Wrap Text
Report to Shareholders for the Quarter ended 30 September 2013
DRDGOLD LIMITED
(Incorporated in the Republic of South Africa)
Registration Number.1895/000926/06
JSE share code: DRD
ISIN: ZAE000058723
NYSE trading symbol: DRD
("DRDGOLD" or "the company")
REPORT TO SHAREHOLDERS
FOR THE QUARTER ENDED
30 SEPTEMBER 2013
GROUP RESULTS: KEY FEATURES
Q1 2014 V Q1 2013
- Two-year wage settlement
- Flotation/fine-grind commissioning underway
- Gold production down 6% to 33 597oz
- Operating profit down to R72.0 million
REVIEW OF OPERATIONS
% change % change
Quarter Sep Quarter Q1 2014 Quarter Jun Q1 2014
Group 2013 Sep 2012 vs Q1 2013 2013 vs Q4 2013
Gold production oz 33 597 35 815 (6) 35 559 (6)
kg 1 045 1 114 (6) 1 106 (6)
Gold sold oz 36 394 37 905 (4) 32 826 11
kg 1 132 1 179 (4) 1 021 11
Cash operating costs US$ per oz 1 164 1 151 1 1 105 5
ZAR per kg 373 433 305 265 22 336 809 11
All-in sustaining costs US$ per oz 1 362 1 406 (3) 1 176 16
ZAR per kg 436 954 372 796 17 365 665 19
Average gold price received US$ per oz 1 333 1 685 (21) 1 373 (3)
ZAR per kg 427 604 446 783 (4) 429 115
Operating profit ZAR million 72.0 173.7 (59) 96.2 (25)
Operating margin % 13 32 (60) 22 (41)
All-in sustaining costs margin % (2) 17 (113) 15 (115)
EBITDA ZAR million 27.6 114.7 (76) 101.5 (73)
Headline (loss)/earnings ZAR million (12.5) 77.2 (116) 34.0 (137)
ZAR cents per share (3) 20 (116) 9 (137)
SHAREHOLDERS INFORMATION
Issued capital
385 383 767 ordinary no par value shares
6 205 559 treasury shares held within the group
5 000 000 cumulative preference shares
Total ordinary no par value shares issued and committed: 388 971 724
MARKET CAPITALISATION
As at 30 September 2013 (ZARm) 2 254.5 As at 30 June 2013 (ZARm) 2 034.8
As at 30 September 2013 (US$m) 220.4 As at 30 June 2013 (US$m) 209.3
STOCK TRADED JSE NYSE*
Average volume for the quarter per day ('000) 378 697
% of issued stock traded (annualised) 26 47
Price - High R6.64 $0.647
- Low R4.81 $0.489
- Close R5.85 $0.572
* This data represents per share data and not ADS data one ADS reflects 10 ordinary shares
DEAR SHAREHOLDER
This quarter was all about our efforts to commission and integrate our new flotation/fine-grind circuit. Volume delivery into the plant was solid and the
flotation circuit worked very well. The mills, however, were slow to get going. This meant that we created a very rich concentrate, which resulted in a
bottleneck at the mills. This, in turn, had the effect that most of the gold in concentrate remained in concentrate.
In production terms, this meant lower gold production and higher unit costs. Our all-in sustaining costs were R436 954/kg and, for the first time since
the September 2010 quarter, the all-in sustaining costs margin was negative at -2%. The start-up issues we experienced with the mills have now been
resolved.
Although the flotation/fine-grind circuit has introduced a layer of complexity into our operations a set of thickeners and a dedicated high-grade leach
and elution circuit we are achieving consistency in the operation of the thickeners and our understanding of the workings of the high-grade leach is
improving. We therefore remain committed to attaining our target of stable operation by December 2013.
While wage negotiations with the National Union of Mineworkers gave rise to a two-day strike by some 600 employees earlier this month outside of
the reporting period I am pleased to report that the wage negotiating process during the quarter was expeditious and largely constructive, resulting
ultimately in a settlement within budgeted parameters. We do not expect that the industrial action, which was peaceful, will have materially impacted on
performance in the second quarter.
On the financial front, operating profit reduced as a result of higher costs, lower gold production and a lower average rand gold price received.
We therefore saw a decline in earnings before interest, taxes, depreciation and amortisation ("EBITDA") and a headline loss of R12.5 million.
Q1 2014 v Q1 2013
OPERATIONAL REVIEW
Throughout for the quarter under review was 9% higher at 6 098 000t compared with the first quarter of FY2013. This was due, as intimated above, to
the ongoing stabilisation of both the western circuit (previously described separately as the Crown/City Deep circuit) and the Elsburg tailings complex
circuit, and consequent, continuing improvement in the operating parameters of the main Crown/Ergo pipeline.
