| Fri 6 Feb 2009, 8:00 | | DRD - DRDGold - Interim Report To Shareholders For The Quarter And Six |
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DRD
DRDD
DRD - DRDGold - Interim Report To Shareholders For The Quarter And Six
Months Ended 31 December 2008
DRDGOLD LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1895/000926/06)
JSE share code: DRD
ISIN: ZAE000058723
Issuer code: DUSM
Nasdaq trading symbol: DROO
("DRDGOLD" or "the company")
INTERIM REPORT TO SHAREHOLDERS FOR THE QUARTER AND SIX MONTHS ENDED 31 DECEMBER
2008
GROUP RESULTS
- 65% increase in operating profit
- 30% rise in headline earnings per share
- 2% drop in cash operating costs
- Acquisition of remaining 35% in Elsburg JV (Ergo Phase 1)
- ERPM underground operations suspended
KEY FEATURES
KEY RESULTS SUMMARY
GROUP Quarter Quarter % Quarter
Dec 08 Sep 08 Change Dec 07
Gold production
Continuing operations oz 60 057 70 861 (15) 77 259
kg 1 868 2 204 (15) 2 403
Discontinued operations oz - - - 3 394
kg - - - 106
Group oz 60 057 70 861 (15) 80 653
kg 1 868 2 204 (15) 2 509
Cash operating costs
Continuing operations US$/oz 654 755 13 703
ZAR/kg 217 839 188 967 (15) 153 690
Discontinued operations US$/oz - - - 1 336
ZAR/kg - - - 281 613
Group US$/oz 654 755 13 730
ZAR/kg 217 839 188 967 (15) 159 094
Gold price received US$/oz 769 864 (11) 797
ZAR/kg 255 213 216 297 18 173 606
Capital expenditure US$ million 9.2 9.1 (1) 6.7
ZAR million 91.8 70.2 (31) 45.3
6 months 6 months 6 months
to Dec 08 to Jun 08 to Dec 07
Gold production
Continuing operations oz 130 918 141 589 166 416
kg 4 072 4 404 5 176
Discontinued operations oz - - 13 427
kg - - 417
Group oz 130 918 141 589 179 843
kg 4 072 4 404 5 593
Cash operating costs
Continuing operations US$/oz 709 678 639
ZAR/kg 202 212 167 950 142 966
Discontinued operations US$/oz - - 1 098
ZAR/kg - - 245 885
Group US$/oz 709 678 673
ZAR/kg 202 212 167 950 150 639
Gold price received US$/oz 821 918 739
ZAR/kg 234 150 225 696 165 254
Capital expenditure US$ million 18.3 24.7 11.8
ZAR million 162.0 185.4 81.8
STOCK ISSUED CAPITAL
376 673 613 ordinary no par value shares
5 000 000 cumulative preference shares
395 709 532 total ordinary no par value shares issued and committed
STOCK TRADED JSE NASDAQ
Avg. volume for the quarter per day (000) 1 185 1 700
% of issued stock traded (annualised) 82 118
Price - High R6.00 US$0.595
- Low R2.86 U$S0.285
- Close R5.50 U$S0.557
FORWARD LOOKING STATEMENTS
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 DRDGOLD serves, 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 limitations, those described in the section
entitled `Risk Factors` included in the annual report for the fiscal year ended
30 June 2008, which was filed with the United States Securities and Exchange
Commission on 12 December 2008 on Form 20-F. Shareholders should not place
undue reliance on these forward-looking statements, which speak only as of the
date thereof. DRDGOLD does 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.
OVERVIEW
Dear shareholder
Safety, health and environment
I report with deep regret the death of one employee in a work-related incident
during the quarter under review. Annanias Timbe died from injuries sustained
when he fell into the measuring flask of a loading box underground at the No 6
Shaft of Blyvooruitzicht Gold Mining Company Limited ("Blyvoor") on 10 October
2008.
Notwithstanding this sad event, Blyvoor`s performance in respect of all of the
key safety indicators (per million man hours) showed improvement in the quarter:
the Dressing Station Injury Frequency Rate ("DSIFR") improved from 35.33 to
28.64, the Disabling Injury Frequency Rate ("DIFR") from 10.71 to 9.73, the
Reportable Injury Frequency Rate ("RIFR") from 5.09 to 4.05, and the Fatal
Injury Frequency Rate ("FIFR") from 0.54 to 0.27. During the quarter, Blyvoor
spent R6.7 million on the purchase of additional self-contained self-rescuers
and R0.6 million on the expansion of its underground seismic monitoring network.
As one would expect, East Rand Proprietary Mines Limited ("ERPM") - the
underground operations of which were suspended at the end of October 2008 -
showed substantial improvement in respect of all of the key safety indicators.
Crown Gold Recoveries (Pty) Limited ("Crown") recorded deterioration only in
respect of its RIFR: from 2.28 to 2.84.
