DRDGold issues small dividend after trying year
JSE-listed dump recycling specialist DRDGold, which processes old gold tailings dumps to extract residual gold, declared a 5c per share final dividend for the year ended 30 June 2017 – a year CEO Niel Pretorius describes as having been challenging, but which involved steps to position the company well for FY2018 and beyond.
In a shift of its operational centre of gravity to the central and eastern Witwatersrand, necessitated by depletion of resources in the west, Pretorius says the recovery of material from a number of legacy reclamation sites and closure of the Crown plant were completed during the year.
Also, three new reclamation sites in the centre and to the east were commissioned, while preparation was started for the commissioning of a fourth by the third quarter of FY2018.
The cost and time required to mechanically reclaim material from the legacy sites were greater than anticipated. This, together with the knock-on effect of treating the low-volume material through the normal gold recovery circuit and a drop in the average gold price received, combined to impact negatively on the company's operating and financial performance for the year, Pretorius says.
Gold production was 4 percent lower at 4 265kg, reflecting a 5 percent drop in the average yield to 0.171g/t. Operating profit was 41 percent lower at R256.8 million, after accounting for a 5 percent increase in total cash operating costs to R2 087.9 million.
During the year, costs were rigorously addressed for the longer term, Pretorius says. Work to centralise water distribution and adjustments to the Ergo plant's water reticulation system are expected to yield a saving in the cost of water used of some R24 million a year.
More cost benefits are expected to flow from the sweating of the Ergo plant's electronic monitoring system to improve plant efficiency. A saving of R1.3 million a month in the cost of reagents has already been recorded.
"By the end of the 2017 financial year, much of the pain had been absorbed; most of the legacy sites had been cleared and substantial progress had been made on the rehabilitation of the Crown plant site, which is expected to be completed by the end of calendar year 2017. We expect the cost benefit in the 2018 financial year of eliminating of the overall Crown footprint to be of the order of R72 million."