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DRDGOLD LIMITED - Condensed consolidated unaudited interim results for the six months ended 31 December 2018

Release Date: 13/02/2019 08:00
Code(s): DRD     PDF:  
 
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.



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