Thanks very much for joining us, also for joining us at this slightly later hour. It was to accommodate me because I'm dialing in from the U.S. Hopefully the results are good enough to have made it worth your while to come in at this later hour. I think hopefully the catering will also make up for it. Thanks for joining us so late. Riaan will do the bulk of the presentation this morning. He has, as he's done in the past, put all of the good news into the financial slides, I'll just talk around that.
I'll kick off with going to the first slide, a disclaimer and ask that you once again just pay particular attention to the content of the disclaimer because we do include in this presentation some information that's forward-looking in nature. Hence this is worth a read. Next slide, please. The next slide number three, key features. We spent a lot of time in 2017, I think that was also the main message in last year's results presentation of just the various measures that we took to migrate the operations from the West Rand more towards the Central and East Rand, tying up a few loose ends in that area, clean up of ground and the CMR sites, also the cost implications that had, also the implications on production itself.
We told you about the steps that we were taking to put new sites, reclamation sites in place. There were three of those. Also measures that we were taking to change our water reticulation system to have a fully integrated closed circuit. The expectation was that all of these measures were going to impact on this year also this year going forward. I think a lot of what you're seeing in these results, both insofar as just the efficacy of the business is concerned, also on the cost side or the direct results of the measures that were taken in the previous year. We're really looking at two years results here, not just one year's result.
Also, this presentation would be incomplete without reference to the information management system that we put in place, that's assisting us to stay ahead of the plant, which has become so important. The key features for this year, as you could see rather, is the very significant increase in production. Just a different footprint altogether that we were mining this year. Another thing that we've managed to get through the 150,000 ounce mark, but with this combination of assets and the recoveries you'll see later on also are right back to where they were in 2016 with a 0.2 recovery, as opposed to the 0.16s that we saw earlier in 2017. Very pleased with the fact that we were able to report free cash flow that we added to our cash balance year-on-year.
I don't know if there are many other mining operations in South Africa that's had a free cash flow year from that South African operation. That bears testimony, I think, to the way that the business has been set up. We have always been a cash flow focused business. This is one of the most important considerations for us and priorities for us. Business has got to make cash. The 38% drop in externally sourced potable water. You would have seen those of you who've actually read through the integrated report that we set ourselves the target to have a year-on-year reduction in potable water usage. This 38% drop is not coincidental. It is also as a consequence of having said infrastructure in place, that's helping us to be less of a burden on the environment. It assists us in establishing natural capital value.
For a country like South Africa with limited water and a society like Johannesburg, which is ever on the increase with influx of people, I think this is a good space to be in to reduce the amount of water that we're using and that competes with potable water users. The increase in operating profit, obviously as a consequence of the rise in production, but also the drop in unit costs. This comes as a consequence of those two positives. Notwithstanding the fact that there was a slight decline in gold price. All sustaining cost margin. This is the thing that I think in the long term is going to bite many producers. Since we have been required to report all-in sustaining costs or all-in-sustaining costs. You can see how much in sustenance capital per ounce was required in order to keep your operations going.
I'm not entirely convinced that all the sustaining capital that's required to be spent has been spent in the industry broadly speaking. If you were to assess production from production numbers, not from companies as a whole, but from production units, from separate units, I wouldn't at all be surprised if you're actually starting to spot standalone production units because of maybe saving a little bit on the sustenance capital, because this is now very visible. It's easy to say that you have operating costs of $650 or $700 an ounce, but just how much is the sustenance capital? That number is now glaringly visible. That is in the long term, something that I think is good for the gold price, especially because of the dynamics happening now around paper gold or fake gold and the lending of gold and so forth.
There might be a bit of a supply squeeze going forward, which might be a new dynamic that's not entirely factored into gold price at the moment, international gold price. Then, of course, also on the dust side. Mining's been happening in Johannesburg, in and around Johannesburg for many, many decades. A city has developed around the mines, which require new standards on managing the impacts of mining operations and dust in particular. The standards that were put in place many, many years ago assumed that there would be a buffer between community, between societies, communities, and the mines. That's simply been ignored, both in the pre and the post-democratic era. That's brought about a new standard of looking at these things. It's a costly standard. It costs a lot of money.
I think our dedication to this program and the numbers are shared with you later on in the program or in the presentation, starting to pay off, and we're definitely seeing a very significant reduction in dust emissions on the sites that we are responsible for. It's not the case in the whole of the industry. There's a lot of abandoned sites where dust is a major problem. On the Far West Rand and the West Rand, dust is a big problem. The sites that we have in our footprint that's part of our portfolio of assets, the graph is certainly trending in the right direction. This is consistent with our stated strategy of improving the quality of life of the people affected by our operations in and around the Johannesburg area. Next slide, please. We'll go to slide 4 or page 4, the operating trends.
