DRDGOLD is in the process of finalising its results for the year ended 30 June 2020 and the Company has reasonable certainty that revenue increased by R1,422.9 million, or 52%, to R4,185.0 million (2019: R2,762.1 million), as a result of an increase in (i) Ergo’s revenue by R486.8 million to R3,064.3 million (2019: R2,577.5 million) and (ii) Far West Gold Recoveries (FWGR) revenue by R936.1 million to R1,120.7 million (2019: R184.6 million).
At Ergo, the 33% increase in the Rand gold price received offset an 11% decrease in gold sold, which was as a result of a 3.0Mt decline in volume throughput to 20.2Mt, due mainly to the COVID-19 national lockdown in South Africa and interruptions in power supply from Eskom and the City of Ekurhuleni.
FWGR enjoyed its first full financial year of Phase I production, taking full advantage of the higher gold price.
The impact of the increase in revenue on earnings and headline earnings was moderated by an increase in cash operating costs of R203.1 million, or 8%, to R2,626.0 million (2019: R2,422.9 million), largely due to the inclusion of the additional cash operating costs of FWGR for the full financial year.
The increase of 8% in cash operating costs is also reflective of the total volume throughput increasing by 8% with the cash operating costs per unit being stable at R100/t.
The Group temporarily halted its operations on 26 March 2020 pursuant to the announcement of the Lockdown.
The regulations pertaining to the Disaster Management Act, No. 57 of 2002, issued by the Department of Co-operative Governance and Traditional Affairs define gold mining and refining as an essential service and therefore exempt from restrictions imposed by the Lockdown.
Despite this exemption, and in consultation with the Department of Mineral Resources and Energy and organised labour, DRDGOLD only recommenced production at its operations once it was satisfied that the appropriate measures and protocols, to limit the risk of infection to staff and others, were fully implemented and operational, as further detailed below:
- FWGR, with a relatively small footprint and with staff living close by, was able to restart operations on 4 April 2020; and
- Ergo restarted operations on 9 April 2020, with reclamation from a limited number of sites continuing through to the end of June. Ergo’s Knights plant only restarted operations on 7 May 2020.