portfolio,” he added.

For the 2021 financial year, DRDGold plans production of between 165,000 and 185,000 ounces at a cash operating cost of around R535,000 per kg (US$32,179 per kg).

Contact the author at [email protected]

Story by ProactiveInvestors


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