DRD Gold HEPS down 22%

DRD Gold, a South African gold mining company, recently announced its ability to reinstate a dividend for the 15th consecutive year. However, despite this achievement, the company has faced significant challenges in the operating environment. In a recent interview with CNBC Africa, Niël Pretorius, the CEO of DRD Gold, discussed the company's performance in the past year and its plans for the future. Pretorius mentioned that while the internal environment at DRD Gold was favorable, with the workforce showing dedication and productivity, external factors posed challenges. The company had to navigate logistical difficulties, including disruptions caused by the COVID-19 pandemic, as well as weather-related issues such as flooding and low energy supply. Despite these challenges, DRD Gold managed to exceed production guidance and keep costs in check. However, the company did face surging costs, particularly in light of cost inflation in inputs such as reagents and fuel. To address this, Pretorius emphasized the importance of operational efficiencies and cost control measures. DRD Gold maintained its dividend payment streak and generated free cash flow of over 800 million, demonstrating resilience in a challenging environment. Regarding the outlook on gold prices, Pretorius acknowledged the complexities in the market dynamics but expressed optimism based on fundamental factors such as high energy prices, inflation, and political tensions. He highlighted the attractiveness of gold as a defensive investment in times of uncertainty. Looking ahead, DRD Gold is planning to increase its capital expenditures (CapEx) to enhance its operations and support future growth. With a significant cash reserve and no debt, the company will invest in a solar plant and infrastructure development, totaling around 1.4 billion rands in the coming financial year. Pretorius also touched upon the energy challenges in South Africa and expressed support for the government's efforts to address the country's energy crisis. Despite the uncertainties in the operating environment, DRD Gold remains focused on sustainable growth and efficiency improvements to navigate the evolving landscape in the gold mining industry.