DRDGOLD dips into its stockpile as output declines


DRDGOLD dips into its stockpile as output declines


Published Date: 2020-05-08 | Source: Stephen Gunnion | Author: Stephen Gunnion

DRDGOLD dips into its stockpile as output declines

The gold producer sold down its inventory in anticipation of the lockdown, benefitting from a rising gold price.

DRDGOLD has reined it its production guidance for the year after it temporarily halted its operations in March due to the national lockdown.

In a quarterly operating update, the group reported a 13% decline in gold production for the three months to end-March after its tailings retreatment operations at Ergo Mining and Far West Gold Recoveries closed down. However it sold just 3% less gold quarter-on-quarter as it reduced its inventory in anticipation of the lockdown. As a result, cash operating costs per kilogram of gold sold increased by 6% from the previous quarter while the cash operating cost per ton of material processed remained stable.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 18% to R389 million due to a 13% improvement in the price it received for its gold. Costs rose due to an increase in capital expenditure over the quarter. Cash and cash equivalents jumped 238% to R1.83 billion due to free cashflow and cash received from Sibanye-Stillwater after it increased its stake in the gold producer to 50.1% from 38%.

In January, DRDGOLD said it was likely to beat its production guidance of 175,000 to 190,000 ounces of gold for the year to end-June. Due to the lockdown and related interruptions to its business, as well as continuing uncertainty surrounding the pandemic, it now expects to track the lower end of production guidance of 175,000 ounces. However, it said it was benefiting from the increase in the rand gold price, currently above R1 million a kilogram, which has also been boosted by the weaker currency.

DRDGOLD's shares fell 4.8% to R16.90 yesterday. Sibanye-Stillwater declined 2% to R34.75.


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