It’s a difficult time for gold penny stocks. The commodity is becoming harder to find and more expensive to mine. To combat this, companies are consolidating in order to make a profit.
We’re looking at DRDGOLD (NYSE:DRD) today, up 3.9% and selling for $2.05, at the time of writing.
Gold Penny Stocks: DRDGOLD
According to Niel Pretorius, CEO of DRDGOLD:
“Large gold miners are no longer capable of delivering value and growth organically—ounces in existing mines are becoming harder and more expensive to mine. Hence, to deliver into the value growth expectations of their shareholders, consolidation has become necessary.”
This penny stock is one such example of this new phenomenon in the sector. DRDGOLD is one of the oldest and continuously listed mining companies on the Johannesburg Stock Exchange. It recently acquired Sibanye-Stillwater’s West Rand Tailings Retreatment Project (WRTRP), a producer of gold and platinum.
In doing so, DRDGOLD transformed its business. The acquisition offered the company a foothold into the African market along with a new commodity in platinum. It has since grown aggressively across the continent and has cut overhead unit costs through increased production.
Significantly, DRDGOLD was at risk of losing major ground because gold was its only asset. The acquisition has changed all that.
Gold Penny Stocks
According to its website, the company produced 150 423 oz of gold and generated $35.6 million USD approx in revenue. However, the company spent $32.8 million USD on capital projects, which doesn’t leave much left in the pot as far as investors stand.
But perhaps 2019 will be the year the acquisitions and expansion plans return a serious profit for the company. It is expecting to double its gold reserves as it utilizes its new facilities in the West Rand area. In a matter of months, the DRDGOLD penny stock could see a serious bump up the charts.
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