DRDGOLD Limited (DRDGOLD; JSE, NYSE: DRD) has reported a nine per cent increase in operating profit to R679.3 million for the financial year ended 30 June 2013 compared with FY2012, and a consequent 11% increase in headline earnings per share (HEPS) to 68 South African (SA) cents.The company has declared a final dividend of 14 SA cents per share, contributing to a total distribution for the year of 28 SA cents, up 180% on the previous year. Gold production for the year was 8% higher at 146 381oz, reflecting an 8% increase in ore milled to 23 254 000t and a slight increase in recovered grade, from 0.195g/t to 0.196g/t. Revenue increased by 18% to R2 076.5 million, a consequence both of higher gold production and a nine per cent improvement in the average rand gold price received to R458 084/kg. All-in sustaining unit costs, as defined by the World Gold Council, rose by 10% to R365 569/kg. Key contributors were the costs associated with the mining of additional sand resources at the Knights plant and above-inflation increases in the cost of labour, electricity and reagents. The all-in sustaining costs margin was steady at 20%. Capital expenditure was 13% higher at R361.5m, due mainly to continued development of the flotation/fine-grind circuit at Ergo’s Brakpan plant.
While higher capex and a 10% drop in the average rand gold price received during the fourth quarter resulted in a 53% decline in free cash flow generated to R97.9m, this cash – together with debt raised during the year of R165m – resulted in an increase in cash and cash equivalents to R377.2m.In respect of the company’s Zimbabwe assets, which have been up for sale, expressions of interest have been received and negotiations to conclude the sale are continuing. The small Cason underground operation has been placed on care and maintenance. Looking ahead to the first half of FY2014, CEO Niël Pretorius says commissioning of the flotation/fine-grind circuit at Ergo’s Brakpan plant will continue, with a view to achieving completion and stable production by December 2013. For the ensuing year as a whole, there will be increased focus on achieving sustainable profits and to deliver into the targets set for reduced potable water usage and dust emission, Pretorius says. “We will invest substantially in development of social capital; in particular we want to improve our employees’ competence in the area of personal financial management, to curb the associated scourges of over-indebtedness and garnishee orders. “On the technology front, we will look afresh at the potential our new technologies offer in terms of greater scale, both within our existing footprint and further afield.”