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DRD
DRDD
DRDGold Limited - Report To Shareholders For The Six Months Ended 31 December
2005
DRDGOLD LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1895/000926/06)
ARB number 086 277 616
JSE trading symbol: DRD
ISIN Code: ZAE000058723
Issuer code: DUSM
Nasdaq trading symbol: DROOY
ASX trading symbol: DRD
("DRDGOLD" or "The Company")
REPORT TO SHAREHOLDERS FOR THE SIX MONTHS ENDED 31 DECEMBER 2005
2006 FINANCIAL YEAR
GROUP RESULTS (Unaudited)
KEY FEATURES
- Emperor consolidation approved by shareholders
- SA Mining Charter equity compliance attained through KBH transaction
- Group cash operating costs steady at US$375/oz
- Argonaut, Sallies new order prospecting rights granted: 11Moz resource
potential
KEY RESULTS SUMMARY
GROUP
6 months to 6 months to 6 months to
31 Dec 2005 30 Jun 2005 31 Dec 2004
(*Restated) (*Restated)
Attributable gold production(**)
Australasian operations oz 126 770 151 996 165 138
kg 3 945 4 726 5 138
South African operations oz 139 117 125 485 126 417
kg 4 327 3 903 3 932
Discontinued operations oz - 47 584 152 266
kg - 1 480 4 736
Group oz 265 887 325 065 443 821
kg 8 272 10 109 13 806
Cash operating costs
Australasian operations US$/oz 323 254 206
ZAR/kg 67 891 50 889 41 103
South African operations US$/oz 430 391 488
ZAR/kg 90 410 78 356 97 522
Discontinued operations US$/oz - 665 459
ZAR/kg - 133 275 91 814
Group US$/oz 375 372 372
ZAR/kg 78 756 74 618 74 256
Gold price received
Group US$/oz 467 428 420
ZAR/kg 98 131 85 771 83 941
Capital expenditure
Net Group US$ m 17.6 11.5 13.4
ZAR m 114.5 71.4 83.4
* Figures restated where applicable to effect the transition from South African
Statements of Generally Accepted Accounting Practice ("SA GAAP") to
International Financial Reporting Standards ("IFRS").
** Attributable - including Emperor Mines Limited ("Emperor") 39.52% from 5
December 2005 (previously 45.33%); Crown Gold Recoveries (Pty) Limited ("CGR")
and East Rand Proprietary Mines Limited ("ERPM") 100% from 1 December 2005
(previously 40%).
STOCK
ISSUED CAPITAL
308 086 126 ordinary no par value shares
5 000 000 cumulative preference shares
Total ordinary no par value shares issued
and committed: 341 994 830
STOCK TRADED JSE ASX NASDAQ FRANKFURT
Avg. volume for the 6 months
per day (000) 292 10 2 806 81
% of issued stock traded
(annualised) 25% 1% 238% 7%
Price - High R10.80 A$2.26 US$1.66 Euro 1.31
- Low R5.60 A$1.08 US$0.85 Euro 0.74
- Close R9.30 A$2.08 US$1.44 Euro 1.22
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 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 licenses 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.
OVERVIEW
Dear Shareholder
SAFETY
We report, with deep regret, that three employees died in work-related incidents
during the six months under review. This compares with eight in the previous six
months. Enoque Matues Mapossa died in a fall of ground at Blyvooruitzicht Gold
Mining Company Limited ("Blyvoor") on 28 September 2005 and Sharveen Prasad and
Sireli Mansawa in separate falls of ground at Emperor on 18 November 2005 and 16
December 2005 respectively.
There was an improvement in Emperor"s safety record for the six months under
review, compared with the preceding half-year. The Disabling Injury Frequency
Rate ("DIFR") decreased from 8.12 to 6.81 and the Lost Time Injury Frequency
Rate ("LTIFR") from 3.73 to 1.63. A full inquiry involving the Fijian Department
of Mineral Resources has been conducted into the fatalities that occurred and
remedial measures have been implemented.
Tolukuma Mines Limited ("Tolukuma") continued an outstanding safety record with
no lost time incidents for the six months under review. The LTIFR reduced from
0.85 in the six months to June 2005 and to 0.00 in the six months to 31 December
2005.
At the South African operations - Blyvoor, ERPM and CGR - the significantly
fewer fatalities and dressing station cases during the six months are enormously
encouraging, but deteriorations at all three with respect to the LTIFR and the
Serious Injury Frequency Rate ("SIFR"), indicate there can be no relenting in
the efforts to improve safety.
GOLD MARKET
Gold continued its phenomenal run from early to mid-September 2005 when the link
between US dollar gold price movements and the US dollar/rand exchange rate was
broken. In spite of the dollar remaining relatively strong against major
currencies such as the euro, the pound and the yen, gold in US dollar terms
moved upwards.
