| Thu 21 Oct 2010, 8:00 | | DRD - DRDGold Limited - Report to shareholders for the 1st Quarter ended |
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DRD
DRDD
DRD - DRDGold Limited - Report to shareholders for the 1st Quarter ended
30 September 2010
DRDGOLD LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1895/000926/06)
JSE trading symbol: DRD
ISIN: ZAE 000058723
Issuer code: DUSM
Nasdaq trading symbol: DROOY
("DRDGOLD" or "the Group")
REPORT TO SHAREHOLDERS FOR THE 1st QUARTER ENDED 30 SEPTEMBER 2010
GROUP RESULTS
KEY FEATURES
- Gold production up 6%
- Operating profit of R 69.4 million impacted negatively by Eskom winter
tariffs amounting to R27.8 million
- Blyvoor achieves 1 million fatality free shifts and 4 million fall of
ground fatality free shifts
- R500 million Domestic Medium Term Note Programme established
KEY RESULTS SUMMARY
GROUP Quarter Quarter % Quarter
Sep 10 Jun 10 Change Sep 09
Gold production
oz 65 267 61 632 6 57 292
kg 2 030 1 917 6 1 782
Gold production sold oz 69 607 57 293 21 59 864
kg 2 165 1 782 21 1 862
Cash operating costs US$/oz 1 084 1 004 (8) 968
ZAR/kg 256 498 244 331 (5) 243 684
Gold price received US$/oz 1 218 1 204 1 950
ZAR/kg 288 054 292 769 (2) 239 098
Capital expenditure US$ million 8.1 8.9 9 8.2
ZAR million 59.4 67.5 12 64.2
STOCK
ISSUED CAPITAL
384 884 379 ordinary no par value shares
5 000 000 cumulative preference shares
Total ordinary no par value shares issued and committed: 404 378 780
STOCK TRADED JSE NASDAQ*
Avg. volume for the quarter per day (000) 663 846
% of issued stock traded (annualised) 45 57
Price - High R3.79 US$0.535
- Low R2.80 US$0.392
- Close R3.66 US$0.519
*This data represents per share data and not per American Depositary
Share("ADS") data - one ADS reflects ten ordinary shares.
FORWARD-LOOKING STATEMENTS
Many factors could cause the actual results, performance or achievements of
DRDGOLD to be materially different from any future results, performance or
achievements that may be expressed or implied by such forward-looking statements
including among others, adverse changes or uncertainties in general economic
conditions in the markets DRDGOLD serves, a drop in the gold price, a sustained
strengthening of the Rand against the Dollar, regulatory developments adverse to
DRDGOLD or difficulties in maintaining necessary licenses or other governmental
approvals, changes in DRDGOLD`s competitive position, changes in business
strategy, any major disruption in production at key facilities or adverse
changes in foreign exchange rates and various other factors.
These risks include, without limitation, those described in the section entitled
`Risk Factors` included in the annual report for the fiscal year ended 30 June
2009 which was filed with the United States Securities and Exchange Commission
on 27 November 2009 on Form 20-F. Shareholders should not place undue reliance
on these forward-looking statements, which speak only as of the date thereof.
DRDGOLD does not undertake any obligation to publicly update or revise these
forward-looking statements to reflect events or circumstances after the date of
this report or to the occurrence of unanticipated events. Any forward-looking
statements included in this report have not been reviewed and reported on by
DRDGOLD`s auditors.
OVERVIEW
Dear shareholder
Safety, health and environment
I am pleased to report that, once again, DRDGOLD`s operations have recorded a
fatality-free quarter. It is particularly noteworthy that, during the quarter,
Blyvooruitzicht Gold Mining Company Limited ("Blyvoor") achieved both 1 million
fatality-free shifts and 4 million fall of ground fatality-free shifts.
All operations reported deteriorations in other key safety parameters - dressing
station injuries, disabling injuries and reportable injuries - pointing to a
need for renewed focus on the safety auditing, awareness and improvement
initiatives in place.
