Board-Ansicht
Mix-Ansicht- Wenn der Wechselkurs zum Fitnesstraining wird: Durban 1 - Nachfrager, 24.10.2003, 16:19
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Wenn der Wechselkurs zum Fitnesstraining wird: Durban 1
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Costs Tumble, Post-Restructuring, At DRD's North West Operations
`Greater earnings, cashflow from outside SA from next quarter'
By Staff
JOHANNESBURG, South Africa, Oct 23, 2003 (PRIMEZONE via COMTEX) -- A 60-day review process and restructuring exercise focused on returning the North West Operations (NWO) of Durban Roodepoort Deep, Limited (JSE: DUR; NASDAQ: DROOY; ASX: DRD) to profit had resulted in a reduction in wage costs to 44% of total working costs and a planned 26% reduction in monthly working costs, from R106 million (US$14 million) in July to R78 million (US$11 million) in October, Chairman and Chief Executive Officer Mark Wellesley-Wood said today (23.10.03), at the release of the company's results for the quarter ended 30 September 2003.
The NWO's new production profile would be 5% lower a month, Wellesley-Wood said. Development and opening up of reserves had not been compromised and the operations' life of mine remained at 15 years. Some 3 000 NWO employees had been retrenched at a cost of R39.5 million (US$5.4 million).
In spite of the cost of restructuring at the NWO and the job losses that had resulted, DRD had made a valuable contribution to the South African economy and the gold market as a whole, Wellesley-Wood said.
"We have created more than 6 000 jobs at our South African operations during the last three years and our localization programmes in Papua New Guinea (PNG) have taken the representation of nationals in our workforce there to more than 95%," he said.
Looking ahead, Wellesley-Wood said prospects for the immediate future would depend on the Rand-Dollar exchange rate. Referring to the company's recently announced intention to acquire a 20% interest in the Porgera Joint Venture in PNG, he said DRD was seeking to add lower cost production to its portfolio.
"We continue to diversify our asset base, and it is expected that a greater proportion of our earnings and cash flow will be derived from outside South Africa from the next quarter.
"While we are still one of the most marginal gold producers in the industry at the current exchange rate...the stake in the Porgera Joint Venture will provide a sustainable cashflow to support our value creation strategy."
DRD's gold production for the quarter under review increased at all but the NWO where a 14% reduction from underground feed resulted from the review process and restructuring exercise. While all but the NWO recorded cash operating profits, the loss of R41.9 million (US$5.6 million) at the NWO led to a R21 million (US$2.7 million) cash operating loss for the company as a whole.
The gold price received was substantially unchanged quarter on quarter, with the rise in the Dollar price offset by a lower exchange rate.
Cash operating unit costs increased by 3.6% in Rand terms due to the annual wage increase effective from 1 July, Wellesley-Wood said. A two-year agreement had been signed with all unions and associations, with the increase for the current year averaging 9.2%.
Cash and cash equivalents increased to R612 million (US$86 million) from R332 million (US$44 million), mainly as a result of the capital raising completed during the quarter.
Referring to the 27 million new shares issued to Investec Bank during the quarter that had raised a total of R483 million (US$64 million), Wellesley-Wood said that the proceeds had been used for the NWO restructuring costs and to substantially fund the 20% stake in the Porgera JV, as well as for general working capital requirements.
In addition, cash resources were used to reduce debt by R118 million (US$16 million). Consequently, the current ratio increased to 1.85 (1.09), while shareholders' equity more than doubled to R798 million (US$111 million). The interest-bearing debt: equity ratio improved to 66% (173%), while the interest-bearing debt: market capitalization ratio improved to 11% (15%).
ERPM
At ERPM, 40%-owned and wholly managed by DRD, the planned gold production build-up continued with a 34% increase on the previous quarter, Wellesley-Wood said. The operation reported its first cash operating profit since its acquisition a year ago.
The potential for open-pit mining is being examined.
Blyvooruitzicht
Blyvooruitzicht had recovered some of the previous quarter's lost ground, Wellesley-Wood said. While underground feed was still being restricted by ore pass constraints, and around the 1A sub-shaft some 10 000 tonnes of broken rock were still in circuit, a mid shaft loading arrangement to relieve the constraint would be operational in December 2003.
Progress on the No 4 and 5 slimes dam project was on track to come into production in January 2004 at a budgeted cost of R45 million (US$6 million), he said. Some 27.2 million tonnes of slime at an average delivered grade of 0.568 grams per tonne are available for treatment at a rate of 240 000 tonnes per month.
Australasia
At DRD's wholly-owned Tolukuma operation in PNG production was stable but logistics costs impacted negatively, Wellesley-Wood said. Mining of the newly discovered Zine Vein on surface is continuing and exploration for the underground extension is showing encouraging results. Zine accounted for an additional 2 000 ounces of gold in the quarter under review.
In September, PNG's central Department of Environment and Conservation and the provincial Health Department, reporting on their water quality and health investigations at Tolukuma, had found that all test results were within compliance limits and that there was no connection between regional health issues and the operation of the mine, Wellesley-Wood said. The company would continue with its monitoring of the environment and with the roll-out of its local community programmes.
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