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Marginal gold miner Durban Roodepoort Deep (DRD, DUR) on Thursday reported headline earnings per share of 3.9 South African cents for the December 2003 quarter, up from a 24.4 cents loss in the September 2003 quarter.
The group's quarterly operating profit was 94.7 million rand from a 21 million loss previously.
Gold production for the December quarter was 237,307 ounces, up 20% from 198,493 oz in the September quarter.
The increase in output was mainly due to the acquisition of a 20% interest in the Porgera joint venture in Papua New Guinea (PNG).
DRD also cut cash operating costs by 21% to 71,766 rand a kilogram from 90,520 rand/kg previously, while in US dollar terms the company's cash costs declined to US$330/oz from $378/oz.
The cash operating margin for the company increased to 20% in the December quarter from a loss in the previous quarter.
With almost a third of DRD's production from low-cost operations in Australasia, attributable gold production of 237,307 oz and an average cash operating cost of $330/oz or 71,766 rand/kg, the margin has been restored to the business, DRD said.
The reason for the decline in unit costs was the restructuring of the North-West operations and the acquisition of the interest in the Porgera joint venture.
At DRD's South African operations, cash operating costs at its North-West mines were reduced by 23% in rand terms, but production decreased by 11% during the quarter.
Quarter-on-quarter, the underground grade at the North-West operations improved from 4.74 grams per ton to 5.72g/t.
Production at the Blyvooruitzicht mine in the North-West increased by 5% compared with the previous quarter.
Cash operating unit costs were unchanged at $346/oz, but were down 9% to 75,273 rand/kg in rand terms.
The Blyvooruitzicht slimes dam project was commissioned at the end of the quarter, having been funded from a portion of the proceeds of the $66 million senior convertible note issue in 2002.
During the December quarter, $4 million or 27.1 million rand was spent on the slimes dam capital project.
In total, DRD's South African operations produced 145,677 oz, from 152,235 oz previously during the quarter.
Average cash operating cost were $376/oz or 81,697 rand/kg, compared to the previous quarter of $392/oz or 93,822 rand/kg, respectively.
This generated a cash operating profit of $2.3 million or 15.4 million rand, compared to a loss in the previous quarter of $4.5 million or 34.4 million rand.
In DRD's Australasian operations the Tolukuma mine in PNG has produced in excess of 7,000 oz of gold per month for the past 10 months at an average cash operating cost of $263/oz.
During the December quarter the mine produced 21,767 oz of gold, from 21,283 oz in the previously quarter. Cash operating costs were reduced by 10% to $253/oz from $280/oz.
During the quarter $1.4 million was spent on mobile plant and equipment, the Milaihamba project and a new drill rig at Tolukuma.
The acquisition of 20% of the Porgera joint venture was completed with effective from 1 October 2003 at a price of $75.9 million.
Porgera added 46,136 oz to the company's Australasian production portfolio for the December quarter at a cash operating cost of $222/oz and a cash operating profit of $8.8 million.
DRD's attributable portion of the joint venture's capital expenditure was $1.8 million for the quarter.
The Australasian operations accounted for 67,903 oz of quarterly production or just under one third of the company's production.
Average cash operating cost was $232/oz and cash operating profit $11.8 million for the quarter.
"Our stated strategy is to grow the Australasian operations to 100,000 oz of quarterly production at an average cash operating cost below $250/oz," DRD said in a statement.
At the Crown/ERPM joint venture in South Africa, in which DRD has a 40% stake, attributable production decreased marginally to 23,727 oz at an average cash operating cost of 79,486 rand/kg.
During the December quarter an option was issued to Investec Bank (Mauritius) to acquire 10.2 million new DRD ordinary shares at a 4.5% discount to the 10-day weighted average share price.
If exercised, part of the proceeds will be used to close out 50% of the remaining 315,000 oz South African power utility Eskom "gold for electricity" swap, DRD said.
In line with corporate governance guidelines, the roles of chairman and chief executive officer at DRD were split and a new position of senior independent non-executive director created.
Mark Wellesley-Wood remains as executive chairman and will retain responsibility for operations and the strategic direction of the company.
Ian Murray, formerly deputy CEO, has been appointed CEO and will also retain responsibility for the financial function.
Geoff Campbell has been appointed senior independent non-executive director.
On prospects, DRD said that the group had been offered a direct interest of 5% in the Porgera joint venture for a consideration of $23.4 million to the Enga people of Papua New Guinea, through their investment vehicle Mineral Investment Enga (MRE).
The acceptance date of the offer has been extended to 2 February 2004 and the date for completion of the transaction to 30 April 2004.
"DRD's investment in eight operating gold mines and significant diversification of earnings in various currencies, provides the platform to deliver consistent results," the company said.
"Our stock market value of $750 million today, is substantially higher than the $80 million of three years ago. This demonstrates our commitment to increasing shareholder value," DRD added in a statement.
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