JOHANNESBURG (miningweekly.com) – It's been a very good year for DRDGOLD, was the opening remark of CEO Niël Pretorius about the company’s 4 839 kg gold production exceeding annual guidance and 85%-higher free cash flowing in spite of major R3.5-billion capital expenditure and a final R1-billion-plus cash dividend payout that roughly equalled the total market cap of the company when Pretorius did his first presentation 19 years ago.

“The production was pretty pleasing,” said Pretorius about coming within a hair’s breadth of 5 t of gold production, which was roughly 5 000 oz higher than the top end of guidance thanks to “very smart management” of the throughput mix. (Also watch attached Creamer Media video.)

Achieved was an average yield of just under 0.2 g/t, which was a 2% increase on plants that were working very efficiently.

With the exception of a very short period in 2018 when the Johannesburg Stock Exchange-listed company needed to protect cash flows, DRDGOLD has never hedged and deliberately so.

That placed it in a position to take full advantage of the 40% increase in the gold price, which translated into revenue for the year of a 42%-higher R11-billion-plus.

Cash operating costs for the year were under R1-million a kilogram, which was also better than guidance and a 7% increase year-on-year. Considering the number of double-digit increases that form part of the cost basket of gold production in South Africa, “this was testimony to some really good cost discipline”, which translated into an 83%-higher, R6.4-billion operating profit.

That informed the 89% headline earnings increase of R4.2-billion and strong 85%-higher R2.2-billion free cash flow, which is a very important parameter for DRDGOLD, because, as a dividend-paying company, generating cash is an important internal measure of efficiency.

“We're talking a final dividend of just more than a billion against free cash flow of R2.2-billion and capital expenditure of R3.5-billion, and remember that a big part of our Vision 28 story is that at some point in future capital expenditure is going to become considerably smaller, and if the gold price holds up, it will not have diminished significantly.

“In fact, it could be significantly higher because remember, we're targeting about a ton of additional gold production . . . and as a dividend-paying company, start factoring in a substantial portion of that into what's available for your dividend, and that's the DRD promise.

“That's really what we're working towards at this stage, and we're hoping that it will find its way into how share price has been interpreted at some stage over the next few years, as we get closer and nearer to completion of Vision 28 subparts,” Pretorius outlined in the financial year 2026 presentation of financial results attended by Mining Weekly.

Ergo’s production in the last six months of the financial year was exceptional. The East Rand operation lifted gold output by 150 kg a month at a time when the gold price was averaging R2 460 000/kg and ended up increasing revenue to R8.1-billion for FY26 compared with last year’s R5.7-billion. "We couldn't have done it if we didn't have the exceptional teams,” DRDGOLD CFO Henriette Hooijern pointed out, to which DRDGOLD COO Jaco Schoeman added: “I would just like to agree. Our operational staff, and our contractors and our consultants, everybody, right from the cleaning staff to the top, to the board, everybody had to fire on all cylinders to achieve these results.”