By: OrePulse

South African gold producer DRDGold generated free cash flow of R725.8 million in the quarter ended September, as higher gold output and firmer bullion prices lifted earnings while spending on its Vision 2028 expansion program began to taper.

DRDGold processes gold recovered from surface and tailings material rather than through conventional underground mining. Operating profit climbed 42 percent year-on-year to R1.63 billion, on revenue that increased 31 percent to R2.95 billion, the company reported. Gold production rose 10 percent to 42,021 ounces, with yield improving 15 percent even though the volume of material treated declined 5 percent.

Capital spending on growth projects fell 29 percent from a year earlier to R555.7 million, less than half the R1.16 billion spent in the June quarter. Growth capital outlays have now declined for a second straight quarter, as the heaviest spending phase of the Vision 2028 expansion recedes. Spending on sustaining capital, by contrast, rose to R119.7 million. The Vision 2028 program is aimed at lifting annual output toward about 200,000 ounces. In the 12 months to June, capital project spending totaled R3.5 billion, compared with R2.2 billion in the prior financial year.

At its Far West Gold Recoveries operation, a new tailings storage facility was 77 percent complete, while an expansion of the DP2 processing plant was substantially finished and scheduled for commissioning in October.

Costs also climbed: cash operating expenses increased 12 percent to R1.3 billion, a rise the company linked to higher diesel and reagent prices and to outlays made ahead of new infrastructure coming online. All-in sustaining costs increased 6 percent to R1.14 million per kilogram, while all-in costs fell 10 percent.

The company closed the quarter with R2.45 billion in cash reserves and remained free of bank debt, after having distributed R1.04 billion to shareholders as a final dividend.

The company maintained its production guidance for the year to June 2027 at between 160,000 and 170,000 ounces, unchanged from previous forecasts. DRDGold's financial year runs from July to June, so the September quarter marked the opening three months of that annual guidance period.

The combination of stronger operating cash generation and reduced growth capital requirements pushed free cash flow higher for the quarter, even as the company continued to fund construction work at Far West Gold Recoveries and absorb higher input costs.