DRDGold narrowed down cash operating costs by 4% despite elevated electricity tariffs during the quarter to September, despite grappling with higher electricity tariffs.
This strategic improvement has been primarily attributed to a 7% increase in gold production, leading to a significant jump in sales volumes, which contributed to a rise in the company’s share price by 3.82% during early trade on the Johannesburg Stock Exchange (JSE).
Shares in DRDGold surged to R19.84 in mid-morning trade, extending the company’s positive rally on the local market. DRDGold has traded stronger on the JSE in the past seven days, half-year and year to date.
Investors in the company were chuffed yesterday after it said cash operating costs per kilogram of bullion had dropped 4% from the previous quarter’s threshold of R856 723 per kilogram (kg). This was due to “an increase in gold sold” for the quarter.
The quarter, however, was not devoid of challenges, particularly from the seasonal escalation in costs driven by two months of elevated electricity tariffs imposed by Eskom from June to August.
Nonetheless, the company managed to offset these challenges through improved production.
DRDGold’s output soared to 1 319 kg, aided by a 13% uptick in tonnage throughput. The productivity boost came despite yields falling to 0.012 grammes per ton for the same period.
Furthermore, DRDGold reported an additional 53kg of gold production during the quarter, reaching a total of 1 289 tons.
“Cash operating costs per ton of material decreased by 6% from the previous quarter to R176 per ton due to the increase in tonnage throughput. The number of mechanically reclaimed sites (clean-up sites) which are more costly to operate compared to hydro mining, have started to reduce,” said the company.
This reduction is expected to continue, resulting in a decreasing cost profile for the gold producer over the remainder of the financial year to June 2025.
DRDGold expects additional decreases in costs as the solar power plant and battery energy storage system comes on stream in the second quarter of its June 2025 full year. Construction of the company’s solar plant has already been completed, with commissioning scheduled for the quarter to December.
Adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) for the period under review increased by 17% from the previous quarter to R680.8 million as a result of increased gold sold and the accompanying higher gold price received.
As at the end of September, DRDGold had cR72.7m more in cash and cash equivalents of R594.2m. This was after it paid the final cash dividend of R172.3m for the year ended 30 June 2024.
It had also already provisioned for capital expenditure, including prepayments towards capital items,of R323.3m incurred for the first quarter of the 2025 financial year.
“The high gold price has increased liquidity and cash generated during the current quarter which will, inter alia, be applied towards the company’s extended capital expenditure programme for FY2025,” said DRDGold in a trading update.