Wrap Text
Condensed consolidated unaudited interim results for the six months ended 31 December 2018
DRDGOLD Limited
(Incorporated in the Republic of South Africa)
Registration No.1895/000926/06
JSE share code: DRD
NYSE trading symbol: DRD
ISIN: ZAE 000058723
("DRDGOLD" or the "Company" or the "Group")
CONDENSED CONSOLIDATED
UNAUDITED INTERIM RESULTS
for the six months ended 31 December 2018
KEY FEATURES
83%
Increase in Mineral
Reserves from
3.28Moz to 6Moz
Gold production
down 3% to
2 280 kg
Operating profit
down 54% to
R102.2 million
All-in sustaining
costs margin of 0.8%
Investment in
growth capital
R306.0 million
Environmental
spend up 28%
Externally sourced
potable water usage
down by 31%
REVIEW OF OPERATIONS
Six months to Six months to %
31 Dec 2018 31 Dec 2017 change (1)
Gold production kg 2 280 2 341 (3)
oz 73 304 75 267 (3)
Gold sold kg 2 255 2 291 (2)
oz 72 500 73 663 (2)
Cash operating costs R per kg 510 111 451 689 13
US$ per oz 1 118 1 050 6
All-in sustaining costs R per kg 551 131 500 125 10
US$ per oz 1 208 1 187 2
Average gold price received R per kg 554 760 547 653 1
US$ per oz 1 216 1 272 (4)
Operating profit R million 102.2 219.9 (54)
Operating margin % 8.2 17.5 (53)
All-in sustaining costs margin % 0.8 8.7 (91)
Headline (loss)/earnings R million (46.3) 60.4 (177)
SA cents per share (cps) (7.2) 14.3 (150)
(1) % Change is rounded to the nearest percent and is based on the rounded amounts as presented, which is rounded to the nearest hundred thousand Rand
Issued capital
696 429 767 ordinary no par value shares (30 June 2018: 431 429 767)
9 361 071 treasury shares held within the Group (30 June 2018: 9 361 071)
5 000 000 cumulative preference shares (30 June 2018: 5 000 000)
Stock traded JSE NYSE(2)
Price
- 6 month intra-day high R4.00 $0.272
- 6 month intra-day low R2.66 $0.176
- Close R3.13 $0.208
(2) This data represents per share data and not American Depository Receipt (ADR) data -
one ADR reflects ten ordinary shares
Market capitalisation Rm US$m
As at 31 December 2018 2 179.8 144.9
As at 30 June 2018 1 574.7 109.6
Rounding of figures may result in computational discrepancies
RESULTS
The condensed consolidated interim financial statements of DRDGOLD
for the six months ended 31 December 2018 are available on DRDGOLD's
website as well as at the Company's registered office.
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 licenses 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 2018, which we filed with
the United States Securities and Exchange Commission on 31 October 2018 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 and
financial information included in this presentation have not been reviewed and reported on
by DRDGOLD's auditors.
DIRECTORS (*British)(**American)
Executives
DJ Pretorius (Chief Executive Officer)
AJ Davel (Chief Financial Officer)
Independent Non-executives
GC Campbell* (Non-executive
Chairman)
EA Jeneker
J Turk** (service period concluded
31 October 2018)
JA Holtzhausen
TVBN Mnyango
JJ Nel (appointed 30 November 2018)
Company Secretary
R Masemene
Sponsor
One Capital
FOR FURTHER INFORMATION
CONTACT NI?L PRETORIUS
Tel: (+27) (0) 11 470 2600
Fax: (+27) (0) 11 470 2618
Website: www.drdgold.com
1 Sixty Jan Smuts Building
2nd Floor - North Tower
160 Jan Smuts Avenue
Rosebank, 2196
South Africa
PO Box 390, Maraisburg, 1700,
South Africa
DEAR SHAREHOLDER
SIX MONTHS ENDED 31 DECEMBER 2018 VS SIX
MONTHS ENDED 31 DECEMBER 2017
OVERVIEW
We are pleased to include for the first time operating and financial
information from our Far West Gold Recoveries (FWGR) project.
