The processing facilities and water filtration beds at the Ergo gold recovery plant, run by DRDGold, as seen from the air in Brakpan. Picture: BLOOMBERG
The processing facilities and water filtration beds at the Ergo gold recovery plant, run by DRDGold, as seen from the air in Brakpan. Picture: BLOOMBERG

Tailings retreatment specialist DRDGold will report an enormous leap in annual profit as it realised the benefits of a second source of gold and a higher gold price.

In annual results to end-June, DRDGold, which processes old gold dumps to the east and west of Johannesburg, said its post-tax profit increased to R78.5m from R6.5m the year before.

Revenue grew to R2.8bn from R2.5bn, with the new Far West Gold Recoveries unit contributing R185m since it began commercial production in April 2019.

DRDGold, which will release its annual results on September 3, acquired the West Rand tailings from Sibanye-Stillwater, which took a 38.5% stake in the tailings miner in exchange.

Gold production for the year increased to 4,826kg from 4,679kg at an all-in sustaining cost of R524,713/kg, up from R505,622/kg a year before.

DRDGold sold 4,783kg of gold during the year. It did not give an explanation as to why it did not manage to sell 43kg of gold during the year.

Earnings a share will be up to 11.95c compared to 1.5c a share a year before, despite the 265-million shares issued to Sibanye. Headline earnings, which account for once-off items, were forecast at a maximum 11.07c a share compared to 1.7c a year earlier.

On an all-in cost metric, which included the capital to bring the Far West gold operations into production, costs were R600,941/kg compared to R524,651/kg.

The all-in cost for Far West Gold Recoveries was R1.5m/kg,  but this includes the capital spent and will drop off sharply now that spending on the project is largely completed.

On an all-in sustaining cost basis, however, the operation came in at R450,852/kg for its 333kg of gold production. It sold 305kg of gold in the period.

Far West Gold Recoveries underperformed versus DRDGold’s expectations, with lower-than-expected revenue because of the three-month delay in reaching commercial production due to an equally long wait to conclude the deal with Sibanye.

DRDGold’s cash holdings fell to R279m from R302m, but it had no debt after raising and repaying R192m during the financial year. The money was used at the new project.

seccombea@businesslive.co.za