This makes for some good reading. I'll go to yields first, this is what I was referring to, the yields getting sort of bumping against the 0.2s again. That's where they were in rather the 2015s, 2016s, is the yields just below the 0.2s. This, of course, is as a consequence of two things. One, we managed to have much better density profiles this year because you didn't have the sort of sterilization, so to speak, of the operating circuits that we saw in financial year 2017, the first half of 2017. That's when a lot of the cleanup material from the crown sites found its way into the operating circuits, and the quality of material and the composition of material reaching the plants. That was difficult to maintain and manage compared to where we are now. That's the one thing.
That's a more consistent throughput. Second thing also is the fact that we did mine higher grades from certain of our sites. We're setting up the business in such a way that we can extend this beyond the life of some of the current operating circuits. You see that as a consequence of those high grades and recovery numbers that we saw, that production was up both quarters, which brought us to the 150,000 ounces for the year. That was notwithstanding the fact that volumes had come down. Maybe what this graph is not telling you is the things that didn't happen this year that were problems for us in the past. They didn't happen this year because the way that the business has been set up and the way that the business has been improved and infrastructure has been set up.
The reduction in tons that you see right there towards the end second half of the financial year. That's obviously when we hit the rainy season. I sometimes get a thing that if there are two thunderclouds in the skies above Johannesburg, then the one would find its way just immediately over the Elsburg complex, and the other one would go and sit over Oliver Tambo Airport. Because you would have sunny skies in the West Rand and just a deluge over those two areas. In the past what we saw was impact on densities, which in turn would then impact on carbon efficiency, because with lower density, your carbon settles at the bottom of your CIL tank. You got to manage that water balance very, very carefully. What's happening is the method of mining is being adapted and adjusted.
There's a very nice picture right at the end of this presentation that actually shows how the clean and dirty water separation systems are now better as a consequence of the way that the method of mining these facilities, how that's been adjusted. That was a conscious decision, obviously. What we also saw, and this is maybe something that went unnoticed, is the fact that with the Eskom strike, the supply of electricity for the first time became very unpredictable. Very unpredictable in the sense that we would have trip outs that were unannounced. Typically what would happen, and this is the arrangement that we have with Eskom, is if there's going to be maintenance or if there's a risk of a trip out or some other issue that they experience with the supply of electricity, then we would get advanced warning.
Now with the strike and with the funnies that were going on as part of this strike, for the first time, we did have an announced trip out. The encouraging part of that is, insofar as our operations are concerned, it's not encouraging to have trip outs and an interruption in supply, but it's how the business responded to that, how the infrastructure responded to that. If this was three, four years ago, then you would have had massive choke ups of pipelines. In all likelihood, you would have had one or two of your thickeners tripping as well. As a consequence, the better part of a week, maybe two weeks to drain them, to clean them out, and to get the system back up and running again.
The backup systems that we have in place and that we spoke about over the last few years to keep this whole thing in motion, to keep everything in suspension and make sure that nothing settles down. I think those are the fruits that we're reaping now of those investments. The fact that the interruption lasts as long as the interruption of power, that you don't have this massive knock-on effect. Make no mistake, we had some scary moments there because this happened out of the blue. You can imagine a 60-kilometer-long pipeline filled up half a meter in diameter and slowly rushing towards your plant, and all of a sudden there's no power. It makes for a messy business if you're not prepared.
I do think that what the operating team has done over the last few years is just put systems in place that have made us far more resilient to this sort of thing. That's why we're in a position to, despite the various contingencies associated with our environment, that we can report numbers like this, take full advantage of what in fact has become a favorable set of circumstances price-wise and otherwise. Those are the operating trends. I'm going on to the next slide now, page number five, which is the financial review and all the good news which Riaan has monopolized again. I'll hand you over to him.
Thank you very much, Niël. Thank you for setting the scene for the financial results, not hogging the spotlight on them. Good morning, ladies and gentlemen, from my side. Again, my privilege to take you through these results, which we are very proud of. As I said, Niël has set the scene brilliantly for us to talk through some of the trends on the financial side. The operating margin, a very healthy 14%. Remember, operating margin of cash costs, say to revenue. In the context of revenue, remember, as Niël has alluded to it, the gold price year-on-year was down by 3% for us. It ended up at just ZAR 534,000.
You'll see on the two half year reviews as well, we started off just under ZAR 550 for the first half, then that dropped to just over ZAR 520,000 per kilogram for the second half of the financial year 2018, which puts all the sort of half year-on-half year numbers into context. Still a very healthy 14% and 30% up on the prior year, again, with that decrease in gold price. Cash operating cost, as Niël has alluded to, we're very comfortable that management has worked very hard to have that under control. That's also reflected in the cash operating cost per kilogram, that is down 6% to under ZAR 460,000 per kilogram, as well as the all-in sustaining costs, just over ZAR 500,000 per kilogram, also down 5% year-on-year.