Construction on this project started in August 2018 and early
commissioning commenced in December 2018. As a consequence,
the overall operating and financial results for the six months ended
31 December 2018 are not directly comparable with those for the six
months ended 31 December 2017.
2018 was a tough year for most South African gold miners, and although
we managed to avoid the labour- and safety-related issues that impacted
the volume throughput of many other producers, we were not spared
the challenges of power utility, Eskom and its distributing agencies, in
distress. Whilst plant performance on the whole was consistent with
our expectations, approximately 49kg of gold were lost due directly to
power supply disruptions.
Our internal back-up generation capacity assisted in getting production
going immediately after power was restored each time, containing
losses to an extent.
The impact of lower throughput was felt however; in terms of gold
production, which was 3% down, unit costs, which were up, and
operating profit, which was down.
Encouraging, though, is that Ergo's three new projects, about which
we have reported previously have all been implemented successfully.
Reclamation of the 4L50 dump, part of the Elsburg Tailings Complex,
is fully operational; conversion of the Brakpan plant from elution to
zinc precipitation in the final stage of gold extraction is resulting in the
expected improvement in efficiencies; and the two ball mills relocated
to Brakpan from Crown have been commissioned, allowing for the
retreatment of higher-grade sand reserves.
We are also very pleased with progress at FWGR Phase 1: Driefontein 5
reclamation site has been fully commissioned; refurbishment of the
Driefontein 2 plant was completed at the end of January 2019; and the
upgrading of the Driefontein 4 tailings dam is on track for completion
by the end of March 2019. Consequently, all indications are that Phase 1
will be fully commissioned during the first half of calendar year 2019.
It is all the more rewarding that work on the project to the end of the
reporting period was undertaken with a clean slate in terms of safety.
I am sad to have to report, however, the death of Mr Lareon Cloete,
electrical foreman at Ergo, who died from injuries sustained in an
incident during routine maintenance of an Eskom substation, serving
Ergo. Our thoughts and prayers are with his loved ones. The Mine Health
and Safety Inspectorate is conducting an enquiry into the incident.
OPERATIONAL REVIEW
Overall gold production was 3% lower at 2 280kg, reflecting a 2%
decline in overall throughput to 12 004 000t and a 0.5% decline in the
overall average yield to 0.190g/t.
While FWGR contributed 140 000t at 0.314g/t, Ergo's throughput was
3% lower at 11 864 000t and its average yield 2% lower at 0.188g/t.
Ergo's lower throughput was a consequence mainly of major power
interruptions experienced over 11 days during the second quarter of
financial year 2019, caused by a fire at an Eskom sub-station, a lightning
strike on the Brakpan tailings complex transformer yard, and load-
shedding by the Johannesburg Metropolitan Municipality. Sadly, the
once mighty Eskom is now Ergo's single biggest risk factor.
The lower yield resulted primarily from a reduction in higher grade
sand throughput at the Knights plant, the impact of which was not
entirely offset by the processing of other sand material trucked from
clean-up sites.
While total cash operating costs were up 9% following the inclusion of
FWGR as well as a 6% increase at Ergo, cash operating unit costs overall
rose by 13% to R510 111/kg due mainly to a 9% increase in Eskom's
power tariff, trucking costs and a drop in production.
All-in sustaining costs overall were 10% higher at R551 131/kg, a
combination of the factors mentioned above and of lower sustaining
capital expenditure at Ergo.
FINANCIAL REVIEW
Total revenue was virtually unchanged at R1 252.5 million; while
FWGR's contribution was R19.5 million, Ergo's was 2% lower at
R1 233.0 million. The average Rand gold price received was 1% higher,
helping to offset the impact of lower gold production and sales.
Total cash operating costs were 9% higher at R1 168.8 million, reflecting
the inclusion of FWGR costs at R33.5 million and a 6% rise in those of
Ergo to R1 135.3 million. Total all-in sustaining costs were 8% higher at
R1 242.7 million; while those of FWGR were R44.7 million, Ergo's were
2% higher at R1 164.2 million.
