DRD reports quarterly loss
Posted Thu, 23 Oct 2003
Gold miner Durban Roodepoort Deep (DRD) on Thursday reported a headline loss per share of 24.4 cents for the September quarter from a 54.2 cents profit in the June quarter.
The company showed a cash operating loss of R21-million for the quarter from a loss of R7.6-million previously and quarterly revenue declined to R467.5-million from R497.7-million.
Gold production for the quarter was 198 493 ounces from 207,725 oz previously due to a 14 percent reduction at DRD's North West province operations following a 60-day review process and restructuring exercise.
The restructuring exercise resulted in about 3000 workers being retrenched at a cost of R39.5-million ($5.4-million).
Cash operating unit costs increased by 3.6 percent to R90 520 a kilogram from R87 368 per kilogram due to the annual wage increase of 9.2 percent effective from July 1.
DRD's main focus during the September quarter was turning around its North West operations.
The restructuring at these operations has resulted in a reduction in wage costs to 44 percent of the total working costs and a reduction of 26 percent in monthly working costs, from R106-million ($14-million) in July 2003 to R78-million ($11-million) in October.
Development and opening up of ore reserves have not been compromised in the process and the mine's life remains at 15 years as a result, DRD said.
DRD has a 40 percent stake in the Crown Gold Recoveries joint venture with Khumo Bathong Holdings and manages the ERPM mine and Crown surface retreatment operations on behalf of the joint venture.
ERPM's gold production build up continued with a 34 percent increase on the previous quarter and the mine reported its first cash operating profit since its acquisition a year ago.
Potential for open-pit mining is being examined.
DRD's Blyvoor mine recovered some of the lost ground from the previous quarter.
At the Tolukuma mine in Papua New Guinea production was stable, but logistics costs impacted negatively on costs.
Cash and cash equivalents increased to R612-million ($86-million) from R332-million ($44-million), mainly as a result of the capital raising completed during the quarter.
New shares were issued to Investec Bank on September 9 (18 million shares) and on September 12 (9 million shares), raising a total of R483-million ($64-million).
The proceeds from the placements are to be used for the North West operations restructuring costs and to substantially fund the purchase price for the 20 percent stake in the Porgera Joint Venture in Papua New Guinea, as well as for general working capital requirements.
Post quarter end, DRD acquired Oil Search's interest in the Porgera Joint Venture at a cost of $73.8-million.
On completion, this will increase DRD's attributable annual gold production from the Australasian region from 90 000 oz to 260 000 oz.
During the quarter, cash resources were used to reduce debt by R118-million ($16-million).
Regard prospects, DRD said earnings would remain dependent on the rand exchange rate.
"We have closed high-cost capacity at the North West operations and are seeking to add lower cost production to the portfolio in Papua New Guinea. We continue to diversify our asset base, and it is expected that a greater proportion of our earnings and cash flow will be derived from outside South Africa from the next quarter," DRD said in a statement.
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