| Thu 27 Jan 2005, 8:54 | | DECEMBER QUARTER PRODUCTION |
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DRDGOLD LIMITED - DECEMBER QUARTER PRODUCTION INFORMATION
DRDGOLD LIMITED
(Formerly Durban Roodepoort Deep, Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1895/000926/06)
ARBN number 086 277 616
JSE trading symbol: DRD
ISIN Code: ZAE 000058723
Issuer code: DUSM
NASDAQ trading symbol: DROOY
ASX trading symbol: DRD
(`DRDGOLD`)
REPORT ON ACTIVITIES FOR THE SECOND QUARTER ENDED 31 DECEMBER 2004
OF THE 2005 FINANCIAL YEAR
GROUP RESULTS (Unaudited)
KEY FEATURES
* Outstanding safety record
* Porgera Joint Venture achieves 1 million ounces of production
* Attributable offshore production increases to 39% of total attributable
production
* Blyvoor restructuring completed
* ERPM extends life and receives state assistance
* Emperor rights issue completed
KEY RESULTS SUMMARY
GROUP Quarter Quarter 6 mths to Quarter
Dec 2004 Sep 2004 Dec 2004 Dec 2003
Gold production (attributable) oz 223 297 220 524 443 821 237 307
kg 6 947 6 859 13 806 7 381
Gold price received US$/oz 433 403 420 396
R/kg 84 843 82 785 83 941 86 032
Capital expenditure US$ m 6.5 6.0 12.5 8.1
ZAR m 39.0 38.9 77.9 55.4
STOCK
ISSUED CAPITAL
255 316 895 ordinary no par value shares
5 000 000 cumulative preference shares
Total ordinary no par value shares issued and committed: 283 103 158
STOCK TRADED JSE ASX NASDAQ FRANKFURT
Avg. volume for the quarter per day (000) 167 8 3 348 107
% of issued stock traded (annualised) 17% 1% 342% 11%
Price - High R14.76 A$3.10 US$2.25 Euro 1.79
- Low R8.00 A$1.88 US$1.44 Euro 1.06
- Close R8.20 A$1.88 US$1.54 Euro 1.06
SAFETY
During the quarter, Blyvoor and North West Operations both achieved one million
fatality-free shifts. This reflects continuing emphasis on programmes designed
to achieve behavioral change relating to safety in the workplace.
Blyvoor recently won the West Rand Mine Managers` safety competition for the
seventh consecutive year. The mine has achieved a 71% improvement in its Lost
Time Injury Frequency Rate (rate per million man hours) from 17.84 in 1999 to
5.19 currently.
South Africa`s Department of Minerals and Energy (DME) recently released figures
indicating that DRDGOLD recorded the lowest fatality rate amongst South African
gold producers in 2004. While this is a pleasing development, it is regrettable
that Blyvoor and East Rand Proprietary Mines Limited (ERPM) both recorded single
fatalities during the quarter under review, indicating that there is no place
for complacency.
PRODUCTION
Attributable gold production for the Group increased marginally quarter on
quarter. This reflects a 13% increase in offshore attributable production, due
mainly to the inclusion of the 45.33% attributable production from Emperor Mines
Limited (Emperor) for the full quarter. Production from the South African
operations decreased by 5%, mainly the result of restructuring at
Blyvooruitzicht (Blyvoor) during the previous quarter. Production from the North
West Operations was slightly lower, reflecting the impact of various
infrastructural constraints. These are being addressed.
COSTS
Cash operating unit costs improved quarter on quarter, indicative both of lower
labour costs at Blyvoor post-restructuring and of overall lower unit costs from
offshore operations. In respect of the South African operations, further
interventions are anticipated in order to achieve cost levels that will deliver
acceptable margins from the South African operations at a planned gold price of
R82 000 per kilogram. Specific details of the unit costs will be released with
our results on or about 24 February 2005.
GOLD MARKET REVIEW
The average gold price received for the quarter was US$433 per ounce or R84 843
per kilogram compared to US$403 per ounce (R82 785 per kilogram) the previous
quarter.
Quarter on quarter, due to the continued strengthening of the Rand, the Rand
gold price increased by just 2% compared to the Dollar gold price increase of
7%. The average Rand/US$ exchange rate for the quarter was R6.06/US$1 compared
to R6.38/US$1 in the previous quarter.
While we are pleased that the gold price has remained well above the US$400 per
ounce mark, we are still of the view that the Rand`s continued strength is
having a profoundly negative effect on the South African export industry. We
foresee continued Dollar gold price strength in the coming 12 months on the back
of global economic uncertainty but mainly as a result of a continued weakness in
the Dollar. It is to be hoped that lower real interest rates in South Africa
will bring the Dollar/Rand exchange rate to more acceptable levels in the coming
quarter.