Operating profit was R102.2 million, down 54%, a consequence both of
lower production and higher costs.
A headline loss of R46.3 million (7.2 SA cents per share) was incurred,
compared with headline earnings of R60.4 million (14.3 SA cents per
share) in HY2018.
After taking into account R231.8 million capital expenditure at FWGR,
free cash outflow was R261.0 million.
SUSTAINABLE DEVELOPMENT
The information provided here relates to Ergo only.
Total environmental spend was 28% higher at R24.9 million, reflecting
the cost of rehabilitation of 16.5 hectares and 12 hectares respectively
at the Brakpan and Crown tailings facilities.
Total potable water consumption was 31% lower at 1 187Ml, a
consequence both of continued benefit from the central water
distribution facility and a lower requirement by the ongoing vegetation
programme due to adequate rainfall.
LOOKING AHEAD
In guidance provided previously, we planned gold production of between
148 000 and 154 000 ounces in FY2019 for Ergo. In an update to this
guidance, the Group plans to produce between 157 000 and 165 000
ounces at a cash operating cost of approximately R500 000/kg
in FY2019. With FWGR off to a flying start, we look forward to the
benefit of its contribution in the second half of FY2019.
Ni?l Pretorius
Chief Executive Officer
13 February 2019
CONDENSED CONSOLIDATED INTERIM
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Six months to Six months to
31 Dec 2018 31 Dec 2017
Rm Rm
Notes Unaudited Unaudited
Revenue 1 252.5 1 254.8
Cost of sales (1 248.7) (1 139.6)
Gross profit from operating activities 3.8 115.2
Other income 0.1 0.2
Administration expenses and other costs (44.3) (31.9)
Results from operating activities (40.4) 83.5
Finance income 28.2 18.7
Finance expenses (37.1) (25.0)
(Loss)/profit before tax (49.3) 77.2
Income tax 3.1 (16.6)
(Loss)/profit for the period (46.2) 60.6
Other comprehensive (loss)/income
Items that will be reclassified
subsequently to profit or loss,
net of tax
Net fair value adjustment on financial
instruments classified as fair value
through other comprehensive income (3.9) 2.5
Total other comprehensive (loss)/
income for the period (3.9) 2.5
Total comprehensive (loss)/
income for the period (50.1) 63.1
Basic (loss)/earnings per share (1) 3 (7.2) 14.4
Diluted basic (loss)/earnings per share (1) 3 (7.2) 14.4
(1) All per share financial information is presented in South African cents per share (cps) and
is rounded to the nearest one decimal point based on the results as presented, which is
rounded to the nearest million Rand.
CONDENSED CONSOLIDATED INTERIM
STATEMENT OF FINANCIAL POSITION
As at As at As at
31 Dec 2018 30 Jun 2018 31 Dec 2017
Rm Rm Rm
Notes Unaudited Audited Unaudited
Assets
Non-current assets 3 587.5 1 734.1 1 753.9
Property, plant and
equipment 2 2 928.6 1 452.7 1 502.0
Investments in rehabilitation
obligation funds 2 622.2 244.0 235.6
Financial assets 31.0 28.7 11.3
Deferred tax assets 5.7 8.7 5.0
Current assets 590.9 626.3 625.7
Inventories 2 279.6 233.0 242.7
Trade and other receivables 101.9 91.2 88.4
Cash and cash equivalents 4 209.4 302.1 294.6
Total assets 4 178.4 2 360.4 2 379.6
Equity and liabilities
Equity 2 566.2 1 267.3 1 344.4
Non-current liabilities 1 174.3 772.5 742.6
Provision for environmental
rehabilitation 2 819.4 553.5 546.5
Deferred tax liability 154.4 163.7 154.2
Borrowings 5 173.3 - -
Employee benefits 27.2 40.6 26.4
Finance lease obligation - 14.7 15.5
Current liabilities 437.9 320.6 292.6
Trade and other payables 2 404.4 303.2 275.8
Employee benefits 14.5 13.2 10.2
Finance lease obligation 12.9 - -
Current tax liability 6.1 4.2 6.6
Total liabilities 1 612.2 1 093.1 1 035.2
Total equity and liabilities 4 178.4 2 360.4 2 379.6
CONDENSED CONSOLIDATED INTERIM
STATEMENT OF CHANGES IN EQUITY
Six months to Six months to
31 Dec 2018 31 Dec 2017
Rm Rm
Notes Unaudited Unaudited
Balance at the beginning of the period 1 267.3 1 302.4
Total comprehensive income
(Loss)/profit for the period (46.2) 60.6
Other comprehensive (loss)/income (3.9) 2.5
Transactions with the owners
of the parent
Acquisition of Far West Gold Recoveries
assets and liabilities 2 1 349.3 -
Share issue expenses (0.3) _
Dividends paid - (21.1)
Balance at the end of the period 2 566.2 1 344.4
The accompanying notes are an integral part of the condensed
consolidated interim financial statements.
