| Wed 27 Oct 2004, 8:32 | | Report on Activities for the First Quarter |
|
DRDGOLD - Report on Activities for the First Quarter ended 30 September 2004 of
the 2005 Financial Year
DURBAN ROODEPOORT DEEP, LIMITED
(DRDGOLD)
(Incorporated in the Republic of South Africa)
(Registration No.1895/000926/06)
ARBN 086 277616
JSE trading symbol: DUR
ISIN Code: ZAE000015079
Issuer code: DUSM
NASDAQ trading symbol: DROOY
ASX trading symbol: DRD
REPORT ON ACTIVITIES FOR THE FIRST QUARTER ENDED 3O SEPTEMBER 2004 OF THE 2005
FINANCIAL YEAR
GROUP RESULTS
(Unaudited)
CHANGE TO FINANCIAL REPORTING FOR 2004/2005
In line with practice in Australia and the United States, DRDGOLD will
henceforth report as follows:
Quarters 1 and 3: production statistics, operational performance and exploration
results;
Quarters 2 and 4: as above, with either interim of final financial results, in
US GAAP, which is DRDGOLD`s primary reporting convention, and SA GAAP, in
accordance with the listing requirements of the JSE Securities Exchange South
Africa.
KEY FEATURES
Continued strong performance from offshore operations
Further good exploration results at Tolukuma
Emperor stake increased to 45.33%
ERPM back to break-even
Blyvoor 60-day review completed
South African operations restructured
KEY RESULTS SUMMARY
GROUP Quarter Quarter Quarter
Sep 2004 Jun 2004 Sep 2003
Gold production (attributable) oz 220 524 228 465 198 493
kg 6 859 7 106 6 174
Gold price received US$/oz 403 395 362
R/kg 82 785 85 804 86 625
Capital expenditure US$ m 6.0 4.5 4.7
ZAR m 38.9 30.1 35.0
STOCK
ISSUED CAPITAL
248 389 465 ordinary no par value shares
5 000 000 cumulative preference shares
Total ordinary no par value shares issued and committed: 274 267 728
STOCK TRADED JSE ASX NASDAQ FRANKFURT
Avg. volume for the quarter per day (000) 200 32 2 851 95
% of issued stock traded (annualised) 21% 3% 300% 10%
Price - High R15.80 A$3.72 US$2.64 Euro 2.13
- Low R10.30 A$2.30 US$1.63 Euro 1.27
- Close R12.25 A$2.60 US$2.01 Euro 1.62
PRODUCTION
Gold production for the quarter was slightly down on the previous quarter,
mainly as a result of lower production out of South Africa, specifically
Blyvooruitzicht (Blyvoor), which went though a 60-day review, resulting in a
slowdown in production. The percentage of the Group`s production from offshore
has increased from 31% to 35% due in part to the inclusion of our 45.33%
attributable share in production from Emperor from August 2004.
COSTS
Unit costs were slightly up as a direct result of the lower ounces produced in
South Africa, but with the restructuring complete, it is anticipated that the
second quarter`s costs will come back in line with those recorded in the June
quarter.
SAFETY
During the period under review, the Company recorded no fatalities at its
operations. Blyvoor Nos. 5 and 6 shafts achieved one million fatality free
shifts on 30 August and 3 September, 2004 respectively. North West Operations
achieved 500 000 fatality free shifts on 2 September, 2004. Regrettably, after
the quarter-end, Blyvoor recorded a fatality.
North West Operations` lost time injury rate continues to show an improvement,
partly attributable to the implementation of a new safety awareness
communication strategy using a green, yellow and red safety card system.
Blyvooruitzicht is leading the Association of West Rand Mines Inter-Mine Safety
Competition with a lost time injury frequency rate of 6,52. This compares
favourably with the second-placed mine, belonging to another group, at 9,36.
At its Tolukuma operation, the Company continues to show very high safety
standards. The mine has achieved 90 lost time injury free days, after the
previous best of 361 injury free days was broken shortly before the financial
year end.
GOLD MARKET REVIEW
The average gold price received for the quarter was US$403 per ounce (R82 785
per kilogram) compared to US$395 per ounce (R85 804 per kilogram) the previous
quarter. This compares to the average London PM fix for the same period of
US$401.30 per ounce (R82 286 per kilogram).