The behaviour-based safety initiative reported on in previous quarters was taken
forward during the quarter under review. A pilot behaviour-based safety
programme is scheduled to be implemented at Blyvoor`s No 6 Shaft during March
2009 and then rolled out to the rest of DRDGOLD`s operations.
With respect to health matters, we continued to make progress in the areas of
occupational hygiene, noise abatement and radiation protection.
Total expenditure on environmental issues during the quarter was some R7.2
million: R2.4 million at Blyvoor, the largest portion of which (R1.3 million)
was for slimes clean-up; R0.8 million at ERPM, most of which (R0.6 million) was
directed to the rehabilitation trust fund; and R4.0 million at Crown, most of
which was spent on site rehabilitation.
Production
Total gold production was 15% lower for the quarter under review at 60 057 oz,
reflecting declines in production at ERPM (a consequence of the discontinuation
of underground mining) and at Crown. At the latter, this was as a result both of
continued overall throughput reduction in order to manage diminishing tailings
deposition capacity and later than planned commissioning of the Top Star
reclamation site. Blyvoor, however, reported a 4% increase in production, due
mainly to an increase in surface yield.
Financial
Total revenue for the quarter was unchanged at R476.8 million and after
accounting for cash operating costs which were 2.0% lower at R406.9 million, and
gold in process of R24.4 million, operating profit was 65% higher at R94.3
million.
After deduction of depreciation of R17.1 million, provision for environmental
rehabilitation of R9.0 million, and retrenchment costs of R34.4 million, gross
profit from operating activities was R33.8 million.
Adjustments for financial liabilities measured at amortised cost, of R39.8
million, profit on the sale of assets and investments of R10.2 million and
finance income of R25.7 million took the profit before tax to R63.0 million.
Taxation totalled R29.6 million, leaving a net profit of R33.4 million compared
with the previous quarter`s R8.8 million net loss.
Corporate
As a consequence of the decision taken during the previous quarter to suspend
the underground operations of ERPM , we embarked upon a 60-day consultation
process in terms of Section 189A of the Labour Relations Act. This process
affected 1 700 affected employees and their representatives. We concluded
consultations during January 2009 and proceeded to retrench some 1 300
employees. Approximately 109 employees took voluntary retrenchment packages and
251 took transfers to other DRDGOLD operations or were retained to provide
interim maintenance services at ERPM. We have received several offers for ERPM`s
underground operations and have decided not to accept any of them.
During the quarter, we announced that we had reached agreement with the Mintails
group to acquire the remaining 35% of the Elsburg Gold Mining Joint Venture
("Elsburg JV"), the gold component of the Ergo Mining (Pty) Limited ("Ergo JV").
Conclusion of this acquisition will result in us owning 100% of the Elsburg JV.
We are very pleased with the progress achieved on Phase 1 of the Ergo JV.
Commissioning of the first carbon in leach circuit at the Brakpan plant began on
schedule during the December quarter and the project is thus well placed to
achieve the 600 000 tpm throughput planned by April 2009. None of our key
operating assumptions has, to date, proven flawed.
A very pleasing adjunct to the Ergo project is the creation - in conjunction
with the Ekurhuleni Municipality - of the Ekurhuleni Business Development
Academy ("EBDA"). With the Ergo Training Centre as a foundation, a fully
accredited, self-sustaining learning institution is being created which will be
of benefit to people from the surrounding communities and beyond. The intention
is to provide training in the fields of engineering, metallurgy, mining and
business support services. Good progress has been made on refurbishment of the
premises and the first training modules are expected to begin during February
2009.
Changes to the board
With effect from 1 January 2009, I assumed the role of Chief Executive Officer
("CEO") of DRDGOLD, succeeding John Sayers who retired from the board with
effect from 31 December 2008.
The board is grateful to John for the contribution he made during a very
challenging period. His strategy of stabilisation and focus transformed the
company into the profitable, South African gold miner that it is today. He was
instrumental in the divestment of our Australasian assets which, along with the
restructuring of our South African assets, has put the company in excellent
financial health. He will continue in a consultancy role, with special focus on
growth, so that the company can continue to benefit from his expertise and
experience.
Professor Douglas Blackmur`s appointment to the board of directors ceased on 28
November 2008, after a resolution relating to his re-election was withdrawn at
the annual general meeting.
Looking ahead
There appears to be even less certainty as to when the global economic crisis
will start to subside. In fact, fears of inflation and currency volatility seem
to be on the increase. These uncertain times may continue to provide the "safe
haven" attraction of gold, and support the gold price at its current high
levels.
Our Ergo surface retreatment project is coming to fruition now and should
therefore benefit from the higher gold price. We are also pleased that the Top
Star Project is finally up and running, to take advantage of the current gold
price trend.
With the global liquidity squeeze, we will remain cautious of long lead capital
projects, and avoid projects that we cannot fully cover with the cash and
facilities we have at hand. Our focus will therefore remain on increasing
efficiencies, managing risks, controlling costs carefully, and taking a very
disciplined approach to growth.