This had a significant effect on the gold price in Rand terms: it averaged just
under R92 000/kg for the September quarter and almost R101 500/kg for the
December quarter. The increase was driven mainly by the higher US dollar gold
price, which came in at $439/oz in the three months to end-September 2005, and
$486/oz for the three months to end-December 2005. This gave an average for the
first half of DRDGOLD"s current financial year of $467/oz or just over R98
000/kg.
So what is driving this gold market? For the past two years, we have been
mindful of a number of drivers in the gold market; most of these have been
substantiated and expanded upon, with analysts and market commentators calling
for US$600/oz in the current year.
The fundamentals we have addressed that are affecting the gold market - such as
the lack of reserve replenishment, the slowdown in new mining supply, the
reduction in mine supply - especially from South Africa, the growing concerns
about the United States and global economies - have given rise to the upward
movement in the gold price, successfully breaking through US$500/oz before
Christmas and currently standing at around $550/oz. This is territory last seen
25 years ago.
We are confident that this is not just a flash-in-the-pan event. The
fundamentals that many have ignored when looking at the rising gold market -
ascribing gold"s run only to the weakening US dollar - will underpin the gold
market at much higher levels for some time into the future.
PRODUCTION
Group attributable gold production in the first half of the 2006 financial year
was 18% lower at 265 887 oz compared with the previous six months ended 30 June
2005, reflecting both the discontinuation of the North West Operations in South
Africa and a 17% decline in production from the Australasian operations to 126
770 oz. Gold production from the South African operations rose by 11% to 139 117
oz.
While total underground gold production from Blyvoor and ERPM was 5% lower at
105 165 oz, that from surface sources (including Crown) rose by 14% to 80 763
oz, demonstrating DRDGOLD"s pre-eminent role in surface retreatment and its
growing contribution to the company"s South African business. We comment further
on this at later stages in this communication.
AUSTRALASIAN OPERATIONS
Gold production for the first half declined at all three of the Australasian
operations - by 17% to 76 613 oz at Porgera, by 18% to 30 723 oz at Tolukuma,
and by 10% to 19 434 oz at Emperor.
At Porgera, the main reason for lower production was the redirection of
resources to the West Wall cutback, exacerbated by lower yield arising from
reduced mining from the Stage Four open pit and a seven-day power outage during
the second quarter. Yield is expected to improve with increased mining from the
Stage Five open pit, while the West Wall cutback is now 25% complete and
progressing well.
Lower production at Tolukuma resulted from a lack of available mining face,
underground pumping difficulties and bad weather during the first quarter.
Improved pumping efficiencies and an increase in development initiated an
encouraging turnaround during the second quarter with gold production up by 16%
from 14 199 oz to 16 524 oz on a Q1 to Q2 basis. Total development increased by
5.5% when compared with the previous six months in spite of 11 days lost in Q1
due to bad weather and reduced development in Q2 due to flooding of the
declines.
At Emperor, the decrease in production was attributable to a variety of factors
associated with a change in the mine plan. Production has been redirected from
the lower-grade Smith Shaft areas to high-grade Philip Shaft sources. Capital
expenditure is being directed towards improving infrastructure and increasing
production to 1 000 tons ("t") per day.
Cash operating costs at the Australasian operations for the six months under
review rose by 27% to US$323/oz, reflecting lower production and fuel price
increases. At Porgera, cash operating costs rose by 32% to US$274/oz, at
Tolukuma by 21% to US$444/oz, and at Emperor by 10% to US$559/oz. A feasibility
study for the installation of a second hydro-power generation facility at
Tolukuma is under way. This project would reduce the operation"s reliance on
diesel for power generation, and thus helicopter flying hours with a consequent,
significant positive impact on operating costs. At Emperor, feasibility studies
for the installation of coal/bagasse or bio-fuel power generation facilities are
underway.
SOUTH AFRICAN OPERATIONS
Total gold production at Blyvoor for the six months under review increased by 2%
to 83 304 oz, due to a 38% increase in gold production from surface sources -
and in particular from the expanded slimes dam project - to 18 488 oz.
Underground gold production declined by 4% to 64 816 oz as a consequence both of
losing some high-grade B5A area panels following seismic activity during the
first quarter, and a subsequent decision during the second quarter to reduce
mining from this area in the interests of employee safety. In terms of a new
mine plan, production will be increased in the No 4 Shaft and lower-grade No 6
Shaft areas during the March quarter, taking overall underground production to
70 000t per month by September 2006.
Attributable gold production from the Crown surface operation increased by 34%
to 28 923 oz and at ERPM by 19% to 26 890 oz, due primarily to their results
becoming 100% attributable from the month of December 2005, following the re-
absorption of CGR and ERPM into DRDGOLD South African Operations (Pty) Limited
("DRDSA") as wholly owned subsidiaries.