The average yield, however, was 14% lower at 0.171g/t due both to the phasing out of sand material reporting to City Deep for milling and its
replacement with 3L42 slimes material, and to the gold lock-up described above, associated with commissioning of the flotation/fine-grind circuit.
Consequently, gold production was lower at 33 597oz, compared to 35 815oz.
Cash operating costs rose to R373 433/kg from R305 265/kg and all-in sustaining costs increased to R436 954/kg. This was due mainly to the increase in
throughput, lower gold production, an 8% increase by power utility Eskom in the annual electricity tariff, increases averaging 10% in the cost of various
other consumables and provision for wage increments flowing from the recently concluded two-year wage agreement with the National Union of
Mineworkers, which are backdated to July 2013.
Capital expenditure was 34% lower at R52.3 million, reflecting completion of the construction of the flotation/fine-grind circuit.
FINANCIAL REVIEW
Revenue was 8% lower at R484.0 million due to the lower gold production and a 4% decline both in gold sold to 36 394oz and in the average rand gold
price received to R427 604/kg.
After accounting for the increase in cash operating and all-in sustaining costs, operating profit was 59% lower at R72.0 million.
The operating margin was 60% lower at 13% and the all-in sustaining costs margin negative at -2%.
EBITDA declined by 76% to R27.6 million and a headline loss of R12.5 million, or 3 South African cents per share (SA cps), was recorded compared with
headline earnings of R77.2 million or 20 SA cps.
Q1 2014 v Q4 2013
OPERATIONAL REVIEW
Throughput, quarter-on-quarter, improved by 5% from 5 824 000t but the average yield declined by 10% from 0.190g/t, resulting in a 6% drop in gold
production to 33 597oz. Reasons for these quarter-on-quarter movements are detailed in the Q1 2014 v Q1 2013 comparison above.
Cash operating costs increased by 11% from R336 809/kg and all-in sustaining costs by 19% from R365 665/kg while capital expenditure declined
by 29% from R73.8 million.
FINANCIAL REVIEW
Gold revenue rose 10% from R438.1 million quarter on quarter due to an 11% increase in gold sold from 32 826oz. The average rand gold price received
was virtually unchanged at R427 604/kg. After accounting for the increases in cash operating costs, however, operating profit decreased by 25% from
R96.2 million.
The operating margin was 41% lower at 13% and the all-in sustaining costs margin was negative at -2%.
EBITDA was down 73% from R101.5 million and the headline loss of -3 SA cents was recorded, compared with headline earnings of R34 million, or
9 SA cps previously.
LOOKING AHEAD
As previously reported, commissioning and integration of the flotation/fine-grind circuit will continue during the second quarter, with completion expected
by December. While some impact on production in the second quarter is expected, this should be less substantial than in the quarter under review. During
this time we will, of course, seek to offset this impact by paying close attention to all other operating parameters, not least costs.
Niël Pretorius
Chief executive officer
22 October 2013
The condensed consolidated financial statements are prepared in accordance with the framework concepts and recognition and measurement principles
of International Financial Reporting Standards ("IFRS") and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and
Financial Reporting Pronouncements as issued by Financial Reporting Standards Council. The accounting policies adopted are in line with IFRS and are
consistent with those applied in the annual financial statements for the year ended 30 June 2013.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Quarter Quarter Quarter
Sep 2013 Sep 2012 Jun 2013
Rm Rm Rm
Unaudited Unaudited Unaudited
Gold and silver revenue 484.0 526.8 438.1
Net operating costs (412.0) (353.1) (341.9)
Cash operating costs (390.2) (340.1) (372.5)
Movement in gold in process (21.8) (13.0) 30.6
Operating profit 72.0 173.7 96.2
Depreciation (36.4) (34.2) (41.0)
