DRDGold sees future in battery metals

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DRDGOLD ends 2021 financial years without debt
DRDGOLD ends 2021 financial years without debt
  • DRDGold operating profit in the 2021 financial year rose to R2.2 billion, thanks to a strong gold price.
  • But its operating costs also increased, due in part to a 15% increase in Eskom tariffs.
  • The company operates gold surface recoveries and tailings retreatment, but it is now also exploring battery metals.

Debt-free DRDGold finished the 2021 financial year with an operating profit of R2.2 billion, a 39% increase from the previous year, thanks to higher production, sales and a firmer gold price.

The mid-tier gold producer, which is involved in the retreatment of surface tailings, lifted headline earnings by 127% to R1.4 billion.

Gold production grew 6% to 5 723kg, while revenue increased 26% to R5.3 billion. DRDGold has benefited from the  elevated gold price, which peaked at $1 971 in August 2020, coupled with a favourable rand-dollar exchange rate.

However, the price has retreated from the peak levels and is currently at around $1795.28.

"By producing and selling more gold at a substantially higher average rand gold price and containing working cost increases reasonably well, we recorded a much higher operating profit," DRDGold CEO Niel Pretorius said.

The company operates the Far West Gold Recoveries, west of Johannesburg, and the Ergo operations in Brakpan which consist of surface recoveries and metallurgical processes.

Gold production from Ergo Mining was 7% higher at 4 263kg, but the cash operating unit costs also climbed - by 11% to  R629 585/kg, due in part to a 15% Eskom tariff increase, which came into effect in April 2021.

DRDGold indicated that it may also start to focus on battery metals, which its primary shareholder, Sibanye-Stillwater had begun exploring.

"We are aligning ourselves with the strategy of Sibanye-Stillwater and will, in addition to our ongoing commitment to rolling back the environmental legacy of mining through tailings recycling... seek to join this race and play our part in the production of these metals from tailings dams and current arisings."

Sibanye-Stillwater owns a 50.1% stake in DRDGold.

DRDGold declared a final cash dividend of 40 cent per share for the financial year to end of June and stated that it had no outstanding debt. "At year-end, the company remained debt-free," the company said.

The company's share price was flat at around R13.86 on the JSE, in mid-morning trading. 

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