Cash operating costs for the South African operations increased by 10% to
US$430/oz. At Blyvoor they rose by 7% to US$419/oz and at ERPM by 9% to
US$450/oz, while at Crown they were 7% lower at US$382/oz.
Underground cash operating costs were 12% higher at US$461/oz, while surface
cash operating costs were 6% lower at US$366/oz. Again, this demonstrates the
value add to the South African business of the surface operations - particularly
in a rising gold price scenario.
Two-year wage agreements, effective from the second quarter, are factored into
these increases but they reflect, nevertheless, both the negative impact of the
relentless rise in the cost of utilities and locally sourced goods and services.
With respect to the former, it would appear that it is time once again for the
mining industry to point out to suppliers the folly of threatening the geese
that lay the golden eggs with price hikes way beyond the Consumer Price Index
("CPI").
FINANCIAL
Group cash operating profit in the first half of this year was 27% lower than in
the previous six months at R121.2 million mainly as a consequence of the
deterioration in the operating performance of the Australasian operations as a
whole. Net operating profit was 6% higher at R41.7 million.
Group cash operating costs were well contained, rising by less than 1% to
US$375/oz.
CORPORATE DEVELOPMENTS
We are pleased to report that, on 17 and 20 February 2006, shareholders in
DRDGOLD and Emperor approved proposals to vend DRDGOLD"s offshore assets into
Emperor, thus creating the third largest gold producer listed on the Australian
Stock Exchange ("ASX"). On completion of the transaction, DRDGOLD will have an
approximately 88% stake in Emperor. DRDGOLD has agreed with Emperor rights of
exclusivity of operation within the Pacific Rim.
Back home in South Africa, the conclusion of a transaction during the second
quarter between DRDGOLD and Khumo Bathong Holdings Limited ("KBH") in terms of
which KBH has acquired a 15% stake in DRDSA means that DRDGOLD complies with the
Black Economic Empowerment ("BEE") ownership requirement of the South African
Mining Charter.
With respect to the re-financing of its convertible bond, DRDGOLD is negotiating
the extension of the terms of these instruments with existing convertible bond-
holders.
WAY FORWARD
As Porgera progresses the West Wall cutback and mining moves increasingly into
the Stage Five open pit, so both volume and yield should improve. Tolukuma began
turning the corner during the second quarter, better managing underground water,
escalating underground development and, as a consequence, increasing both
volumes and grade. At Emperor, infrastructural improvements and development to
access new higher grade mining areas at Philip Shaft in particular - together
with ongoing interventions to improve worker morale and productivity - are
expected to contribute towards better results. Taking a longer-term view,
exploration results at both Tolukuma and Emperor, reported with the company
production results on 30 January 2006, are extremely encouraging. Exploration
expenditure in the Australasian region over the next two years will total some
A$15 million - A$7 million in Papua New Guinea ("PNG"), A$4 million on the
Tivatu prospect in Fiji and A$4 million on Basala, an inferred resource at the
bottom of the Philip Shaft at Emperor"s Vatukoula Mine.
At ERPM, good progress is being made in traversing the 16-metre up-throw fault
on the eastern side of the mine and very pleasing grades, averaging 20 grams per
tonne ("g/t") in situ, are being encountered in the re-established mining areas.
The company"s application for a new order prospecting right over the
neighbouring Sallies lease area has been granted and development eastward
towards the ERPM/Sallies boundary from within the ERPM lease area has begun.
Drilling is expected to begin within the next 18 months. There is every reason
to believe that the very good grades being experienced on the ERPM side will
continue into the Sallies lease area, with potential to increase DRDSA"s overall
resource position by some 2 million ounces. DRDGOLD has also secured a new order
prospecting right over the Argonaut area, to the south of central Johannesburg,
which could increase the South African resource by a further 9 million ounces.
Given that Argonaut is contiguous to the east with the western portion of the
ERPM lease area, we believe there is even further potential upside.
All of the South African surface operations continue to perform satisfactorily,
supporting the strategic decision to consolidate DRDGOLD"s mining activities in
South Africa and, more specifically, to optimise Crown"s proven technology and
experience in the surface retreatment field. Now the world"s largest surface
retreatment operation, Crown is poised to re-treat the Top Star dump in central
Johannesburg, acquisition of which from AngloGold Ashanti has been agreed in
principle.
In summary, we have made good progress in creating two stand-alone units, one in
Australasia and the other in South Africa. With Emperor now in a position to
access capital outside of South Africa, it has capacity to grow. The South
African operations have been stabilised and a platform has been established for
growth into Africa. We look forward to reporting on progress in the next six
months.
NOTE REGARDING FINANCIAL INFORMATION
Basis of preparation
DRDGOLD has adopted IFRS for the annual period beginning on 1 July 2005. These
financial statements for the six months ended 31 December 2005 have been
prepared in accordance with IFRS and International Accounting Standard ("IAS")
34, "Interim Financial Reporting".
