Top executives at DRDGold remain optimistic about the future, forecasting 2024 as a favourable year despite a notable decline in production.
The gold producer is committed to a substantial R10 billion capital investment programme aimed at increasing output over the next four years.
Currently, DRD Gold anticipates an output of approximately five tons of gold, but aims to enhance this figure to six tons as part of its ambitious strategy. The projected dip in production is attributed to delays around the commissioning of new reclamation sites at its Ergo operations, yet leadership insists that this will not deter their vision for growth.
DRDGold chairman Tim Cumming, and CEO Niël Pretorius, said in the company’s annual report released this week that despite the production setback, 2024 was proving to be favourable for the company.
“As an unhedged producer, we enjoyed the full benefit of the higher gold price of R1 248 679 per kilogram received over the year. This increased year-on-year revenue by 14% to R6.2bn,” they said.
Moreover, after paying dividends for 2023 full year and 2024 half year totalling R731.7 million, income taxes of R72.5m and re-investing R2.98bn in capital projects, the company closed the June 2024 trading year with cash balances of R521.5m.
Capital projects undertaken during the year under review include a 60MW solar power plant and a further 160MWh battery energy storage system
DRDGold is geared to continue investing in capital projects. The R10bn planned for the next four years will be central for its strategy upto 2028.
Through capital investment projects, the company is keen to “establish the infrastructure required to increase the combined throughput capacity of Ergo and Far West Gold Recoveries (FWGR) operations to 3m tons per month, up from the current 2.15m tons, and to increase the technical capacity to produce approximately six tons of gold” per year.
Over the year to June 2024, steady performance from FWGR together with higher grades from several clean-up sites helped to soften the impact of delayed commissioning of sites at Ergo, with the company attaining 93% of its planned gold output.
“We believe that the embedding of sustainable development in our operating and financial construct is a compelling differentiator for DRDGold in an industry where the sustainability of ESG is being questioned ever more by the investor market for weighing down the financial bottom line,” Pretorius commented.
The company had an operating profit of R2bn for the year to June and free cash outflow of R1.1bn. It spent R40.8m on environmental management with 41 hectares of land clearance applications submitted to the National Nuclear Regulator for approval.
“Construction of the Regional Tailings Storage Facility at FWGR is underway,” it added.
DRDGold narrowed down cash operating costs by 4% despite elevated electricity tariffs during the quarter to September after it grew production by 7% and raised sales volumes by 53 kilograms.
Shares in DRDGold traded at R21.80 in afternoon trade on the JSE yesterday. The gold producer’s stock has rallied on the JSE over the past few months.
BUSINESS REPORT