The performance of the gold price in rand terms during the quarter, however,
featured two distinct halves due to movements in the exchange rate. The first
six weeks saw the lowest rand gold price since 2000 at an average of R78 534 per
kilogram. Following the interest rate cut of 50 basis points on 12 August 2004,
the Rand/US$ exchange rate moved from around R6.22/US$1 to R6.75/US$1, resulting
in the gold price for the second half of the quarter averaging R85 697 per
kilogram.
CORPORATE DEVELOPMENTS
The Company`s takeover bid for the ASX-listed Fijian gold miner, Emperor Mines
Limited (`Emperor`), closed on 30 July 2004, resulting in DRDGOLD holding 45.33%
of Emperor. DRDGOLD`s Executive Chairman, Mark Wellesley-Wood, has since been
appointed Managing Director of Emperor on an interim basis, and DRDGOLD`s
Divisional Director - Australasia, Richard Johnson, has been appointed to the
Emperor board. DRDGOLD now has three nominees on the six-member Emperor board,
David Baker being the other non-executive director nominated by DRDGOLD.
Emperor is in the process of completing a rights issue to raise approximately
A$20.4 million (US$14.6 million) to fund a portion of Emperor`s Phase Two
capital expansion project at its Vatukoula mine in Fiji, as well as to fund its
short-term working capital requirements. DRDGOLD has agreed to participate in
the rights issue and to subscribe for any shortfall under a shortfall facility
offered by Emperor in connection with that rights issue (subject to limited
termination rights).
In response to an application by three shareholders of Emperor, the Australian
Takeovers Panel has made a declaration of unacceptable circumstances in relation
to the Emperor rights issue, and DRDGOLD`s participation in the rights issue,
and has made various orders (including an order that DRDGOLD sells down any
shares acquired through the shortfall facility). DRDGOLD has applied for a
review of that decision.
In other developments:
DRDGOLD listed on the Port Moresby Stock Exchange on 18 August 2004, reflecting
the Company`s growth as one of Papua New Guinea`s major gold producers;
as announced on 29 September 2004, the Company intends to seek shareholders`
approval to change its name to DRDGOLD Limited at the forthcoming AGM on 26
November 2004; and
on 30 September 2004, shareholders approved the increase in the Company`s
authorized share capital from 300 million shares to 600 million shares to
facilitate its acquisition and growth strategies.
DRDGOLD wins R35.7 million (plus cost and interest) case against JCI Gold/CAM.
AUSTRALASIAN OPERATIONS Quarter Quarter Quarter
Sep 2004 Jun 2004 Sep 2003
Gold production (attributable) oz 77 387 70 990 21 283
kg 2 407 2 208 662
Capital expenditure US$ m 3.8 1.7 0.6
ZAR m 24.2 11.7 4.7
The increase in gold production was due mainly to the inclusion of DRDGOLD`s
45.33% share of Emperor`s production from August 2004.
Porgera Quarter Quarter % Change Quarter
Sep 2004 Jun 2004 Sep 2003
Ore milled t000`s 288 327 (12) -
Yield g/t 5.20 4.74 10 -
Gold produced kg 1 498 1 550 (3) -
oz 48 162 49 834 (3) -
Although ore milled at Porgera was slightly lower than the previous quarter,
improved grades assisted with continued good gold production performance.
Tolukuma Quarter Quarter % Change Quarter
Sep 2004 Jun 2004 Sep 2003
Ore milled t000`s 52 52 - 44
Yield g/t 11.65 12.65 (8) 15.05
Gold produced kg 606 658 (8) 662
oz 19 484 21 156 (8) 21 283
Average labour strength 813 751 (8) 472
Tolukuma`s 18-month run of exceeding 7 000 plus ounces of production per month
was broken in August when the mine fell slightly short of its target. Production
in the September quarter was hampered by lower grades being mined from the
Gulbadi vein.
A feasibility study is nearing completion for a proposed extension of the Zine
open pit to the south of the first pit that was completed earlier this year.
This study is based on infill drilling that has been carried out this year.
Emperor(45.33% attributable)* Quarter Quarter % Change Quarter
Sep 2004 Jun 2004 Sep 2003
Ore milled t`000 38 - - -
Yield g/t 7.97 - - -
Gold produced kg 303 - - -
oz 9 741 - - -
* Emperor accounted for on an equity basis from 1 August 2004.