Movement in provision for environmental rehabilitation (4.0) (10.0) 30.0
Environmental rehabilitation costs (10.7) (17.2) (4.2)
Retrenchment costs (2.4)
Care-and-maintenance costs (5.1) (8.8) 0.9
Other operating income/(expenses) 1.9 (7.2) (9.2)
Gross profit from operating activities 15.3 96.3 72.7
Impairments (0.8) (238.0)
Corporate and administration expenses (23.3) (18.0) (19.1)
Share-based payments (0.8) (0.3) (1.2)
Profit on disposal of assets 2.5 8.1
Net finance (expense)/income (6.0) 29.6 (23.9)
(Loss)/profit before taxation (15.6) 110.1 (201.4)
Taxation (4.6) (16.8) 3.3
(Loss)/profit after taxation (20.2) 93.3 (198.1)
Attributable to:
Equity owners of the parent (13.3) 78.6 (174.5)
Non-controlling interest (6.9) 14.7 (23.6)
(20.2) 93.3 (198.1)
Other comprehensive income
Foreign exchange translation and other 0.5 4.9 2.1
Net gain on disposal of an available-for-sale financial asset
reclassified to profit or loss 0.3
Reclassification of fair-value adjustment on available-for-sale
investments to profit or loss 101.3
Mark-to-market of available-for-sale investments (36.3) (23.4)
Total comprehensive income for the period (19.7) 62.2 (118.1)
Attributable to:
Equity owners of the parent (12.8) 47.5 (95.5)
Non-controlling interest (6.9) 14.7 (22.6)
(19.7) 62.2 (118.1)
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Quarter Quarter Quarter
Sep 2013 Sep 2012 Jun 2013
Rm Rm Rm
Unaudited Unaudited Unaudited
Reconciliation of headline (loss)/earnings
Net (loss)/profit (13.3) 78.6 (174.5)
Adjusted for
Impairments 0.8 238.0
Profit on disposal of assets (2.5) (8.1)
Non-controlling interest in headline earnings adjustment 0.6 (13.8)
Taxation thereon 0.5 (7.6)
Headline (loss)/earnings (12.5) 77.2 34.0
Headline (loss)/earnings per share cents (3) 20 9
Basic (loss)/earnings per share cents (4) 21 (46)
Diluted headline (loss)/earnings per share cents (3) 20 9
Diluted basic (loss)/earnings per share cents (3) 21 (45)
Calculated on the weighted average ordinary shares issued of: 379 178 208 379 178 208 379 178 208
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at As at
30 Sep 2013 30 Jun 2013 30 Sep 2012
Rm Rm Rm
Unaudited Audited Unaudited
Assets
Non-current assets 2 087.2 2 066.3 1 999.0
Property, plant and equipment 1 775.7 1 756.3 1 692.8
Non-current Investments and other assets 129.2 130.1 125.7
Environmental rehabilitation trust funds and investments 180.8 177.0 174.1
Deferred tax asset 1.5 2.9 6.4
Current assets 587.9 604.8 712.8
Inventories 124.9 138.8 91.8
Trade and other receivables 131.7 88.8 211.1
Cash and cash equivalents 331.3 377.2 409.9
Total assets 2 675.1 2 671.1 2 711.8
Equity and liabilities
Equity 1 575.7 1 648.3 1 657.6
Equity of the owners of the parent 1 361.3 1 427.0 1 416.2
Non-controlling interest 214.4 221.3 241.4
Non-current liabilities 725.2 777.0 753.6
Loans and borrowings 75.5 143.3 166.0
Post-retirement and other employee benefits 9.1 8.7 6.1
Provision for environmental rehabilitation 537.3 524.3 513.8
Deferred tax liability 103.3 100.7 67.7
Current liabilities 374.2 245.8 300.6
Trade and other payables 281.8 221.5 269.8
Loans and borrowings 92.4 24.3 30.8
Total equity and liabilities 2 675.1 2 671.1 2 711.8
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Quarter Quarter Quarter
Sep 2013 Sep 2012 Jun 2013
Rm Rm Rm
Unaudited Unaudited Unaudited
Balance at the beginning of the period 1 648.3 1 633.9 1 765.8
Share capital issued (0.3)
for costs (0.3)
Increase in share-based payment reserve 0.2 0.3 0.3
Net (loss)/profit attributable to equity owners of the parent (13.3) 78.6 (174.5)
Net (loss)/profit attributable to non-controlling interest (6.9) 14.7 (23.6)
Dividends paid on ordinary share capital (53.1) (38.5)
Treasury shares recognised/acquired 0.3
Fair-value adjustment on available-for-sale investments (36.3) (23.4)
Reclassification of fair-value adjustment on available-for-sale investments to profit
or loss 101.3
Other comprehensive income 0.5 5.2 2.1
Balance at the end of the period 1 575.7 1 657.6 1 648.3
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Quarter Quarter Quarter