Transition to IFRS
The transition to IFRS has been implemented in accordance with IFRS 1 "First-
Time Adoption of International Financial Reporting Standards" and DRDGOLD"s
transition date is 1 July 2004. Comparative information has accordingly been
restated from this date. There are certain voluntary exemptions, as discussed
below, where the full retrospective restatement of comparatives is not required.
Voluntary exemptions
DRDGOLD has applied its accounting policies retrospectively from the date of
transition, with the exception of the following permitted exemptions:
- Share-based payment transactions - DRDGOLD has elected not to apply IFRS 2,
"Share-based payments", to share options granted prior to 7 November 2002 as
well as those share options granted after that date which had vested before 1
January 2005.
- Business combinations - DRDGOLD has elected not to apply IFRS 3 "Business
Combinations" to all past business combinations that occurred before the date of
transition to IFRS.
- Fair value or revaluation as deemed cost - Certain items of mining assets
have been measured at their fair value at the transition date and that fair
value has been used as their deemed cost at that date.
IFRS Adjustments
Share based payments
Under SA GAAP, DRDGOLD did not recognise any expense for share options granted
to employees. Under IFRS 2, options to acquire the entity"s equity instruments
that were granted post 7 November 2002 and which remained unvested at 1 January
2005 are measured at fair value at grant date. The expense is recognised over
the vesting period, adjusted to reflect actual levels of vesting.
The cumulative effect of DRDGOLD"s equity-settled schemes on opening accumulated
loss at 1 July 2004 is an increase in accumulated loss of R6.0 million. The
corresponding credit is to the share-based payments reserve. The effect on the
loss for the 2005 financial year is an increase in the loss of R10.6 million (31
December 2004: R5.3 million). There are no taxation implications of these
adjustments.
Property, plant and equipment
Previously IAS 16 "Property, plant and equipment" did not clearly set out the
requirement for separate depreciation of significant components of property,
plant and equipment. The revised IAS 16 requires significant components of an
asset, with useful lives that differ significantly from the asset as a whole, to
be depreciated seperately over their useful lives.
Translation of a foreign operation
Previously IAS 21 "The effects of changes in foreign exchange rates" allowed an
entity to translate the financial statements of a foreign operation that was
integral to the operations of the entity as if the transactions of the foreign
operation had been those of the entity. This allowed non-monetary assets and
liabilities of the foreign operation to be translated at historical exchange
rates and monetary assets and liabilities to be translated at closing exchange
rates. The revised IAS 21 does not contain a distinction between an "integrated
foreign operation" and a "foreign entity" and all assets and liabilities of a
foreign operation are translated at closing exchange rates.
The condensed consolidated financial statements below are prepared in accordance
with IFRS.
CONSOLIDATED INCOME STATEMENT
6 months to 6 months to Effect of 6 months to
31 Dec 2005 30 Jun 2005 transition 30 Jun 2005
IFRS SA GAAP to IFRS IFRS
Rm Rm Rm Rm
Continuing operations
Gold and silver revenue 629.5 570.0 - 570.0
Cash operating costs (508.3) (412.9) 8.1 (404.8)
Cash operating profit 121.2 157.1 8.1 165.2
Corporate administration
and other expenses (66.9) (39.0) - (39.0)
Share-based payments (6.8) - (5.3) (5.3)
Business development (11.5) (8.5) - (8.5)
Exploration costs (0.9) (6.6) - (6.6)
Care and maintenance costs (4.8) (8.1) - (8.1)
Cash profit from operations 30.3 94.9 2.8 97.7
