Increased surface production offsets lower underground ounces
22 October 2009
Johannesburg, South Africa. 22 October 2009. DRDGOLD Limited (JSE: DRD; Nasdaq: DROOY) today announced a 1% decrease in gold production to 57 292oz for the quarter ended 30 September 2009, an increase in gold from surface sources offsetting the impact of lower underground production.
Gold production from surface sources - 10% higher at 38 870oz - comprised 68% of the quarter's total production, and reflected a 181% increase in ounces from ErgoGold; a 6% increase in ounces from Crown; and a 35% increase in ounces from ERPM. The latter now functioning solely as a surface retreament operation.
Underground gold production - for which the underground operations of Blyvoor are now the only source - was 14% lower, a consequence of 11 production shifts lost due to strike action, the continuing negative impact of high-grade panels damaged by seismicity in June and a shift in Main Reef mining from the eastern side of No 5 Shaft to the western side.
Total revenue for the quarter was 6% higher at R445.2 million, an 8% increase in gold sold off-setting the impact of a 2% drop in the average Rand gold price received to R239 098/kg.
Cash operating costs were 3% higher at R434.2 million, due mainly to power utility Eskom's 32% general tariff increase effective from 1 July 2009 and to a provision for wage increases.
A net loss of R63.3 million was recorded for the quarter under review, compared with a net profit of R42.6 million in the previous quarter.
Looking ahead, DRDGOLD CEO Niel Pretorius said margins, in the face of further electricity price hikes, will remain under pressure until the Rand gold price recovers. In the near term, DRDGOLD's focus would be optimisation of the ErgoGold surface retreatment operation and reduction of Blyvoor's fixed overhead costs through restructuring.
South Africa & North America
James Duncan, Russell & Associates
+27 11 880 3924 (office)
+27 82 892 8052 (mobile)
Investor and Media Relations
Phil Dexter, St Jamess Corporate Services
+44 20 7499 3916 (office)
+44 779 863 4398 (mobile)
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.
These risks include, without limitation, those described in the section entitled "Risk Factors" included in our annual report for the fiscal year ended 30 June 2008, which we filed with the United States Securities and Exchange Commission on 12 December 2008 on Form 20-F. You should not place undue reliance on these forward-looking statements, which speak only as of the date thereof. We do not undertake any obligation to publicly update or revise these forward-looking statements to reflect events or circumstances after the date of this report or to the occurrence of unanticipated events.