Media releases

DRDGOLD announces 60-day review and issues North West operations section 189 notice

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Published: Thursday, 03 March 2005 02:00

DRDGOLD today announced a 60-day operational review of its North West Operations, and issued a notice to unions and associations in terms of Section 189 (3) of the Labour Relations Act.
Johannesburg, South Africa. 3 March 2005. DRDGOLD Limited (JSE: DRD; NASDAQ: DROOY; ASX: DRD; POM SoX: DRD) today announced a 60-day operational review of its North West Operations at Stilfontein in South Africa’s North West Province, and issued a notice to unions and associations in terms of Section 189 (3) of the Labour Relations Act.

Section 189 (3) details the requirements of a formal consultative process management is obliged to enter into with employees when it envisages dismissals based on changed operational and financial circumstances.

In the six months to 31 December 2004, DRDGOLD recorded a total net loss of R370.1 million, of which R279.2 million, or 75%, was incurred by the North West Operations. Currently, the North West Operations are losing some R20 million a month.

DRDGOLD’s Chief Executive Officer, Mark Wellesley Wood, said today that, while the stronger Rand and the consequent weaker Rand gold price were factors in the North West Operations’ poor performance, there has been a failure to deal with these realities by continuously improving productivity and reducing costs.

To survive the current crisis, Wellesley-Wood said, productivity at the North West Operations would have to increase by 35% in terms of grams per total employee costed and current working costs of R71 million a month would have to be slashed to R40 million.

“We are acutely aware that, in the event of failure to achieve these targets, placing the entire North West Operations on care and maintenance becomes an option we must consider.”

The North West Operations currently employ 6 513 people. Some 2 780 people were retrenched as part of a restructuring process some 18 months ago but subsequent performance improvements were not sustained.

“The urgency with which the North West Operations’ current situation must now be addressed through appropriate restructuring means it is essential that the meeting of the statutory requirements of restructuring, as scoped by Section 189 (3), begins immediately,” Wellesley-Wood said.

“I am encouraged that employees and their representatives understand the seriousness of the situation at the North West Operations and are already engaged with management in consultation on ways to improve productivity, cut costs and return to profitability.

“We remain open to all offers and suggestions, either to sustain mining at the North West Operations or to retain access to their reserves,” Wellesley-Wood said.

DRDGOLD has requested the Commission for Conciliation, Mediation and Arbitration (CCMA) to facilitate consultation in terms of Section 189 (3).

Wellesley-Wood said it is envisaged that the CCMA-facilitated process will run concurrently with the consultation process already under way at the North West Operations.

Queries:

South Africa
Investor and Media Relations
Ilja Graulich, DRDGOLD
+27 11 381 7826 (office)
+27 83 604 0820 (mobile)

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

North America
Investor and Media Relations
Barbara Cano, Breakstone & Ruth International
+1 646-536-7015 (office)
+1 917-861-2530 (mobile)

Australasia
Investor and Media Relations
Paul Downie, Porter Novelli
+61 893 861 233 (office)
+61 414 947 129 (mobile)

United Kingdom/Europe
Investor and Media Relations
Phil Dexter, St James's Corporate Services
+44 20 7499 3916 (office)
+44 779 863 4398

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DRDGOLD is the world’s 9th largest primary gold producer, with mines in South Africa as well as Australasia, a key target for growth. For fiscal year 2004, DRDGOLD produced 905 000 ounces of gold, up from under 100 000 ounces a year in 1997, when current operations were amalgamated.

DRDGOLD has primary listings on the Johannesburg (JSE:DRD) and Australian (ASX:DRD) stock exchanges and secondary listings on NASDAQ (DROOY), the London and Port Moresby stock exchanges and the Paris and Brussels Bourses. Its shares are also traded on the regulated unofficial market of the Frankfurt Stock Exchange and the Berlin OTC Market.

For more information, please visit www.drdgold.com

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FORWARD-LOOKING STATEMENTS
Some of the information in this press release may contain projections or other forward-looking statements regarding future events or other financial performance, including forward-looking statements and information relating to DRDGOLD that are based on the beliefs of management, as well as assumptions made by and information currently available to management. When used in this press release, the words "estimate", "project", "believe", "anticipate", "intend", "expect" and similar expressions are intended to identify forward-looking statements. Such statements reflect management¹s current views with respect to future events and are subject to risks, uncertainties and assumptions. These statements include the Company's ability to continue as a going concern, its ability to successfully restructure the South African operations and, in particular the North West operations, its ability to significantly reduce its costs in South Africa, its ability to fund its future commitments, including the restructure of the North West Operations.

Many factors could cause 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 licenses or other governmental approvals, changes in DRDGOLD¹s competitive position, changes in business strategy, any major disruption in production at our 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 2004, which we filed with the United States Securities and Exchange Commission on 29 November 2004 on Form 20-F, as amended by the Form 20-F/A filed on December 3, 2004, and those detailed from time to time with the United States Securities and Exchange Commission. 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.