DRDGOLD (US:DRD)2019-09-03 21:41Financial Data and Key Metrics Changes - Revenue for the year increased by 11% to ZAR 2.7 billion, with a significant contribution from Ergo operations [4][23] - Headline earnings showed positive results, reflecting both long-term outcomes and operational performance [6][22] - Operating profit decreased by 20% year-on-year but increased by 50% in the last six months [15] - Cash operating costs rose by 7% year-on-year, with a 4% increase in the last six months [14] Business Line Data and Key Metrics Changes - Ergo operations produced just under 5 tons of gold, with a yield of over 0.20 grams per ton [5][8] - Far West operations produced 140 kilos in the previous six months, focusing on reprocessing slime, with production stabilizing at 0.228 grams per ton [10][18] - The all-in sustaining cost margin increased from 5.5% to 9.1% year-on-year, aided by a decrease in rehabilitation obligations [20] Market Data and Key Metrics Changes - The gold price increased significantly, impacting revenue positively, with an average price of ZAR 150,000 to ZAR 160,000 per kilo [5][19] - The operating margin decreased slightly from 14.3% to 13.5% year-on-year, but increased to almost 18% in the last six months due to higher gold prices [19] Company Strategy and Development Direction - The company aims to leverage its relationship with Sibanye-Stillwater to explore new opportunities and enhance operational efficiency [61][64] - A focus on sustainable development is emphasized, with initiatives aimed at community engagement and environmental rehabilitation [40][44] - The company is exploring alternative energy solutions to mitigate risks associated with Eskom, including power storage and solar energy [72][73] Management's Comments on Operating Environment and Future Outlook - Management highlighted Eskom as a significant systemic risk for the industry and the economy, emphasizing the need for solutions [67][74] - The company is optimistic about future production levels returning to previous highs, addressing internal challenges that affected throughput [69][70] - There is a commitment to improving operational efficiency and reducing reliance on Eskom through innovative energy management strategies [72][73] Other Important Information - The company declared a dividend of ZAR 0.20 per share, marking the 12th consecutive year of dividend payments [39] - Free cash flow generated in the second half of the financial year was nearly ZAR 250 million, reflecting strong operational performance [21] Q&A Session Summary Question: What is the outlook for Ergo volume given the challenges faced? - Management acknowledged a drop in Ergo volume but indicated that it is not a new normal and that efforts are being made to restore it to previous levels [66][69] Question: What is the long-term solution for Eskom? - Management stated that Eskom remains a critical risk and that while complete replacement is not feasible, strategies are being developed to mitigate its impact through energy management and storage solutions [67][72]