DRDGOLD H1 Earnings Call Highlights

• Strong H1 results and dividend: Higher gold prices drove revenue up ~33% to just over ZAR 5 billion, free cash flow rose 149% to ZAR 791 million and operating profit jumped 72% to ZAR 2.7 billion, enabling an interim cash dividend of ZAR 0.50 per share (19th consecutive year).

• Vision 2028 progression and resource growth: The company reinvested ZAR 1.6 billion into projects—Daggafontein, Witkop, DP2 and RTSF remain on track (many targeting Q1 2027 commissioning)—and reported net resource growth to about 741 million tons and 6.2 million ounces.

• Renewables cutting costs and footprint: PV+BESS deployment reduced group grid electricity use by ~28% (Ergo down ~38%), lowering electricity costs (Ergo -23%) and materially shrinking the company’s reported carbon footprint.

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DRDGOLD (NYSE:DRD) used its interim results presentation for financial year 2026 to highlight stronger earnings and cash generation amid a higher gold price, while emphasizing progress on its Vision 2028 growth program and a sharp reduction in grid electricity use following the rollout of renewable energy initiatives.

Management also opened the call by paying tribute to Jan Nelson, who recently passed away, noting his role in laying the foundation for what became Pan African Resources. The company said Henriette had fully assumed the Chief Financial Officer position effective February 1, and outlined finance portfolio restructuring that included the promotion of Mpho Mashatola to head corporate finance and take on investor relations responsibilities.

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The company said its board approved an interim cash dividend of ZAR 0.50 per share, marking its nineteenth consecutive financial year of declaring a dividend. Management said it had previously expected Vision 2028 would require substantial debt, but a surge in the gold price allowed the company to distribute a portion of free cash flow.

Key figures cited on the call included:

• Free cash flow up 149% to ZAR 791 million

• Cash and cash equivalents of ZAR 1.7 billion at period-end

• Revenue up 33% to just over ZAR 5 billion

• Operating profit up 72% to ZAR 2.7 billion

• Headline earnings up 99%

• Capital reinvestment of ZAR 1.6 billion, primarily toward Vision 2028

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Henriette said the “star performer” was the gold price, which increased 43% from the comparable six-month period, from about ZAR 1.5 million per kilogram to just over ZAR 2.1 million per kilogram. She said the stronger gold price “couldn’t have come at a better time” given the company’s capital spending program.

Management said the Ergo operation’s current design includes reduced throughput and a higher proportion of high-volume, low-grade sites. The company noted that in late 2024 it was almost entirely reliant on clean-up at mature sites while water use licenses for replacement sites were delayed, changing the blend of material being processed.

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Despite those mix changes, the group reported 2.3 tons of gold produced in the half-year and said performance trended toward the higher end of guidance. Throughput was 12.5 million tons for the period, which management said would equate to roughly 25 million tons for the year on a flat extrapolation. Management positioned this against Vision 2028 targets of 3 million tons per month (36 million tons per year) and 6 tons of gold output per year.

COO Jaco said Ergo’s H1 FY2026 volumes were lower than both halves of FY2025 due to three factors: weather and rain interruptions during summer, four power interruptions (despite the PV and battery energy storage system operating at 96% efficiency), and a deliberate strategy to limit deposition tonnage while developing infrastructure such as Witkop and Daggafontein to extend life of mine under Vision 2028.

Jaco said Ergo’s yield was down about 0.01 gram per ton compared with H1 FY2025, contributing to lower gold output, while Far West Gold Recoveries maintained consistent throughput volumes but saw yield decline by 0.023 grams per tonne versus H1 FY2025 due to lower head grade as Driefontein 5 approached the end of its contribution. Consolidated group output fell 9% in kilograms for the six months, though it was 3% higher than H2 FY2025.

The company highlighted improved profitability and margins, supported by the higher gold price and cost containment. Management cited an all-in sustaining margin of 48% for the period. Henriette said group operating margin rose to 54% for the six months, and all-in sustaining cost was about ZAR 1.1 million per kilogram, with all-in sustaining margin ending “just over 48%.”

On the cost side, Henriette said Ergo cash operating costs rose only 2% to ZAR 1.9 billion despite above-inflation increases in reagents and consumables. She attributed part of the resilience to a 23% decrease in electricity costs at Ergo, despite Eskom’s 13% rate increase.

For Far West Gold Recoveries, management reported revenue of just over ZAR 1.4 billion despite a 7% decrease in gold sold, benefiting from the higher gold price. Cash operating costs increased about 14% year-over-year as the operation gears up for growth and faces higher consumables on an older plant. Henriette said Far West operating profit increased from about ZAR 750 million to nearly ZAR 1.1 billion, representing a 73% operating margin.