If I jump to all-in sustaining cost margin, again, the second half impacted by a lower gold price, still a 70% overall increase year-on-year in all-in sustaining cost margin. As Niël said, a very important measure to measure the sustainability of an operation. As you know, over and above cash operating costs, it includes sort of sustaining capital expenditure, which we never hold back at our operations and make sure we spend the necessary capital also for projects that can improve the recovery and reduce the costs. Again, a very good number for us. All of this culminates, as Niël has said, in probably the most important measure for us, which is free cash flow, where we jump from a negative ZAR 45 million in the full financial year 2017 to a very healthy ZAR 93.4 million for the year 2018.
Again, gold price having an impact on that number in the second half. Headline earnings per share, I just wanna pause because that looks very much out of sync. Overall, ZAR 0.017 per share headline earnings, a significant increase from last year. I just wanna put some color into why that sort of if you look at the two distinct periods, which we don't report as two distinct periods, we report the half year, December and then the full year in June. A big chunk of that has to do with a gold in process adjustment that froze it out for the two distinct periods. Although at half year there was a ZAR 40 million gold in process positive adjustment cost, for the full year it was ZAR 24, that ZAR 16 that gets it down to that throws the two periods by about ZAR 60 million.
The second half was impacted by lower revenue because of the lower gold price, as I've alluded to. There's always year-end adjustments as we only update our Life of Mine on a yearly basis. Measurements and remeasurements of things like long-term incentive scheme, short-term incentive scheme, and also the transaction costs of about ZAR 9 million that we incurred for the Sibanye-Stillwater assets acquisition impacted the distinct period as a period, but still a significant increase year-on-year in our headline earnings. Looking income statement, as Niël has said, revenue impacted by gold production up by 10%, despite the decrease in the average gold price of 3%, which means a 6% increase in revenue year-on-year.
The cost of sales line, as you can see, barely moves, just under 2% change, which really is a function of the total cash operating costs only moving by 3% year-on-year. Again, I think is a really impressive achievement. As I've alluded to, sort of offset by that ZAR 24 million gold in process, let's call it investment as a cutoff at that point, which decreases that to the 2% movement year-on-year. Administrative expenses and overheads I've already mentioned, which is included there is the long-term incentive scheme change of about ZAR 17 million in the last period, and also the transaction costs, making up that ZAR 19.7 million number, including the corporate costs that we carry. Finance income on all the rehab investment funds, and related cash investments that we hold.
Finance explains the majority of that non-cash. It relates to the unwinding of the environmental provision of finance charge that's booked through the income statement, as a time value of money charge relating to the rehab liability. Profit before tax looks very good. I just wanna pause here for a moment. We normally don't pause to talk about tax for various reasons. I really wanna put the positive spin on this negative tax charge. To provide some color here. What it essentially does, as you know, accountants have this concept of deferred tax. It's not tax that's paid to SARS as current tax, but it measures sort of tax allowances that's available in the future against carrying values of assets and liabilities. As you know, the gold mining industry does not pay a straight 28% corporate tax.
It's a sliding tax scale depending on the taxable profit that the entity makes in that year, and very much driven by the Life of Mine profitability. What it says essentially, the more profit that you predict to make or taxable profits, the higher the tax rate that you'll be charged at. In this case, as you know, there was a 10% increase in reserves year-on-year for Ergo, which means more profitable results from the Ergo Life of Mine, which means the deferred tax, effective deferred tax rate changed from 18.6 to just over 20% in the current year. It has to do with future earnings, but that raise or rise in the deferred tax rate impacts current earnings and ultimately headline earnings per share as well. Just to provide context to that number.
The more profits you expect to make, the higher tax rate you're gonna pay, and that's why it flows down to a profit for the year. Obviously the headline earnings and earnings number is based on that number. Okay. Going over to the statement of financial position, property, plant, and equipment, very much a function of capital expenditure that we incur, less the depreciation. It has declined slightly year-on-year. Non-current investments and other assets mostly relate to our rehab fund assets that earns interest and grow year-on-year. Cash and cash equivalents, I'll elaborate in the cash flow statement, but as Niël already said, a healthy increase to just over ZAR 302 million. Other current assets, I've already alluded to slight increase in inventory, quite a big decrease in receivables, in that number. On the equity line, why has it come down?
Remember there was a dividend paid, actually two in last year of ZAR 42.2 million. The one declared at this results presentation last year, also the interim dividend of ZAR 0.05 per share. Plus obviously the profit that goes through equity. Rehab year-on-year, pretty stable. There was an unwinding that I've alluded to in the income statement of a finance charge of about ZAR 48 million, there was settlement of liabilities of about ZAR 24 million. Again, wanna emphasize that. I still believe that DRD is one of the few mining companies that actually incurred settle liabilities from their operating cash flow while they do their mining. That's a very positive effect.
Deferred tax I've already spoken to, that balance has gone up, function of the higher effective deferred tax rate, mainly the decrease in the carrying value of property, plant, and equipment. Other non-current liabilities, some employee liabilities, finance leases, pretty stable year-on-year. Current liabilities, there was quite a big increase in creditors. Our funded our working capital at that point in time, which leaves us with a very solid textbook 2 current ratio. On the statement of cash flows, free cash flow, as you know, a function of the net cash inflow from operating activities, less investing activities. If you deduct those two, you get to the ZAR 93.4 million. Again, it's a good cash generated by operations, some working capital release that I've alluded to in that, receivables and payables. Interest received on bank accounts.