Retrenchment costs (1.0) (5.6) - (5.6)
Investment income 35.4 (33.4) - (33.4)
Finance charge (23.0) (18.3) (1.1) (19.4)
Net operating profit 41.7 37.6 1.7 39.3
Rehabilitation (7.8) (19.8) 1.1 (18.7)
Depreciation (71.4) (44.5) (13.0) (57.5)
(Loss)/profit on financial
instruments (7.5) 5.0 - 5.0
Movement in gold in process 12.1 5.5 - 5.5
Loss before taxation (32.9) (16.2) (10.2) (26.4)
Taxation (17.3) (41.5) - (41.5)
Deferred taxation 16.5 52.4 - 52.4
Loss after taxation (33.7) (5.3) (10.2) (15.5)
(Loss)/profit on sale of
assets/investments (3.4) - - -
Impairments 52.2 (72.1) - (72.1)
Loss from associates (79.9) (57.0) - (57.0)
Discontinued operations
Loss for the period from
discontinued operations (6.3) (11.4) - (11.4)
Minority interest 1.2 - - -
Net loss (69.9) (145.8) (10.2) (156.0)
Headline loss per share-cents
- From continuing operations (37.5) (23.2) (3.8) (27.0)
- Total operations (37.1) (50.4) (3.8) (54.2)
Basic loss per share-cents
- From continuing operations (21.0) (50.0) (3.8) (53.8)
- Total operations (23.1) (54.3) (3.8) (58.1)
Diluted headline loss
per share-cents (37.1) (50.4) (3.8) (54.2)
Diluted basic loss
per share-cents (23.1) (54.3) (3.8) (58.1)
Calculated on the weighted
average ordinary shares
issued of: 303215809 268646022 268646022 268646022
CONSOLIDATED INCOME STATEMENT
6 months to Effect of 6 months to
31 Dec 2004 transition 31 Dec 2004
SA GAAP to IFRS IFRS
Rm Rm Rm
Continuing operations
Gold and Silver revenue 581.9 - 581.9
Cash operating costs (434.5) 5.5 (429.0)
Cash operating profit 147.4 5.5 152.9
Corporate administration and
other expenses (71.6) - (71.6)
Sharebased payments - (5.3) (5.3)
Business development (9.5) - (9.5)
Exploration costs (4.9) - (4.9)
Care and maintenance costs (6.1) - (6.1)
Cash profit from operations 55.3 0.2 55.5
Retrenchment costs (20.5) - (20.5)
Investment income 14.5 - 14.5
Finance charge (18.5) 1.7 (16.8)
Net operating profit 30.8 1.9 32.7
Rehabilitation 2.7 (1.7) 1.0
Depreciation (66.4) (16.3) (82.7)
(Loss)/profit on financial instruments 1.7 - 1.7
Movement in gold in process 5.2 - 5.2
Loss before taxation (26.0) (16.1) (42.1)
Taxation (36.6) - (36.6)
Deferred taxation (10.1) - (10.1)
Loss after taxation (72.7) (16.1) (88.8)
Profit on sale of assets/investments 3.0 - 3.0
Impairments - - -
Loss from associates (20.7) - (20.7)
Discontinued operations
Loss for the period from discontinued
operations (279.7) - (279.7)
Minority interest - - -
Net loss (370.1) (16.1) (386.2)
Headline loss per share-cents
- From continuing operations (37.8) (6.5) (44.3)
- Total operations (64.4) (6.5) (71.0)
Basic loss per share-cents
- From continuing operations (36.6) (6.5) (43.1)
- Total operations (149.9) (6.5) (156.4)
Diluted headline loss
per share-cents (64.4) (6.5) (71.0)
Diluted basic loss
per share-cents (149.9) (6.5) (156.4)
Calculated on the weighted
average shares issued of: 246924284 246924284 246924284
CONDENSED CONSOLIDATED BALANCE SHEET
6 months to 6 months to Effect of 6 months to
31 Dec 2005 30 Jun 2005 transition 30 Jun 2005
IFRS SA GAAP to IFRS IFRS
Rm Rm Rm Rm
Employment of Capital
Net mining assets 1 003.1 799.1 (2.0) 797.1
Investments 145.8 108.3 - 108.3
Environmental trust funds 55.2 42.9 - 42.9
Other non-current assets 243.2 214.6 - 214.6
Current assets 348.6 394.3 7.6 401.9
Inventories 137.9 103.3 8.0 111.3
Trade and other receivables 72.9 49.8 (0.4) 49.4
Cash and cash equivalents 137.8 241.2 - 241.2
1 795.9 1 559.2 5.6 1 564.8
Capital employed
Shareholders equity 647.7 620.6 1.2 621.8
Shareholders interest 619.2 614.8 1.2 616.0
Minority shareholders
interest 28.5 5.8 - 5.8
Long-term borrowings 11.9 359.4 - 359.4
Post retirement health care
provisions 18.0 - - -
Derivative instruments 7.5 3.7 - 3.7
Rehabilitation 289.7 151.0 - 151.0
Deferred mining and income
taxes 74.7 95.7 - 95.7
Provisions 62.6 45.7 - 45.7
