Media releases

7% increase in operating profit; cost increases contained

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Published: Thursday, 25 August 2005 02:00

DRDGOLD today reported a 7% increase in Group cash operating profit to R157.1 million for the second half of FY05

Johannesburg, South Africa. 25 August 2005. DRDGOLD Limited (JSE: DRD; NASDAQ: DROOY; ASX: DRD; POM SoX: DRD) today reported a 7% increase in Group cash operating profit to R157.1 million for the second half of FY05.

DRDGOLD CEO Mark Wellesley-Wood said that this result, together with a 3% increase year on year to R304.5 million, reflected both a steady recovery of the company’s South African operations from “radical, largely Rand-induced restructuring” and a comparatively sound performance overall from its Australian operations.

“While past events have taught us never to be sanguine, we have entered FY06 in much better shape – materially and psychologically – than we entered FY05,” he said.

Although the average US Dollar gold price received year on year was 8% higher at US$423 per ounce, the ravages of Rand strength were revealed in the average Rand gold price received in FY05 – more than 2% down at R84 690 per kilogram, Wellesley-Wood commented.

In the second half, the average US Dollar price received was almost 2% higher than in the first half at US$428 per ounce and, ‘fortuitously’, a moderate weakening in the Rand resulted in an increase of more than 2% in the average Rand gold price received to R85 771 per kilogram.

“This was still lower, however, than the average for FY04 of R86 788 per kilogram.”

While Group cash operating costs year on year were 9% higher at US$375 per ounce, the benefits of the African restructuring were apparent from the containment of the cash operating cost increase in the second half to little more than 1% compared with the first half, Wellesley-Wood said.

“Were it not for a 23% increase in cash operating costs for the Australasian operations as a whole half-year on half-year, and the residual impact of the discontinued North West Operations’ high costs, we would have done even better.”

Although net operating profit for the second half of FY05 was 34% higher at R41.2 million, an impairment of R127.4 million on DRDGOLD’s 45.33% investment in Emperor to A$0.28c per share was the major contributor to a R140.0 million pre-tax loss.

“We could have hoped, given the difficulties faced by our South African business during the year, that our Australasian interests had not come somewhat ‘off the boil’ in the second half.

“However, as the South African operations have been restored to rights, we have been able to redirect financial and human resources to Australasia, building our support systems there just when they are needed.

“Specifically, we have bolstered our Brisbane office with the re-location of Michael Marriott from South Africa as our Chief Operating Officer in Australasia, joining Divisional Director Richard Johnson and Financial Manager André Labuschagne, and we have appointed Sandra Spencer as Human Resources Manager. At Emperor’s Vatukoula Mine, Sean O’Connor from South Africa has become General Manager as part of the finance and operating support package we announced recently.

The difference is being felt already,” Wellesley-Wood said.

Shareholders’ equity increased to R627.1 million in the second half of FY05 compared with R428.1 million in the first half, and the current ratio from 0.84 to 1.45. Cash and cash equivalents increased from R143.1 million to R241.2 million.

Queries:

South Africa
Investor and Media Relations
Ilja Graulich, DRDGOLD
+27 11 219 8707 (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 Group International
+1 646 452 2334 (office)

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 an intermediate unhedged gold producer with mines in South Africa as well as Australasia. The company’s production profile is split equally between its highly leveraged SA operations and its low cost, cash generative offshore mines.

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 us that are based on the beliefs of our management, as well as assumptions made by and information currently available to our management. When used in this release, the words "estimate", "project", "believe", anticipate", "intend", "expect" and similar expressions are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to risks, uncertainties and assumptions.

Many factors could cause our 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 us or difficulties in maintaining necessary licenses or other governmental approvals, changes in our 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 29 April 2005 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.