As you can see there, the actual interest paid, the cash paid is very small in relation to the charge in the income statement. Acquisition of property, plant, and equipment, again, similar to last year, even though we had a challenging year from a cash flow point of view, we're not withholding any capital spend that's necessary to set up the business and make it more efficient in future years. That was no different. Niël will allude to three specific projects that made up the bulk of that capital spend. Profits on disposal of property, plant, and equipment. Land sales slightly less this year. That also explains why the earnings per share is a bit lower this year because it includes a lower profit on sale of property, which as you know, that's always excluded from the headline earnings per share calculation.
Just pointing out environmental rehabilitation payments that I've mentioned increased by roughly ZAR 10 million year-on-year. The dividends that I alluded to, the ZAR 42.2 million, that comes off as financing activities and leaves us with an increase in cash of ZAR 48 million and just over ZAR 300 million in cash and cash equivalents. That's on the financial side. I'm handing back now, Niël, on to page 10, the Ergo projects.
Thank you, Riaan. If we can get straight into the projects, page 11. This is the 4L50 reclamation site. This is a third of the new reclamation sites that we were working on in 2017, and then we got it ready to be included into the production circuit, into the operating circuit earlier this year. You can see the amount of tons that we're processing from there per month, 450,000, which is obviously taking a bit of pressure off some of the other sites. It's nicely accessible. Picture later on also shows how I alluded to earlier, we've managed to mine it in such a way that we have better control over clean and dirty water separation.
It's really all about making sure that we consistently deliver the right material at the right rate, the right density, the right composition, the right time into the plant. This one is certainly making a contribution towards that point. To compare this to where we were 18 months ago, pumping material from CMR into the circuit and the amount of space that that was taking up and the impact that that was having on plant efficiency, this is a vast improvement. zinc precip is something that we're very excited about, both in respect of the greater optionality it provides. It does give us a bit of headroom insofar as volume throughput is concerned. It's a shorter process. I personally like the fact that you basically batch treat every consignment of eluates. Of course, it also has the added advantage of cost saving.
It's costing us less. We're hoping to see the upside of that also coming through. The initial indications, and Jaco and Henry would both be able to give you more color on that. Initial indications on the zinc precip are positive and very much in line with, consistent with what our expectations were, what our targets were. I see Jaco waving his hand. Am I on the wrong slide? Are you on page 12? Are we good? Thank you. Right. I want to move on to page 13. Sorry, I can't see. I just see the glare on the front page. If I'm on the wrong slide, please just put up a hand there, Jaco. This is page 13, on the ball mills. With the closure of the Crown plant, which if I may add, looks really nice.
You wouldn't know that there used to be a plant there. The cleanup work there has been nothing short of spectacular. Despite some very interesting challenges from a, call it the informal reclamation industry, we managed to salvage these, and they've been moved to Ergo, where they're now being integrated into our system. What this basically does for us is we're now in a position to these high pockets of sand material scattered around the East Rand. Instead of having to transport those all the way across to City Deep, where the other mills are, we now have a place for them, and they can be integrated into the Ergo circuit. The City Deep space has now been opened up. The remaining bit of sand material that's in and around the central Johannesburg area, that can now go into the City Deep circuit.
The impact of this is significant. It's actually surprising to see how a little bit of high-grade material can impact on the average grade of your entire throughput. This we believe is something that jells nicely with the Knights plant now reaching the final phases of its life over the next two years or so based on current throughput, current materials Ergo, very favorably to become an acquirer to insource external materials, sand materials scattered around the East Rand that landowners want to get rid of because it's sterilizing their land, and it's an environmental nuisance and an environmental risk. Moving on to the next slide number 14 on sustainable development. I said earlier that the mines were started in the Rand, and then the city came to the mine.
In fact, the city was as a consequence of the mine, Johannesburg is probably a textbook example of what sustainable development looks like. Notwithstanding the fact that it was probably the furthest thing from the minds of the earlier pioneers, that they wanted to build a self-sustainable city with an economy that becomes independent of mining. That's what it did. Problem is that there are a whole host of issues, legacy issues, because in those days, they were maybe not as sensitive as we are today about impacts on society and also impacts on the environment. Social capital is an important aspect. Our target is to integrate the value add of the various capital stocks and to deploy resources and capital in such a way that value creation in one is also value creation in another. Our focus is poverty alleviation.
That's what you see in the agricultural program, where we initially targeted 250 families, we've now gone through 1,000 families. That program has been expanded to include two additions to the curricula on self-development, rather personal growth, and also we call it a mini MBA. We're very proud of our association with Umsizi and the work that they're doing on that. I think we are increasingly establishing ourselves as an organization that whilst we don't do much in the way of social capital infrastructure, we don't build schools and hospitals and so forth. That's too large a footprint to do this sort of thing. We have a 60, 70-kilometer footprint. We're becoming a teaching organization. We're imparting knowledge and equipping people to self-empower. It's wonderful to see the effects of that.
