DRDGold reports significant earnings growth and ambitious future plans

DRDGold’s headline earnings a share increased 69% and the dividend was raised 100% to 40 cents, following a greater level of stability and success during the year to June 30 and a robust gold price.

The share price fell slightly by 0.77% to R25.90 on Wednesday morning on the JSE, but in a reflection of investor confidence in improving fortunes at the company, the share price is up over 53% over 12 months.

The company, which has the retreatment of mine tailings as its core business, said Wednesday a “new normal” was established at Ergo and its life had been extended. Ambitious growth objectives were being pursued at Far West Gold Recoveries (FWGR).

CEO Niël Pretorius said within DRDGold “we talk about Ergo 1 – this was from 2008 when we acquired the operation through to the end of 2023, a time of higher yields and high throughput. We now talk about Ergo 2, an extension of the Ergo lifespan to beyond 2040 to process a resource base previously thought non-viable, through an expansion of deposition capacity and a re-modelled cost profile.”

Gold production at Ergo was 5% lower at 3 473kg for the year, reflecting a 21% decrease in yield to 0.178g/t. Throughput rose by 21% to 19.5Mt. The lower yield reflected depletion of higher grade material from clean-up activities at Ergo’s completed reclamation sites, and a build-up in tonnage from new, lower grade reclamation sites.

Higher throughput resulted from a year unaffected by delays in the start-up of new reclamation sites and the community-related disruptions that occurred in the 2024 financial year.

While cash operating costs in R/kg were 9% higher at R1 064 447/kg (R974 764/kg) due to a decrease in gold production, they were 14% lower in R/t at R190.

“This indicates a change in Ergo’s cost profile as it transitions to recovery from fewer, larger sites. An 8% increase in all-in sustaining costs to R1 149 134/kg was driven by higher cash operating costs.”

Growth capex was much lower at R340.1m (R2.11 billion), due to the completion of the solar PV plant and battery system.

Gold production at FWGR was stable at 1 357kg (1 363kg) - throughput and yield remained virtually unchanged, the former at 6.1Mt (6.2Mt) and the latter at 0.222g/t (0.221g/t).

“This steady-state performance was in line with current plant and deposition capacity, pending completion of the capital projects."

Cash operating costs rose 7% to R492 049/kg due to expansion-related staffing increases, inflationary pressures on labour costs, higher maintenance for ageing plant equipment, and reagent and consumable cost increases.

Sustaining capex was 57% lower at R33.8m (R77.8m) due to steady-state operations, growth capex was 130% higher at R1.56bn, reflecting progress with capital projects underway.

Ergo’s solar PV plant and battery system (60MW solar plant and 160mWh battery system), commissioned in November 2024, was functioning at 97% of design capacity at year-end, and largely met the daytime power needs of the operation’s reclamation sites, plant and the Brakpan TSF (tailings storage facility).

The cost saving was about R108m at year-end; significant given electricity is Ergo’s fourth-largest operating cost item after labour, contractors and reagents.

Surplus electricity delivered into the grid of power utility Eskom at year-end was 41 791 804kWh. Credits for this “wheeling” of surplus power to Eskom had yet to be fully realised, and engagement with Eskom on this issue was in progress.

Once the credits flow, these will be used to offset the power of the Ergo operation currently drawn from the Eskom grid, the group said.

Pretorius said their Vision 2028 strategy was a roadmap for sustainable gold production, focused on expanding operations, improving gold recovery, reducing environmental impact, and maximising social impact.

Key operational aspects focused on increasing throughput to 3Mtpm and boosting gold production to more than 200 000oz/pa.

The guidance for the 2026 financial year was gold production of between 140 000 and 150 000 ounces at cash operating costs of about R995 000/kg. To achieve Vision 2028, capital growth investment of some R7.8bn was planned for the medium term.

Until Daggafontein was ready to receive Ergo tailings in about a year, Ergo’s throughput and thus the deposition rate onto the Brakpan TSF would remain throttled at 1.65Mtpm, Pretorius said.

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