CORPORATE DEVELOPMENTS
During the quarter, DRDGOLD arranged a borrowing facility with Investec Bank for
US$50 million to assist the company with its offshore growth strategy. So far,
some US$7 million has been drawn down in order for the company to exercise its
rights following a rights issue by Emperor.
AUSTRALASIAN OPERATIONS Quarter Quarter % 6 mnths to Quarter
Dec 2004 Sep 2004 Change Dec 2004 Dec 2003
Gold production
(attributable) oz 87 751 77 387 13 165 138 67 903
kg 2 731 2 407 13 5 138 2 112
Capital expenditure US$ m 5.4 3.8 (42) 9.2 3.2
ZAR m 33.1 24.2 (37) 57.3 21.8
Overall higher production from the Australasian operations was mainly due to
good results from Porgera and, for the first time, a full quarter`s attributable
ounces included from Emperor.
Porgera Quarter Quarter % 6 mnths to Quarter
(20% of the Joint Venture) Dec 2004 Sep 2004 Change Dec 2004 Dec 2003
Ore milled t`000 318 288 10 606 295
Yield g/t 5.32 5.20 2 5.27 4.86
Gold produced oz 54 417 48 162 13 102 579 46 136
kg 1 693 1 498 13 3 191 1 435
Increased ore milled and improvement in grade resulted in gold production being
13% higher than the previous quarter. The good results for the quarter
contributed to the Joint Venture`s achievement of 1 million ounces of production
in the 2004 calendar year.
Tolukuma Quarter Quarter % 6 mnths to Quarter
Dec 2004 Sep 2004 Change Dec 2004 Dec 2003
Ore milled t`000 55 52 6 107 50
Yield g/t 10.85 11.65 (7) 11.24 13.54
Gold produced oz 19 183 19 484 (2) 38 667 21 767
kg 597 606 (2) 1 203 677
Tolukuma`s gold production was 2% lower than the previous quarter, reflecting
grade fluctuations, the impact of which was partly offset by the milling of
additional tonnage.
Tolukuma employed the services of an external contractor during the quarter to
assist with the implementation and rollout of exploration projects.
Emperor* Quarter Quarter % 6 mnths to Quarter
(45.33% attributable) Dec 2004 Sep 2004 Change Dec 2004 Dec 2003
Ore milled t`000 67 38 76 105 -
Yield g/t 6.58 7.97 (17) 7.09 -
Gold produced oz 14 151 9 741 45 23 892 -
kg 441 303 45 744 -
* Emperor accounted for on an equity basis from 1 August 2004.
Increased production is due to DRDGOLD`s attributable share being reported for a
full quarter.
SOUTH AFRICAN OPERATIONS Quarter Quarter % 6 mnths to Quarter
Dec 2004 Sep 2004 Change Dec 2004 Dec 2003
Gold production
(attributable) oz 135 546 143 137 (5) 278 683 169 404
kg 4 216 4 452 (5) 8 668 5 269
Capital expenditure US$ m 1.1 2.2 50 3.3 5.0
ZAR m 5.9 14.7 60 20.6 33.5
The South African operations continue to suffer from the effects of the strong
Rand. As a consequence, they are monitored continuously and remedial action is
implemented promptly.
Blyvooruitzicht Quarter Quarter % 6 mnths to Quarter
Dec 2004 Sep 2004 Change Dec 2004 Dec 2003
Area mined m2 000 32 48 (33) 80 49
Development m 258 720 (64) 978 603
Face length m 1 268 1 755 (28) 1 512 2 128
Stoping width cm 107 109 2 108 107
Ore milled
Underground t`000 129 180 (28) 309 193
Surface t`000 768 577 33 1 345 430
Total t`000 897 757 18 1 654 623
Yield
Underground g/t 7.49 6.74 11 7.06 8.85
Surface g/t 0.27 0.21 29 0.24 0.66
Total g/t 1.31 1.76 (26) 1.52 3.20
Gold produced
Underground oz 31 057 39 031 (20) 70 088 54 914
kg 966 1 214 (20) 2 180 1 708
Surface oz 6 623 3 858 72 10 481 9 131
kg 206 120 72 326 284
Total oz 37 680 42 889 (12) 80 569 64 045
kg 1 172 1 334 (12) 2 506 1 992
Capital expenditure US$ m (0.3) 0.2 250 (0.1) 4.4
ZAR m (1.9) 1.5 227 (0.4) 29.3
The 12% decrease in gold production compared to the previous quarter is the
result of the operational review which began in the previous quarter. This
resulted in the revised mining plan. The reduction in mining activities at No`s
4 and 6 shafts has resulted in more cost-effective mining in this quarter. As a
result of the revised mining plan, the yield from underground improved by 11%
from 6.74 grams per tonne in the previous quarter to 7.49 grams per tonne in the
quarter under review.
