JSE-listed gold miner DRDGold expects headline earnings per share (HEPS) to be lower by between 1% and 9% for the full year to June 2024 after operating costs soared by 14%, negating an increase in revenue by a similar margin.
With the company warning that its HEPS for the full year will be lower compared to the previous year’s 148.2 cents per share, shares in DRDGold were trading 1.45% weaker on the JSE yesterday afternoon at R16.97 per share.
Revenues in the company for the full year firmed by 14% to R6.2 billion. DRDGold’s Ergo Mining Proprietary Limited division raised revenue by R416.3 million to R4.5bn, attributable to a 20% increase in the rand gold price received.
However, the amount of gold sold by Ergo during the year to June slumped by 8% to 3 625 kilograms as a result of a decrease in throughput tonnages from 17.3 tons in 2023 to 16.1 tons.
The lower gold sold for the period has been attributed to a reduction in tonnage throughput, which was impacted by the late commissioning of two sites.
DRDGold’s Far West Gold Recoveries Proprietary Limited (FWGR) raised revenue by R327.1m during the year under review to R1.714bn. The company has attributed this to a firming in the rand gold price received as well as a 2% increase in gold sold from the operation which amounted to 1 364 kilograms.
“The increase in gold sold was mainly due to a 9% increase in throughput tonnages from 5.7 tons to 6.2 tons,” said the company.
“However, the lower head grade of the top-layer material reclaimed at Driefontein #3 resulted in a 7% decrease in yield from 0.237 grams per ton in the previous corresponding period to 0.221 grams per ton.”
DRDGold said production delays, reclamation activities at clean-up sites and the rehabilitation programme to process material at legacy sites had resulted in the group falling short of its production guidance of between 165 000 ounces and 175 000 ounces. The company produced 160 850 ounces.
It also exceeded its cash operating unit cost guidance of R800 000 per kilogram, with unit costs expected to be approximately between R820 000 per kilogram and R835 000 per kilogram during the year to June 2024.
But with Ergo’s replacement reclamation sites now fully operational and the clean up programme coming to an end, the operation’s production is expected to stabilise for the upcoming financial year ending June 30, 2025.
DRDGold’s cash expenditure on capital projects increased by R1.8bn to almost R3bn. This was mainly spent on the construction of Ergo’s solar power plant. The power plant is expected to be completed later this year.
The FWGR Phase II project, aimed at doubling capacity at the Driefontein 2 Plant and to commence the building of the 800 million tons Regional Tailings Storage Facility which is under way, also gobbled up capital during the period to June.
As at the end of the reporting period, DRDGold had R521.5m in cash and cash equivalents compared to R2.471bn a year earlier.
“The Group remains free of any bank debt as at 30 June 2024. To support liquidity in funding the significant capital expansion programme at both operations, the Company secured a R500m general bank facility with Nedbank Limited (which) remained undrawn at 30 June 2024,” said DRDGold.
Additionally, the company has recently entered into a committed 5-year R1bn revolving credit facility with an uncommitted R500m accordion option with Nedbank.
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