Compliance was satisfactory at all operations in respect of occupational health-
related matters during the quarter.
Environmental management spend for the quarter totalled R8.1 million.
I would like to draw your attention to the recent publication of the company`s
annual report and sustainable development report for the 2010 financial year.
Our sustainable development report was produced once again in accordance with
guidelines provided by the Global Reporting Initiative. Both reports can be
accessed on the DRDGOLD website, www.drdgold.com
Production
Total gold production during the quarter increased by 6% to 65 267oz, a
consequence mainly of higher production from Blyvoor. Some 63% - 41 057oz - of
total gold production was from surface retreatment.
Gold production sold was 21% higher at 69 607oz as a result of 4 340oz of gold
produced in the previous quarter which was sold in the current quarter.
Financial
Revenue for the quarter was R623.6 million as a result of the 21% increase in
gold production sold. We achieved an operating profit of R69.4 million after
accounting for total cash operating costs, which were 11% higher at R520.7
million due to higher winter tariffs for electricity and annual wage increases.
Gross profit for the quarter was R36.6 million, down 50% on the previous
quarter`s normalised gross profit of R72.9 million after stripping out a non
cash credit of R71.3 million arising from the transfer of environmental
rehabilitation liability adjustments following the disposal of the Durban
Roodepoort Deep and West Wits mining licenses. The quarter closed on a net loss
of R8.3 million, compared to a normalised net profit of R19.9 million in the
previous quarter, after taking into account the environmental rehabilitation
liability adjustment and the foreign currency translation reserve of R156.7
million which was realised on the voluntary liquidation of our offshore
subsidiaries.
Exploration and prospecting
In Zimbabwe, the number of claims at Leny held by Chizim Gold - DRDGOLD`s joint
venture with Zimbabwe-based Chizim Investments - has increased both through
acquisitions and pegging from 46 (covering 454ha) to 61 (covering 602 ha).
At the end of the quarter some five drill holes totalling 1 176m had been
completed, all showing extensive sulphides and mineralization. Core has been
split and sent for assay, with results expected by the end of November.
Trenching continues and is scheduled for completion by the end of December.
When all first phase drilling and trenching results have been assessed, a second
infill, drilling programme will be designed to define the orebody.
Also in Zimbabwe, six gold greenfields prospects have been evaluated since
February this year.
Corporate activity
After quarter-end we announced that our 74%-owned subsidiary, DRDGOLD South
African Operations (Pty) Limited ("DRDGOLD SA"), had successfully raised R108
million for the previously-announced R300 million Crown/Ergo pipeline under a
R500 million Domestic Medium Term Note Programme ("DMTN Programme"). From time
to time, DRDGOLD SA may issue notes in terms of the DMTN Programme to raise
further capital if required.
Detailed operational review
Blyvoor
Total gold production rose by 13% to 30 287oz, reflecting a 15% increase in
underground gold production to 24 210oz and a 7% increase in surface gold
production to 6 077oz.
Higher underground gold production resulted both from a 4% increase in
underground throughput to 193 000t and a 10% increase in underground yield to
3.90g/t. While the higher-grade No 5 Shaft delivered the volume increase,
reflecting continued progress with opening up and development, all three
producing shafts - 4, 5 and 6 - recorded improved yields.
The increase in surface gold production was due mainly to a 9% increase in
surface yield to 0.25g/t. Surface throughput was slightly higher at 759 000t.
Total cash operating costs were 2% lower at R287 668/kg due to increased gold
production. Underground cash operating costs declined by 2% to R324 898/kg and
surface cash operating costs by 1% to R139 339/kg.
Operating profit was 26% lower at R3.4 million, reflecting higher power costs a
consequence both of Eskom`s general tariff increase and two months of operation
at the power utility`s higher winter tariff; the annual wage increment; and a
lower Rand gold price received.
Capital expenditure, 2% lower at R19.1 million, was directed mainly towards
continued opening up and development, particularly in the No 5 Shaft mining
area.
