DRD.
Net Asset Value Per Share (ZARc) (cents) 345.89 350.13
Headline (loss)/earnings 9 months to
31 Mar 2014
9 months to
(10)
Mar 2013
59
Financial review
Revenue was down 17% from R1 638.4 million due to lower gold production
and a drop in sales of 10% from 112 912oz, together with an 8% decline in
the average Rand gold price received for the period to R431 159/kg.
After accounting for net operating costs – 9% higher at R1 154.6 million
– operating profit was 64% lower at R207.4 million. The cash operating
margin declined from 35% to 14% and the all-in sustaining costs margin
from 22% to 2%.
EBITDA declined from R401.3 million to R89.9 million and a headline loss
of 10 ZAR cents per share was recorded compared with earnings of 59 ZAR
cents per share
LOOKING AHEAD
Twelve months ago, when our Ergo plant consisted only of the Low Grade
Section and when the gold price was U$1 683/oz, our market capitalisation
was almost twice what it is today.
Now, by suspending the High Grade Section, we have returned the business
to a condition similar to that of a year ago with a Rand gold price that
is still very favourable. Notwithstanding the events of the quarter under
review, we remain firmly of the view that the difficult part of the project is
behind us. The flotation circuit and the mills work, and our theory that we
can isolate the gold-bearing pyrites, and grind them down to liberate the
gold they shield, has been proven in practice.
Our focus and efforts, therefore, remain to find a way to take advantage
of this technology without compromising the “bread-and-butter” part of
the operations. We said in our announcement to the market early in April
that we thought this might take three to four months to complete. Due
to the fact that the Low Grade Section is essentially back to stable state,
and because of the very high confidence threshold that we are demanding
before we will again expose the Low Grade Section to the FFG and High
Grade Section process, we have decided that, rather than work towards a
date, we will work towards an outcome.
Niël Pretorius
Chief executive officer