Niel Pretorius
Chief Executive Officer
NOTE REGARDING FINANCIAL INFORMATION
The condensed consolidated financial statements below have been prepared in
accordance with International Financial Reporting Standards ("IFRS") and IAS 34,
which is consistent with the accounting policies used in the audited annual
financial statements for the year ended 30 June 2008.
CONDENSED CONSOLIDATED Quarter Quarter Quarter
Statement of comprehensive Dec 08 Sep 08 Dec 07
Income R m R m R m
Unaudited Unaudited Unaudited
Continuing operations
Gold and silver revenue 476.8 476.7 416.9
Net operating costs (382.5) (419.5) (368.0)
Cash operating costs (406.9) (416.5) (369.3)
Movement in gold in process 24.4 (3.0) 1.3
Operating profit 94.3 57.2 48.9
Depreciation (17.1) (17.0) (19.9)
Movement in provision for
environmental rehabilitation (9.0) (12.1) (4.8)
Retrenchment costs (34.4) (0.9) (5.1)
Gross profit from operating activities 33.8 27.2 19.1
Impairments (4.8) (47.6) -
Administration expenses and
general costs (32.4) (6.1) (17.7)
Share-based payments (3.1) (1.1) (0.9)
Care and maintenance costs (3.1) (2.8) (2.8)
Financial liabilities measured
at amortised cost 39.8 7.3 (0.8)
Profit/(loss) on sale of assets
and investments 10.2 (1.6) -
Finance income 25.7 32.9 15.4
Finance expenses and unwinding
of provisions (3.1) (2.7) (4.8)
Profit before taxation 63.0 5.5 7.5
Income tax (8.6) (15.6) (3.5)
Deferred tax (21.0) 1.3 -
Profit/(loss) after taxation 33.4 (8.8) 4.0
Discontinued operations
Profit for the period
from discontinued operations - - 6.6
Profit on sale of assets and investments - - 118.3
Impairment from discontinued operations - - (44.4)
Net profit/(loss) for the period 33.4 (8.8) 84.5
Attributable to:
Ordinary shareholders of the company 54.7 3.1 93.2
Minority interest (21.3) (11.9) (8.7)
33.4 (8.8) 84.5
Other comprehensive income
Foreign exchange translation 7.8 (19.5) (54.9)
Mark-to-market of available for sale
investments - - -
Total comprehensive income/(loss)
for the period 41.2 (28.3) 29.6
Attributable to:
Ordinary shareholders of the company 62.5 (16.4) 38.3
Minority interest (21.3) (11.9) (8.7)
41.2 (28.3) 29.6
Reconciliation of headline profit
Net profit 54.7 3.1 93.2
Adjusted for:
Impairments 4.8 47.6 -
Impairment from discontinued operation - - 44.4
Profit on sale of discontinued
operations - - (118.3)
(Profit)/loss on sale of
assets and investments (9.8) 1.2 -
Minority share of headline adjustments 1.4 (12.4) (10.1)
Headline earnings 51.1 39.5 9.2
Headline earnings per share-cents 13.6 10.5 2.4
Basic earnings per share-cents 14.5 0.8 24.8
Diluted headline earnings 13.6 10.5 2.4
Diluted basic earnings per
share-cents 14.5 0.8 24.8
Calculated on the weighted average
ordinary shares issued of 376 598 733 376 573 381 376 141 981
CONDENSED CONSOLIDATED 6 months 6 months 6 months
Statement of comprehensive to Dec 08 to Jun 08 to Dec 07
income R m R m R m
Unaudited Unaudited Unaudited
Continuing operations
Gold and silver revenue 953.5 994.0 849.9
Net operating costs (802.0) (725.0) (739.3)
Cash operating costs (823.4) (739.6) (740.0)
Movement in gold in process 21.4 14.6 0.7
Operating profit 151.5 269.0 110.6
Depreciation (34.1) (29.4) (39.6)
Movement in provision for
environmental rehabilitation (21.1) (20.7) (9.5)
Retrenchment costs (35.3) (5.1) (6.2)
Gross profit from operating activities 61.0 213.8 55.3
Impairments (52.4) (63.9) -
Administration expenses and
general costs (38.5) (40.4) (40.5)
Share-based payments (4.2) (6.2) (0.4)
Care and maintenance costs (5.9) (9.9) (5.3)
Financial liabilities measured
at amortised cost 47.1 (88.5) (0.8)
Profit/(loss) on sale of assets
and investments 8.6 (0.9) 12.0
Finance income 58.6 62.6 13.1
Finance expenses and unwinding
of provisions (5.8) (0.7) (13.2)
Profit before taxation 68.5 65.9 20.2
Income tax (24.2) (9.8) (3.5)
Deferred tax (19.7) 81.6 -
Profit after taxation 24.6 137.7 16.7
Discontinued operations
Loss for the period
from discontinued operations - (1.8) (50.0)
Profit on sale of assets and investments - 42.9 1 126.3
Impairment from discontinued operations - (2.3) (44.4)
