Media releases

Blyvoor gives notice of right-sizing consultation process

26 August 2009

Johannesburg, South Africa, 26 August 2009. DRDGOLD Limited (JSE: DRD; NASDAQ: DROOY) announced today that it has advised unions of its intention to right-size the Blyvooruitzicht operations (Blyvoor) of its 74%-held subsidiary, DRDGOLD South African Operations (Pty) Limited (DRDGOLD SA).

Blyvoor will now proceed with a 60-day facilitated consultation process in terms of Section 189A of the Labour Relations Act to determine the future of affected employees.

DRDGOLD announced at its quarterly briefings last Thursday that right-sizing at Blyvoor had become necessary.

This had been brought about by:

  • a 5% drop in underground production to 21 349oz due mainly to seismic damage to high-grade panels;
  • a 16% drop in the average Rand gold price received to R244 927/kg due to Rand strength; and
  • a 17% increase in underground cash operating costs to R289 816/kg.

The damaged panels will take up to six months to rehabilitate, during which time monthly production from the affected areas will be reduced from 2 500m² per month to 200m² per month.

This extended, negative impact on underground production, combined with dim prospects for a substantial Rand gold price recovery in the short-term, a 32% power price increase from power utility Eskom with effect from 1 July and the prospect of paying at least the 6% wage increase currently on the table with unions, makes right-sizing at Blyvoor inevitable.

A combined management/unions task team has been appointed and is currently investigating possible cost-reduction measures at the mine. It is envisaged that the task team will continue its work during the Section 189A consultation process, and beyond.

Queries:

South Africa & North America

James Duncan, Russell & Associates
+27 11 880 3924 (office)
+27 82 892 8052 (mobile)

United Kingdom/Europe
Investor and Media Relations

Phil Dexter, St James's Corporate Services
+44 20 7499 3916 (office)
+44 779 863 4398 (mobile)


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Many factors could cause the actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, adverse changes or uncertainties in general economic conditions in the markets we serve, a drop in the gold price, a continuing strengthening of the rand against the dollar, regulatory developments adverse to DRDGOLD or difficulties in maintaining necessary licences or other governmental approvals, changes in DRDGOLD's competitive position, changes in business strategy, any major disruption in production at key facilities or adverse changes in foreign exchange rates and various other factors.

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