DRDGold reports earnings surge after new project comes online
Tailings retreatment specialist DRDGold, whose share price more than doubled in 2019, reported a 69% surge in revenue during its half-year to end-December, mostly due to the effect of a full period of production from a new project.
Revenue at its Far West Gold Recoveries project surged to R521.8m from the previous year’s R19.5m, with the company also benefiting from a higher gold price.
The Far West Gold Recoveries project was acquired in July 2018, with the transaction involving a swap of Sibanye-Stillwater’s tailings and one of Driefontein mine’s processing plants for a 38% stake in DRDGold. Earlier in January, Sibanye-Stillwater exercised its options to take a 50.1% stake in DRDGold.
Revenue also rose by R356.6m to R1.589bn at the DRD Gold’s Ergo plant near Brakpan, 50km east of Johannesburg. At Ergo, there was a 3% increase in gold sold and a 26% higher average price in rands for gold received.
The company said at the end of December it had cash and cash equivalents of R543.4m, up 94% from the previous year. The company remains debt free.
DRDGold is SA’s leading producer of gold from tailings dumps, which contain minuscule traces of the metal in processed ore. It is targeting up to 190,000oz of gold in its 2020 financial year to end-June.
It treats more than 24-million tons of tailings a year to the east of Johannesburg and has, with the Sibanye transaction, started processing 500,000 tons a month of tailings west of the historical gold-mining city.
DRDGold’s share price jumped 8.6% to R9.01, a more than three-year high, on Thursday.