DRDGold shrugs off challenges, declares final dividend

JOHANNESBURG (miningweekly.com) – Surface material gold mining company DRDGold on Tuesday declared a final dividend of 5c a share despite the challenging 12 months to June 30.

DRDGold CEO Niël Pretorius described the company's exacting 2017 financial year as positioning the company well for the 2018 financial year and beyond.

In a shift of its operational centre of gravity to the central and eastern Witwatersrand necessitated by depletion of resources in the west, Pretorius says the recovery of material from a number of legacy reclamation sites and closure of the Crown plant were completed during the year.

Also, three new reclamation sites in the centre and to the east were commissioned and preparation was started for the commissioning of a fourth by the third quarter of financial year 2018.

The cost and time required to mechanically reclaim material from the legacy sites were greater than anticipated.

This, together with the knock-on effect of treating the low-volume material through the normal gold recovery circuit and a drop in the average gold price received combined to impact negatively on the company’s operating and financial performance for the year, Pretorius said.

Gold production was 4% lower at 4 265 kg, reflecting a 5% drop in the average yield to 0.171 g/t.

Operating profit was 41% lower at R256.8-million, after accounting for a 5% increase in total cash operating costs to R2 087.9-million. During the year, costs were rigorously addressed for the longer term, Pretorius says.

Work to centralise water distribution and adjustments to the Ergo plant’s water reticulation system are expected to yield a saving in the cost of water used of some R24-million a year.

More cost benefits are expected to flow from the sweating of the Ergo plant’s electronic monitoring system to improve plant efficiency. A saving of R1.3-million a month in the cost of reagents has already been recorded.

On sustainable development during the year, Pretorius said only five dust exceedances were measured compared with 22 in the previous year, reflecting the positive impact of the company’s ongoing dump vegetation programme.

The total water usage dropped by 8% and usage of externally sourced potable water by 26%, pointing to the success of water distribution system improvements, and 90 ha of land were cleared for redevelopment compared with 62 ha in the previous year.

The number of women in the workforce rose to 20% of the total and R14.3-million was spent on various community and skills development projects, mainly within DRDGold’s operating footprint.