Media releases

DRD delivers a turnaround

Details

Published: Monday, 15 January 2001 02:00

Durban Roodepoort Deep, Limited (DRD) today reported that improvements in operational performance, coupled with a best-ever cash profit after capex of R15 million (US$2 million), have realized significantly improved results for the quarter ended December 2000. DRD CASH POSITIVE DESPITE STATIC GOLD PRICE

Group highlights

• All four operations in profit
• Cash operating profit up 46%
• Best ever cash generation of R15m ($2m)
• Gold production of 8 584 kg (275 980 oz), despite effect of public holidays

Durban Roodepoort Deep, Limited (DRD) today reported that improvements in operational performance, coupled with a best-ever cash profit after capex of R15 million (US$2 million), have realized significantly improved results for the quarter ended December 2000.
The company reported a 46% increase in cash operating profit to R40 million (US$5 million), whilst cash operating costs were maintained at previous levels, reflecting a slight decrease in unit cost terms to end at R54 629/kg (US$224/oz). This is despite a four per cent decrease in gold production from 8 961 kg (288 107 oz) in the September quarter to 8 584 kg (275 980 oz) in the December quarter, primarily as a result of public holidays.

Mark Wellesley-Wood, Chairman and acting Chief Executive Officer said, "The restructuring programme embarked on in the last quarter is now complete and we expect to continue to improve on these results in forthcoming quarters. All of these factors are indicative of our intention to become a cash generative business with a significant resource base which can be turned to account when the gold price recovers."

All operations recorded an operating profit in the quarter. Notably Blyvoor moved into profit as expected, but underground production is still constrained by transportation bottlenecks. The re-processing operations of Crown operated in steady state while the Tolukuma gold mine in Papua New Guinea increased gold output.

Overall though, gold production was down due to increased low grade mill feed over the Christmas holiday period.

The balance sheet position is also improving with debt reduced by R47 million (US$6 million) in the quarter.

A Task Force has been established to better control and reduce procurement costs. A "zero tolerance" campaign, and the implementation of new purchasing systems, should lead to significant savings in the future.

Says Wellesley-Wood, "DRD is delivering on the promises made to its shareholders over the past six months, despite a static gold price, and will continue to do so in the quarters ahead. We have been investing in our mines to produce organic growth and we will consider the acquisition of assets best suited to our management style".