Current liabilities 683.8 283.1 4.4 287.5
Trade and other payables 317.6 218.4 4.4 222.8
Derivative instruments-net - - - -
Current portion of long-term
borrowings 366.2 64.7 - 64.7
1 795.9 1 559.2 5.6 1 564.8
CONDENSED CONSOLIDATED BALANCE SHEET
6 months to Effect of 6 months to
31 Dec 2004 transition 31 Dec 2004
SA GAAP to IFRS IFRS
Rm Rm Rm
Employment of Capital
Net mining assets 707.4 15.7 723.1
Investments 213.8 - 213.8
Environmental trust funds 144.4 - 144.4
Other non-current assets 186.2 - 186.2
Current assets 331.4 - 331.4
Inventories 93.6 - 93.6
Trade and other receivables 94.7 - 94.7
Cash and cash equivalents 143.1 - 143.1
1583.2 15.7 1 598.9
Capital employed
Shareholders equity 433.9 15.7 449.6
Shareholders interest 428.1 15.7 443.8
Minority shareholders interest 5.8 - 5.8
Long-term borrowings 300.6 - 300.6
Post retirement health care
provisions - - -
Derivative instruments 9.7 - 9.7
Rehabilitation 242.6 - 242.6
Deferred mining and income taxes 127.9 - 127.9
Provisions 72.3 - 72.3
Current liabilities 396.2 - 396.2
Trade and other payables 328.7 - 328.7
Derivative instruments-net 15.3 - 15.3
Current portion of long-term
borrowings 52.2 - 52.2
1583.2 15.7 1 598.9
CONDENSED STATEMENT OF CHANGES IN EQUITY
6 months to 6 months to Effect of 6 months to
31 Dec 2005 30 Jun 2005 transition 30 Jun 2005
IFRS SA GAAP to IFRS IFRS
Rm Rm Rm Rm
Balance at the beginning of
the financial year 621.8 433.9 15.7 449.6
Minority shareholders interest
now reflected in shareholders
equity - - - -
Restated balance at the
beginning of the financial
year 621.8 433.9 15.7 449.6
Share capital issued 98.4 225.6 5.3 230.9
- for acquisition finance
and cash 94.1 240.7 - 240.7
- for share options
exercised 1.0 - - -
- for increase in share based
payment reserve 6.8 - 5.3 5.3
- for costs (3.5) (15.1) - (15.1)
Net loss attributed
to ordinary shareholders (69.9) (145.8) (10.2) (156.0)
Net loss attributed
to minority shareholders (1.2) - - -
Increase in minorities 23.9 - - -
Currency translation
adjustments and other (25.3) 106.9 (9.6) 97.3
Balance as at the end of
the period 647.7 620.6 1.2 621.8
Reconciliation of headline loss
Net loss (69.9) (145.8) (10.2) (156.0)
Adjusted for:
- impairment of assets and
investments (52.2) 75.6 - 75.6
- Loss/(gain)on discontinued
operations 6.3 (65.2) - (65.2)
- Loss/(profit) on sale of
assets 3.4 - - -
Headline loss (112.4) (135.4) (10.2) (145.6)
CONDENSED STEMENT OF CHANGES IN EQUITY
6 months to Effect of 6 months to
31 Dec 2004 transition 31 Dec 2004
SA GAAP to IFRS IFRS
Rm Rm Rm
Balance at the beginning of the
financial year 564.1 1.3 565.4
Minority shareholders interest now
reflected in shareholders equity 5.8 - 5.8
Restated balance at the beginning
of the financial year 569.9 1.3 571.2
Share capital issued 270.3 5.3 275.6
- for acquisition finance and cash 281.9 - 281.9
- for share options exercised 0.5 - 0.5
- for increase in share based payment
reserve - 5.3 5.3
- for costs (12.1) - (12.1)
Net loss attributed to ordinary
shareholders (370.1) (16.1) (386.2)
Currency translation adjustments and
other (36.2) 25.2 (11.0)
Balance at the end of December 2005 433.9 15.7 449.6
Reconciliation of headline loss
Net loss (370.1) (16.1) (386.2)
Adjusted for:
- impairment of assets and investments 214.0 - 214.0
- Loss on sale of assets (3.0) - (3.0)
Headline loss (159.1) (16.1) (175.2)
EQUITY RECONCILIATION OF PREVIOUS SA GAAP TO IFRS
30 Jun 2005 1 Dec 2004 1 Jul 2004
Rm Rm Rm
Shareholders" equity as previously
reported 620.6 433.9 569.9
Property, plant and equipment (2.9) (4.3) 0.2
Translation of a foreign operation 4.1 20.0 1.1
As reported under IFRS 621.8 449.6 571.2
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
6 months to 6 months to Effect of 6 months to
31 Dec 2005 30 Jun 2005 transition 30 Jun 2005
IFRS SA GAAP to IFRS IFRS
Rm Rm Rm Rm
Net cash in/(out)flow from
