DRDGOLD’s financial year ended on a high following an increase in the group’s operating profit to R1 562.1 million.
The company has also declared interim dividends of 50 SA cents per share for the year ended 30 June 2020, bringing the total dividend to 85 SA cents per share. Commenting on DRDGOLD’s 2020 financial year, CEO Niël Pretorius said, “The first half was characterised by solid performance and a sense of confidence about our ability to at the least maintain this, but by the middle of the third quarter the COVID-19 pandemic was upon us all.”
He added that amidst the fear, uncertainty and challenges since March, investors globally have turned to gold and gold stocks. “This has handsomely reflected in our revenue and margin for the year. Free cashflow was R926.4 million and our market capitalisation mushroomed from R3 billion to more than R23 billion.”
Pretorius attributes DRDGOLD’s healthy performance to the set-up of the business. “Surface-based, tightly staffed and substantially automated, we were well-positioned relative to much of the mining industry to implement the global and national recommended COVID-19 precautionary measures, to leverage the gradual easing in lockdown regulations and to get back into business.”
The group’s total gold production increased by 9% to 5 424kg, reflecting an 8% increase in total throughput and a 5% increase in average yield as Far West Gold Recoveries (FWGR) achieved stable production and made its first full 12-month contribution.
Group revenue increased by 52% to R4,185.0 million due to higher gold production and gold sold, together with an extraordinary 33% rise in the average Rand gold price received to R768, 675/kg.
Cash operating costs were 8% higher at R2 626.0 million, due mainly to the inclusion of the cash operating costs of FWGR for the full financial year.
Headline earnings of R634.5 million (82.4 SA cents per share) were reported compared with headline earnings of R72.7 million (10.9 SA cents per share) in the comparative period.
Looking ahead to the 2021 financial year, Pretorius said DRDGOLD is cognisant that the COVID-19 risk will remain for some time, and its impact on the business will need to be continually managed and reviewed. With this, he anticipates larger social obligations and supplier risks, the former requiring continuing support to DRDGOLD’s neighbouring communities.
“Good progress has been made in advancing Phase 2 of FWGR and we are well into the planning and permit application processes. In terms of other growth prospects, the business seeks to play a bigger role in the Sibanye-Stillwater environmental value proposition and to leverage the opportunities of other non-core surface assets in their portfolio,” he concluded.