DRDGold, one of South Africa’s leading gold producers, has experienced a downturn in its share price on the Johannesburg Stock Exchange (JSE), a trend attributed directly to a slight decline in gold prices.
In an interview on Tuesday, CEO Niel Pretorius explained that this dip was reflective of a broader trend affecting various gold stocks, including Harmony Gold, which has seen its shares weaken by 7% over the past week as well.
Pretorius said that gold prices had traded traded a little bit lower around $2 900 (around R54 300) per ounce compared to where it was some weeks ago.
“I think that's related to the performance of the gold price. If you look at the gold index, you'll see that that's pretty much been the trend for for the entire gold counters,” Pretorius said.
“So what you're really seeing is market response to slight drop in the price. I think if you look at the the last six months trends, then the trend looks a little bit healthier.”
In the past six months, gold prices have traded nearly 16% stronger.
DRDGold, whose gold production for half year to December 2024 grew 1% to 82 434 ounces, has reported an interim dividend of 30 cents per share.
This was after half year headline earnings grew 65% to R970.1 million, equating to 112.6 cents in headline earnings per share.
Cash and cash equivalents increased from R521.5m as at 30 June 2024 to R661.2m as at the end of December 2024 after spending R947.6m in total capital expenditure.
“The gold price performed really well, and as an unhedged producer we were able to take full advantage of the 26% rise in the average rand gold price received to R1 478 663/kg. Higher throughput and inflationary increases resulted in a 6% increase in total cash operating costs to R2 215.1 million,” said the company.
This resulted in operating profits for the half year rising by 74% to nearly R1.6 billion.
Throughput recorded for the period, a reduction in mechanical mining and solar power contributed to a 9% reduction in operating unit costs per tonne from R188 per tonne to R172 per tonne while the operating profit margin for the period rose by 36% to 42%.
DRDGold’s production at Ergo was maintained at 1 844kg, attributed to the full ramp up of newly commissioned high volume lower grade reclamation sites that have replaced virtually cleaned up high-grade reclamation sites.
The 22% increase in tonnages milled from Ergo was due to the successful commissioning and ramp-up of production at three sites which began early in the 2024 calendar year.
However, yields from Ergo decreased by 20% to 0.187 grams per ton, a contrast to the period-on-period increase seen previously.
“This reduction is primarily linked to the lower-grade material from the newly commissioned sites replacing higher-grade sources,” explained the company.
Far West Gold productivity had a moderate 9% increase to 720kg. This improvement “reflects the mine’s full operational status, resulting in consistent tonnage as well as improved head grade” from Driefontein.
Cash operating costs for Far West Gold increased 8% to R328.7m, attributable to inflation and particularly higher than inflation increases in security and labour costs.
BUSINESS REPORT