That's the one part of our social capital focus, is the poverty alleviation. The other one is youth education. Wayne Swanepoel, whose head I can see from where I'm sitting here, and glasses, he can tell you more about our youth education. Is Adelaide there? Wayne, did Adelaide join us? They can both tell you more about the youth education initiatives that we have, and the successes that we're seeing there with eight schools participating in math, science, and accountancy extra classes. ZAR 14 and a half million spent on the community spend, and the details are with those two of my colleagues. On the human capital side, this template is designed in such a way that it incorporates This is page 15. You can just move to page 15, slide number 15 on the human capital side.
This slide is designed to align with the different new segments that we're seeing in the draft Mining Charter. Although the Mining Charter is still a hot topic of discussion, subject of negotiation, we are of the view that a number of the provisions in the third charter are pretty much a given, and we're adjusting the manner in which we're reporting some of these issues such a way that these reporting topics align with the contents of the charter. Just from the top to the bottom, you can see the change in HDSA. Although the gross number suggests that we're right on target, we do believe that on the senior levels, we have work to be done.
We're taking steps both at board level and also in the development of other senior executive management skills, to bring I think, more focus onto this particular aspect. I think in the next few weeks, there will be further information shared in this regard. The board is certainly leading by example in this regard. On the women in mining, you can see we're right there on 20%, and we're very pleased with that. What we do find is that with our female colleagues, is that the attention to detail when it comes to the management of equipment in particular is something that we could learn from. We should have done this decades ago. The fact that women were kept outside of these core and critical skills for so long, it was just to our disadvantage.
We're happy to see this number, I think it will spontaneously increase because the value is clear and apparent. On the individual training courses, you can see that ABET there is making a very large contribution of 1,546 individuals taking advantage of some of the individual training courses that we're offering at ABET, and that also shows a healthy increase. On the natural capital side, I said earlier that our objective is to improve the quality of life of people living in and around Johannesburg area and that are in proximity to our operations. Because of the movement of people, the establishment of communities within buffer zones, sadly also after we became a democracy, there appeared to have been either indifference or maybe lack of appreciation for the importance of these buffer zones.
It does require a different approach to the environmental standards that we maintain. There you can see this is on top of a tailings dam. Vegetation that's been established. I'm referring to the picture now, and this is on page 16. Both vegetation, grass, and shrubs that has been established, but also trees to keep the wind away from the surface of these dumps. Big issue still for us is the fact that a lot of new vegetation gets destroyed in fires, and we had those again over winter. That notwithstanding, we are seeing very significant reductions in dust emissions, especially around the Crown Complex near Nasrec. If you were to compare the condition of these tailings now to where they were 10 years ago, it's chalk and cheese.
I do believe that this has set a whole new standard in dust suppression and dust containment, making use of sustainable practices in an environment where water is a scarce commodity. If there's one legacy that I believe the management team and DRDGOLD can aspire towards, then it would be to neutralize the impact of the legacy of mining in and around the Johannesburg area. This is certainly going a long way towards achieving that objective. Sadly, as I said earlier, a lot of abandoned sites that have not been lifted with this sort of detail and that's becoming an increasing problem. Hopefully, this will make some small contribution towards the quality of life of the people living in and around the Soweto and Riverlea areas. Moving on to the next slide number 17. Far West Gold Recoveries, the update, straight into 18.
Feel free to admire that picture just for a little bit. The quality of infrastructure that we acquired from Sibanye is very encouraging. It's enabling us to get into this very quickly, to get into production very quickly. The transaction was completed on the 1st of August 2018. At the time, we'd already secured orders for some of the long lead items in order to enable us hit the ground running and to have this thing up and running by the second half of the current financial year. We are very pleased with this transaction. Saw that it's taken our gold reserves to close to six million ounces of gold reserves on surface, accessible by way of our mining process of using high pressure water, capable of being linked up with existing infrastructure.
I think what makes this an exciting project is if you looked at the combination of assets and maybe some of the previous models, it was going to be tough for us to do this and to take full advantage of this reserve if we had to wait until after a very large plant had been built and a very large tailings deposition facility had been built. That's very much part of the future strategy for this project. We do want to, as we want to do with Ergo, we want to optimally exploit our ore body. We want to see if we can mine all of these dumps and clean up that entire area and move it all to a well-managed deposition facility out at Vissers fontien and the Brakpan tailings dam. We want to do exactly the same thing here.
To take the sort of dilution that we did in order to acquire this, then to have to wait for three, four years maybe of further capitalization and construction, commissioning, and so forth. I think that was going to weigh heavy on DRD and the DRDGOLD story, which is a cash flow story and a dividend paying story. The fact that we were able to acquire these plants, the Driefontein plants, as part of the parcel of assets, the fact that we got a deposition facility in the number 4 dam. It's really like the Springbok scrum in the old days. You could cover them with a blanket. They're so close together. It's a very nicely concentrated footprint here.
