JOHANNESBURG (miningweekly.com) – Surface gold mining company DRDGold expects to report lower earnings on better-than-guided production and lower capital investment.

In the 12 months to June 30, DRDGold produced 183 902 oz of gold at a cash operating cost of R600 875/kg, with a capital investment of R584.1 million.

Guided was between 160 000 oz and 180 000 oz at R600 000/kg and R600-million capital.

Shareholders were advised on Wednesday that the JSE-listed company’s earnings a share would be down 32% to 12% and headline earnings a share between 33% and 13% down.

The expected earnings decreases follow Ergo’s 6%-revenue decrease to R3 704.9-million on a 3% lower rand gold price received and a 3% decrease in gold sold.

For the Ergo and Far West Rand Gold Recoveries reclamation operations owned and managed by DRDGold, revenue was 3% down at R5 118.5-million.

Ergo's revenue decreased by 6% to R3 704.9-million owing mainly to a 3% decrease in the rand gold price received and a 3% decrease in gold sold. The decrease in gold sold resulted from a 4% decrease in volume throughput offset by a 1% increase in yield.

Far West Rand Gold Recoveries’ revenue increased by 7% to R1 413.6-million on 9% more gold sold, resulting from an 8% increase in yield, notwithstanding volume throughput decreasing by 1%, the company headed by CEO Niël Pretorius stated in a stock exchange news services announcement accessed by Mining Weekly.

The impact of the decrease in revenue on earnings and headline earnings was further impacted by a 13% increase in cash operating costs to R3 463.8-million on mainly above inflationary increases in the costs of key consumables, diesel, steel and cyanide.

At Ergo, cash operating costs increased by 13%, to R3 009.8-million and at Far West Rand Gold Recoveries by 12% to R454-million.

CASH-RICH AND DEBT FREE

DRDGold's cash and cash equivalents at the end of its financial year were R2 525.6-million, with an available-if-needed R200-million ABSA Bank revolving credit facility.

In the 12 months to June 30, DRDGOLD generated free cash flow  – cash inflow from operating activities less cash outflow from investing activities –  of R871.6-million and paid cash dividends of R513.3-million.

The group remains free of any bank debt.