Emperor reported in its quarterly report, released on 11 October 2004, that
`gold won for the September quarter decreased by 20% to 27 632 ounces compared
with the June quarter (34 539 ounces). Gold shipped, however, increased by 3% to
35 169 ounces (34 259 ounces). Tonnage treated for the quarter decreased by 13%
to 139 164 tonnes (160 002 tonnes) while delivered grade decreased by 9% to 7.15
grams per tonne (7.86 grams per tonne). Gold in Circuit (GIC) has been reduced
to `near normal` levels. Preliminary test work on alternatives to maintain
`normal` levels of GIC in the future, should high sulphur grades in mill feed
occur again, has been completed. A number of options have been rejected
following the preliminary tests. Further tests on samples produced by the
gravity concentration option are required before committing capital funds.` The
full details of Emperor`s quarterly results are available on its website,
www.emperor.com.au.
SOUTH AFRICAN OPERATIONS Quarter Quarter Quarter
Sep 2004 Jun 2004 Sep 2003
Gold production (attributable) oz 143 137 157 475 177 210
kg 4 452 4 898 5 512
Capital expenditure US$ m 2.2 2.8 4.1
ZAR m 14.7 18.4 30.3
Blyvooruitzicht Quarter Quarter % Change Quarter
Sep 2004 Jun 2004 Sep 2003
Area mined m2 000 48 53 (9) 51
Development m 720 288 150 973
Face length m 1 755 1 990 (12) 2 017
Stoping width cm 109 109 - 110
Ore milled
Underground t`000 180 207 (13) 222
Surface t`000 577 719 (20) 388
Total t`000 757 926 (18) 610
Yield
Underground g/t 6.74 6.59 2 7.26
Surface g/t 0.21 0.31 (32) 0.74
Total g/t 1.76 1.72 2 3.11
Gold produced
Underground kg 1 214 1 365 (11) 1 611
oz 39 031 43 886 (11) 51 796
Surface kg 120 224 (46) 287
oz 3 858 7 201 (46) 9 227
Total kg 1 334 1 589 (16) 1 898
oz 42 889 51 087 (16) 61 023
Capital expenditure US$ m 0.2 1.2 83 2.4
ZAR m 1.5 7.2 79 18.1
Average labour strength 3 289 5 298 38 5 716
Following the retrenchment of 1 619 employees at a cost of R24 million
(excluding leave pay) in September 2004, a six-month plan has been put in place
aimed at returning Blyvoor to break even. The basis of this plan is to reduce
mining of areas serviced by expensive infrastructure and to focus on areas where
improved efficiencies will result. It is pleasing to note the increase in grade
from underground from 6.59 grams per tonne to 6.74 grams per tonne.
Volumes of mining have been reduced at No. 4 shaft and No. 6 shaft, leaving No.
5 shaft as Blyvoor`s main production unit. Broken ore sampling has been
introduced in order to reduce dilution and improve mining discipline.
The retrenchment of the employees at Blyvoor was achieved in record time and a
principle of `best man for the job` was applied to ensure retention of key
competencies.
The supervisory structure has been changed to incorporate production supervisors
who will take charge of the stopes, the overall objective being to improve
discipline, increase efficiencies and reduce supervisory costs.
The re-processing of surface slimes is showing improvement following a shift in
the recovery of material from Dam No. 4 to Dam No.5. Metallurgical improvements
have resulted in an increase in recoveries of 53%.
Other sources of surface production are being investigated in order to utilize
excess capacity in the gold plant.
Phase 2 and 3 of the current plan is aimed at identifying the medium- to long-
term potential of re-equipping the No. 2A sub shaft system in order to access
previously abandoned resources. Implementation will be dependant upon the
successful turnaround of the existing operation.
