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DRDGOLD on track to reach upper end of fiscal 2021 output guidance as revenue surges 41% in first half

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DRDGOLD Limited (NYSE:DRD) (JSE:DRD), the South Africa mine tailings group, says it is on track to reach the upper range of its output guidance for fiscal 2021 as it reported a 41% increase in revenue in its first half. 

In the six months to December 31, 2020, the gold producer reported revenue of R2,977.4 million (US$205.2 million). This increase was largely due to the higher average Rand gold price received – at R988,009 per kilogram (kg) (US$68,070), which also offset the 2% decrease in gold production across the group. 

READ: DRDGOLD continues to benefit from higher Rand gold price as it reports profit boost for first half

Notably, the miner has declared an interim dividend of 40 South African cents per share for the period. 

DRDGold is majority-owned by Sibanye-Stillwater, the major platinum group metals (PGMs) and gold producer. DRDGold operates the Ergo Mining Operations (EMO) business on the eastern Witwatersrand, and also the Far West Gold Recoveries (FWGR) project.

CEO Niël Pretorius told investors on Tuesday that despite the challenges of the coronavirus (COVID-19) pandemic, an erratic Eskom (South Africa’s public power group) and some fierce weather, the company was “tracking toward” the upper range of its full-year 2021 production guidance of 185,000 ounces (oz) gold and well within the cash operating cost guidance of around R535,000 per kg.

“Further, we have managed – in particular with FWGR – to continue our growth trajectory,” he added.

At FWGR, work for a definitive feasibility study (DFS) and planning for the Phase 2 project continued apace in the first half, while the amended design for the regional Tailings storage facility (TSF) was submitted to the Department of Water and Sanitation in November last year, the company noted.

Meanwhile, at Ergo, reclamation began from the 4L30 dump, a fourth residue line to the Brakpan TSF was installed and smaller, more manoeuvrable cyclones at the Brakpan TSF were added.

Increased capital expenditure in the period at both Ergo and FWGR accounted partly for the group’s higher all-in sustaining costs (AISC) – up 14% to R650,915/kg (US$44,850/kg) at Ergo and 40% up to R365,070/kg (US$25,144/kg) at FWGR.

“The gold price outlook and the performance of the business allow us to take a bolder view on the design parameters of Phase 2 in terms of volume throughput and deposition capacity, to position it strongly for regional consolidation. At Ergo, planning work on increasing deposition capacity is well advanced,” Pretorius added.

 “Much about the pandemic’s passage – in South Africa and the world – remains uncertain. All of our capital investment strategies, therefore, are viewed with due regard to the potential volatility and risk associated with this.”

As reported earlier this month, as of December 31, 2020, DRDGold’s cash and cash equivalents was R2,169.4 million (US$149.2 million) with a revolving credit facility with ABSA Bank Limited of R200 million (US$13.7 million) available.

Notably, it remained free of any bank debt at the end of the year and its liquidity is enhanced by current high Rand gold price levels.

Contact the author at [email protected]

Story by ProactiveInvestors


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