While the underground operations are stabilising, the consolidation of mining
areas has increased the mine`s exposure to seismicity, resulting in loss of
production. A strategy to increase mining activity to the west of No 5 shaft has
been implemented in order to reduce seismic risk. Grade in this area is slightly
lower than that in the eastern portion of No 5 shaft.
Gold produced from surface operations increased from 3 858 ounces (120
kilograms) to 6 623 ounces (206 kilograms) as a result of higher production from
the slimes dam project. Tonnage increased by 33% quarter on quarter. The project
is beginning to deliver a return on investment but recoveries are not what were
anticipated.
The sale of a sag mill resulted in a net capital expenditure recoupment of
US$0.3 million (R1.9 million).
North West (Hartebeestfontein and Buffelsfontein mines)
Quarter Quarter % 6 mnths to Quarter
Dec 2004 Sep 2004 Change Dec 2004 Dec 2003
Area mined m2 000 81 92 (12) 173 81
Development m 10 442 8 340 25 18 782 11 082
Face length m 2 871 3 003 (4) 2 937 2 845
Stoping width cm 121 120 (1) 120 118
Ore milled
Underground t`000 344 396 (13) 740 383
Surface t`000 394 170 132 564 662
Total t`000 738 566 30 1 304 1 045
Yield
Underground g/t 5.87 5.54 6 5.70 5.72
Surface g/t 0.85 1.09 (22) 0.92 0.53
Total g/t 3.19 4.21 (24) 3.63 2.43
Gold produced
Underground oz 64 944 70 572 (8) 135 516 70 411
kg 2 020 2 195 (8) 4 215 2 190
Surface oz 10 770 5 980 80 16 750 11 221
kg 335 186 80 521 349
Total oz 75 714 76 552 (1) 152 266 81 632
kg 2 355 2 381 (1) 4 736 2 539
Capital expenditure US$ m 1.3 2.1 38 3.4 0.6
ZAR m 7.9 13.1 40 21.0 4.2
Production was down slightly quarter on quarter. Underground production
decreased by 8%, whilst surface production increased by 80% quarter on quarter.
Underground production has declined as the result of rationalisation of non-
profitable mining areas. Face length mined has been negatively affected by
infrastructural constraints. These are being addressed.
Capital expenditure has been limited to what is essential to sustain the
operation.
Notwithstanding some positive indicators in respect of underground yield in the
quarter, continuing poor results into December have necessitated the placement
of the North West Operations under operational review.
Crown (40% attributable)* Quarter Quarter % 6 mnths to Quarter
Dec 2004 Sep 2004 Change Dec 2004 Dec 2003
Ore milled t`000 894 913 (2) 1 807 1 024
Yield g/t 0.40 0.42 (5) 0.41 0.41
Gold produced oz 11 613 12 282 (5) 23 895 13 631
kg 361 382 (5) 743 424
* Crown accounted for on an equity basis.
Production at Crown was down 5% due both to tonnage shortfall at the Knights and
Crown plants and a decrease in grade. Residue pipeline failures during the
quarter also impacted negatively on gold production.
ERPM (40% attributable)* Quarter Quarter % 6 mnths to Quarter
Dec 2004 Sep 2004 Change Dec 2004 Dec 2003
Area mined m2 # 000 16 25 (36) 41 31
Development # m 108 74 46 182 956
Face length # m 683 770 (11) 727 1 383
Stoping width # cm 133 128 (4) 130 122
Ore milled
Underground t`000 35 47 (26) 82 54
Surface t`000 210 152 38 362 -
Total t`000 245 199 23 444 54
Yield
Underground g/t 7.27 6.70 9 6.92 5.77
Surface g/t 0.36 0.26 38 0.33 -
Total g/t 1.34 1.79 (25) 1.54 5.77
Gold produced
Underground oz 8 032 10 127 (21) 18 159 10 096
kg 250 315 (21) 565 314
Surface oz 2 507 1 287 95 3 794 -
kg 78 40 95 118 -
Total oz 10 539 11 414 (8) 21 953 10 096
kg 328 355 (8) 683 314
* ERPM accounted for on an equity basis
# Represents total mine
Gold production from underground was down 21% as a result of wage review-
related work stoppages in December, as well as constraints placed on the
operation as a result of the loss of a second outlet facility at the Far East
Vertical (FEV) shaft.
Production from the Cason dump reclamation increased by 95% as a result both of
high tonnage and improved sand face grade.
