DRDGOLD Limited (NYSE:DRD) (JSE:DRD), the South Africa mine tailings retreatment specialist, told investors Monday that it expects profits to more than double in its first half to end-December 2020 amid a continued higher Rand (R) gold price and increased revenue.
In a trading statement, the mining group said it expected to report earnings per share (EPS) of between 106.2 cents and 115.8 cents per share for the six month period compared to 48.4 cents for the previous corresponding period.
Revenue is expected to be 41% higher at R2,977.4 million (US$198.5 million), compared to R2,111.4 million (US$140.4 million) in the same period of 2020.
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DRDGold is majority-owned by Sibanye-Stillwater, a major platinum group metals (PGMs) and gold producer. It operates the Ergo Mining Operations (EMO) business on the eastern Witwatersrand, and also the Far West Gold Recoveries (FWGR) project.
FWGR’s revenue increased to R708.7 million (US$47.2 million), compared to R521.8 million (US$34.7 million) in the same period of 2020, due mainly to the 42% increase in the Rand gold price received, the company said.
Meanwhile, Ergo’s revenue increased to R2,268.7 million (US$151.2 million), from R1,589.6 million (US$105.9 million) in 2020, boosted as well by a 1% increase in gold sold.
Volume throughput at Ergo increased by 3% to mitigate a 3% decrease in yield, mainly down to the depletion of high-grade reserves available to the Knights plant.
At Ergo, cash operating costs increased by 10% and at FWGR, they went up by 14%.
As of December 31, 2020, DRDGOLD’s cash and cash equivalents was R2,169.4 million (US$144.5 million), with a revolving credit facility with ABSA Bank Limited of R200 million (US$13.3M) 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 giles@proactiveinvestors.com