These condensed consolidated interim financial statements for the
six months ended 31 December 2018 have been prepared under
the supervision of DRDGOLD's Chief Financial Officer, Mr AJ Davel
CA(SA). The condensed consolidated interim financial statements were
authorised for issue by the directors on 8 February 2019.
CONDENSED CONSOLIDATED INTERIM
STATEMENT OF CASH FLOWS
Six months to Six months to
31 Dec 2018 31 Dec 2017
Rm Rm
Notes Unaudited Unaudited
Net cash (outflow)/inflow from
operating activities (5.2) 155.8
Cash (used in)/
generated by operations (11.6) 147.5
Interest received 9.4 11.3
Interest paid (1.8) (1.5)
Income tax paid (1.2) (1.5)
Net cash outflow from investing
activities (255.8) (92.8)
Acquisition of property, plant and
equipment (247.1) (86.6)
Proceeds on disposal of property,
plant and equipment 0.1 1.5
Environmental rehabilitation payments (8.8) (7.7)
Net cash inflow/(outflow) from
financing activities 168.3 (22.1)
Borrowings raised 5 174.0 -
Initial fees incurred on borrowings 5 (3.6) -
Repayment of finance lease obligation (1.8) (1.3)
Share issue expenses (0.3) -
Dividends paid on ordinary
share capital - (20.8)
(Decrease)/increase in cash and cash
equivalents (92.7) 40.9
Opening cash and cash equivalents 302.1 253.7
Closing cash and cash equivalents 4 209.4 294.6
Reconciliation of cash (used in)/
generated by operations
(Loss)/profit before tax (49.3) 77.2
Adjusted for:
Depreciation 69.3 82.3
Movement in gold in process (18.5) (40.9)
Environmental rehabilitation payments (5.7) (0.6)
Profit on disposal of property, plant and
equipment included in other income (0.1) (0.2)
Share-based payment expense 3.2 0.2
Finance income (28.2) (18.7)
Finance expenses 37.1 25.0
Other non-cash items 10.9 (1.0)
Working capital changes (30.3) 24.2
Change in trade and other receivables (11.3) 25.0
Change in non-current receivables (6.8) -
Change in inventories (13.9) (21.5)
Change in trade and other payables
and employee benefits 1.7 20.7
Cash (used in)/generated by operations (11.6) 147.5
The accompanying notes are an integral part of the condensed consolidated
interim financial statements.
NOTES TO THE CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The condensed consolidated interim financial statements are prepared
in accordance with International Financial Reporting Standard, IAS 34
Interim Financial Reporting, the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee and Financial Pronouncements
as issued by Financial Reporting Standards Council and the requirements
of the Companies Act of South Africa.
The accounting policies applied in the preparation of the condensed
consolidated interim financial statements are in terms of International
Financial Reporting Standards and are consistent with those applied in
the previous consolidated annual financial statements except for the
adoption of IFRS 9 Financial Instruments (IFRS 9) and IFRS 15 Revenue
from Contracts with Customers (IFRS 15), with effect from 1 July 2018.
IFRS 15 Revenue from Contracts with Customers
The standard contains a single model that applies to contracts with
customers.