Crown
Gold production was slightly lower at 23 952oz. While yield declined by 2% to
0.42g/t, throughput rose by 1% to 1 774 000t.
Cash operating costs rose by 9% to R229 740/kg due both to the higher cost of
power and the annual wage increase.
Operating profit was 15% lower at R46.9 million, reflecting a lower Rand gold
price received and higher costs.
Capital expenditure was 13% lower at R29.6 million, R17.9 million of which was
for the new Crown/Ergo pipeline.
Ergo
A 1% increase in gold production to 11 028oz reflected a 1% increase in
throughput to 3 285 000t. Yield was unchanged at 0.10g/t.
Higher power tariffs and the annual wage increase resulted in a 16% increase in
cash operating costs to R229 015/kg.
Operating profit was 40% lower at R19.1 million due to a lower Rand gold price
received and higher costs.
Ongoing rehabilitation work at the Brakpan tailings deposition site accounted
for most of the capital expenditure, which was 25% lower at R8.6 million.
Looking ahead
We anticipate that we will continue to operate in an environment characterised
by a strong gold price but with challenges from rising costs.
Our priorities are as stated at the end of the previous quarter:
- improving key sustainability drivers at Blyvoor, maintaining if not improving
on 70 000 underground reef tonnes per month;
- developing on schedule the Crown/Ergo pipeline (and associated second CIL
circuit at Ergo`s Brakpan plant), in order to fully exploit the synergies
between the Crown and Ergo operations;
- at Ergo, attaining a steady throughput of 1.2mt per month, holding down costs
and maintaining a healthy margin, while pushing for grade improvement through on
going research; and
- in Zimbabwe, making the most of the steadily improving climate for business in
that country, to evaluate the growing number of exciting prospects coming our
way and to pursue those with the greatest promise.
Niel Pretorius
Chief Executive Officer
NOTE REGARDING FINANCIAL INFORMATION
The condensed preliminary consolidated financial statements below have been
prepared in accordance with International Financial Reporting Standards
("IFRSs"), AC 500 Standards as issued by the Accounting Practices Board,
Schedule 4 of the Companies Act and the disclosure requirements of International
Accounting Standards 34, which is consistent with the accounting policies used
in the audited annual financial statements for the year ended 30 June 2010.
CONDENSED CONSOLIDATED Quarter Quarter Quarter
Statement of comprehensive income Sep 10 Jun 10 Sep 09
R m R m R m
Unaudited Unaudited Unaudited
Continuing operations
Gold and silver revenue 623.6 521.7 445.2
Net operating costs (554.2) (430.2) (449.4)
Cash operating costs (520.7) (468.4) (434.2)
Movement in gold in process (33.5) 38.2 (15.2)
Operating profit/(loss) 69.4 91.5 (4.2)
Depreciation (27.6) (57.7) (42.7)
Movement in provision for
environmental rehabilitation (4.8) 110.9 (8.4)
Retrenchment costs (0.4) (0.5) (1.2)
Gross profit/(loss) from
operating activities 36.6 144.2 (56.5)
