DRDGold CEO Niel Pretorius. Picture: MARTIN RHODESAt least, that’s the business model of DRDGold, the best-performing stock on the MSCI ACWI Select Gold Miners Investable Market Index in 2020. The company, which specialises in recovering gold from mine dumps in and around Johannesburg, has surged 277% in 2020, also making it the biggest gainer on SA’s FTSE/JSE Africa all share benchmark.
With the Covid-19 pandemic spurring demand for safe-haven assets and central banks pumping unprecedented levels of stimulus, gold has surged to a record high, boosting shares of producers. Also helping DRDGold in 2020 was a R1.1bn capital injection as Sibanye Gold boosted its stake in the company, as well as the stock’s re-inclusion in the VanEck Vectors Gold Miners ETF.
DRDGold’s fortune is turning after a tepid first half of 2019 that saw the stock fall as much as 20% and it was removed from the VanEck gold ETF. Still, the stock more than doubled in 2019 after the company began buying back shares, posted a rise in operating profits and paid its highest annual dividend since Bloomberg data going back to 1996.
“If gold prices stay at current levels, I would be surprised to see very significant increases in the share prices,” he said. “If the sentiment turns against gold, there could be some big losses.”
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