This enabling us to, for relatively modest CapEx, get this thing up and running, and up and running in such a way that it provides additional optionality. We're not locking ourselves into one specific model here. To start with production in the first quarter of the new calendar year. We're very excited about this and our objective, our target is to not bring about a dilution of the earnings from Ergo, so that the cash flows coming out of the revenues coming out of this project such that it fully makes up the 38% dilution of Ergo earnings, and not just make it up, but in fact contribute towards that, so that the net aggregate value add per capita is in fact positive. The indications are that it would be. For us, this is very much a step change. Right.
What we also did was for the first time in a very long time, I think the first time since 2001, we've decided to take on a bit of price protection. We've agreed a collar with our bankers, and we committed just over 5,500 ounces per month towards this product. We have a put at ZAR 565,000, which obviously at this stage is of no use because of where the rand has gone following yesterday and the day before's events in South Africa. The numbers that came out Then we sold a call at just under ZAR 609,000. This is done on a monthly basis. It's netted up on a monthly basis, and there'll be a cash out, depending on which way the collar went.
It was important for us, considering the fact that we are taking on debt, obviously now with the gold price that is favorable in the last few days, we'll probably take on less debt because the business is doing well, operations are doing well, and we are seeing cash flow. We're probably being a little bit overly conservative here. Again, you don't know if the gold price is going to go down tomorrow. Certainly, the international price seems to be a bit under pressure. I see here in New York, it's $1,190 an ounce, so that's come off a little bit of its highs here, but it also came down by $10. The international flavor seems to be a little bit on the unattractive side, but in South African terms, gold price is such that it's good for cash flow.
Being good for cash flow, it means less of a drawdown from the facility. In doing our numbers and just making sure that we consider that from every risk angle and making sure that we don't run the risk of coverage ratio breaches, et cetera. We are going to be spending the bulk of this money, the beauty of this kind of project. We're not talking about a five-year project or a seven-year project. We're talking about a four or five-month project, and we'll be spending the bulk of the capital to get this show on the road and get up and running before we start pumping the first slides and seeing the first production. There is going to be a period of high capital outlay, investment, without revenue flows coming in from that site.
You've got that two, three-month period, which we don't want to be vulnerable. We don't want to go into something knowing that there's a risk of some coverage ratio breach or something like that. For us, this was a comfortable level because we looked at a gold price of ZAR 525,000 in a kilo, where it was a few weeks ago at ZAR 550,000 in a kilo. We thought that if we could lock in this number of ounces at ZAR 560,000, then we could, for all intents and purposes, break even with the rest of our production. There's some guidance on where that break-even number is. We'll make enough to cover the interest that we need to pay on this facility, assuming that we have drawn down 100%.
It's good cover to ensure that this new risk or this new obligation rather, new liability that we're assuming that that's covered, that's looked after. Typically, I think what we do is we do have a modular type of operation. We do have switch-on, switch-off capacity, and we've done it in the past where we defer certain expenses and we maybe hold back on some of the CapEx. Interest payments are due when interest payments are due. It's a date. It's a fixed date. You don't want to find yourself in a situation where you can't pay your interest, especially now that the environment's become favorable. We wanted to do this a few months ago when the gold price also went through, I think, ZAR 575. I think it sort of turned at ZAR 578.
It required a very long discussion at board level because as a company, we think that 90% of our appeal to the investor market is the fact that we are unhedged and that we offer full exposure to the gold price. If you look at the trade patterns, the liquidity, the volatility in our share price, then that's probably why most people invest in the stock. Even the ones that are in the stock long-term, they seem to trade it over and over and over again in the long term. Increasingly, I find myself leaning towards that as well. I think you know that you would have picked up that I bought just over 600,000 DRDGOLD shares in the last year after having sold most of all of my DRDGOLD shares or most of them the year before.
These are the opportunities that the share offers, full exposure to gold price is just the sort of thing that the market is looking at. In order to continue to offer that opportunity, we need to make sure that the business stays in business. In order to do that, we need to make sure that we pay our commitments. This is a new commitment. It's not an operating commitment. It's not something that you can defer. Hence, a strong argument was made out in favor of establishing this, and the board gave us the go-ahead. It comes to an end in May.
We want to get back to full exposure to gold price as soon as possible, by May, we should have established revenue flows also out of the new circuit, then there's no need for this anymore. Looking at protecting margin, this is a risk management tool to ensure that we have enough revenue flows to pay the interest commitments if we were to draw down fully on this product. Looking ahead, we are targeting between 148,000 and 154,000 ounces coming out of the Ergo combination, which doesn't include any production coming out of the Far West Rand. You can also see our cash operating costs slightly up on where it is this year. The business has been set up in such a way that these targets are realistic.
