| Thu 27 Oct 2011, 8:00 | | DRD - DRDGold Limited - Report to shareholders for the 1st quarter ended 30 |
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DRD
DRDD
DRD - DRDGold Limited - Report to shareholders for the 1st quarter ended 30
September 2011
DRDGOLD LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1895/000926/06)
JSE trading symbol: DRD
ISIN: ZAE000058723
Issuer code: DUSM
NASDAQ trading symbol: DROOY
("DRDGOLD" or "the Group")
REPORT TO SHAREHOLDERS FOR THE 1st QUARTER ENDED 30 SEPTEMBER 2011
GROUP RESULTS
KEY FEATURES FOR THE QUARTER
- Gold production up 1% to 63 562 oz
- Revenue up 28% to R806.2 million
- Operating profit up 82% to R202.5 million
- Headline earnings up 150% to 20 cents per share
- Net cash inflow from operations up 14% to R117.9 million
- Board considering offers received for Blyvoor
KEY RESULTS SUMMARY
GROUP Quarter Quarter % Quarter
Sep 11 Jun 11 Change Sep 10
Gold production oz 63 562 63 079 1 65 267
kg 1 977 1 962 1 2 030
Gold production sold oz 65 523 61 150 7 69 607
kg 2 038 1 902 7 2 165
Gold price received US$/oz 1 734 1 522 14 1 218
ZAR/kg 395 568 331 372 19 288 054
Cash operating costs US$/oz 1 305 1 283 2 1 084
ZAR/kg 297 808 280 240 6 256 498
Operating profit US$ million 28.5 16.4 74 9.5
ZAR million 202.5 111.0 82 69.4
Capital expenditure US$ million 9.9 13.8 (28) 8.1
ZAR million 77.9 93.6 (17) 59.4
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: 406 467 306
STOCK TRADED JSE NASDAQ*
Avg. volume for the quarter per day (000) 913 1 357
% of issued stock traded (annualised) 62 92
Price - High R4.89 US$0.579
- Low R2.97 US$0.421
- Close R4.20 US$0.508
*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 licences 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
2010 which was filed with the United States Securities and Exchange Commission
on 29 October 2010 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
I am pleased to announce another encouraging set of operating and financial
results for the quarter under review as a result of steady production and a
healthy increase in the average gold price to R395 568/kg. Operating profit rose
by 82% from the previous quarter to R202.5 million, and headline earnings per
share ("HEPS") from 8 cents to 20 cents.
There were no fatal accidents during the quarter and of the five employees who
were injured in a seismic event at Blyvooruitzicht Gold Mining Company Limited
("Blyvoor") on 20 September 2011, two are back at work and three are well on
their way to a full recovery.
Production
Q1 2012 v Q4 2011
Total gold production for the quarter was up 1% from the previous quarter to 63
562oz due mainly to a 5% increase in production at Blyvoor.
Q1 2012 v Q1 2011
Compared with the first quarter of FY2011, gold production was slightly lower in
the first quarter of FY2012. This was a consequence mainly of lower production
at Blyvoor, currently under Chapter 6 business rescue proceedings, and a slight
drop in production at the Crown and Ergo circuits, where we are in the process
of phasing out sections of the Crown and City Deep plants and integrating them
with the Ergo circuit, and also introducing two new reclamation sites. More
information is provided under the detailed operational review below.
Financial
Q1 2012 v Q4 2011
Revenue for the quarter increased by 28% from the previous quarter to R806.2
million, reflecting a 7% increase in gold sold and a 19% increase in the average
gold price received to R395 568/kg.
Cash operating costs rose by 7% to R588.8 million but, with the higher average
Rand gold price received, operating profit was up 82% at R202.5 million.
Headline earnings rose by 160% to R75.4 million.
Q1 2012 v Q1 2011
Revenue for the quarter compared to the comparable quarter in FY2011, was 29%
higher at R806.2 million, reflecting a 37% increase in the average Rand gold
price received to R395 568/kg together with a 6% decrease in gold sold. After
accounting for total cash operating costs - 13% higher at R588.8 million - due
mainly to power cost increases and provisions for wage increases - operating
profit was 192% higher at R202.5 million. HEPS were 20 cents compared with a
headline loss per share of 1 cent in the first quarter of FY2011.
Detailed operational review
Ergo
For the quarter under review and going forward, the operating and financial
results of the Ergo and Crown surface retreatment operations are consolidated.
Results for the two operations for the September quarter of FY2011 have been
consolidated for comparative purposes.