Net profit for the period 24.6 176.5 1 048.6
Attributable to:
Ordinary shareholders of the company 57.8 144.6 850.3
Minority interest (33.2) 31.9 198.3
24.6 176.5 1 048.6
Other comprehensive income
Foreign exchange translation (11.7) 20.9 62.7
Mark-to-market of available for sale
investments - 1.7 -
Total comprehensive income
for the period 12.9 199.1 1 111.3
Attributable to:
Ordinary shareholders of the company 46.1 167.2 913.0
Minority interest (33.2) 31.9 198.3
12.9 199.1 1 111.3
Reconciliation of headline profit/(loss)
Net profit 57.8 144.6 850.3
Adjusted for:
Impairments 52.4 63.9 -
Impairment from discontinued operation - 2.3 44.4
Profit on sale of discontinued
operations - (42.9) (1 126.3)
Profit on sale of assets and
Investments (8.6) (9.2) (12.0)
Minority share of headline adjustments(11.0) (5.1) 208.9
Headline earnings/(loss) 90.6 153.6 (34.7)
Headline earnings/(loss)
per share-cents 24.1 40.8 (9.2)
Basic earning per share-cents 15.3 38.4 226.3
Diluted headline earning/(loss)
per share-cents 24.1 40.8 (9.2)
Diluted basic earnings per share-cents 15.3 38.4 226.3
Calculated on the weighted average
ordinary shares issued of: 376 586 057 376 261 700 375 669 155
CONDENSED CONSOLIDATED As at As at As at As at
Statement of financial 31 Dec 08 30 Sep 08 30 Jun 08 31 Dec 07
position Rm Rm Rm Rm
Unaudited Unaudited Audited Unaudited
Property, plant and equipment 891.2 821.2 815.6 652.3
Non-current investments and
Other assets 64.8 65.3 65.3 57.7
Environmental rehabilitation
Trusts funds 120.7 116.0 110.8 82.8
Deferred tax 61.8 82.8 81.6 -
Current assets 944.9 1 036.6 1 189.2 956.6
Inventories 97.4 67.4 62.9 69.2
Trade and other receivables 223.5 145.2 240.5 123.2
Cash and cash equivalents 609.0 809.0 846.1 749.2
Assets classified as held
for sale 15.0 15.0 39.7 15.0
Total assets 2 083.4 2 121.9 2 262.5 1 749.4
Equity and Liabilities
Equity 1 285.4 1 240.7 1 305.5 1 130.2
Shareholders equity 1 257.4 1 191.4 1 244.3 1 083.5
Minority shareholders interest 28.0 49.3 61.2 46.7
Long-term liabilities 93.8 120.8 125.7 49.2
Post retirement and other
employee benefits 24.1 23.4 22.7 21.5
Provision for environmental
rehabilitation 405.7 394.9 381.3 288.3
Current liabilities 274.4 342.1 427.3 260.2
Trade and other payables 262.2 270.3 387.4 260.2
Short term liabilities 12.2 34.2 39.9 -
Liabilities classified
as held for sale - 37.6 - -
Total equity and liabilites 2 083.4 2 121.9 2262.5 1 749.4
CONDENSED Quarter Quarter Quarter
Statement of changes in equity Dec 08 Sep 08 Dec 07
Rm Rm Rm
Unaudited Unaudited Unaudited
Balance at the beginning of
the period 1 240.7 1 305.5 1 251.8
Share capital issued 0.4 - -
for acquisition finance and cash - - -
for share options exercised 0.4 - -
for costs - - -
Increase in share-based
payment reserve 3.1 1.1 0.9
Net profit attributed to
ordinary shareholders 54.7 3.1 93.2
Net (loss)/profit attributed to
minority shareholders (21.3) (11.9) (8.7)
Dividends declared - (37.6) -
Decrease in minorities - - (152.1)
Other comprehensive income 7.8 (19.5) (54.9)
Balance as at the end of the
period 1 285.4 1 240.7 1 130.2
CONDENSED 6 months 6 months 6 months
Statement of changes in equity Dec 08 Jun 08 Dec 07
Rm Rm Rm
Unaudited Unaudited Unaudited
Balance at the beginning of
the period 1 305.5 1 130.2 143.5
Share capital issued 0.4 2.0 27.1
for acquisition finance and cash - - 28.0
for share options exercised 0.4 2.3 -
for costs - (0.3) (0.9)
Increase in share-based
payment reserve 4.2 6.2 0.4
Net profit attributed to
ordinary shareholders 57.8 144.6 850.3
Net (loss)/profit attributed to
minority shareholders (33.2) 31.9 198.3
Dividends declared (37.6) - -
Decrease in minorities - (32.0) (152.1)
Other comprehensive income (11.7) 22.6 62.7
Balance as at the end of the
period 1 285.4 1 305.5 1 130.2
CONDENSED CONSOLIDATED Quarter Quarter Quarter
Statement of cash flows Dec 08 Sep 08 Dec 07
Rm Rm Rm
Unaudited Unaudited Unaudited
Net cash in/(out) flow
from operations 29.5 25.3 (360.2)
Net cash (out)/in flow
from investing activities (81.6) (46.4) 240.9
Net cash (out)/in flow from
financing activities (149.5) (2.6) 20.1
Decrease in cash and
