Corporate profile

Established in 1895 to exploit the world's richest known gold deposit, South Africa's Witwatersrand Basin, Durban Roodepoort Deep, Limited has withstood the test of time and numerous challenges to its survival. As a single commodity gold mining company and due to the evolving nature of the Group, the name Durban Roodepoort Deep, Limited will in future be changed to DRDGOLD Limited. In recent years particularly, DRDGOLD has come to be characterised by dynamism, drive and an independent spirit that has seen it develop from being a rescuer of struggling South African gold mining operations - a turnaround agent - to an engine for growth beyond South Africa, into the Australasian region.

In the 2004 financial year, gold production from DRDGOLD's total portfolio of underground, opencast and surface retreatment operations (including attributable portion of associate and joint venture) was 905 023 ounces, some 26%, or 233 190 ounces, of this was derived from its Australasian mining interests - the Tolukuma mine in Papua New Guinea (PNG) and the 20% interest in the Porgera Joint Venture, also in PNG.

During 2004 DRDGOLD made an offer to shareholders of Emperor Mines Limited (Emperor) of Australia to acquire the remaining 80.22% of shares in issue that the Group did not already own and at the close of the offer period on 30 July 2004 the acceptances received had increased its shareholding from 19.78% to 45.33%. DRDGOLD is committed both financially and in respect of technical expertise to Phase 2 of the development of Emperor's Vatukoula Mine in Fiji. On 14 September 2004 Emperor announced an A$20.4 million non-renounceable rights issue to fund a portion of its Phase 2 expansion project. Under the rights issue, eligible Emperor shareholders will be entitled to subscribe for four fully paid ordinary shares in Emperor for every 10 ordinary shares held in Emperor at an issue price of A$0.45 per share. DRDGOLD has agreed to apply for its entitlement under the rights issue, as well as for any shortfall to the issue (subject to certain conditions) under the shortfall facility. Emperor's rights offering is currently scheduled to close on 8 October 2004.

Following completion of the Emperor transaction subsequent to year-end, annualised production from Australasia is approximately 350 000 ounces, bringing the Group to within reach of its initial growth target of 400 000 ounces of low-cost, annual production from this region in a relatively short space of time.

Production in the 2004 financial year from DRDGOLD's South African mining interests - the Blyvooruitzicht mine, the North West Operations (comprising Buffelsfontein and Hartebeesfontein mines) and its 40% interest in the black economic empowerment entity, Crown Gold Recoveries (Crown) and ERPM - accounted for 74% of total production, compared with more than 92% in the previous year. The negative impact of the strength of the South African Rand on revenues, together with challenges arising largely from the maturity of the operations, has prompted an intensive restructuring programme of the South African mining operations.

DRDGOLD distinguishes itself by its incontrovertible confidence in the long-term strength of the gold market. It has invested heavily in buying back historical hedge positions in order to present itself to the investing community as an unhedged single commodity gold producer, thus providing full exposure to gold price movements. As a commitment to its faith in the value of gold as a form of currency, DRDGOLD acquired a strategic 50.25% interest in a subsidiary (Net-Gold Services Ltd) of the internet-based gold investment company, G.M. Network Limited (GoldMoney.com) during 2004, and continues to search for value-adding gold beneficiation opportunities.

DRDGOLD's total attributable Mineral Resource base at 30 June 2004 was 57.7 million ounces (63.9 million ounces at 30 June 2003) and its total attributable Ore Reserves were 11.7 million ounces (15.8 million ounces at 30 June 2003) including 40% of our associates Crown and ERPM, 20% of the Porgera Joint Venture and 19.78% of Emperor.

The 26% net decline year-on-year in attributable Ore Reserves is due to the shaft closures at the Buffels and ERPM sections and the decline in the Rand gold price, which was offset in part by the addition of 1.4 million ounces as a result of the acquisition of a 20% interest in the Porgera Joint Venture. Attributable Ore Reserves from Australasia now constitute 16% of the total reserve base of the Group, compared to less than 1% in the previous year, providing further indication of the success of the Group's growth strategy in the region.

In October 2003 the Group acquired all of the shares in Orogen Minerals (Porgera) Limited, or OMP, and Mineral Resources Porgera Limited, or MRP, from Oil Search Limited for a final purchase price of R542.3 million (US$77.1 million). The transaction was effected through the amalgamation of OMP and MRP, with our wholly-owned subsidiary, Dome Resources (PNG) Limited (subsequently renamed DRD (Porgera) Limited). This resulted in the Group acquiring a 20% interest in the unincorporated Porgera Joint Venture in PNG.

In an effort to reduce costs DRDGOLD established an insurance company, Fortis Limited, in May 2004. The company is based in PNG and focuses on providing worker compensation insurance to the Tolukuma mine, which resulted in a year-on-year reduction of 90% in related insurance premiums. During June 2004, the insurance strategy was further expanded with the establishment of a cell captive arrangement in White Rock Insurance Company PPC Limited, to facilitate access to reinsurance and additional insurance markets in order to further reduce the annual cost of insurance across the different regions in which we operate.

At 30 June 2004 DRDGOLD's market capitalisation was R3.7 billion (US$588 million).

DRDGOLD is a public company with its primary listings on the Johannesburg and Australian stock exchanges and secondary listings on the NASDAQ SmallCap Market and the London and Port Moresby stock exchanges. The Company's shares are also traded on the Marche Libre in Paris, the Regulated Unofficial Market of the Frankfurt Stock Exchange and the Berlin and Stuttgart OTC markets as well as Euronext Brussels in the form of International Depository Receipts.

DRDGOLD logo