Q1 2012 v Q4 2011
Total gold production in the quarter was down 2% to 34 562oz from
35 364oz in the previous quarter. This was the result of a 4% drop in throughput
to 5 231 000t. This reflects the combined, temporary impact of the relocation of
recovery operations from the depleted Top Star site to the 11.5Mt, 0.52g/t 3A2
site and the commissioning of the 3L42 site. Yield was 5% up, from 0.20g/t to
0.21 g/t.
Material from the 3A2 site reports to the Crown plant for retreatment pending
completion and commissioning of the full Crown/Ergo pipeline by the end of
calendar 2011, after which it will report to the Brakpan plant for retreatment.
Material from the 3L42 site reports to the Brakpan plant for retreatment via the
City Deep plant and the City Deep/Elsburg portion of the Crown/Ergo pipeline.
Completion and commissioning of the second carbon in leach ("CIL") circuit at
the Brakpan plant increases the plant`s retreatment capacity by 50% from 1.2Mtpm
to 1.8Mtpm which is expected during October 2011.
Operating profit rose by 40% to R156.5 million, after accounting for a 13%
increase in cash operating unit costs to R260 189/kg, due mainly to power tariff
increases and provisions for wage increases.
Capital expenditure was slightly lower at R58.1 million (Q4 2011: R59.1
million).
Q1 2012 v Q1 2011
Gold production for the quarter was 1% lower compared with the comparable
quarter in FY2011 at 34 562oz, reflecting a 5% decrease in the average yield to
0.21g/t. Throughput was 3% higher at 5 231 000t.
Cash operating costs were 13% higher at R260 189/kg, mainly as a result of lower
gold production, increased Eskom tariffs and provision for wage increases.
Operating profit more than doubled to R156.5 million, a consequence of the
substantially higher average Rand gold price received.
Capital expenditure of R58.1 million, compared with R38.2 million in the
comparable quarter of FY2011 was directed mainly towards the Crown/Ergo
pipeline, the second CIL circuit at the Brakpan plant and ongoing work to
increase the capacity of the Brakpan tailings facility.
Blyvoor
Q1 2012 v Q4 2011
Blyvoor recorded a significant improvement in overall performance in the quarter
from the previous quarter. Total gold production increased by 5% to 29 000oz,
reflecting a 10% rise in underground gold production to
21 509oz. Gold production from surface sources was 8% lower at 7 491oz.
Higher underground gold production in the quarter resulted mainly from a 9%
improvement in underground yield to 3.64g/t, reflecting a return to the use of
optimal explosives, compromised in the June 2011 quarter by an explosion at the
premises of the explosives supplier. Underground throughput, up 1% at 184 000t,
would have been higher but for a wage-related work to rule by employees for
three weeks during August and September which was ended by the granting to
management of a court interdict.
Lower surface gold production in the quarter was the consequence of a 9% decline
in surface yield to 0.30g/t, marking an end to a surface clean-up exercise which
boosted surface gold yield, and thus, production, in the June 2011 quarter.
Total surface throughput was slightly higher at
783 000t.
Total cash operating costs in the quarter were slightly lower at
R342 642/kg compared with the June 2011 quarter, notwithstanding the negative
impact of two months of Eskom`s higher winter tariff. This was a consequence
both of higher gold production and lower overtime costs due to the
aforementioned work to rule. Underground cash operating costs were 4% lower at
R415 913/kg and surface cash operating costs slightly higher at R132 262/kg.
Total operating profit in the September 2011 quarter was R46.0 million compared
with a R0.6 million operating loss in the previous quarter, reflecting higher
gold production, lower costs and a higher rand gold price received.
Capital expenditure, down 37% in the quarter from the previous quarter at R16.6
million, was directed mainly towards ongoing underground opening-up and
development to improve flexibility and offset the impact of continuing seismic
activity.
Q1 2012 v Q1 2011
Total gold produced in the quarter was 4% down on the 30 287oz produced in the
September FY2011 quarter due both to a 5% drop in underground throughput and a
7% drop in underground yield.
Surface throughput in the quarter was 3% higher and surface yield 20% higher.
Total cash operating costs were 19% higher. Underground cash operating costs and
surface cash operating costs were 28% higher and 5% lower, respectively.
Total cash operating profit marked a substantial improvement on the R3.4 million
recorded in the September FY2011 quarter.
Capital expenditure was 13% higher at R19.1 million.
Zimbabwe
At Leny a diamond drill rig capable of drilling to 40m has been ordered and will
be used to explore the area around and below the known exposed veins at Leny and
GNZ. At Ascot, soil geochem survey results are expected shortly and will
determine whether a drilling programme follows.