Impairments - (6.2) -
Administration expenses and
general costs (32.5) (12.0) (46.3)
Share-based payments (0.6) (0.6) (0.7)
Net (loss)/gain on financial liabilities
measured at amortised costs (12.6) 6.2 -
Profit on disposal of assets 4.4 0.9 1.2
Profit on disposal of subsidiaries and
joint venture - 158.2 -
Finance income 5.3 7.4 8.4
Finance expenses (3.6) (7.2) (3.1)
(Loss)/profit before taxation (3.0) 290.9 (97.0)
Income tax (3.6) 12.4 (6.8)
Deferred tax (1.7) (55.4) 40.5
Net (loss)/profit for the period (8.3) 247.9 (63.3)
Attributable to:
Equity owners of the parent 0.3 240.9 (48.4)
Non-controlling interest (8.6) 7.0 (14.9)
(8.3) 247.9 (63.3)
Other comprehensive income
Foreign exchange translation - (156.8) 0.2
Mark-to-market of available-for-sale
investments - 5.2 -
Total comprehensive income for
the period (8.3) 96.3 (63.1)
Attributable to
Equity owners of the parent 0.3 88.0 (48.2)
Non-controlling interest (8.6) 8.3 (14.9)
(8.3) 96.3 (63.1)
Reconciliation of headline (loss)/earnings
Profit/(loss) 0.3 240.9 (48.4)
Adjusted for
Impairments - 6.2 -
Profit on disposal of assets (4.4) (0.9) (1.2)
Profit on disposal of subsidiaries and
joint venture - (158.2) -
Non-controlling interest in headline
earnings adjustment 1.1 3.5 -
Headline (loss)/earnings (3.0) 91.5 (49.6)
Headline (loss)/earnings
per share-cents (0.8) 23.9 (13.1)
Basic earnings/(loss) per share-cents 0.1 63.0 (12.8)
Diluted headline (loss)/earnings
per share-cents (0.8) 23.9 (13.1)
Diluted basic earnings/(loss)
per share-cents 0.1 63.0 (12.8)
Calculated on the weighted average
ordinary shares issued of: 384 884 379 382 569 557 378 020 712
Adjusted headline earnings/(loss)
Per share - cents* 2.5 22.3 (13.1)
(Adjusted for the net (loss)/gain on financial liabilities measures at amortised
costs)
* From time to time DRDGOLD may publicly disclose certain "Non-GAAP" financial
measures in the course of its financial presentation release, earnings
conference calls and otherwise.
CONDENSED CONSOLIDATED As at As at As at
Statement of financial position 30 Sep 10 30 Jun 10 30 Sep 09
Rm Rm Rm
Unaudited Audited Unaudited
Property, plant and equipment 1 896.0 1 863.2 1 759.1
Non-current investments and
other assets 24.8 48.1 43.0
Environmental rehabilitation
trust funds 129.3 126.1 134.2
Deferred tax 137.6 140.7 184.9
Current assets 396.2 402.1 458.8
Inventories 126.7 132.6 90.1
Trade and other receivables 107.9 66.3 119.4
Cash and cash equivalents 146.6 188.2 234.3
Assets classified as held for sale 15.0 15.0 15.0
Total assets 2 583.9 2 580.2 2 580.0
Equity and Liabilities
Equity 1 622.6 1 649.9 1 502.5
Equity of the owners of the parent 1 531.9 1 550.6 1 414.9
Non-controlling interest 90.7 99.3 87.6
Long-term liabilities 39.8 59.0 65.1
Post retirement and other
employee benefits 13.6 13.4 45.0
Provision for environmental
rehabilitation 429.5 420.6 423.4
Deferred tax 166.7 168.1 173.7
Current liabilities 311.7 269.2 370.3
Trade and other payables 311.7 269.2 322.3
Short-term liabilities - - 48.0
Total equity and liabilities 2 583.9 2 580.2 2 580.0
