DRDGold, a gold tailings retreatment specialist, reported an improved annual operating performance and cash flows as it continued its legal battle with the Ekurhuleni municipality over tens of millions of rand in fees charged for electricity.

DRDGOLD today departed from a long-standing commitment not to hedge its gold production in acknowledgement that a transaction with Sibanye-Stillwater unveiled some 10 months ago had introduced more risk into the business.

Surface gold producer DRDGold on Wednesday reported a sharp rise in operating profit, higher gold production and a spurt of cash flow.

 The high quality of the gold tailings retreatment infrastructure that surface gold mining company DRDGold has acquired on the Far West Rand in partnership with Sibanye-Stillwater is enabling the company to get into production very quickly, DRDGold CEO Niél Pretorius said on Wednesday.

Shares in gold producer and recovery specialist DRDGOLD [JSE:DRDGOLD] jumped by 6% at noon on Wednesday, after it announced a year-on-year increase of 38% in operating profit to R355.2m. Total gold production was up 10% to 4 679kg, while the group grew its headline earnings per share from 0.2c in 2017 to 1.7c for the year ended June 30, 2018.

A 10% increase in gold production provided an important fillip for surface gold mining company DRDGold, which benefitted from high-grade sand material in the 12 months to June 30.

Dual-listed gold recovery company DRDGold expects to report earnings per share (EPS) of between 1.18c and 1.82c apiece for the financial year ended June 30, compared with earnings of 3.2c in the prior comparable period, which represents a decrease of between 43% and 63%.

“Anyone can be a CEO; you can be the CEO of your corner shop if you want to,” said Niël Pretorius who actually doesn’t sell vegetables or cigarettes, but happens to be the CEO of a surface gold retreatment company – DRDGold.

It was all-systems go for DRDGold which announced today it had concluded the purchase of surface gold reserves from Sibanye-Stillwater in exchange for a 38% stake in the company worth R396m.

While the strengthening of South Africa’s rand against the dollar in recent months has been widely welcomed by many, it has somewhat dampened the outlook for exporters and mining firms reliant on a weakened currency to widen margins.