At Dilcap (John Bull), soil geochem survey and IP survey results are expected
shortly, and will determine whether trenching and drilling follows. At Zhombe,
magnetic and IP surveys are to begin shortly.
At Gweru Alluvials we have prioritised two exploration sites - one alluvial and
one primary. We have submitted applications for mining and environmental
authorisations over the alluvial site, which is on the Guinea Fowl River and are
currently investigating mining and recovery methods. We have also conducted IP
and magnetic surveys over the primary site, which is on the Impali River. We
have identified six initial drill targets and drilling has started.
Looking ahead
We were pleased to receive four separate offers for our stake in Blyvoor. The
board of DRDGOLD is considering the merits of these offers and we are on track
to meet our December 2011 target to announce the disposal of our stake.
We have made a high-level appointment to drive our growth and business
improvement initiatives and the previously-announced unlocking of value at ERPM
Extensions 1 and 2. Further details in this regard will be announced once the
individual has fully separated his ties with his former employer.
By December we hope to have the integrated Crown and Ergo circuits fully
operational and then we will work towards fully optimising recoveries at the
Brakpan plant, and take a more focused look at by-product feasibility. We are
excited about these opportunities and the robust cash flows our recycling
circuits offer.
We have completed our exploratory site visits to Mozambique. In the next few
months we will raise the tempo of our exploration activities in this region.
Niel Pretorius
Chief Executive Officer
NOTE REGARDING FINANCIAL INFORMATION
The condensed consolidated financial statements are prepared in accordance with
the recognition and measurement principles of International Financial Reporting
Standards ("IFRS"), AC 500 Standards as issued by the Accounting Practices Board
and the disclosure requirements of IAS 34. The accounting policies are in line
with IFRS and are consistent with those applied in the annual financial
statements for the year ended 30 June 2011.
CONDENSED CONSOLIDATED Quarter Quarter Quarter
Statement of comprehensive income Sep 11 Jun 11 Sep 10
R m R m R m
Unaudited Unaudited Unaudited
Continuing operations
Gold and silver revenue 806.2 630.2 623.6
Net operating costs (603.7) (519.2) (554.2)
Cash operating costs (588.8) (549.8) (520.7)
Movement in gold in process (14.9) 30.6 (33.5)
Operating profit 202.5 111.0 69.4
Depreciation (27.8) (34.9) (27.6)
Movement in provision for
environmental rehabilitation (7.3) (35.3) (4.8)
Retrenchment costs - - (0.4)
Gross profit from operating
activities 167.4 40.8 36.6
Impairments - (547.7) -
Environmental rehabilitation costs (14.7) (16.2) (8.1)
Corporate, administration and
other costs (29.0) (43.0) (24.4)
Share-based payments (0.4) (0.9) (0.6)
Net (loss)/gain on financial liabilities
measured at amortised costs (0.3) 33.5 (12.6)
Profit on disposal of assets - 1.6 4.4
Finance income 5.9 6.4 5.3
Finance expenses (5.4) 2.4 (3.6)
Profit/(loss) before taxation 123.5 (523.1) (3.0)
Income tax (5.8) (0.4) (3.6)
Deferred tax (34.6) 15.6 (1.7)
Net profit/(loss) for the period 83.1 (507.9) (8.3)
Attributable to:
Equity owners of the parent 75.4 (367.9) 0.3
Non-controlling interest 7.7 (140.0) (8.6)
83.1 (507.9) (8.3)
Other comprehensive income
Foreign exchange translation (2.6) 0.8 -
Mark-to-market of available-for-sale
investments - 0.3 -
Total comprehensive income for
the period 80.5 (506.8) (8.3)
Attributable to