CONDENSED CONSOLIDATED Quarter Quarter Quarter
Statement of changes in equity Sep 10 Jun 10 Sep 09
Rm Rm Rm
Unaudited Unaudited Unaudited
Balance at the beginning of
the period 1 649.9 1 539.7 1 584.0
Share capital issued (0.4) 13.3 (0.1)
For acquisition finance and cash - 14.3 -
for share options exercised - - 0.4
for costs (0.4) (1.0) (0.5)
Increase in share-based
payment reserve 0.6 0.6 0.7
Net profit/(loss) attributed to
equity owners of the parent 0.3 240.9 (48.4)
Net (loss)/profit attributed to
non-controlling interest (8.6) 7.0 (14.9)
Dividends declared (19.2) - (19.0)
Other comprehensive income - (151.6) 0.2
Balance as at the end of the
period 1 622.6 1 649.9 1 502.5
CONDENSED CONSOLIDATED Quarter Quarter Quarter
Statement of cash flows Sep 10 Jun 10 Sep 09
Rm Rm Rm
Unaudited Unaudited Unaudited
Net cash in/(out)flow from operations 21.9 154.1 (101.6)
Net cash out flow
from investing activities (55.0) (111.1) (64.2)
Net cash (out)/inflow from
financing activities (8.5) (55.2) 45.9
Decrease in cash and cash equivalents (41.6) (12.2) (119.9)
Translation adjustment - (0.9) 0.6
Opening cash and cash equivalents 188.2 201.3 353.6
Closing cash and cash equivalents 146.6 188.2 234.3
Reconciliation of net
cash in/(out)flow from operations
(Loss)/profit before taxation (3.0) 290.9 (97.0)
Adjusted for:
Movement in gold process 33.5 (38.2) 15.2
Depreciation and impairments 27.6 63.9 42.7
Movement in provision for
environmental rehabilitation 4.8 (110.9) 8.4
Share-based payments 0.6 0.6 0.7
Net loss/(gain) on financial liabilities
measured at amortised cost 12.6 (6.2) -
Profit on disposal of assets (4.4) (0.9) (1.2)
Profit on disposal of subsidiaries and
joint venture - (158.2) -
Finance expenses and unwinding of
provisions 3.0 4.8 2.5
Growth in environmental trust funds (2.0) (2.4) (2.4)
Other non-cash items (1.4) (26.0) 5.0
Taxation paid - (0.5) -
Working capital changes (49.4) 137.2 (75.5)
Net cash in/(out)flow from operations 21.9 154.1 (101.6)
KEY OPERATING AND FINANCIAL RESULTS (Unaudited)
OPERATIONS Blyvoor Crown Ergo Total
(Metric)
Ore milled (`000t)
Underground Sep 10 Qtr 193 - - 193
Jun 10 Qtr 185 - - 185
Surface Sep 10 Qtr 759 1 774 3 285 5 818
Jun 10 Qtr 755 1 760 3 269 5 784
Total Sep 10 Qtr 952 1 774 3 285 6 011
Jun 10 Qtr 940 1 760 3 269 5 969
Yield (g/t)
Underground Sep 10 Qtr 3.90 - - 3.90
Jun 10 Qtr 3.54 - - 3.54
Surface Sep 10 Qtr 0.25 0.42 0.10 0.22
Jun 10 Qtr 0.23 0.43 0.10 0.22
Total Sep 10 Qtr 0.99 0.42 0.10 0.34
Jun 10 Qtr 0.88 0.43 0.10 0.32
Gold Produced (kgs)
Underground Sep 10 Qtr 753 - - 753
Jun 10 Qtr 654 - - 654
Surface Sep 10 Qtr 189 745 343 1 277
Jun 10 Qtr 176 749 338 1 263
Total Sep 10 Qtr 942 745 343 2 030
Jun 10 Qtr 830 749 338 1 917
Cash operating costs (ZAR per kg)
Underground Sep 10 Qtr 324 898 - - 324 898
Jun 10 Qtr 333 986 - - 333 986
Surface Sep 10 Qtr 139 339 229 740 229 015 216 165
Jun 10 Qtr 140 858 211 216 198 118 197 907
Total Sep 10 Qtr 287 668 229 740 229 015 256 498
Jun 10 Qtr 293 034 211 216 198 118 244 331
Cash operating costs (ZAR per tonne)
