Media releases

Watershed year for DRD

Details

Published: Wednesday, 02 August 2000 02:00

Johannesburg, 2 August 2000. Durban Roodepoort Deep, Limited reported today a 121% increase in cash operating profit to R49.7 million (US$7.4 million) for the quarter ended June 2000, with quarterly gold production of 292,698 oz. Results for the quarter ended 30 June 2000

Key features

• Cash operating profit up 121% to R49.7 million (US$7.4 million)
• Gold production increased to 9,104 kg (292,698 oz)
• Gold revenue received up 5% to R58,048/kg (US$263/oz)
• Cash operating costs decreased to R52,590/kg (US$239/oz)
• Net capex of R28.2 million (US$4.1 million)
• Once-off write down of assets at discontinued operations has negative impact on annual results

Johannesburg, 2 August 2000. Durban Roodepoort Deep, Limited reported today a 121% increase in cash operating profit to R49.7 million (US$7.4 million) for the quarter ended June 2000, with quarterly gold production of 292,698 oz. This was on the back of a gold revenue increase of 5% to R58,048 (US$263/oz). Cash operating costs were well contained and decreased to R52,590/kg (US$239/oz).

Net capital expenditure of R28.2 million (US$4.1 million) was spent mainly on development and infrastructure to ensure extended life of mine at Blyvoor and Harties. This is the last big tranche of capital and the capex profile reduces substantially into the future.

The company has reported separately on discontinued operations, which includes the anticipated write down of Durban Deep and West Wits sections and Barison Tropical (which were closed mainly as a result of the low gold price) and Hargraves Resources (which was closed as a result of flooding).

Commenting on the results at a presentation in Johannesburg, DRD CEO Mike Prinsloo said, "This has been a watershed year for DRD as we have successfully embarked on the repositioning of the company. Where in the past we concentrated on being an operator of marginal mines - such as West Wits and Durban Deep, the bulk of our production will now come from longer life, lower cost operations - like Blyvoor and Harties.

"In this quarter we have delivered the operating turnaround that we had promised at the end of the last quarter. Following this watershed year, DRD is well positioned for further growth in South Africa and Australasia. A strengthening operational performance is anticipated during the year ahead which will build DRD's cash reserves."

Key features for the quarter include:

• The closure of all loss-making underground and surface operations at Durban Deep and West Wits sections;


• Good progress on Blyvoor 2000, with hoisting through Blyvoor 5 shaft;


• Completion of the Dome acquisition, with results consolidated for the first time; and


• Further reduction in hedge exposure

At the close of the quarter the company reported reserves of 15.7 million oz and resources upside of 90.6 million oz. Both are reported in terms of the SAMREC code.

Mike Prinsloo concluded that, "The year ahead will see the company strive to establish greater critical mass, to generate free cash and to strengthen the balance sheet. We will further capitalise on potential synergies between Buffels and Harties, whilst at Blyvoor in particular we anticipate doubling production and achieving more than $50/oz cost reduction in the year ahead."

DRD Chairman Mark Wellesley-Wood re-emphasized the company's commitment to the creation of shareholder value by focusing on return on equity and achieving operating efficiency (lower cost/kg) with capital efficiency (lower cost of capital).

DRD announced at the presentation the appointment of Ian Murray as Chief Financial Officer, following the resignation of Charles Mostert. In addition, Dick Plaistowe (previously Director: New Business) has been appointed Chief Operating Officer, Australasia and Alistair Banfield as Manager, Finance: Australasia.

Wellesley-Wood thanked Mostert for his contribution to the company over the past three years. He also welcomed the appointment of Murray. "Ian Murray has played a vital role in the company since its inception and has been an able understudy to Charles during this time. Ian will be based in South Africa with overallgroup responsibility for financial affairs. These structural changes have been brought about by the need to increase the resources dedicated to the financial aspects of the company on the one hand and to separate these from our operational focus in Australasia."

Wellesley-Wood confirmed that DRD was now following an independent growth strategy, which will include further Australasian and South African acquisitions in the medium term.

"We are also considering potential South African acquisitions such as those which may be disposed of by Gold Fields and AngloGold."

IAN MURRAY (34)
(Chief Financial Officer, Durban Roodepoort Deep, Limited)

CA (SA); ACMA; Advanced Taxation Certificate

Ian Murray was appointed an alternate director of DRD in July 1999. Prior to his appointment as Chief Financial Officer in July 2000, he was Manager: Corporate Finance since his appointment in 1999. In this capacity he was intimately involved in merging the company's various mining operations to form the company's current structure.

Ian Murray's career started in 1989 with KPMG Aiken & Peat as an Audit Manager. He then moved to Price Waterhouse Management Consultants in 1993 as a Senior Consultant before joining the Barclays Bank plc Group Taxation Department in 1995. Later that year he accepted a position at Bioclones (Pty) Limited as Group Financial and Administration Manager.

DICK PLAISTOWE (50)
(Chief Operating Officer: Australasia, Durban Roodepoort Deep, Limited)

BSc (Hons) Mining Engineering, Nottingham Universtity, MDP (Unisa), Programme for Management Development (Harvard)

Dick Plaistowe was appointed a Director of DRD in October 1997. Prior to his appointment as Chief Operating Officer: Australasia, Dick was Director: New Business for DRD.

Born and schooled in Melbourne, Australia, Dick has close on 30 years experience in the South African surface, open pit and deep level gold, coal and metalliferous mining industries.