Sep 2013 Sep 2012 Jun 2013
Rm Rm Rm
Unaudited Unaudited Unaudited
Net cash inflow from operations 11.2 32.0 77.5
Net cash outflow from investing activities (57.1) (85.3) (109.6)
Net cash in/(out)flow from financing activities 164.7 (1.1)
Loans and other 164.7 (1.1)
(Decrease)/increase in cash and cash equivalents (45.9) 111.4 (33.2)
Foreign exchange movement 0.1
Opening cash and cash equivalents 377.2 298.5 410.3
Closing cash and cash equivalents 331.3 409.9 377.2
Reconciliation of net cash inflow from operations
(Loss)/profit before taxation (15.6) 110.1 (201.4)
Adjusted for:
Movement in gold in process 21.8 13.0 (30.6)
Depreciation and impairment 37.2 34.2 279.0
Movement in provision for environmental rehabilitation 4.0 10.0 (30.0)
Share-based payments 0.8 0.3 1.2
Profit on disposal of assets (2.5) (8.1)
Finance expense and unwinding of provisions 9.2 1.1 31.9
Growth in environmental trust funds (1.1) (1.5) (1.4)
Other non-cash items 1.1 (1.9) 10.6
Taxation paid 7.0 (5.8)
Working capital changes (46.2) (137.8) 32.1
Net cash inflow from operations 11.2 32.0 77.5
ERGO KEY OPERATING AND FINANCIAL RESULTS (unaudited)
Ore milled ('000t) (metric) (imperial) Sep 2013 Qtr 6 098 6 721
Jun 2013 Qtr 5 824 6 419
Yield (g/t) (oz/t) (metric) (imperial) Sep 2013 Qtr 0.171 0.005
Jun 2013 Qtr 0.190 0.006
Gold produced (kg) (oz) (metric) (imperial) Sep 2013 Qtr 1 045 33 597
Jun 2013 Qtr 1 106 35 559
Cash operating costs (ZAR/kg) (US$/oz) Sep 2013 Qtr 373 433 1 164
Jun 2013 Qtr 336 809 1 105
Cash operating costs (ZAR/t) (US$/t) Sep 2013 Qtr 64 6
Jun 2013 Qtr 64 6
Gold and silver revenue (ZAR million) (US$ million) Sep 2013 Qtr 484.0 48.5
Jun 2013 Qtr 438.1 45.1
Operating profit (ZAR million) (US$ million) Sep 2013 Qtr 72.0 7.2
Jun 2013 Qtr 96.2 9.3
Capital expenditure (ZAR millions) (US$ million) Sep 2013 Qtr 52.3 5.2
Jun 2013 Qtr 73.8 7.6
ALL-IN SUSTAINING COSTS RECONCILIATION (unaudited)
R million unless otherwise stated
Net operating costs Sep 2013 Qtr 412.0
Jun 2013 Qtr 341.9
Corporate, administration and other expenses Sep 2013 Qtr 22.3
Jun 2013 Qtr 29.5
Rehabilitation and remediation (accretion and amortisation) Sep 2013 Qtr 13.2
Jun 2013 Qtr 2.0
Capital expenditure (sustaining) Sep 2013 Qtr 9.2
Jun 2013 Qtr 31.1
All-in sustaining costs* Sep 2013 Qtr 456.7
Jun 2013 Qtr 404.5
Retrenchment costs Sep 2013 Qtr 2.4
Jun 2013 Qtr
Rehabilitation and remediation (not related to current operations) Sep 2013 Qtr 10.7
Jun 2013 Qtr 4.2
Care-and-maintenance costs Sep 2013 Qtr 5.1
Jun 2013 Qtr (0.9)
Capital expenditure (non-sustaining) Sep 2013 Qtr 43.8
Jun 2013 Qtr 47.5
All-in costs* Sep 2013 Qtr 518.7
Jun 2013 Qtr 455.3
All-in sustaining costs (R/kg) Sep 2013 Qtr 436 954
Jun 2013 Qtr 365 665
All-in sustaining costs (US$/oz) Sep 2013 Qtr 1 362
Jun 2013 Qtr 1 176
All-in costs (R/kg) Sep 2013 Qtr 496 320
Jun 2013 Qtr 411 664
All-in costs (US$/oz) Sep 2013 Qtr 1 547
Jun 2013 Qtr 1 319
* All-in cost definitions based on the guidance note on non-GAAP Metrics issued by the World Gold Council on 27 June 2013
FORWARD-LOOKING STATEMENTS
Many factors could cause the actual results, performance or achievements 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 we serve, 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 our annual report for the fiscal year ended 30 June
2012, which we filed with the United States Securities and Exchange Commission on 26 October 2012 on Form 20-F. You should not place undue reliance
on these forward-looking statements, which speak only as of the date thereof. We do 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.
DIRECTORS (*British)(**American)
Executives: DJ 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
FOR FURTHER INFORMATION, CONTACT NIËL PRETORIUS
OR CRAIG BARNES AT:
niel.pretorius@drdgold.com, craig.barnes@drdgold.com
Web: http://www.drdgold.com
Quadrum Office Park - Building 1 - 50 Constantia Boulevard
Constantia Kloof Ext 28 - South Africa
PO Box 390 - Maraisburg, 1700 - South Africa
Date: 22/10/2013 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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