Headline earnings per share nearly doubled, rising from ZAR 1.12 per share to ZAR 2.23 per share. Henriette said administrative and other expenses rose 23%, driven mainly by long-term incentive share-based payment expense, which increased alongside the share price.

The company also discussed a ZAR 5 million loss on the sale of an asset tied to the sale of Stellar to Noah. Management said proceeds were about ZAR 147 million, “recouping most of our costs,” and described the transaction as paving the way for future agreements.

Management repeatedly framed the period’s performance around funding and executing Vision 2028. On the balance sheet, Henriette said property, plant and equipment continued to grow due to investment in the program and was expected to keep increasing over the next two to three years.

Jaco provided updates on major capital projects across Ergo and Far West Gold Recoveries:

• Daggafontein (Ergo): Pipeline installation described as virtually complete, with final tie-ins remaining. The project was said to be on schedule and on budget, with start anticipated in Q1 2027. Management said it provides 120 million tons of deposition capacity and a 20-year life of mine.

• Witkop TSF (Ergo): In the authorization stage. The company said it appointed an independent professional person as part of the Department of Water and Sanitation dam safety process, while environmental approvals remain pending. Commissioning was described as anticipated within the next three years, with targeted capacity of 310 million tons and deposition of 1.3 million tons per month for at least a 20-year life.

• DP2 expansion (Far West): Expansion from 600,000 tons to 1.2 million tons per month. Jaco said the plant was about 80% complete, on time and on budget, with commissioning expected in Q1 2027. He also highlighted construction of a smelt house, targeted for commissioning in Q1 2028, noting Far West currently does not have its own smelt house facilities.

• RTSF (Far West): Designed for 800 million tons of deposition capacity at 2.4 million tons per month and a 30-year life of mine. Management said liner installation was progressing, with beneficial occupation aligned to a Q1 2027 start.

• Pipelines (Far West): 135 km of piping infrastructure, with 104 km completed (about 77%), linking DP2, the RTSF, and the new Lebanon site.

On resources, Jaco said the Kloof 2 dump from Sibanye was added to mineral resources, contributing about 67 million tons and 480,000 ounces. After depletion over the six months, the company reported a net increase of 55 million tons to 741 million tons of resources, and an increase of 350,000 ounces to 6.2 million ounces.

Management emphasized sustainability metrics, with the solar and battery energy storage system (BESS) contributing to reduced grid electricity consumption. Jaco said group grid electricity consumption decreased about 28%, while Ergo was down 38% when comparing six months in H1 to H2 FY2025, given the asset has operated since November of the prior year.

He said electricity costs declined 23% at Ergo despite a 12.7% increase in tariff rates, and the company recorded just under ZAR 50 million in wheeling and offsetting revenues used against other Eskom accounts in the group.

Management distinguished the Ergo PV and BESS system from the Stellar/Noah transaction. Jaco said Stellar is a planned 150 MW solar facility in Polokwane; DRDGOLD sold its 100% interest after developing the project to viability, while securing 30 MW (about 20%) of the future power at what he described as a “very, very competitive price.” The company said this was aimed at anticipating higher power demand and potential carbon footprint increases as Vision 2028 projects come online.

In the highlights portion, management said the company’s carbon footprint shrank by 93.4% and that grid electricity consumption was down 28%. Later, the CEO also referred to a 34% decrease in carbon footprint while discussing environmental performance trends, attributing the electricity consumption swing largely to using less power from the grid rather than reduced total usage.

On social performance, management said it spent ZAR 25.6 million on socioeconomic development and described the spending as focused on building platforms participants could leverage, rather than one-off handovers.

Looking ahead, management said its key focus remains delivering production and cost guidance while prioritizing execution of Vision 2028, including regulatory engagement and early occupation milestones. The company also noted it is in discussions with other companies about its model of reprocessing mine waste using existing infrastructure, and referenced entering into an agreement related to a device aimed at improving extraction efficiency, with more information to be provided in the future.

DRDGOLD (NYSE: DRD) is a South African gold producer focused on the retreatment of surface tailings from historic mining operations on the Witwatersrand Basin. The company recovers fine gold particles from low‐grade tailings using an integrated, carbon‐in‐leach (CIL) processing circuit that is designed to maximize yield and minimize environmental impact. DRDGOLD’s operations are centered on sustainable resource utilization, transforming previously discarded material into saleable gold doré bars.

The company operates two primary tailings retreatment facilities on the West Rand and East Rand of Gauteng Province.

The article “DRDGOLD H1 Earnings Call Highlights” was originally published by MarketBeat.