North West Quarter Quarter % Change Quarter
(Hartebeestfontein and Sep 2004 Jun 2004 Sep 2003
Buffelsfontein mines)
Area mined m2 000 92 91 1 102
Development m 8 340 11 017 (24) 8 434
Face length m 3 003 3 147 (5) 3 577
Stoping width cm 120 118 (2) 118
Ore milled
Underground t`000 396 396 - 483
Surface t`000 170 63 169 737
Total t`000 566 459 23 1 220
Yield
Underground g/t 5.54 5.84 (5) 4.74
Surface g/t 1.09 3.38 (68) 0.74
Total g/t 4.21 5.50 (23) 2.33
Gold produced
Underground kg 2 195 2 312 (5) 2 291
oz 70 572 74 333 (5) 73 657
Surface kg 186 213 (13) 546
oz 5 980 6 848 (13) 17 555
Total kg 2 381 2 525 (6) 2 837
oz 76 552 81 181 (6) 91 212
Capital expenditure US$ m 2.1 1.7 (24) 1.6
ZAR m 13.1 11.0 (19) 11.8
Average labour strength 6 930 7 496 8 11 081
Following the retrenchment of 119 employees at a cost of R 3.7 million at the
Buffels section, the North West Operations have kept No. 9 and No. 11 shafts at
Buffels in production. The principal focus, however, is on improving recovered
grade and consequently the balance of mining will move to higher-grade shafts at
Harties - No. 2 shaft, No. 4 shaft and No. 5 shaft - with only selective mining
taking place at No. 6 shaft, No. 7 shaft and No. 8 shaft. All production from
underground is now treated at the South Plant and treatment rates of 125 000
tonnes per month are planned for the rest of the financial year.
During the quarter the North plant was re-commissioned and fed with screened
waste rock dump material. This will continue until such time that the current
source of material is depleted, with the additional possibility of processing
alternative surface source material. This project generated 2 572 ounces (80
kilograms) of gold during the month of September.
Crown (40% attributable)* Quarter Quarter % Change Quarter
Sep 2004 Jun 2004 Sep 2003
Ore milled t`000 913 952 (4) 1 013
Yield g/t 0.42 0.41 2 0.40
Gold produced kg 382 392 (3) 408
oz 12 282 12 603 (3) 13 117
Average labour strength # 833 846 2 807
* Crown accounted for on an equity basis.
# Represents total mine.
ERPM (40% attributable)* Quarter Quarter % Change Quarter
Sep 2004 Jun 2004 Sep 2003
Area mined m2 # 000 25 29 (14) 39
Development # m 74 240 (69) 1 042
Face length # m 770 1 081 (29) 1 360
Stoping width # cm 128 140 9 118
Ore milled
Underground t`000 47 56 (16) 62
Surface t`000 152 86 77 -
Total t`000 199 142 40 62
Yield
Underground g/t 6.70 6.61 1 5.91
Surface g/t 0.26 0.26 - -
Total g/t 1.79 2.75 (35) 5.91
Gold produced
Underground kg 315 370 (15) 369
oz 10 127 11 896 (15) 11 858
Surface kg 40 22 82 -
oz 1 287 708 82 -
Total kg 355 392 (9) 369
oz 11 414 12 604 (9) 11 858
Average labour strength # 2 125 2 932 28 3 182
* ERPM accounted for on an equity basis.
# Represents total mine.
As reported in the previous quarter, the ERPM operation has undergone extensive
restructuring. The outcome of the restructuring program was for the ERPM
underground operations to be placed on controlled closure program ending in
March 2005. Following the retrenchment of 806 employees in August 2004, the mine
has achieved a significant reduction in costs coupled with improved
productivity. As a result the mine has been restored to profitability, and the
original planned closure of the underground section has been postponed. Progress
in the quarter under review has been very satisfactory, particularly the 55%
improvement in productivity. Productivity, measured in terms of metres face
advance per employee, had reached a new record of 11.8 metres in September 2004
compared with a low of 7.6 metres in March 2004. The focus now is on the mine`s
Far East Vertical (FEV) and South East Vertical (SEV) shafts.
The plan is to insert up to eight `high pressure concrete plugs` to isolate the
FEV and SEV shafts allowing the rest of the mine to fill with water. Discussions
are in progress with the relevant Government agencies to provide financial
assistance for the plugs and the re-institution of the State water pumping
subsidy which was suspended in April this year.
At Crown surface, production was steady. The Company is investigating a number
of new surface sources to complement its life of mine profile.
EXPLORATION
DRDGOLD`s exploration is based around its wholly owned PNG operation, Tolukuma.
