DRDGOLD reported sharply higher annual earnings after a strong gold price offset flat production and rising operating costs.
The mine-tailings specialist recorded headline earnings of R4.3 billion for the year ended June, an increase of 89%.
Operating profit rose 83% to R6.5 billion, while revenue increased 42% to R11.2 billion.
Higher Gold Price Drives Growth
DRDGOLD produced 4,839kg of gold during the year, compared with 4,830kg in the previous period.
While production barely changed, the average rand gold price received rose 40% to about R2.29 million per kilogram.
The higher price was the main driver behind the company’s earnings and revenue growth.
Mine Tailings Gain More Value
DRDGOLD operates a different model from conventional underground gold miners.
The group reprocesses historical mine tailings to recover gold left behind by earlier mining operations.
Rising gold prices increase the value of those old deposits, even when production volumes remain stable.
Operating Costs Rise 8%
Cash operating costs increased by 8% during the year.
Cost pressures included:
- Sodium cyanide supply constraints in South Africa
- Higher diesel prices linked to conflict in the Middle East
- Increased trucking costs
- Higher electricity tariffs at the Far West Gold Recoveries operation
The 40% increase in the average rand gold price received outpaced the rise in operating costs.
Vision 2028 Investment Continues
DRDGOLD increased capital expenditure by 57% to R3.5 billion.
The company continued investing in its Vision 2028 projects, including new reclamation and processing infrastructure.
Despite the higher spending, free cash flow increased 85% to R2.3 billion.
Cash holdings more than doubled to R2.8 billion, and the group ended the financial year without bank debt.
Final Dividend Declared
DRDGOLD declared a final dividend of 120 cents per share.
DRDGOLD Sets FY2027 Production Guidance
The company expects to produce between 160,000 and 170,000 ounces of gold during the 2027 financial year.
This equals approximately 5.0 to 5.3 tonnes.
Capital expenditure is expected to decline from R3.5 billion to slightly more than R3 billion as the Vision 2028 programme progresses.
DRDGOLD’s annual results show how a higher gold price increased the value generated from largely unchanged production.
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