cash equivalents (201.6) (23.7) (99.2)
Translation adjustment 1.6 (13.4) (48.9)
Opening cash and cash equivalents 809.0 846.1 897.3
Closing cash and cash equivalents 609.0 809.0 749.2
Reconciliation of net
cash outflow from operations
Profit before taxation 63.0 5.5 7.5
Net operating loss from
discontinued operations - - 6.6
63.0 5.5 14.1
Adjusted for:
Movement in gold process (24.4) 3.0 (1.3)
Depreciation and impairments 21.9 64.6 19.9
Movement in provision for
Environmental rehabilitation 9.0 12.1 4.8
Share-based payments 3.1 1.1 0.9
(Profit)/loss on derivative financial
instruments (39.8) (7.3) 0.8
(Profit)/loss on sale of assets
and investments (10.2) 1.6 -
Finance expenses and unwinding of
provisions (1.8) (1.6) (3.9)
Growth in environmental trust funds (3.3) (3.5) (2.0)
Other non cash items 1.8 0.9 (18.4)
Taxation paid (24.9) - (1.6)
Working capital changes 35.1 (51.1) (373.5)
Net cash in/(out)flow 29.5 25.3 (360.2)
CONDENSED CONSOLIDATED 6 months 6 months 6 months
Statement of cash flows Dec 08 Jun 08 Dec 07
Rm Rm Rm
Unaudited Unaudited Unaudited
Net cash in/(out) flow
from operations 54.8 231.0 (669.9)
Net cash (out)/in flow
from investing activities (128.0) (186.5) 2 111.3
Net cash (out)/in flow from
financing activities (152.1) 27.6 (1 039.5)
(Decrease)/increase in cash
and cash equivalents (225.3) 72.1 401.9
Translation adjustment (11.8) 24.8 209.6
Opening cash and cash equivalents 846.1 749.2 137.7
Closing cash and cash equivalents 609.0 846.1 749.2
Reconciliation of net cash outflow
from operations
Profit before tax 68.5 65.9 20.2
Net operating loss from
discontinued operations - (1.8) (50.0)
68.5 64.1 (29.8)
Adjusted for:
Movement in gold process (21.4) (14.6) (0.7)
Depreciation and impairments 86.5 93.3 39.6
Movement in provision for
Environmental rehabilitation 21.1 20.7 9.5
Share-based payments 4.2 6.2 0.4
(Profit)/loss on derivative financial
instruments (47.1) 88.5 0.8
(Profit)/loss on sale of assets
and investments (8.6) 0.9 (12.0)
Finance expenses and unwinding of
provisions (3.4) 3.1 (7.8)
Growth in environmental trust funds (6.8) (6.3) (3.8)
Other non cash items 2.7 (29.3) 17.8
Taxation paid (24.9) (11.8) (35.8)
Working capital changes (16.0) 16.2 (648.1)
Net cash in/(out)flow
from operations 54.8 231.0 (669.9)
KEY OPERATING AND FINANCIAL RESULTS (Unaudited)
CONTINUING OPERATIONS
Blyvoor Quarter Quarter % Quarter
Dec 08 Sep 08 Change Dec 07
Ore milled
Underground t`000 150 154 (3) 164
Surface t`000 889 884 1 937
Total t`000 1 039 1 038 - 1 101
Yield
Underground g/t 4.56 4.65 (2) 4.80
Surface g/t 0.40 0.32 25 0.30
Total g/t 1.00 0.96 4 0.97
Gold produced
Underground oz 21 991 23 020 (4) 25 302
kg 684 716 (4) 787
Surface oz 11 414 9 034 26 9 131
kg 355 281 26 284
Total oz 33 405 32 054 4 34 333
kg 1 039 997 4 1 071
Cash operating costs
Underground US$/oz 765 934 18 823
ZAR/kg 252 617 233 929 (8) 179 621
ZAR/t 1 152 1 088 (6) 862
Surface US$/oz 251 451 44 418
ZAR/kg 84 020 112 836 26 91 415
ZAR/t 34 36 6 28
Total US$/oz 590 798 26 715
ZAR/kg 195 012 199 799 2 156 232
ZAR/t 195 192 (2) 152
Cash operating profit
US$ m 6.8 2.1 224 2.9
ZAR m 62.3 16.7 273 19.6
Capital expenditure (net)
US$ m 3.1 2.2 (41) 2.5
ZAR m 29.2 17.4 (68) 17.0
6 months 6 months 6 months
Dec 08 Jun 08 Dec 07
Ore milled
Underground t`000 304 329 358
Surface t`000 1 773 1 926 1 793
Total t`000 2 077 2 255 2 151
Yield
Underground g/t 4.61 4.46 4.92
Surface g/t 0.36 0.32 0.31
Total g/t 0.98 0.92 1.07
Gold produced
Underground oz 45 011 47 164 56 649
kg 1 400 1 467 1 762
Surface oz 20 448 19 740 17 619
kg 636 614 548
Total oz 65 459 66 904 74 268
kg 2 036 2 081 2 310
Cash operating costs
Underground US$/oz 852 815 736
ZAR/kg 243 059 201 706 164 709
ZAR/t 1 119 899 811
Surface US$/oz 339 364 412
ZAR/kg 96 752 89 896 92 175
ZAR/t 35 29 28
Total US$/oz 692 682 659
ZAR/kg 197 356 168 716 147 502
ZAR/t 193 156 158
Cash operating profit
US$ m 8.9 15.7 5.7
ZAR m 79.0 116.8 39.6
Capital expenditure (net)
US$ m 5.3 5.8 4.4
ZAR m 46.6 44.1 30.7
Total gold production rose by 4% to 33 405 oz, driven by a 26% increase in gold
produced from surface sources to 11 414 oz.
