Media releases

Benefits from ‘tough love’ start to realise

Details

Published: Thursday, 24 August 2006 02:00

Operational results for the quarter and year ended 30 June 2006
Johannesburg, South Africa. 24 August 2006. DRDGOLD Limited (JSE: DRD; NASDAQ: DROOY), in its operational results for the quarter and year ended 30 June 2006, reported a 2% increase in attributable gold production to 131 857oz, reflecting a 4% increase in gold production to 90 181oz from its 85%-owned subsidiary, DRDGOLD South African Operations (Pty) Limited (DRDGOLD SA).

CEO Mark Wellesley-Wood said South African production for the year – 25% higher at 315 976oz – was an early measure of some of the benefits starting to arise from the completion of the re-positioning of DRDGOLD’s gold investments into two distinct regional entities – DRDGOLD SA in South Africa and Africa, and Emperor in the Pacific Rim.

“An enormously important consequence is that there will be no cross-subsidisation of one by the other going forward, a fact that, in the past, caused value destruction and consequently, enormous and understandable shareholder irritation.”

In South Africa, Wellesley-Wood said, the upswing in production could be attributed to:

• a generally, steady-state performance from Crown and the other surface recovery operations;
• better production at ERPM, notwithstanding faulting encountered and increased seismicity experienced towards the end of the June quarter; and
• the start of Blyvoor’s new, volume-driven plan.

DRDGOLD’s total attributable gold production for the year was 31% lower at 527 401oz, reflecting the impact of a 33% decline in Australasian gold production for the year to 211 425oz. Australasian gold production for the quarter was 3% lower at 41 676oz. Contributors were:

• ongoing west wall remediation at the Barrick-managed Porgera Joint Venture in Papua New Guinea (PNG), now 60% complete;
• underground flooding and bad weather at Tolukuma in PNG; and
• a planned shutdown at Vatukoula in Fiji to begin a shift from volume to value in mining, together with extensive infrastructural upgrades and employee re-training.

Costs

Group cash operating costs for the quarter were 12% lower at $452/oz.

For the year, Group cash operating costs were 16% higher at $433/oz, the driver being a 57% increase in Australasian cash operating costs to $362/oz. Those for the South African operations were 9% higher year on year at $480/oz.

Looking ahead

“Injections” of fresh board and senior management capacity, vital to their success going forward, had taken place at both DRDGOLD SA and Emperor in recent months, Wellesley-Wood said.

Also important for the future, there had been a 35%increase in DRDGOLD’s attributable reserves to 8.8 million oz and a 30% increase in attributable resources to 47.6 million oz.

“In South Africa, Blyvoor’s plan to deliver fewer, more profitable ounces continues and the mine has a new approach to its No 2 Sub-shaft project which is expected to substantially reduce the capital cost; ERPM’s great promise lies in the extension of high-grade mining into the adjacent Sallies lease area, with exploration drilling already under way; and for Crown much in the medium term depends on a successful outcome to its application to mine the Top Star dump in central Johannesburg.

“In Australasia, with Porgera in the capable hands of the new majority shareholder, Barrick, there is every reason to believe that turnaround forecasts will be met; at Tolukuma, a range of infrastructural improvements, coupled with mining of recently discovered bonanza Zine deposits, should lead to significant improvements; and at Vatukoula, higher grade mining, infrastructural improvements and the development of human capital means there is the very real prospect of profitable mining into the future.”

The way forward for DRDGOLD was clear, Wellesley-Wood said, and filled with brown- and greenfields growth opportunities in a climate of seemingly sustained gold price buoyancy.

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)

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

---

DRDGOLD is a medium-sized, unhedged gold producer with investments in South Africa and Australasia. Incontrovertibly bullish about its product, the company has recently concluded extensive refocusing of its gold interests.

In South Africa, the company has an 85% interest in DRDGOLD South African Operations (Pty) Limited (DRDGOLD SA), while in Australasia, it has a 78.9% interest in Emperor Mines Limited.

In the 2006 financial year, DRDGOLD SA contributed 60% or 315 976 ounces – of total attributable gold production of 527 401 ounces, and Emperor 211 425 ounces. At 30 June 2006, DRDGOLD’s total attributable resource base was 47.6 million ounces and its total attributable reserves were 8.8 million ounces.

For more information, please visit www.drdgold.com

---

Disclaimer:

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 2005, which we filed with the United States Securities and Exchange Commission on 15 December 2005 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.