DRDGOLD has declared a dividend of 20 SA cents per share for the financial year ended 30 June 2019 – a threefold increase on that declared for FY2018 and marking 12 consecutive years of dividend yield.
CEO Niël Pretorius describes FY2019 for the industry as a whole as “exceptionally challenging…fraught with disruptive labour action, the near-collapse of power utility Eskom and a loss of investor confidence, as evidenced by capital freeze and high-profile corporate emigrations.
“DRDGOLD’s performance, however, was not just contrary to the industry trend, but testimony to the resilience of a business model that has been several years in the making,” says Pretorius.
Group gold production was 6% higher at 4 977kg, due mainly to 484kg produced by the company’s new operation, Far West Gold Recoveries (FWGR). Gold production from the Ergo operation was 4% lower at 4 493kg due to a 5% decline in ore milled to 23 162 000t.
Group revenue increased by 11% to R2 762.1-million – R2 577.5-million from Ergo and R184.6-million from FWGR. Ergo’s revenue was 3% higher due to the higher average Rand gold price received reducing the impact of lower gold sales.
Group operating profit was up 5% to R371.8-million after accounting for group cash operating costs of R2 422.9-million. FWGR’s contribution was R89.0-million after accounting for cash operating costs of R111.8-million while that of Ergo was 20% lower at R282.8-million after accounting for cash operating costs, 7% higher at R2 311.1-million.
Headline earnings were substantially higher, increasing to R72.7-million (10.9 SA cents per share) from R7.0-million (1.7 SA cents per share). The increase includes a non-recurring credit of R60.0-million relating to a change in estimate of the provision for environmental rehabilitation.
In FY2020, Pretorius says, DRDGOLD looks forward to seeing the full benefits of Ergo’s completed capital projects and the attainment of steady-state operations at FWGR Phase 1 flowing through to the Group bottom-line.
“We expect also to advance planning for commencement of FWGR Phase 2.” For the 2020 financial year, group gold production of between 175 000 and 190 000 ounces at a cash operating cost of approximately R490 000/kg is planned.
On the current gold price of approximately R740 000 per kilogram, up R162 000 per kilogram on the average gold price received during FY2019, Pretorius says, “Time will tell if this is sustainable, but while it lasts the impact on our cash flows is nothing short of remarkable.”