Our management information system enables us to stay ahead of the plant, it has become somewhat more predictable. Diagnostically, it's an easier operation, also insofar as maintaining stability. I think the team has a lot more information at their disposal with which they can ensure that they do stay ahead of the plant. Ergo is most certainly still leveraging the benefits of 2017's inputs and changes, it is set for improved performance also now with the new capital projects having been bedded in. Insofar as the Far West Gold Recoveries circuit is concerned, obviously we're looking forward to it also starting to make a contribution towards the bottom line by the second half of 2018. This is the picture that I was telling you about. This is the 4L50 picture where you could see these different benches are being mined.
This is now looking towards Springs. That's from Johannesburg site looking towards Springs. It's really taking it off bit by bit from the I think that would be the northeastern corner moving towards the southwestern corner. Enabling us, not just insofar as clean and water separation is concerned, to have a better setup, but also just the way in which screen oversize is being managed to ensure that once we're done, we are in fact done. This is the slide with 4L50. Moving on to the last slide, which is the contact details. If you do want to have any more color on any of these slides and some of the information that we shared, then please feel free to contact us and we'll be sure to get back to you. I think we've covered just about everything that we did.
This is the last slide, my connections. If you guys wanna add anything or if there are any questions, feel free to ask.
I'm just reading from the webcast now. Surely any business needs to protect margin at current gram gold price and ensure a good margin can be locked in. It says, "Harmony have shown an ongoing hedging program. Around 20% of production has been exceptional at good hedging prices. Surely DRD can adopt this too.
Yes. We studied probably one of the most interesting case studies in hedging as part of the representations that we made to our board in setting up this current instrument. We don't think that based on the profile of our investor, on what the investment story is, the investment proposition is, we don't believe that we should step off taking full exposure from gold price. It is a cyclical business. While some of the dynamics that drive gold price have changed, we do believe that there's a balance that's restored half the time and that a hedge that looks very clever now could just turn out to be not so clever in three or four years from now. We don't have a hedging strategy. We have a risk management strategy to protect liquidity risk or to protect us against potential liquidity risk having assumed a new obligation.
Once that obligation's been discharged, our intention is to continue to take full exposure to the gold price, because we believe that that's the DRDGOLD investment story. That offers the opportunity to generate returns on either side of the gold price cycle.
Yeah. Niël, there's a question on trading volumes are very low. How can we get interest in the stock to pick up so that overhang can be cleared?
Especially in South Africa, I'm a little disappointed. I was surprised to see that 5,000 shares can move the share price 4%-5%, which is just silly. Ultimately, we tell the story, and I think it's a good story. Ultimately, what happens in the stock market is it's pretty much up to the shareholders. I can't trade every day. We're in an open period again from tomorrow onwards, and that's when I can trade. I think the market has seen that I've reinvested in the stock, and there's no reason for me to stop. I do think it's a good story and that the stock is certainly offering some upside at this stage, depending on where you stand with gold price.
My sentiment insofar as gold price is concerned is that in the long term, two, three, four, five years, it's gotta start moving again, the international gold price. The shareholders are in control of the shares. We're in control of the business, and we're putting information out into the market, which we believe is accurate, which we believe is current. I think that the value system of this business is such that we try to maintain a high standard of custodianship and responsibility in managing our shareholders' capital. The market's the market. We don't control the market. What we have done this last year, hopefully that will start to assist It's changed the marketing approach somewhat. Fewer of these conferences, these very expensive conferences where you have five or six or maybe 10 interviews and more on a digital platform.
We're using Proactive Investors as an international digital platform here locally or here in N.Y. Wainwright is also assisting us in using their platform as a way of spreading the message. We're reaching far more people, and obviously this requires a slightly different approach to marketing and telling the story slightly more visual, using more imagery, strong headlines, and then hoping that would get those who are scrolling through the 500 companies that they follow. Maybe something catches their eye and that they would dive a little bit deeper into the numbers and do a bit of substantive analysis of the business, and recognize, as far as I'm concerned, that it's a business on solid fundamentals, fundamental analysis. A business on solid fundamentals.
There'll be no comment on no dividend at year-end. It says, the Sibanye-Stillwater deal capital requirements, it was mentioned in the promotion of the deal that this was not going to be a factor.
Yes. We paid an interim dividend just before we issued the shares to Sibanye-Stillwater to acquire the transaction. I think one of the concerns that was raised was that we will now be immediately diluting earnings and diluting dividends. We want to make sure that the next dividend that's paid is paid from the joint revenues, and that the new circuit also contributes towards that. To pay dividends now, especially now at the beginning of this capital project, while we might be drawing down, I think it would be artificial. We're diluting the ERGO earnings without having established a new revenue source. What really are you saying to the market? We're borrowing money in order to pay dividends. Yes, we paid the interim dividends. The uninterrupted yearly dividend record that we're trying to maintain, that hasn't been interrupted.
Clearly once revenues start coming in from the new circuit, it too will pay its proportion towards earnings for the whole of the DRDGOLD share of it.