Underground gold production was 4% lower at 21 991 oz, reflecting both a 3%
decline in underground throughput to 150 000 t and a 2% decline in the average
underground yield to 4.56 g/t. The lower underground gold production is
reflective both of a slower than expected return to normal levels of operation
following the previous quarter`s Section 54 closures and of the Section 54
closure that followed a fatal accident during the quarter under review, which
resulted in the loss of two days of production.
Higher surface gold production resulted primarily from a 25% increase in the
average surface yield to 0.40 g/t, a consequence of recovering the lower
portions of the main tailings dams where yields are characteristically higher.
Surface throughput rose by 1% to 889 000 t.
Total cash operating costs were 2% lower at R195 012/kg, a consequence of the
increase in total gold production. Underground cash operating costs increased
by 8% to R252 617/kg and surface cash operating costs declined by 26% to R84
020/kg.
Cash operating profit was 273% higher at R62.3 million, reflecting higher gold
production and a much stronger average Rand gold price received, the latter
resulting from a more favourable average Rand/US Dollar exchange rate during the
reporting period.
Capital expenditure increased by 68% to R29.2 million, a major line item being
the purchase of additional self-contained self-rescuers.
Production build-up on the Way Ahead Project continues according to plan with a
rate of 610 m2 per month being achieved by the end of the quarter under review
and 1 200 m2 per month targeted by the end of the June 2009 quarter.
The 15/29 Incline Project has encountered a slight delay due to late supplier
delivery of the winders.
Some 100 former production employees of the ERPM mine which has been placed on
care and maintenance have been transferred to Blyvoor. They will be deployed to
a project to open up more face length on the Main Reef, the objective being to
boost volumes at real cost levels.
Crown Quarter Quarter % Quarter
Dec 08 Sep 08 Change Dec 07
Ore milled t`000 1 531 2 066 (26) 2 138
Yield g/t 0.36 0.36 - 0.30
Gold produced oz 17 747 23 985 (26) 20 737
kg 552 746 (26) 645
Cash operating costs
US$/oz 575 544 (6) 617
ZAR/kg 189 848 136 075 (40) 134 798
ZAR/t 68 49 (39) 41
Cash operating profit
US$ m 3.1 7.7 (60) 3.6
ZAR m 36.3 60.0 (40) 24.6
Capital expenditure (net)
US$ m 1.2 1.6 25 0.3
ZAR m 12.8 12.2 (5) 2.2
6 months 6 months 6 months
Dec 08 Jun 08 Dec 07
Ore milled t`000 3 597 3 950 4 285
Yield g/t 0.36 0.33 0.33
Gold produced oz 41 732 42 246 45 108
kg 1 298 1 314 1 403
Cash operating costs
US$/oz 557 543 562
ZAR/kg 158 943 134 479 125 628
ZAR/t 57 48 41
Cash operating profit
US$ m 10.8 16.3 7.7
ZAR m 96.3 121.8 53.9
Capital expenditure (net)
US$ m 2.8 5.3 0.5
ZAR m 25.0 38.4 3.7
Total gold production was 26% lower at 17 747 oz, resulting from a 26% decline
in total throughput to 1 531 000 t. The average yield was unchanged at 0.36 g/t.
Reasons for the lower throughput are twofold: continuing implementation of the
decision announced in the previous quarter to adjust throughput downward to 400
000 tpm in order to address the diminishing capacity of the current tailings
deposition site, and a delay of approximately one month in commissioning the Top
Star reclamation site.
Regarding the creation of additional tailings deposition capacity, various
options -including construction of a pipeline to Ergo`s Withok tailings
deposition site - are being considered currently.
