Shares in South African gold miner DRDGold on Friday plunged 20% following the group’s results for the half-year ended in December 2004, which were released on Thursday, and which analysts and brokers termed “shocking”.
At 10.15am on the JSE Securities Exchange, DRDGold was quoted down 20% or R1,60 at R6,25. Earlier, it had fallen to R6 — its lowest level since February 17, 2001.
“DRDGold is down after it published shocking results on Thursday. The group’s underground operations in South African continue to haemorrhage cash and they will need to finance the restructuring of their North-West operations,” an analyst said.
“The local share price is basically following the move in DRDGold’s Nasdaq American Depository Receipt (ADR), which got thumped in the US overnight,”
he added.
DRDGold’s US ADR closed on Wednesday at $1,49 and ended down 26% at $1,11 on Thursday. During US trade on Thursday, it fell as much as 48% to $0,78.
On Thursday, the group reported an interim headline loss per share of 64,4 cents for the six months ended December 2004 from a loss of 18,5 cents for the half-year ended in December 2003.
The group showed a net loss of R370,1-million from R37,3-million previously.
DRDGold was looking to turnaround its North-West operations, which consists of its Harties and Buffels gold mines, to a break-even point within six to 12 months, DRDGold chief executive officer Mark Wellesley-Wood said on Thursday.
The group’s North-West province mines produced 80 569 troy ounces of gold in the half-year to December 2004, but saw a cash operating loss of $6,5-million.
DRDGOLD warned on Thursday that cash generated by offshore assets may not be adequate to cover future commitments with respect to its planned restructuring.
“We expect to finance our commitments from existing cash resources, the sale of assets and funding facilities we have in place or are seeking to negotiate. It is management’s belief that existing cash resources, net cash generated from offshore operations and additional funding will be sufficient to meet our anticipated commitments,” DRDGold said.
DRDGOLD warned that if certain circumstances arise the company would not have sufficient cash resources to meet its current obligations in the normal course of business, which may have an adverse impact on our financial ability to continue operating as a going concern. – I-Net Bridge