DRDGold considers paying interim dividend as it pumps first-quarter cash
The addition of Sibanye-Stillwater’s tailings and processing plant gives the DRDGold board reason to consider paying an interim dividend
DRDGold started pumping cash as it brought the first phase of its new project into full production, increasing its cash holdings by R54m in the space of three months, prompting the board to consider an interim dividend.
DRDGold, a tailings retreatment specialist which extracts gold from old waste dumps, grew its cash to R333.6m by the end of the September quarter from R279.5m it held at its June year-end.
During the quarter it paid a R136m cash dividend and increased working capital by R134m, but it kept its balance sheet debt free.
“The board of directors will consider the payment of a dividend once the half-year results (for the six months ended December 31) have been finalised,” DRDGold said.
DRDGold ramped up its 2019 final dividend to 20c — its 12th consecutive annual dividend — from the 5c dividend the year before.
The company spent R331m on starting the Far West Gold Recoveries project since it acquired it in July 2018. The transaction involved a swap of Sibanye-Stillwater’s tailings and one of Driefontein mine’s processing plant for a 38% stake in DRDGold.
The project will reach steady state production levels during the 2020 financial year after reaching commercial production in April 2019.
DRDGold reported gold production of 1,493kg in the September quarter, a 5% increase on the previous quarter, boosted by higher processed tonnages at the Far West asset, and a 1% increase in grade to 0.209 grams per tonne.
While the grade improvement sounds small, when considered against the 500,000 tonnes a month treated at Far West Gold Recoveries and 2-million tonnes a month at the Ergo plant near Brakpan, 50km east of Johannesburg, it all contributed to the higher gold output.
All-in sustaining costs increased by 11% to R517,219/kg. DRDGold received R696,368/kg and sold 1,510kg of gold, a 6% increase.
Adjusted earnings before interest, tax, depreciation and amortisation, which is not a formal accounting metric but one used to asses a company’s ability to repay debt, doubled to R326m.