While two factors delayed the Top Star commissioning - slowing of construction
to contain dust pollution during the dry months before the onset of the summer
rains, and removal of higher volumes of overburden than was initially
anticipated - monthly throughput had reached the targeted 100 000 tpm by the end
of the quarter. This is half the planned full recovery rate.
Due to lower gold production, Crown`s cash operating costs for the quarter were
40% higher at R189 848/kg and cash operating profit 40% lower at R36.3 million.
Capital expenditure was 5% higher at R12.8 million, the major components of
which were completion of Top Star construction and tailings deposition site
maintenance.
ERPM Quarter Quarter % Quarter
Dec 08 Sep 08 Change Dec 07
Ore milled
Underground t`000 36 64 (44) 72
Surface t`000 298 379 (21) 504
Total t`000 334 443 (25) 576
Yield
Underground g/t 5.19 5.30 (2) 7.11
Surface g/t 0.30 0.32 (6) 0.35
Total g/t 0.83 1.04 (20) 1.19
Gold produced
Underground oz 6 011 10 899 (45) 16 463
kg 187 339 (45) 512
Surface oz 2 894 3 923 (26) 5 626
kg 90 122 (26) 175
Total oz 8 905 14 822 (40) 22 089
kg 277 461 (40) 687
Cash operating costs
Underground US$/oz 1 005 1 062 5 777
ZAR/kg 354 011 265 794 (33) 170 171
ZAR/t 1 839 1 408 (31) 1 210
Surface US$/oz 1 157 840 (38) 729
ZAR/kg 370 122 210 385 (76) 159 537
ZAR/t 70 68 (3) 55
Total US$/oz 1 054 1 003 (5) 765
ZAR/kg 359 245 251 130 (43) 167 463
ZAR/t 194 261 26 200
Cash operating (loss)/profit
US$ m (3.0) (2.1) (43) 0.6
ZAR m (28.8) (16.5) (75) 3.5
Capital expenditure (net)
US$ m 2.5 0.6 (317) 1.3
ZAR m 23.5 4.3 (447) 9.0
6 months 6 months 6 months
Dec 08 Jun 08 Dec 07
Ore milled
Underground t`000 100 146 157
Surface t`000 677 849 1 010
Total t`000 777 995 1 167
Yield
Underground g/t 5.26 4.83 6.76
Surface g/t 0.31 0.36 0.40
Total g/t 0.95 1.01 1.25
Gold produced
Underground oz 16 910 22 665 34 147
kg 526 705 1 062
Surface oz 6 817 9 774 12 893
kg 212 304 401
Total oz 23 727 32 439 47 040
kg 738 1 009 1 463
Cash operating costs
Underground US$/oz 1 042 966 710
ZAR/kg 297 156 239 404 158 765
ZAR/t 1 563 1 156 1 072
Surface US$/oz 975 564 606
ZAR/kg 278 198 141 674 135 653
ZAR/t 69 51 54
Total US$/oz 1 022 845 681
ZAR/kg 291 710 209 959 152 430
ZAR/t 225 213 191
Cash operating (loss)/profit
US$ m (5.1) 2.0 2.4
ZAR m (45.3) 15.7 16.5
Capital expenditure (net)
US$ m 3.1 1.9 2.2
ZAR m 27.8 14.9 15.2
ERPM`s results reflect the effect of only one month of underground mining - a
consequence of the previously-announced suspension of the underground mining
operations.
Total gold produced was 40% lower at 8 905 oz, reflecting a 45% decline in
underground gold production to 6 011 oz and a 26% decline in surface gold
production to 2 894 oz.
Underground throughput for the month of October was 36 000 t, down 44% from the
previous full quarter`s 64 000 t. The average yield was 2% lower at 5.19 g/t.
Lower surface gold production resulted from a 6% decline in the average yield to
0.30 g/t as recovery of lower grade material from the southern face of the Cason
dump continued. Surface throughput was down 21% to 298 000 t.
Total cash operating costs were 43% higher at R359 245/kg, reflecting the lower
gold production. Underground cash operating costs rose by 33% to R354 011/kg and
surface cash operating costs by 76% to R370 122/kg.
The cash operating loss, quarter on quarter, increased by 75% to R28.8 million.
Capital expenditure increased to R23.5 million from R4.3 million, reflecting a
land acquisition forming part of an overall plan to realise value for DRDGOLD`s
property holdings.
EXPLORATION AND PROSPECTING
ERPM
All exploration drilling has been terminated due to ERPM`s underground
operations having been suspended. Final resource estimation for ERPM began
during January 2009.
Extension 1
The following mining activities took place in the Extension 1 area in accordance
with the revised prospecting programme (all figures in situ):
Area M2 SW G/t Tons Grams Remarks
71e 2e 40 1.10 11.9 121 1 435
71e 3ae 198 1.37 0.1 743 74 Faulting
71e 3e 34 1.21 5.4 113 609 Faulting
Extension 2
Copies of the Sallies exploration borehole logging and reports from Anglogold
Ashanti were exchanged for sampling data and reports from Blyvoor.