Underground Sep 10 Qtr 1 268 - - 1 268
Jun 10 Qtr 1 181 - - 1 181
Surface Sep 10 Qtr 35 96 24 47
Jun 10 Qtr 33 90 20 43
Total Sep 10 Qtr 285 96 24 87
Jun 10 Qtr 259 90 20 78
Gold and silver revenue (ZAR million)
Sep 10 Qtr 297.0 218.1 108.5 623.6
Jun 10 Qtr 217.0 215.3 89.4 521.8
Operating profit (ZAR million)
Sep 10 Qtr 3.4 46.9 19.1 69.4
Jun 10 Qtr 4.6 55.1 31.8 91.5
Capital expenditure (ZAR million)
Sep 10 Qtr 19.1 29.6 8.6 57.3
Jun 10 Qtr 19.6 34.0 11.4 65.0
OPERATIONS Blyvoor Crown Ergo Total
(Imperial)
Gold Produced (oz)
Underground Sep 10 Qtr 24 210 - - 24 210
Jun 10 Qtr 21 027 - - 21 027
Surface Sep 10 Qtr 6 077 23 952 11 028 41 057
Jun 10 Qtr 5 658 24 081 10 866 40 605
Total Sep 10 Qtr 30 287 23 952 11 028 65 267
Jun 10 Qtr 26 685 24 081 10 866 61 632
Cash operating costs (US$ per oz)
Underground Sep 10 Qtr 1 373 - - 1 373
Jun 10 Qtr 1 373 - - 1 373
Surface Sep 10 Qtr 589 972 968 914
Jun 10 Qtr 580 869 815 814
Total Sep 10 Qtr 1 216 972 968 1 084
Jun 10 Qtr 1 204 869 815 1 004
Gold and silver revenue (US$ million)
Sep 10 Qtr 40.4 29.6 14.8 84.8
Jun 10 Qtr 28.7 28.4 11.8 68.9
Operating profit (US$ million)
Sep 10 Qtr 0.5 6.4 2.6 9.5
Jun 10 Qtr 0.6 7.3 4.2 12.1
Capital expenditure (US$ million)
Sep 10 Qtr 2.6 4.0 1.2 7.8
Jun 10 Qtr 2.6 4.4 1.5 8.5
CASH OPERATING COSTS RECONCILIATION
(R`000 unless otherwise stated)
OPERATIONS Blyvoor Crown Ergo Total
Total cash costs
Sep 10 Qtr 300 597 180 960 89 815 571 372
Jun 10 Qtr 218 875 143 931 65 172 427 978
Movement in gold in process
Sep 10 Qtr (22 560) (14) (10 898) (33 472)
Jun 10 Qtr 30 894 (1 997) 9 326 38 223
Less: Production taxes, rehabilitation and other
Sep 10 Qtr 2 272 5 673 (95) 7 850
Jun 10 Qtr 2 150 (22 808) 6 931 (13 727)
Less: Retrenchment costs
Sep 10 Qtr - - - -
Jun 10 Qtr (768) - - (768)
Less: Corporate and general administration costs
Sep 10 Qtr 4 782 4 117 460 9 359
Jun 10 Qtr 5 169 6 541 603 12 313
Cash operating costs
Sep 10 Qtr 270 983 171 156 78 552 520 691
Jun 10 Qtr 243 218 158 201 66 964 468 383
Gold produced
Sep 10 Qtr 942 745 343 2 030
Jun 10 Qtr 830 749 338 1 917
Total cash operating costs - R/kg
Sep 10 Qtr 287 668 229 740 229 015 256 498
Jun 10 Qtr 293 034 211 216 198 118 244 331
Total cash operating costs - US$/oz
Sep 10 Qtr 1 216 972 968 1 084
Jun 10 Qtr 1 204 869 815 1 004
DIRECTORS - (*British)(**American)
Executive:
DJ (Niel) Pretorius (Chief Executive Officer)
CC Barnes (Chief Financial Officer)
Non-executives:
J Turk **
Independent non-executives:
GC Campbell*(Non-Executive Chairman); RP Hume; EA Jeneker
Company Secretary:
TJ Gwebu
INVESTOR RELATIONS
For further information, contact Niel Pretorius at:
Tel: (+27)(0)11 470 2600, Fax: (+27) (0)11 470 2618,
website: http://www.drdgold.com
Quadrum Office Park, 50 Constantia Boulevard,
Constantia Kloof Ext 28, South Africa.
PO Box 390,
Maraisburg, 1700,
South Africa.
Roodepoort
21 October 2010
JSE LIMITED SPONSOR
One Capital
Date: 21/10/2010 08:00:09 Produced by the JSE SENS Department.
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