Okay. The question for me, I'll just recap. Basically, the headline earnings per share dropped from first half to full year. I've tried to cover it in the presentation. Let me just recap. One of the major moves was the gold in process move that was at ZAR 40.9 million at half year, ended up at ZAR 24 million credit to the income statement for the full year. That movement as a whole was almost ZAR 57 million. Other major movements for the 2 six-month periods, revenue down roughly ZAR 20 million. Long-term incentive, short-term incentive adjustment and transaction costs close to ZAR 30 million. Cash operating costs in the second half of the year contributed roughly ZAR 5 million, which explains the 2 six-month periods and the impact on headline earnings specifically.
Rolf, thank you for all your questions and the interest that you show. That is all the questions that I have off the webcast. Any other questions in the audience?
My thanks to Rolf for those comments are usually helpful and certainly keep us on our toes.
Martin Creamer from "Mining Weekly." Niël, could you please tell me what the life of your company is now, given the new Far West Gold Recoveries project? How far does that take you? Will you be carrying out the same sort of rehab philosophy on the West Rand as you have on the East Rand?
Yes. Martin, they're different models. The West Rand, the number 3 and number 5 dam, which we refer to as the first phase of the Far West Rand operations, that has a standalone life of 12 years. Obviously we've undertaken to also look at the incorporation of the whole of that footprint into a much larger initiative, and that will be the subject matter of a 2-year study from when we start producing. Then it could be substantially longer. If my memory serves me correct, I think it's a 15-year model, and there's also an 18 or 20-year model, if I'm not mistaken. Jaco, you could maybe just confirm that. I see you nodding. They're different iterations. 12, 15, and 20, Martin.
Are you looking at any other assets on the West Rand that could be included in this? West Wits seems to still be around. You have a slight footprint there. Is there anything else that you could incorporate? Is there a lot still to come in?
Well, everything that we want to introduce or the only thing that we can look at now at this stage is what we own, what we bought. This is not an island. Obviously, there are lots and lots of dumps around the Far West operations footprint. Many of those are attractive dumps. That whole Western Deep Levels belt, the Driefontein Turffontein belt, those were spectacularly rich reefs. The gold content is good in those tailings dams. We certainly will. They'll feel comfortable in our portfolio, there's no doubt about that. Of course, if you could add a few hundred million tons, it just makes your model for a larger plant so much easier. That hurdle rate drops. The opportunity will certainly present itself.
One of our key filters, one of our key strategic considerations when we look at these things, and once again, it might be overly conservative, but it served us well. It served us well over the last 10, 12 years, is that we started the surface story, we started building the surface story, expanding on the surface story with net cash flow as a core element of the story. We're very conscious of net cash flow per capita, net cash flow per share. These earnings are earnings. These fair value adjustments, they could confuse you into believing that a company is financially very strong. I think we were all caught unawares by something similar to that a few months ago when we saw a major corporate collapse in South Africa.
They could give you the impression that maybe something is not as strong when in fact it is very robust and strong, which is probably where our results fall in this year. Net cash flow per share, it's money in your pocket. It's what you can use to buy bread and milk with. You can't buy much with a fair value adjustment or a deferred whatever you want to call it, although we have long conversations about it. Cash is something that you can apply to build infrastructure, to build a capital base. What we don't want to do. This is not a runaway growth story where deal momentum is the thing that's going to make this thing attractive.
I think we will want to stay committed to our core philosophy of real value built, actual value, and that there's underlying value that supports the business. Yes, there will be plenty of opportunities, I think, to incorporate, and we'll look at those with an open mind. We will want to participate with those that I think share our value system and our commitment to dealing with these things responsibly. We've made mistakes in the past. Probably never sell another mine when I have a say in the matter. We would want to maybe incorporate assets going forward and collaborate with people who share our values. That opportunity will certainly be there. It will have to be done in such a way that we don't undermine the per capita value add philosophy that we have.
We don't want to be burning ounces on the one end because we're just acquiring ounces more rapidly on the other end. It's like trying to sprint a marathon. You're going to run out at some stage. Does that answer your question, Martin?
Yes, it does. Just finally, could you just give us a word on the yield that you'll have on the West Rand versus the yield you've got on the East Rand?
It's a higher grade. The initial phase does have a higher head grade. We do anticipate high yields. I think it's about 25% higher are the initial indications. Again, this is tailings, and you'll know exactly how much you're going to make when you actually see that gold bar coming out of the smelter. Based on our past experience, based on our knowledge of the geology of this particular site, we have a fairly good idea of what we could target. Those found its way into the market update that went out last year when we announced the transaction, as part of the transaction. I'm careful to say it will definitely be this or it'll definitely be that, but it's probably going to be about a 25% high yield. I think at the moment we're just under a 0.2. What's that?
That's a .225, .25 thereabouts. A .25. Jaco, can you maybe give an indication? .25 yield, yeah.
Thank you.