During the quarter under review, the DME granted ERPM a pumping subsidy of R1.6
million a month until the end of February 2005, back-dated to April 2004. In
addition, the DME has approved a grant of R7 million for the first phase of a
project to insert plugs to contain underground water ingress. The full three-
phase, 44-month plugging project - expected to cost some R29 million - is
intended to allow mining from ERPM`s FEV shaft, hoisting from its South East
Vertical shaft and pumping from its South West Vertical Shaft to continue beyond
the planned closure date of March 2005. Under certain gold price assumptions,
these developments create potential for mining to continue for eight years,
preserving some 2 000 jobs.
EXPLORATION - TOLUKUMA
ML104 Exploration
Zine Resource - Infill drilling
Infill drilling of the Zine structure continues with a total of six holes
completed during the quarter for a total of 558.9 metres.
Tabulated below are some of the results.
Hole No From To Interval True Au
Depth(m) Depth(m) (m) width(m) (g/t)
ZN075 61.6 64.0 2.6 1.74 5.73(incl 0.39m
@ 18.13 g/t)
ZN076 77.4 78.2 0.8 0.8 <0.10 g/t
ZN077 103.1 104.1 1.0 0.77 3.38(incl 0.49m
@ 4.59 g/t)
ZN078 82.8 83.3 0.5 0.4 3.55
ZN080 75.3 76.3 1.0 0.6 14.8
The deposit appears to be characterised by a high nugget effect with erratic
grade distribution and large grade range. Current indications are that gold is
mostly localised at flexure points or bends along a structure in a dilatational
setting and at the intersection of fault planes.
Underground LMA90 drilling
The LMA90 rig continued drilling the southern extension of Gulbadi and Zine
structures. During the quarter, a total of 2 568.8 metres was drilled from
eleven holes.
Assay results received to date with grades >1.0 g/t Au are presented below.
Hole No From To Interval True Au
Depth(m) Depth(m) (m) width(m) (g/t)
TU022 127.5 129.7 2.2 1.7 3.00
TU025 125.4 129.6 4.2 3.0 22.1(incl 1.6m
@ 31.0 g/t)
TU027 160.4 164.8 4.4 4.1 1.2 (incl 1.1m
@ 2.2 g/t)
TU028 149.3 153.5 4.2 2.5 2.9 (0.8m
@ 4.0 g/t & 0.6m
@ 4.0 g/t)
TU029 277.8 279.2 1.4 1.4 5.3 (incl 0.5m
@ 13.4 g/t)
TU030 135.0 136.9 1.9 1.5 4.2
TU030 185.6 189.9 4.3 2.5 9.1(incl 1.2m
@17.9 g/t)
TU031 102.0 103.5 1.5 1.3 3.4
TU032 142.6 145.0 2.4 1.4 6.6(incl 0.3m
@16.7 g/t)
TU032 225.0 230.6 5.6 3.6 4.4(incl 0.9m
@10.80 g/t)
Banana Vein
Significant drilling results are as follows:
Hole No From To Weighted Average Au
(m) (m) g/t
DG001 64.6 65.1 0.5m @ 16.8 g/t
DG002 146.7 149.2 0.5m @ 5.0 g/t incl 0.2m @ 13.1 g/t
DG002 152.1 155.1 0.7m @ 7.2 g/t incl 0.3m @ 11.1 g/t
Lock/Dagakuma Vein exploration
A detailed geological review is currently in progress on all trench and drill
hole data for the Lock/Dagakuma project area.
120/Zine North Project
Trenching, mapping and sampling have been completed along the strike length of
the 120/Zine structure over a total length of 180 metres.
A total of three holes were completed to date.
Significant intercepts are tabulated as follows:
Hole No True Thickness Au Comments
(m) g/t
120/ZN_001 5.67 6.05 Incl 1.2m @ 14.3 g/t & 1.4m
@ 7.53 g/t Au
120/ZN_002 5.0 5.00 Incl 1.0m @ 9.79 g/t
BOARD CHANGES
DRDGOLD is pleased to announce the appointment of Doug Campbell as Chief
Financial Officer and as an executive director of the company. Doug has a wealth
of financial experience, a significant portion of which has been acquired in the
South African mining sector.
MARK WELLESLEY-WOOD IAN MURRAY
Executive Chairman Chief Executive Officer
27 January 2005
INVESTOR INFORMATION
DIRECTORS - (*British)(**Australian)(***American)
Executives:
MM Wellesley-Wood (Executive Chairman)*
IL Murray (Chief Executive Officer)
DN Campbell (Chief Financial Officer)
Non-executives:
MP Ncholo ; J Turk ***
Independent non-executives:
D Blackmur** ; GC Campbell ; RP Hume
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.