As reported in the previous quarter, the Company has increased its drilling and
exploration activities, focusing on near mine exploration utilising its five
owned drill rigs. Encouraging drill data has again been collected over the past
quarter. Surface diamond drilling of the Zine Vein south of the Zine pit has
been completed and a resource calculation has been undertaken. A feasibility
study looking at open cast mining of this vein is under way.
Gulbadi South Extension
Underground drilling of the southern extension of the Gulbadi vein is ongoing
and encouraging results are being encountered in drill holes approximately 1 312
feet (400 metres) south of current mine workings.
Values in hole TUO20, approximately 400 metres south of current mine workings
showed 2.9 metres @ 57.2 grams per tonne Au (including 1.6 metres @ 102.7 grams
per tonne Au)
Significant results are listed in the table below. Infill drilling is now
being undertaken between the drill holes shown below and the current workings
to evaluate this zone.
Gulbadi South underground drilling statistics:
Hole No From To True Au Ag Comments
(m) (m) width (g/t) (g/t)
TU004 260.7 261.7 0.6 10.5 22
TU009 259.9 262.2 0.8 9.9 23 Includes 0.2m @19.5 g/t Au
TU010 284.4 284.5 0.1 453.4 314 Visible gold <5m above
main structure
TU011 254.5 257.6 2.5 7.7 30 Includes 0.7 @ 26.7 g/t Au
TU016 370.9 371.7 0.6 6.9 12
TU018 260.9 265.9 3.0 6.8 37 Visible gold. Includes
0.7m @ 7.8 g/t and 0.6m @
22.5 g/t Au
TU020 263.4 267.0 2.9 57.2 21 Visible gold. Includes
2.9m @ 57.2 g/t Au
Lock and Dagakuma
Diamond drilling has begun following the encouraging results encountered in
surface trenching. To date results have been erratic, so geological
interpretation and drilling is being undertaken to decide whether to continue
with exploration of these veins.
120/Zine North Project
Geological mapping, trenching and sampling of the 120/Zine North project has
been carried out over a distance of 1 476 feet (450 metres). Results to date
have been sufficiently encouraging that follow-up diamond drilling will be
carried out in due course.
At Porgera, a significant underground exploration program aimed at identifying
additional resources and changing resources to reserves is ongoing. This program
is focused on re-evaluation of the Central, North Zone and Eastern Deeps,
delineation drilling of the North Zone and exploration drilling of the East
Zone.
A target generation study has identified a number of additional exploration
targets either as extensions of known structures or new structures. It is likely
that these targets will be drilled in due course.
BOARD CHANGES
David Baker, who joined the board in January 2002, retires with effect from 27
October 2004 due to increased commitments. We would like to thank David for his
valuable service and insight as a director.
DRDGOLD is pleased to announce the appointment of James Turk, an American
citizen, to the board as a non-executive director. James is the founder and a
director of GoldMoney (www.goldmoney.com), the operator of a digital gold
currency payment system based on three U.S. patents awarded to him. He has
specialised in international banking, finance and investment since graduating in
1969 from George Washington University with a B.A. degree in International
Economics. DRDGOLD acquired a strategic 50.25% interest in a subsidiary (Net-
Gold Services Ltd) of the internet-based gold investment company, G.M. Network
Limited (GoldMoney.com) during 2004.
MARK WELLESLEY-WOOD IAN MURRAY
Executive Chairman Chief Executive Officer and Chief Financial Officer
27 October 2004
INVESTOR INFORMATION AS AT 30 SEPTEMBER 2004
DIRECTORS - (*British)(**Australian)
Executives:
MM Wellesley-Wood (Executive Chairman)*
IL Murray (Chief Executive Officer and Chief Financial Officer)
Non-executives:
MP Ncholo ; RP Hume ; GC Campbell* ; DC Baker** ; D Blackmur**
Alternate:
A Lubbe
Group Company Secretary:
AI Townsend
INVESTOR RELATIONS
For further information, contact Ilja Graulich at:
Tel: (+27-11) 381-7800, Fax: (+27-11) 482-4641,
e-mail: ilja.graulich@za.drdgold.com,
website: http://www.drdgold.com
45 Empire Road,
Parktown,
South Africa.
PO Box 390,
Maraisburg, 1700,
South Africa.
Date: 27/10/2004 08:01:33 AM
Produced by the JSE SENS Department
