Media releases

Gold production level maintained

Details

Published: Thursday, 23 October 2008 02:00

‘No time for heroics’: CEO

Johannesburg, South Africa, 23 October 2008. DRDGOLD Limited (JSE: DRD; NASDAQ: DROO) today announced that gold production for the quarter ended 30 September 2008 was maintained at 70 861 oz.

Revenue was 4% lower at R476.7 million, reflecting a 4% decline in the average gold price received to R216 297/kg.

Cash operating costs were 9% higher at R416.5 million, in part due to power utility Eskom’s 20% price increase and higher winter tariffs, leaving operating profit 55% lower at R57.2 million.

After accounting for a R47.6 million impairment relating to the restructuring of ERPM and income tax of R15.6 million, the company recorded a net loss of R8.8 million compared with the previous quarter’s profit of R44.5 million.

An 11% increase in production at the Crown surface retreatment operation to 23 985 oz helped to offset the impact of 7% and 2% declines in production at Blyvooruitzicht and ERPM respectively.

At Blyvoor, lower production of 32 054 oz, resulted mainly from the loss of 15 production days due to Section 54 closures imposed by the Department of Minerals and Energy and days of mourning called by the National Union of Mineworkers, following two fatalities resulting from seismicity-related rockfalls.

At ERPM, lower surface production, a result of a decline in the average surface grade, was the primary contributor to lower production of 14 822 oz.

CEO John Sayers, referring to the previously announced cessation of pumping of Central Witwatersrand Basin water from ERPM’s South West Vertical (SWV) Shaft on 6 October following the asphyxiation of two employees on 19 September, said a necessary consequence may be the suspension of underground drilling and blasting at ERPM’s Far East Vertical (FEV) Shaft.

The rising water level from the Central Witwatersrand Basin, together with water resulting from 2 100 tons of ice sent underground from surface daily to cool FEV Shaft’s working areas would exert unsustainable pressure on FEV Shaft’s pumping infrastructure, Sayers said.

“Without being able to continue to supply ice to the underground workings, we will be unable to maintain underground working temperatures to within regulated limits, and may have no other option but to suspend drilling and blasting operations.

“We will have to investigate what possibilities there may be to resume drilling and blasting at a later stage but it would seem that the necessary upgrade to FEV Shaft’s pumping capability could be both costly and lengthy.

“We are currently in discussions with labour, surrounding mines and the relevant government departments to consider these circumstances and how best to manage their consequences,” Sayers said.

Commenting on DRDGOLD’s outlook against the backdrop of the current turmoil in global markets, Sayers said: “This is no time for heroics but rather for careful consideration of all of the dynamics – those which are in our power to manage as well as those that are not – and to plan a rational and economical course ahead that will deliver positive results and value-add.”

DRDGOLD, he said, planned such a course for the next 12 months ahead, focusing on three areas – risk management, cost control and margin management. Reflecting on the company’s acquisition of a further 15% of the Elsburg gold surface retreatment joint venture, Sayers said this was expected to impact positively and quickly on costs and returns.

“Moving ahead, we envisage further steps to achieve a lower-risk, lower-cost, better-return profile, gaining as much leverage as we can from our long-established track record in surface retreatment.”

Queries:

South Africa
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)

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 2007, which we filed with the United States Securities and Exchange Commission on 14 December 2007 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.