Durban Roodepoort Deep Limited’s revenue declined by R42-million in the quarter ended on June 30 as the rand strengthened by seven percent, DRD said in a statement on Thursday.
The rand gold price slumped by eight percent in the same time. Chairman and chief executive Mark Wellesley-Wood said while gold production was virtually unchanged, cash costs in absolute terms were reduced by R12,2-million and in unit terms by 1,2%.
The strength of the rand, however, had taken the cost per ounce in US dollar terms above the current gold price to $352 per ounce.
This ”untenable” situation had led to the company’s decision to declare a 60-day review at its North West Operations. DRD is also dogged by a possible strike, set to begin on Sunday.
Group capital expenditure for the quarter was a record $5,2-million (about R40.6-million) excluding recoupments, but all capex programmes were now under review due to the low rand gold price.
Work on the Argonaut project cost R300 000, but spending on this has also been curtailed in view of the rand’s strength.
Wellesley-Wood said the immediate future would depend on the trend in the rand/dollar exchange rate and the outcome of the North West operations review.
Earnings for the quarter declined to $700 000 (about R5,2-million), and after allowing for increased depreciation and a $12,5-million (about R93-million) write-down on assets and investments, the net operating loss was $12,2-million (about R91-million).
Shareholders’ equity increased to $53,2-million (about R397-million), and cash and equivalents were $45,7-million (about R341-million), largely representing the unexpended balance of the convertible note proceeds.
At the year-end, DRD had audited proven and probable ore reserves of 129,4-million tons at an average grade of 3,81 grams per ton, containing 15,8-million ounces of gold.
As of August 18, the company would be included as a constituent of the Philadelphia Gold and Silver Index, Wellesley-Wood announced.
Tolukuma in Papua New Guinea, having produced a record 21 219 ounces in the quarter under review, had established itself as a consistent gold producer, with ore now derived from at least six vein sources, Wellesley-Wood said.
Production at Blyvooruitzicht was affected both by a blocked ore pass in the 1A Sub Shaft and poorer grades from the operation’s surface sources.
While approximately 20 000 tons of ore are locked up underground due to the ore pass problem, it was expected that the contained gold would be recovered in the current quarter.
Lower surface grades were likely to continue to December 2003, at which time feed from the higher grade slimes dam project would replace current sources.
At North West operations, management had taken measures which included a service-sharing synergy exercise with Blyvooruitzicht, a reduction in overhead, a re-evaluation of the plant configuration, the ”removal” of 3 000 contract workers, a renewed focus on grade control and the opening up of new blocks of ground.
Crown Gold Recoveries — an ERPM mine 40% owned and managed by DRD — had recovered from the fire in February and the production build-up was on track, Wellesley-Wood said.
DRD was pursuing litigation against various parties, including certain former directors and officers, for recovery of lost shareholder value, Wellesley-Wood said.
During the quarter under review, an ex-parte Anton Pillar order against DRD had been successfully overturned and the company’s claim for its lost Continental Goldfields investment was upheld in the West Australian courts. Also, actions regarding the issue of claims for loss from the defunct Rawas mine in Indonesia had been completed. – Sapa