The Group has assessed that there is no impact on adopting IFRS 15, and
revenue recognition remains unchanged as follows:
- Rand Refinery is assessed as being an agent, selling gold and silver on behalf
of the Group; and
- Revenue is recognised on the date that control of gold and silver pass to
the buyer, which is the date on which Rand Refinery sells the gold on the
Group's behalf.
This is the same date as when significant risks and rewards passes under
IAS 18 Revenue.
IFRS 9 Financial Instruments
The standard sets out requirements for recognising and measuring
financial instruments. It also introduced three new classifications for
financial assets: Amortised cost, fair value through profit or loss and fair
value through other comprehensive income.
The following changes have occurred as a result:
- The new classification has had no effect on the accounting of
financial assets and financial liabilities. Investment in other entities
(equity instruments) has been designated at fair value through other
comprehensive income; and
- The method of determining impairment of long-term and other
receivables has changed to reflect the "expected credit loss" model.
Management has made an assessment of the magnitude of the changes
to the impairment model. This did not have a significant impact on the
measurement of financial assets.
There was no material impact on the Group's interim financial results for
the six months ended 31 December 2018.
2. ACQUISITION OF ASSETS AND LIABILITIES
Effective 31 July 2018, DRDGOLD acquired gold assets and liabilities
associated with Sibanye-Stillwater's West Rand Tailings Retreatment
Project, subsequently renamed Far West Gold Recoveries Proprietary
Limited (FWGR).
As purchase consideration for this acquisition, DRDGOLD issued
265 million new ordinary shares equal to 38.05% of DRDGOLD's
outstanding shares to Sibanye-Stillwater and granted Sibanye-Stillwater
an option to subscribe for new ordinary shares up to a total of 50.1%
of the total issued ordinary shares of DRDGOLD at a 10% discount to
the prevailing market value, to be exercised two years from the effective
date of the acquisition.
The transaction has been accounted for under IFRS 2 Share Based
Payment as it represents a receipt of goods in exchange for equity
instruments of DRDGOLD.
The consequence thereof is that the assets and liabilities are recognised
at their fair value using principles under IFRS 13 Fair Value Measurement
as they are identifiable, and their fair value can be reliably measured.
A corresponding increase in equity is also recognised. Included in equity
is the fair value of the option using a binomial tree option pricing model.
No deferred tax has been recognised on the acquisition as it has not
been accounted for as a business combination under IFRS 3 Business
Combinations, and therefore the initial recognition is exempt from
deferred tax under IAS 12 Income Taxes.
The fair value of assets was determined using the income approach
present value technique by applying a nominal discounted cash flow
model which was based on a forward - looking gold price and a risk-
adjusted discount rate based on the weighted average cost of capital.
The fair value of the environmental rehabilitation liability was
determined with the assistance of an independent expert and discounted
to its net present value.
The values at acquisition included:
Rm
Property, plant and equipment 1 225.6
Investments in rehabilitation obligation funds 360.4
Inventories 14.2
Provision for environmental rehabilitation (247.4)
Trade and other payables (3.5)
Equity 1 349.3
Six months to Six months to
31 Dec 2018 31 Dec 2017
Rm Rm
Notes Unaudited Unaudited
3. (LOSS)/EARNINGS PER SHARE
Reconciliation of headline (loss)/earnings
(Loss)/profit for the period (46.2) 60.6
Adjusted for:
Profit on disposal of property, plant
and equipment, net of tax (0.1) (0.2)
Headline (loss)/earnings (46.3) 60.4
Weighted average number of ordinary
shares in issue adjusted for treasury
shares 642 421 957 422 068 696
Diluted weighted average number of
ordinary shares adjusted for treasury
shares (1) 642 421 957 422 068 696
Basic (loss)/earnings per share (2) (7.2) 14.4
Diluted (loss)/earnings per share (2) (7.2) 14.4
Headline (loss)/earnings per share (2) (7.2) 14.3
Diluted headline (loss)/earnings per
share (2) (7.2) 14.3
(1) The Sibanye-Stillwater option (refer note 2) was excluded from the diluted weighted
average number of ordinary shares calculation as its effect would have been anti-dilutive
(2) All per share financial information is presented in South African cents per share (cps) and
is rounded to the nearest one decimal point based on the results as presented which is
rounded to the nearest million Rand
4. CASH AND CASH EQUIVALENTS
As at As at
31 Dec 2018 30 Jun 2018
Rm Rm
Unaudited Audited
Included in cash and cash equivalents is
restricted cash of:
Cash held in escrow (including interest)
relating to the electricity dispute with
Ekurhuleni Metropolitan Municipality
(refer note 6) 118.0 114.2
Guarantees 17.7 17.2
Subsequent to reporting date, a bank guarantee to the value of the cash
held in escrow (including interest) was issued in favour of Ekurhuleni
Metropolitan Municipality and the said cash of R118.0 million held in
escrow was released to Ergo.
