JOHANNESBURG, Feb 24 (Reuters) - South Africa's fourth-biggest gold miner DRDGOLD (DRDJ.J: Quote, Profile, Research) posted a deeper first-half loss on Thursday and warned that it might run short of cash as it restructures mines that are not profitable.
The company has been hit hard by a buoyant rand currency which cuts export income, since it has the most low-grade mines of South Africa's major gold producers.
DRDGOLD shares, which tumbled 60 percent last year, dipped a moderate 1.58 percent to 8.10 rand by 1410 GMT since many investors expected bad news after a trading statement last week.
"They're in a bit of a pickle because they need to restructure and bring down the high costs and that's going to cost money which they don't have," an analyst said.
DRDGOLD's auditor, KPMG, drew attention to the miner's weak financial condition, noting in its financial statements that current liabilities exceeded current assets at the end of last year.
The miner listed a series of risks to its business, including further strengthening of the rand.
"These conditions ... indicate the existence of a material uncertainty which may cast significant doubt about the group having sufficient cash resources to meet its current obligations," a statement said.
Such a cash squeeze might impact on the company's ability to continue operating as a going concern, it added.
The company planned to finance commitments from existing cash resources, the sale of assets and from debt facilities already in place or that would be negotiated, Chief Executive Mark Wellesley-Wood said in the statement.
DRDGOLD posted a headline loss for the six months through December of 64.4 cents per share, compared with a loss of 18.5 cents in the same period a year ago.
The company, which recently changed its name from Durban Roodepoort Deep, also said it had taken an impairment of 214 million rand ($36.57 million) for its North West mining assets, which were in the process of being restructured.
Headline earnings strip out capital, non-trading and extraordinary items. The net loss per share, including the impairment, ballooned to 149.9 cents from 18.1 cents.
MIGHT CLOSE MORE SHAFTS
The red ink was expected after the firm warned last week the headline loss would grow by more than 200 percent.
The firm also had said it might have to close or mothball up to one third of its South African output due to the rand, which has strengthened by more than 130 percent since late 2001.
"We don't have a mandate from shareholders to continue pouring money down black holes and this process is going to end," Wellesley-Wood told a results presentation.
The restructuring at the North West mines, which employs 5,600 miners, might take six months to a year and cost in the region of 30 million to 100 million rand, he added.
Where possible loss-making underground mines would not be completely shut, but put on "care-and-maintenance" so they could be reopened if the rand weakened and made them profitable again.
North West operations, consisting of the Hartebeestfontein and Buffelsfontein mines, accounted for 54 percent of the firm's South African output and 34 percent of total production.
Underground costs at the North West mines in the first half were nearly 15,000 rand per kilogramme higher than the current domestic gold price of 81,000 rand/kg.
DRDGOLD has been expanding in Australasia to lessen its exposure to the South African currency, and its profitable overseas mines now make up 37 percent of total output.
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