operations 1.0 (55.2) 8.1 (47.1)
Working capital changes 8.7 (10.0) - (10.0)
Net cash outflow from
investing activities (97.3) (63.6) (8.1) (71.7)
Net cash (out)/in flow from
financing activities (27.8) 223.7 - 223.7
(Decrease)/increase in cash
and cash equivalents (115.4) 94.9 - 94.9
Translation adjustment 12.0 3.2 - 3.2
Opening cash and cash
equivalents 241.2 143.1 - 143.1
Closing cash and cash
equivalents 137.8 241.2 - 241.2
Reconciliation of net cash in/(out) flow from operations
Net operating profit 41.7 37.6 1.7 39.3
Net operating loss from
discontinued operations (6.3) (76.9) - (76.9)
35.4 (39.3) 1.7 (37.6)
Adjusted for:
interest provision on
convertible bond 14.5 13.7 - 13.7
Amortisation of
convertible costs 3.7 3.7 - 3.7
Financial instruments (3.7) (4.7) - (4.7)
Unrealised foreign exchange
(gain)/loss (28.1) 3.5 - 3.5
Growth in Environmental
trust funds (2.6) (3.9) - (3.9)
Other non cash items 11.5 3.6 6.4 10.0
Interest paid (19.3) (12.3) - (12.3)
Taxation paid (10.4) (19.5) - (19.5)
Net cash in/(out) flow from
operations 1.0 (55.2) 8.1 (47.1)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
6 months to Effect of 6 months to
31 Dec 2004 transition 31 Dec 2004
SA GAAP to IFRS IFRS
Rm Rm Rm
Net cash in/(out) flow from
operations (72.6) 5.5 (67.1)
Working capital changes 8.6 - 8.6
Net cash outflow from investing
activities (220.9) (5.5) (226.4)
Net cash in flow from financing
activities 303.0 - 303.0
Increase in cash and cash equivalents 18.1 - 18.1
Translation adjustment (15.9) - (15.9)
Opening cash and cash
equivalents 140.9 - 140.9
Closing cash and cash
equivalents 143.1 - 143.1
Reconciliation of net cash in/(out) flow from operations
Net operating profit 30.8 1.9 32.7
Net operating loss from
discontinued operations (51.4) - (51.4)
(20.6) 1.9 (18.7)
Adjusted for:
interest provision on
convertible bond 13.6 - 13.6
Amortisation of convertible costs 3.8 - 3.8
Financial instruments (5.2) - (5.2)
Unrealised foreign exchange
(gain)/loss (12.6) - (12.6)
Growth in Environmental
trust funds (1.0) - (1.0)
Other non cash items 3.0 3.6 6.6
Interest paid (12.3) - (12.3)
Taxation paid (41.3) - (41.3)
Net cash (out)/in flow from
operations (72.6) 5.5 (67.1)
KEY OPERATING AND FINANCIAL RESULTS (Unaudited)
Australasian operations
Porgera (20% of the Joint Venture)
6 months to 6 months to 6 months to
31 Dec 2005 30 Jun 2005 31 Dec 2004
(*Restated) (*Restated)
Ore milled t"000 551 594 606
Yield g/t 4.33 4.86 5.27
Gold produced oz 76 613 92 815 102 579
kg 2 384 2 888 3 191
Cash operating costs US$/oz 274 208 166
ZAR/kg 57 682 41 683 33 110
ZAR/tonne 250 203 174
Cash operating profit US$ m 14.8 20.3 26.3
ZAR m 96.6 126.6 163.2
Capital expenditure US$ m 8.8 9.2 6.9
ZAR m 57.3 57.3 42.9
Tolukuma
6 months to 6 months to 6 months to
31 Dec 2005 30 Jun 2005 31 Dec 2004
(*Restated) (*Restated)
Ore milled t"000 101 104 107
Yield g/t 9.47 11.24 11.24
Gold produced oz 30 723 37 647 38 667
kg 956 1 169 1 203
Cash operating costs US$/oz 444 367 312
ZAR/kg 93 347 73 632 62 306
ZAR/tonne 884 828 701
Cash operating profit US$ m 0.1 3.1 4.1
ZAR m 0.4 19.2 25.4
Capital expenditure US$ m 3.6 1.1 2.3
ZAR m 23.7 6.9 14.4
Emperor 39.52% attributable from 5 December 2005 (previously 45.33%)
6 months to 6 months to 6 months to
31 Dec 2005 30 Jun 2005 31 Dec 2004
(*Restated) (*Restated)
Ore milled t"000 102 108 105
Yield g/t 5.93 6.19 7.09
Gold produced oz 19 434 21 534 23 892
kg 605 669 744
Cash operating costs US$/oz 559 507 376
ZAR/kg 117 505 100 986 75 208
ZAR/tonne 701 624 543
South African operations
Blyvoor
6 months to 6 months to 6 months to
31 Dec 2005 30 Jun 2005 31 Dec 2004
(*Restated) (*Restated)
Ore milled
Underground t"000 325 278 309
Surface t"000 1 787 1 587 1 345
Total t"000 2 112 1 865 1 654
Yield
Underground g/t 6.20 7.59 7.06
Surface g/t 0.32 0.26 0.24
Total g/t 1.23 1.36 1.52
Gold produced