Blyvoor
The exploration hole at 38-33 intersected Main Reef and assayed at 1656 cmg/t.
Cover drilling is in progress at 41-18, 38-28 and 38-21. The geologist from ERPM
has been seconded to Blyvoor to assist with the Main Reef exploration.
Three recovery percentage checks for the Doornfontein No 1, 2 and 3 slimes dams
were completed and returned respective values of 37.6, 33.4 and 43.9%.
Crown/Ergo
Phase 2 drilling of the Marievale complex has been completed and a survey of all
the Marievale slimes dams is in progress.
DISCONTINUED OPERATIONS
Tolukuma Quarter Quarter % Quarter
Dec 08 Sep 08 Change Dec 07
Ore milled t`000 - - - 11
Yield g/t - - - 9.64
Gold produced oz - - - 3 394
kg - - - 106
Cash operating costs
US$/oz - - - 1 336
ZAR/kg - - - 292 887
ZAR/t - - - 2 822
Cash operating loss
US$ m - - - (1.7)
ZAR m - - - (11.5)
Capital expenditure (net)
US$ m - - - 0.1
ZAR m - - - 0.3
6 months 6 months 6 months
Dec 08 Jun 08 Dec 07
Ore milled t`000 - - 56
Yield g/t - - 7.45
Gold produced oz - - 13 427
kg - - 417
Cash operating costs
US$/oz - - 1 098
ZAR/kg - - 248 751
ZAR/t - - 1 852
Cash operating loss
US$ m - - (2.6)
ZAR m - - (18.0)
Capital expenditure (net)
US$ m - - 2.2
ZAR m - - 15.3
CASH OPERATING COSTS RECONCILIATION
CONTINUING OPERATIONS (R000 unless otherwise stated)
Crown ERPM Blyvoor Total
Total cash costs Dec 08 Qtr 113 822 134 971 190 908 439 701
Sep 08 Qtr 109 130 121 793 212 802 443 725
Dec 08 Ytd 222 952 256 764 403 710 883 426
Movement in gold in process
Dec 08 Qtr (91) 3 796 20 701 24 406
Sep 08 Qtr 1 243 1 991 (6 245) (3 011)
Dec 08 Ytd 1 152 5 787 14 456 21 395
Less: production taxes,
rehabilitation and other costs
Dec 08 Qtr 5 185 4 028 4 287 13 500
Sep 08 Qtr 5 111 3 035 3 162 11 308
Dec 08 Ytd 10 296 7 063 7 449 24 808
Less: Retrenchment costs
Dec 08 Qtr - 31 111 - 31 111
Sep 08 Qtr - 858 - 858
Dec 08 Ytd - 31 969 - 31 969
Less: Corporate and general
administration costs
Dec 08 Qtr 3 750 4 117 4 705 12 572
Sep 08 Qtr 3 750 4 120 4 195 12 065
Dec 08 Ytd 7 500 8 237 8 900 24 637
Cash operating costs
Dec 08 Qtr 104 796 99 511 202 617 406 924
Sep 08 Qtr 101 512 115 771 199 200 416 483
Dec 08 Ytd 206 308 215 282 401 817 823 407
Gold produced (kgs)
Dec 08 Qtr 552 277 1 039 1 868
Sep 08 Qtr 746 461 997 2 204
Dec 08 Ytd 1 298 738 2 036 4 072
Cash operating costs (R/kg)
Dec 08 Qtr 189 848 359 245 195 012 217 839
Sep 08 Qtr 136 075 251 130 199 799 188 967
Dec 08 Ytd 158 943 291 710 197 356 202 212
Total Cash operating costs (US$/oz)
Dec 08 Qtr 575 1 054 590 654
Sep 08 Qtr 544 1 003 798 755
Dec 08 Ytd 557 1 022 692 709
There has been no material change to the technical information relating to,
inter alia, the Group`s reserves and resources, legal title to its mining and
prospecting rights and legal proceedings relating to its mining and exploration
activities as disclosed in the company`s annual report of 30 June 2008 and
subsequent public announcements.
DIRECTORS - (*British)(**American)
Executive:
DJ (Niel) Pretorius (Chief Executive Officer)
CC Barnes (Chief Financial Officer)
Non-executives:
J Turk **
Independent non-executives:
GC Campbell*(Non-Executive Chairman); RP Hume; EA Jeneker
Company Secretary:
TJ Gwebu
INVESTOR RELATIONS
For further information, contact Niel Pretorius at:
Tel: (+27-11) 219-8700, Fax: (+27-11) 476-2637,
website: http://www.drdgold.com
Ebsco House 4, 299 Pendoring Avenue,
Blackheath, Randburg, South Africa.
PO Box 390,
Maraisburg, 1700,
South Africa.
Randburg
6 February 2009
Sponsor
QuestCo Sponsors (Pty) Limited
Date: 06/02/2009 08:00:01 Produced by the JSE SENS Department.
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