5. BORROWINGS
On 1 August 2018, DRDGOLD entered into a R300 million revolving credit
facility (RCF) with ABSA Bank Limited (acting through its Corporate and
Investment Banking division) to finance the development of Phase 1 of
FWGR and working capital requirements. It replaced the R100 million
overdraft facility that was in place during the year ended 30 June 2018.
Subsequent to reporting date, R125 million of the initial R300 million RCF
was dedicated to issue a bank guarantee as described in note 4, reducing
the available facility to R175 million.
The RCF is classified and measured as a financial liability at amortised cost.
Terms of the RCF
Interest rate Jibar
Interest rate margin 3.25%
Term of the RCF Two years
Security Pledge and cession of DRDGOLD's shares in and
shareholder claims against:
- Ergo Mining Proprietary Limited (guarantor to RCF)
- Far West Gold Recoveries Proprietary Limited
(guarantor to RCF)
As at As at
31 Dec 2018 30 Jun 2018
Rm Rm
Unaudited Audited
Balance at the beginning of the period - -
Borrowings advanced 174.0 -
Initial fees incurred on borrowings (3.6) -
Unwinding of interest 2.9 -
Balance at the end of the period 173.3 -
6. CONTINGENT LIABILITY AND CONTINGENT ASSET:
EKURHULENI METROPOLITAN MUNICIPALITY ELECTRICITY DISPUTE
Whilst the Main Application was initially set down for hearing on
5 December 2018, it was subsequently postponed in order to be brought
before a judicially appointed case manager to determine, inter alia, if
this application ought to be consolidated with an action brought by the
Municipality by way of summons ("Action Matter") to recover the funds
that ERGO disputes and payment of which it has withheld.
ERGO seeks the consolidation on the basis that the issues in the Main
Application matter and the Action Matter overlap extensively and will
require the same expert evidence.
Alternatively to consolidation, the Main Application should be adjourned
pending final determination of the Action Matter. The Municipality is
opposed to the consolidation.
7. FINANCIAL RISK MANAGEMENT FRAMEWORK
Commodity price sensitivity
The Group's profitability and cash flows are primarily affected by changes
in the market price of gold which is sold in US Dollar and then converted
to Rand. In line with our long-term strategy of being an unhedged gold
producer, we generally do not enter into forward gold sales contracts to
reduce our exposure to market fluctuations in the Dollar gold price or
the exchange rate movements. However, during periods when medium-
term debt is incurred to fund growth projects and hence introduce
liquidity risk to the Group we may mitigate this liquidity risk by entering
into facilities to achieve price protection. The need for medium term
borrowings for the first phase development of FWGR introduced some
liquidity risk to the Group.
In September 2018, DRDGOLD committed 50 000 ounces of gold under
a zero-cost collar with a floor of R565 000/kg and a ceiling of just under
R609 000/kg, spread equally till the end of May 2019. The collar was
traded to mitigate the liquidity risk brought about by the medium-term
borrowings secured for the development of FWGR.
The collar is accounted for as a financial asset or financial liability
at fair value through profit or loss and constitutes level 2 on the fair
value hierarchy.