Equity owners of the parent 72.8 (366.9) 0.3
Non-controlling interest 7.7 (139.9) (8.6)
80.5 (506.8) (8.3)
Reconciliation of headline earnings/(loss)
Profit/(loss) 75.4 (367.9) 0.3
Adjusted for
Impairments - 547.7 -
Profit on disposal of assets - (1.6) (4.4)
Non-controlling interest in headline
earnings adjustment - (149.2) 1.1
Headline earnings/(loss) 75.4 29.0 (3.0)
Headline earnings/(loss)
per share-cents 20 8 (1)
Basic earnings/(loss) per share-cents 20 (96) -
Diluted headline earnings/(loss)
per share-cents 20 8 (1)
Diluted basic earnings/(loss)
per share-cents 20 (96) -
Calculated on the weighted average
ordinary shares issued of: 384 884 379 384 884 379 384 884 379
CONDENSED CONSOLIDATED As at As at As at
Statement of financial position 30 Sep 11 30 Jun 11 30 Sep 10
R m R m R m
Unaudited Audited Unaudited
Assets
Non-Current assets 1 817.4 1 778.6 2 187.7
Property, plant and equipment 1 599.0 1 550.1 1 896.0
Non-current investments and
other assets 25.1 25.1 24.8
Environmental rehabilitation
trust funds 136.0 134.2 129.3
Deferred tax 57.3 69.2 137.6
Current assets 599.8 510.0 396.2
Inventories 115.1 122.9 126.7
Trade and other receivables 190.8 128.0 107.9
Cash and cash equivalents 293.9 259.1 146.6
Assets classified as held for sale - - 15.0
Total assets 2 417.2 2 288.6 2 583.9
Equity and Liabilities
Equity 1 271.2 1 219.2 1 622.6
Equity of the owners of the parent 1 291.6 1 247.3 1 531.9
Non-controlling interest (20.4) (28.1) 90.7
Non-current liabilities 689.5 659.4 649.6
Long-term liabilities 40.0 40.4 39.8
Post retirement and other
employee benefits 6.4 6.3 13.6
Provision for environmental
rehabilitation 497.8 490.2 429.5
Deferred tax 145.3 122.5 166.7
Current liabilities 456.5 410.0 311.7
Trade and other payables 375.8 330.7 311.7
Short-term liabilities 80.7 79.3 -
Total equity and liabilities 2 417.2 2 288.6 2 583.9
CONDENSED CONSOLIDATED Quarter Quarter Quarter
Statement of changes in equity Sep 11 Jun 11 Sep 10
R m R m R m
Unaudited Unaudited Unaudited
Balance at the beginning of
the period 1 219.2 1 725.1 1 649.9
Share capital issued - - (0.4)
for costs - - (0.4)
Increase in share-based
payment reserve 0.4 0.9 0.6
Net profit/(loss) attributed to
equity owners of the parent 75.4 (367.9) 0.3
Net(loss)/profit attributed to
non-controlling interest 7.7 (140.0) (8.6)
Dividends declared (28.9) - (19.2)
Other comprehensive income (2.6) 1.1 -
Balance as at the end of the
period 1 271.2 1 219.2 1 622.6
CONDENSED CONSOLIDATED Quarter Quarter Quarter
Statement of cash flows Sep 11 Jun 11 Sep 10
R m R m R m
Unaudited Unaudited Unaudited
Net cash inflow from operations 117.9 103.0 21.9
Net cash out flow
from investing activities (83.1) (114.6) (55.0)
Net cash in/(out)flow from
financing activities - 1.3 (8.5)
Increase/(decrease) in cash and
cash equivalents 34.8 (10.3) (41.6)
Translation adjustment - 0.8 -
Opening cash and cash equivalents 259.1 268.6 188.2
Closing cash and cash equivalents 293.9 259.1 146.6
Reconciliation of net cash inflow from operations
Profit/(loss) before taxation 123.5 (523.1) (3.0)
Adjusted for:
Movement in gold process 14.9 (30.6) 33.5
Depreciation and impairments 27.8 582.6 27.6
Movement in provision for
environmental rehabilitation 7.3 35.3 4.8
Share-based payments 0.4 0.9 0.6
Net loss/(gain) on financial liabilities
measured at amortised cost 0.3 (33.5) 12.6
Profit on disposal of assets - (1.6) (4.4)
Finance expenses and unwinding of
provisions 2.7 0.8 3.0
Growth in environmental trust funds (1.7) (2.8) (2.0)
Other non-cash items (1.7) (11.9) (1.4)
Taxation paid - (0.4) -
Working capital changes (55.6) 87.3 (49.4)
