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DRDGOLD LIMITED - Trading statement and operational update for the year ended 30 June 2019

Release Date: 27/08/2019 08:00
Code(s): DRD     PDF:  
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Trading statement and operational update for the year ended 30 June 2019

(Incorporated in the Republic of South Africa)
(Registration number: 1895/000926/06)
ISIN: ZAE000058723
JSE share code: DRD
NYSE trading symbol: DRD
(“DRDGOLD” or the “Company”)


 In terms of paragraph 3.4(b) of the JSE Limited Listings Requirements, companies are required to
 publish a trading statement as soon as they are satisfied, with a reasonable degree of certainty,
 that the financial results for the current reporting period will differ by at least 20% from the
 financial results of the previous corresponding period.

 DRDGOLD is in the process of finalising its results for the year ended 30 June 2019 (“Results”)
 and shareholders are accordingly advised that the Company has reasonable certainty that it will
 - earnings per share of between 11.65 cents and 11.95 cents per share compared to earnings
     of 1.5 cents per share for the previous corresponding period; and
 - headline earnings per share of between 10.73 cents and 11.07 cents per share compared to
     headline earnings of 1.7 cents per share for the previous corresponding period.

 The expected increase in earnings per share and headline earnings per share for the year ended
 30 June 2019 compared to the previous corresponding period are due mainly to movements in
 the following items:

 1. Revenue
 Revenue increased by R271.7 million, or 11% to R2,762.1 million (2018: R2,490.4 million).
 - Ergo’s R2,577.5 million contribution to revenue was 3% higher than the previous
    corresponding period due to the higher average Rand gold price received moderating the
    impact of 4% lower gold sold; and
 - Far West Gold Recoveries (“FWGR”) made its maiden contribution to revenue of R184.6
    million, the majority of it from 1 April 2019 when commercial production commenced.

 2. Cost of sales
 The increase in revenue was moderated by an increase in cost of sales of R206.2 million, or 9%,
 to R2,553.9 million (2018: R2,347.7 million). This included:
 - An increase in operating costs of R255.9 million (R112.7 million related to the first year of
     operations at FWGR and, the remainder is due mostly to inflationary cost increases at Ergo);
 - A credit of R60.0 million (2018: R2.9 million) resulting from a change in estimated
     environmental rehabilitation, related mostly to Ergo.

 3. Weighted average number of ordinary shares
 Earnings and headline earnings per share increased notwithstanding the issuance of 265 million
 consideration shares to Sibanye Gold Limited trading as Sibanye-Stillwater, on 31 July 2018 in
 respect of the FWGR acquisition.
                                                                            Year ended 30 Jun 2019                   Year ended
                                                                                                                     30 Jun 2018

                                                                                           office and
                                                                    Ergo        FWGR            items       Total           Total
All amounts presented in R million unless otherwise indicated        Rm           Rm               Rm        Rm              Rm
Revenue                                                          2,577.5        184.6              -       2,762.1        2,490.4
Cost of sales                                                   (2,437.3)      (143.1)          26.5      (2,553.9)      (2,347.7)
  Operating (costs)/income                                      (2,351.5)      (112.7)          25.7      (2,438.5)      (2,182.6)
  Depreciation                                                    (142.8)       (25.7)         (0.6)        (169.1)        (168.0)
  Change in estimate of environmental rehabilitation
  recognised in profit or loss                                      58.6            -           1.4           60.0            2.9
  Retrenchment costs                                                (1.6)        (4.7)            -           (6.3)             -

Gross profit from operating activities                             140.2         41.5          26.5          208.2          142.7
Other income                                                         2.2            -           5.7            7.9              -
Administration expenses and other costs                            (12.0)        (2.3)        (76.6)         (90.9)         (90.7)
  Administration expenses and other costs excluding the
  increase in Long-Term Incentive liability                            -            -         (69.5)         (69.5)         (73.5)
  Increase in Long-Term Incentive liability                        (12.0)        (2.3)         (7.1)         (21.4)         (17.2)