8. FAIR VALUES
The Group's assets that are measured at fair value at reporting date
consist of investments in other entities included in financial assets on the
statement of financial position and are financial instruments classified
as fair value through other comprehensive income. Of this line item,
R5.3 million (30 June 2018: R9.2 million) relates to fair value hierarchy
level 1 instruments and R0.2 million (30 June 2018: R0.2 million) relates
to fair value hierarchy level 3 instruments.
The Group's liabilities that are measured at fair value consist of the
zero-cost collar financial liability through profit or loss and is included in
trade and other payables on the statement of financial position. Of this
line item, R9.9 million relates to fair value hierarchy level 2 instruments.
9. SUBSEQUENT EVENTS
Other than disclosed in the preceding notes, there were no subsequent
events between the reporting date of 31 December 2018 and the date
of issue of these condensed consolidated interim financial statements.
10. OPERATING SEGMENTS
The following summary describes the operations in the Group's
reportable operating segments:
- Ergo is a surface retreatment operation which treats old slime and sand
dumps to the south of Johannesburg's central business district as well
as the East and Central Rand goldfields. The operation comprises three
plants. The Ergo and Knights plants continue to operate as metallurgical
plants. The City Deep plant continues to operate as a pump/milling
station feeding the metallurgical plants.
- FWGR is a surface gold retreatment operation and treats old slime
dams in the West Rand goldfields. FWGR is currently in a construction
phase which entails the refurbishment and upgrading of the Driefontein
2 plant and relevant infrastructure to process tailings from the
Driefontein 5 dump and deposit residues on the Driefontein 4 tailings
deposition facility.
Corporate office and other reconciling items are taken into consideration
in the strategic decision-making process of the chief operating decision
maker and are therefore included in the disclosure here, even though
they do not earn revenue. They do not represent a separate segment.
Six months ended 31 Dec 2018 Six months ended 31 Dec 2017
Unaudited Unaudited
Corporate Corporate
office office
and other and other
reconciling reconciling
Ergo FWGR items Total Ergo items Total
Rm Rm Rm Rm Rm Rm Rm
Revenue (external) 1 233.0 19.5 - 1 252.5 1 254.8 - 1 254.8
Cash operating costs (1 135.3) (33.5) - (1 168.8) (1 075.8) - (1 075.8)
Movement in gold in process 15.3 3.2 - 18.5 40.9 - 40.9
Operating profit/(loss) 113.0 (10.8) - 102.2 219.9 - 219.9
Retrenchment costs - (4.7) - (4.7) - - -
Administration expenses and other costs (1) (10.7) (0.4) (33.2) (44.3) (1.8) (31.7) (33.5)
Interest income (2) 4.2 - 4.8 9.0 4.7 6.1 10.8
Interest expense (3) (1.4) - (0.8) (2.2) (1.5) (0.3) (1.8)
Income tax (1.8) (1.3) - (3.1) (1.5) (1.4) (2.9)
Working profit/(loss) before additions to property,
plant and equipment 103.3 (17.2) (29.2) 56.9 219.8 (27.3) 192.5
Additions to property, plant and equipment (14.2) (305.4) (0.1) (319.7) (86.7) (0.1) (86.8)
Working profit/(loss) after additions to property,
plant and equipment 89.1 (322.6) (29.3) (262.8) 133.1 (27.4) 105.7
(1) Includes non-cash items amounting to R7.9 million
(2) Interest income excludes the unwinding of the
long-term receivable
(3) Interest expense excludes the fair value adjustment
on the initial recognition of the long-term receivable
Reconciliation of (loss)/profit for the period
Working profit/(loss) before additions to property,