Underground oz 64 816 67 870 70 088
kg 2 016 2 111 2 180
Surface oz 18 488 13 439 10 481
kg 575 418 326
Total oz 83 304 81 309 80 569
kg 2 591 2 529 2 506
Cash operating costs
Underground US$/oz 469 423 512
ZAR/kg 98 636 84 636 102 375
ZAR/tonne 612 643 722
Surface US$/oz 242 233 321
ZAR/kg 50 887 46 641 64 190
ZAR/tonne 16 12 16
Total US$/oz 419 391 488
ZAR/kg 88 040 78 356 97 522
ZAR/tonne 108 106 148
Cash operating profit/
(loss) US$ m 3.5 3.1 (5.7)
ZAR m 22.6 19.4 (35.7)
Capital expenditure US$ m 4.2 1.2 0.8
ZAR m 27.4 7.8 5.1
Crown (100% attributable from 1 December 2005 (previously 40%)
6 months to 6 months to 6 months to
31 Dec 2005 30 Jun 2005 31 Dec 2004
(*Restated) (*Restated)
Ore milled t"000 2 149 1 745 1 807
Yield g/t 0.42 0.38 0.41
Gold produced oz 28 923 21 529 23 895
kg 899 670 743
Cash operating costs# US$/oz 382 412 379
ZAR/kg 80 276 82 297 75 805
ZAR/tonne 34 32 31
Cash operating profit#
US$m 4.7 1.0 2.2
ZARm 30.6 7.2 13.8
Cash operating profit
attributable to DRDSA US$m 0.9 - -
ZARm 5.5 - -
Capital expenditure
(net)# US$m 2.0 1.2 0.3
ZARm 13.2 7.7 1.9
Capital expenditure
(net) attributable to
DRDSA US$m 0.5 - -
ZARm 3.1 - -
# Represents total operation
ERPM 100% attributable from 1 December 2005 (previously 40%)
6 months to 6 months to 6 months to
31 Dec 2005 30 Jun 2005 31 Dec 2004
(*Restated) (*Restated)
Ore milled
Underground t"000 76 63 82
Surface t"000 587 390 362
Total t"000 663 453 444
Yield
Underground g/t 7.88 8.51 6.92
Surface g/t 0.41 0.43 0.33
Total g/t 1.26 1.55 1.54
Gold produced
Underground oz 19 264 17 233 18 159
kg 599 536 565
Surface oz 7 626 5 414 3 794
kg 238 168 118
Total oz 26 890 22 647 21 953
kg 837 704 683
Cash operating costs#
Underground US$/oz 447 396 367
ZAR/kg 94 025 79 155 73 597
ZAR/tonne 752 667 509
Surface US$/oz 456 460 624
ZAR/kg 95 857 91 874 124 431
ZAR/tonne 40 40 41
Total US$/oz 450 411 412
ZAR/kg 94 525 82 196 82 382
ZAR/tonne 126 127 127
Cash operating
(loss)profit# US$m 0.6 1.0 0.2
ZARm 3.8 6.8 1.3
Cash operating loss
Attributable to DRDSA US$m (0.6) - -
ZARm (3.9) - -
Capital expenditure
(net)# US$m 0.7 (1.1) -
ZARm 4.5 (7.5) -
Capital expenditure
(net) attributable
to DRD SA US$m 0.2 - -
ZARm 1.4 - -
# Represents total operation
Discontinued operations
North West (Hartebeestfontein and Buffelsfontein mines)
6 months to 6 months to 6 months to
31 Dec 2005 30 Jun 2005 31 Dec 2004
Ore milled
Underground t"000 - 246 740
Surface t"000 - 320 564
Total t"000 - 566 1 304
Yield
Underground g/t - 4.68 5.70
Surface g/t - 1.03 0.92
Total g/t - 2.61 3.63
Gold produced
Underground oz - 37 006 135 516
kg - 1 151 4 215
Surface oz - 10 578 16 750
kg - 329 521
Total oz - 47 584 152 266
kg - 1 480 4 736
Cash operating costs US$/oz - 665 459
ZAR/kg - 133 275 91 814
ZAR/tonne - 348 333
Cash operating
(loss)/profit US$ m - (12.1) (6.5)
ZAR m - (75.3) (40.2)
Capital expenditure US$ m - (0.1) 3.4
ZAR m - (0.7) 21.0
Share Option Scheme
The following summary provides information in respect of the DRDGOLD (1996)
Share Option Scheme as at 31 December 2005:
Number of Options % of issued capital
In issue 15 675 441 5.09
Options currently vested 7 684 780 2.49
INVESTOR INFORMATION
DIRECTORS - (*British)(**Australian)(***American)
Executives:
MM Wellesley-Wood (Chief Executive Officer)*
JWC Sayers (Chief Financial Officer)
Non-executives:
J Turk ***
Independent non-executives:
DJM Blackmur**; GC Campbell*; RP Hume
Group Company Secretary:
TJ Gwebu
INVESTOR RELATIONS
For further information, contact Ilja Graulich at:
Tel: (+27-11) 219-8700, Fax: (+27-11) 476-2637,
e-mail: ilja.graulich@za.drdgold.com,
website: http://www.drdgold.com
Ebsco House 4, 299 Pendoring Avenue,
Blackheath, Randburg, South Africa.
PO Box 390,
Maraisburg, 1700,
South Africa.
Johannesburg
23 February 2006
Date: 23/02/2006 08:00:21 AM Produced by the JSE SENS Department