Results from operating activities                                  130.4         39.2         (44.4)         125.2           52.0
Finance income                                                      20.8         22.5          15.0           58.3           38.8
Finance expense                                                    (54.3)       (19.6)         (4.5)         (78.4)         (58.4)
Profit before tax                                                   96.9         42.1         (33.9)         105.1           32.4
Income tax                                                         (14.6)       (13.4)          1.4          (26.6)         (25.9)
Profit for the year                                                 82.3         28.7         (32.5)          78.5            6.5


Ore milled (000’t)                                                23,162        1,277             -         24,439         24,281
Yield (g/t)                                                        0.194        0.261             -          0.197          0.193
Gold produced (kg)                                                 4,493          333             -          4,826          4,679
Gold sold (kg)                                                     4,478          305             -          4,783          4,653
Cash operating costs
  (R/t)                                                              100           88             -             99             88
  (US$/t)                                                              7            6             -              7              6
Cash operating costs
  (R/kg)                                                         512,439      313,443             -        499,749        458,866
  (US$/oz)                                                         1,124          688             -          1,096          1,118
All-in sustaining costs*
  (R/kg)                                                         521,929      450,820             -        524,713        505,622
  (US$/oz)                                                         1,145          989             -          1,151          1,258
All-in cost*
  (R/kg)                                                         527,646    1,533,443             -        600,941        524,651
  (US$/oz)                                                         1,195        3,472             -          1,361          1,298

Sustaining capital expenditure                                    (15.4)        (6.9)          (0.2)        (22.5)          (81.3)
Non-sustaining capital expenditure                                 (7.4)      (323.8)             -        (331.2)          (44.7)

Reconciliation of adjusted EBITDA

Results from operating activities                                                                           125.2            52.0
Depreciation                                                                                                169.1           168.0
Increase in Long-Term Incentive liability                                                                    21.4            17.2
Change in estimate of environmental rehabilitation recognised
in profit or loss                                                                                           (60.0)          (2.9)
Gain on financial instruments                                                                                (2.1)             -
(Gain)/loss on disposal of property, plant and equipment                                                     (5.8)           0.6
Retrenchment costs                                                                                            6.3              -
Transaction costs                                                                                               -            9.0
Adjusted EBITDA **                                                                                          254.1          243.9
   Rounding of figures may result in computational discrepancies
* All-in cost definitions based on the guidance note on non-GAAP Metrics issued by the World Gold Council on 27 June
** The adjusted earnings before interest, taxes, depreciation and amortisation ("EBITDA") is based on the definitions in
DRDGOLD´s revolving credit facility agreements. Adjusted EBITDA is not an IFRS measure and is provided for illustrative
purposes only and because of its nature, it may not fairly present the Company´s results of operations

FWGR’s revenue and cost of sales were lower than the forecasted revenue and cost of sales for
the six months ended 30 June 2019 included in the circular to shareholders, dated 26 February
2018, due primarily to the date of commencement of commercial production for most Phase 1
assets of 1 April 2019 being three months later than the forecasted date of 1 January 2019 as a
result of the effective date of the transaction being three months later than anticipated. All-in
sustaining costs per kg were disproportionately impacted by including the unwinding of the
environmental rehabilitation provision for 11 months while including gold production/sold mostly
for the fourth quarter.

Cash and cash equivalents and borrowings

DRDGOLD ended the financial year with cash and cash equivalents of R279.5 million (2018:
R302.1 million) and borrowings of Rnil after R192 million was raised and repaid on the revolving
credit facility during the year.

The information contained in this announcement does not constitute an earnings forecast. The
financial information provided is the responsibility of the directors of DRDGOLD, and such
information has not been reviewed or reported on by the Company’s auditors.

27 August 2019

One Capital

Date: 27/08/2019 08:00:00
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