plant and equipment 103.3 (17.2) (29.2) 56.9 219.8 (27.3) 192.5
Depreciation (69.0) - (0.3) (69.3) (82.2) (0.1) (82.3)
Profit on disposal of property, plant and equipment 0.1 - - 0.1 0.2 - 0.2
Growth in environmental rehabilitation trust funds
and reimbursive right 5.0 10.0 2.9 17.9 5.2 2.7 7.9
Unwinding of provision for environmental
rehabilitation (23.5) (8.9) (0.6) (33.0) (22.6) (0.6) (23.2)
Fair value adjustment on the initial recognition
of long-term receivable including subsequent
unwinding (0.6) - - (0.6) - - -
Ongoing rehabilitation expenditure (10.3) (0.9) - (11.2) (11.0) - (11.0)
Other operating (costs)/income including care
and maintenance costs (19.3) (4.8) 10.9 (13.2) (21.7) 11.8 (9.9)
Deferred tax (1.0) 10.2 (3.0) 6.2 (13.7) 0.1 (13.6)
(Loss)/profit for the period (15.3) (11.6) (19.3) (46.2) 74.0 (13.4) 60.6
Six months ended 31 Dec 2018 Six months ended 31 Dec 2017
Unaudited Unaudited
Corporate Corporate
office office
and other and other
reconciling reconciling
Ergo FWGR items Total Ergo items Total
Rm Rm Rm Rm Rm Rm Rm
OPERATIONAL PERFORMANCE
Ore milled (000't) 11 864 140 - 12 004 12 253
Yield (g/t) 0.188 0.314 - 0.190 0.191
Cash operating costs
(R/t) 96 239 - 97 87
(US$/t) 7 17 - 7 6
Gold sold 2 220 35 - 2 255 2 291
Reconciliation of All-in sustaining costs
(All amounts presented in R million unless
otherwise indicated)
Cash operating costs (1 135.3) (33.5) - (1 168.8) (1 075.8)
Movement in gold in process 15.3 3.2 - 18.5 40.9
Administration expenses and other costs (2.8) (0.4) (33.1) (36.3) (33.5)
Other operating costs excluding care and
maintenance costs (8.7) (0.8) - (9.5) (5.9)
Unwinding of provision for environmental
rehabilitation (23.5) (8.9) (0.6) (33.0) (23.2)
Capital expenditure (sustaining) (9.2) (4.3) (0.1) (13.6) (48.4)
All-in sustaining costs (1 164.2) (44.7) (33.8) (1 242.7) (1 145.9)
Care and maintenance costs - - (3.9) (3.9) (4.0)
Retrenchment costs - (4.7) - (4.7) -
Ongoing rehabilitation expenditure (10.3) (0.9) - (11.2) (11.0)
Capital expenditure (non-sustaining) (4.9) (301.1) - (306.0) (38.4)
Capital recoupment - - - - 0.7
All-in costs (1 179.4) (351.4) (37.7) (1 568.5) (1 198.6)
Cash operating costs R per kg 504 505 865 714 - 510 111 451 689
Cash operating costs US$ per oz 1 106 1 899 - 1 118 1 050
All-in sustaining costs* R per kg 524 459 1 277 143 - 551 131 500 125
All-in sustaining costs* US$ per oz 1 150 2 799 - 1 208 1 187
All-in costs* R per kg 531 306 10 040 000 - 695 610 523 127
All-in costs* US$ per oz 1 202 22 713 - 1 574 1 213
* All-in cost definitions based on the guidance note on non-GAAP Metrics issued by the World Gold Council on 27 June 2013
The FWGR transaction, effective 31 July 2018, added surface Mineral Reserves of 2.72Moz (246.12Mt@0.34g/t). This is comprised of Proved Mineral
Reserves of 2.1Moz (178.89Mt@0.37g/t) and Probable Mineral Reserves of 0.62Moz (67.23Mt@0.28g/t). There have been no other material changes
to the technical information relating to, inter alia, the Group's Mineral Reserves and Resources, legal title to its mining and prospecting rights and
legal proceedings relating to its mining and exploration activities as disclosed in DRDGOLD's annual reports for the year ended 30 June 2018 and
subsequent public announcements.
The technical information referred to in this report has been reviewed by Messrs Mpfariseni Mudau (SACNASP), Gary Viljoen (SACG), and Vaughn Duke
(SAIMM). All are independent contractors of DRDGOLD. They approved this information in writing before the publication of the report.
Date: 13/02/2019 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.