Net cash inflow from operations 117.9 103.0 21.9
KEY OPERATING AND FINANCIAL RESULTS (Unaudited)
OPERATIONS Blyvoor Ergo * Total
(Metric)
Ore milled (`000t)
Underground Sep 11 Qtr 184 - 184
Jun 11 Qtr 182 - 182
Surface Sep 11 Qtr 783 5 231 6 014
Jun 11 Qtr 779 5 451 6 230
Total Sep 11 Qtr 967 5 231 6 198
Jun 11 Qtr 961 5 451 6 412
Yield (g/t)
Underground Sep 11 Qtr 3.64 - 3.64
Jun 11 Qtr 3.34 - 3.34
Surface Sep 11 Qtr 0.30 0.21 0.22
Jun 11 Qtr 0.33 0.20 0.22
Total Sep 11 Qtr 0.93 0.21 0.32
Jun 11 Qtr 0.90 0.20 0.31
Gold Produced (kgs)
Underground Sep 11 Qtr 669 - 669
Jun 11 Qtr 608 - 608
Surface Sep 11 Qtr 233 1 075 1 308
Jun 11 Qtr 254 1 100 1 354
Total Sep 11 Qtr 902 1 075 1 977
Jun 11 Qtr 862 1 100 1 962
Cash operating costs (ZAR per kg)
Underground Sep 11 Qtr 415 913 - 415 913
Jun 11 Qtr 432 910 - 432 910
Surface Sep 11 Qtr 132 262 260 189 237 401
Jun 11 Qtr 131 197 230 270 211 685
Total Sep 11 Qtr 342 642 260 189 297 808
Jun 11 Qtr 344 006 230 270 280 240
Cash operating costs (ZAR per tonne)
Underground Sep 11 Qtr 1 512 - 1 512
Jun 11 Qtr 1 446 - 1 446
Surface Sep 11 Qtr 39 53 52
Jun 11 Qtr 43 46 46
Total Sep 11 Qtr 320 53 95
Jun 11 Qtr 309 46 86
Gold and silver revenue (ZAR million)
Sep 11 Qtr 356.6 449.6 806.2
Jun 11 Qtr 285.6 344.6 630.2
Operating profit/(loss) (ZAR million)
Sep 11 Qtr 46.0 156.5 202.5
Jun 11 Qtr (0.6) 111.6 111.0
Capital expenditure (ZAR million)
Sep 11 Qtr 16.6 58.1 74.7
Jun 11 Qtr 26.5 59.1 85.6
OPERATIONS Blyvoor Ergo * Total
(Imperial)
Gold Produced (oz)
Underground Sep 11 Qtr 21 509 - 21 509
Jun 11 Qtr 19 548 - 19 548
Surface Sep 11 Qtr 7 491 34 562 42 053
Jun 11 Qtr 8 167 35 364 43 531
Total Sep 11 Qtr 29 000 34 562 63 562
Jun 11 Qtr 27 715 35 364 63 079
Cash operating costs (US$ per oz)
Underground Sep 11 Qtr 1 823 - 1 823
Jun 11 Qtr 1 980 - 1 980
Surface Sep 11 Qtr 580 1 141 1 041
Jun 11 Qtr 599 1 057 970
Total Sep 11 Qtr 1 502 1 141 1 305
Jun 11 Qtr 1 573 1 057 1 283
Gold and silver revenue (US$ million)
Sep 11 Qtr 50.2 63.2 113.4
Jun 11 Qtr 42.2 50.9 93.1
Operating profit (US$ million)
Sep 11 Qtr 6.5 22.0 28.5
Jun 11 Qtr - 16.4 16.4
Capital expenditure (US$ million)
Sep 11 Qtr 2.3 8.2 10.5
Jun 11 Qtr 3.9 8.7 12.6
CASH OPERATING COSTS RECONCILIATION
(R`000 unless otherwise stated)
OPERATIONS Blyvoor Ergo * Total
Total cash costs
Sep 11 Qtr 318 244 369 301 687 545
Jun 11 Qtr 293 455 267 948 561 403
Movement in gold in process
Sep 11 Qtr (1 489) (13 427) (14 916)
Jun 11 Qtr 10 352 20 236 30 588
Less: Production taxes, rehabilitation and other
Sep 11 Qtr 3 023 67 129 70 152
Jun 11 Qtr 2 715 23 934 26 649
Less: Retrenchment costs
Sep 11 Qtr - - -
Jun 11 Qtr - 42 42
Less: Corporate and general administration costs
Sep 11 Qtr 4 669 9 042 13 711
Jun 11 Qtr 4 559 10 911 15 470
Cash operating costs
Sep 11 Qtr 309 063 279 703 588 766
Jun 11 Qtr 296 533 253 297 549 830
Gold produced
Sep 11 Qtr 902 1 075 1 977
Jun 11 Qtr 862 1 100 1 962
Total cash operating costs - R/kg
Sep 11 Qtr 342 642 260 189 297 808
Jun 11 Qtr 344 006 230 270 280 240
Total cash operating costs - US$/oz
Sep 11 Qtr 1 502 1 141 1 305
Jun 11 Qtr 1 573 1 057 1 283
* Ergo includes Crown, Ergo and ERPM.
DIRECTORS - (*British)(**American)
Executive:
DJ (Niel) Pretorius (Chief Executive Officer)
CC Barnes (Chief Financial Officer)
Independent non-executives:
GC Campbell*(Non-Executive Chairman); RP Hume; EA Jeneker; J Turk **
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
27 October 2011
JSE LIMITED SPONSOR
One Capital
Date: 27/10/2011 08:00:02 Produced by the JSE SENS Department.
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