DRDGold full-year revenue climbs 14%

DRDGold, a leading gold company based in South Africa, has announced a significant capital investment of over R7 billion in expanding its operations over the next three years. The company's CEO, Niël Pretorius, discussed the reasons behind this decision in a recent interview with CNBC Africa. Despite the current record gold price, DRDGold is focusing on building a sustainable future for the business by investing in new infrastructure and increasing production capacity. Pretorius explained that the company's Ergo operation, which started in 2008, has reached its peak production and will now undergo significant upgrades to extend its lifespan for another 14 years. This includes the construction of a new tailings dam and a solar farm to support operations. Additionally, the Carltonville operation in the far west will see a doubling of capacity and the implementation of a large tailings storage facility. The decision to invest in expansion comes at a time when DRDGold is optimistic about the future of the gold market. Despite modeling their financial projections based on a lower gold price, Pretorius believes that the current strong fundamentals for gold, driven by increased demand in the Far East and changing sentiment in the West, will support a stable gold price in the near term. The company's investment in renewable energy, such as the recently completed 60-megawatt solar farm, is not only a strategic move to reduce operational costs but also aligns with their commitment to sustainability. The solar farm has already resulted in a 10 percent reduction in power consumption, with further savings expected in the coming years. In terms of operating costs, DRDGold experienced an increase in the last year due to delays in commissioning new sites and regulatory approval processes. However, with the transition back to hydro mining and the completion of new sites, the company anticipates a decrease in costs in the future. The solar farm's full impact on reducing operating costs is a key factor driving this expectation. Pretorius also highlighted the significance of the solar farm in improving the reliability of power supply, particularly in remote areas where interruptions from municipal suppliers have posed challenges. By securing a stable power source and controlling costs, DRDGold aims to enhance operational efficiency and maintain stable labor relations. Looking ahead, the company remains cautiously optimistic about the operating environment in South Africa. The strengthening of the local currency against the US dollar, alongside the rising gold price, has helped mitigate inflationary pressures and diesel costs, creating a favorable landscape for the gold industry. DRDGold's strategic investment in infrastructure and sustainability not only positions the company for future growth but also underscores its commitment to responsible and efficient operations in the dynamic gold market landscape.