| Fri 28 Apr 2006, 8:00 | | DRDGold Limited - Report On Activities For The Thi |
|
DRD
DRDD
DRDGold Limited - Report On Activities For The Third Quarter Ended 31 March 2006
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 ON ACTIVITIES FOR THE THIRD QUARTER ENDED 31 MARCH 2006
OF THE 2006 FINANCIAL YEAR
GROUP RESULTS (Unaudited)
KEY FEATURES
- Group gold production steady at 129 657 oz
- Australasian production 27% lower due mainly to planned West Wall changes at
Porgera
- Blyvoor"s new mine plan kicks in; early intersection of Alpha Dyke
- Ministerial approval for Top Star
- High grade exploration results continue at Tolukuma and Vatukoula
KEY RESULTS SUMMARY
GROUP Quarter Quarter % 9 Months to Quarter
Mar 2006 Dec 2005 Change Mar 2006 Mar 2005
Attributable gold production(*)
Australasian Operations
oz 42 979 58 850 (27) 169 749 79 334
kg 1 337 1 832 (27) 5 282 2 467
South African Operations
oz 86 678 71 407 21 225 795 60 733
kg 2 696 2 221 21 7 023 1 889
Discontinued operations
oz - - - - 47 584
kg - - - - 1 480
Group oz 129 657 130 257 - 395 544 187 651
kg 4 033 4 053 - 12 305 5 836
Cash operating costs
Australasian operations
US$/oz 514 341 (51) 371 227
ZAR/kg 102 286 71 782 (42) 76 540 44 169
South African Operations
US$/oz 511 463 (10) 468 418
ZAR/kg 103 519 97 532 (6) 96 493 81 002
Group US$/oz 512 406 (26) 426 412
ZAR/kg 103 156 85 449 (21) 87 825 81 222
Gold price received
US$/oz 561 487 15 502 431
ZAR/kg 112 633 102 555 10 103 547 83 341
Capital expenditure
US$ million 6.8 12.2 45 24.3 1.3
ZAR million 41.2 79.8 48 155.7 7.1
* 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
316 292 684 ordinary no par value shares
5 000 000 cumulative preference shares
Total ordinary no par value shares issued and committed: 349 489 303
STOCK TRADED JSE NASDAQ FRANKFURT
Avg. volume for the quarter
per day (000) 674 4 311 123
% of issued stock traded
(annualised) 56 356 6
Price - High R12.10 US$2.02 Euro 1.66
- Low R 7.80 US$1.24 Euro 1.05
- Close R 9.20 US$1.55 Euro 1.26
SAFETY
It is with deep regret that we record the deaths of two employees at the South
African operations during the quarter under review. Alfonso Magumane died in a
shaft incident underground at ERPM on 16 February and Castigo Nhuzuane in a fall
of ground at Blyvooruitzicht Gold Mining Company Limited ("Blyvoor") on 21
March. In the previous quarter, the South African operations were fatality-free.
At Blyvoor, both the Disabling Injury Frequency Rate ("DIFR") and the Reportable
Injury Frequency Rate ("RIFR") improved; the former from 6.37 to 5.1 and the
latter from 2.29 to 0.74. At ERPM, the DIFR deteriorated from 14.58 to 16.41,
while the RIFR improved from 9.28 to 4.6. At the CGR surface operation, the DIFR
improved from 5.10 to 3.76 in the quarter under review, but the RIFR
deteriorated from 2.54 to 3.76.
The Australasian operations were fatality-free in the quarter under review. At
Tolukuma Mines Limited ("Tolukuma"), however, both the DIFR and RIFR
deteriorated from 0 to 3.98. At Emperor, the Lost Time Injury Frequency Rate
("LTIFR") remained unchanged at 2, while the DIFR improved from 5 to 4.
PRODUCTION
Group gold production was virtually unchanged at 129 657 ounces ("oz"). While
gold production from the South African operations increased by 21% to 86 678 oz,
that from the Australasian operations declined by 27% to 42 979 oz. In South
Africa, gold production from ERPM"s underground operation was higher; in
Australasia, gold production was lower at all three operations but the major
negative impact arose from planned West Wall changes at Porgera. Production
movements are discussed in more detail in the operation-by-operation
commentaries below.
Australasian operations
Porgera Quarter Quarter % 9 mnths to Quarter
Mar 2006 Dec 2005 Change Mar 2006 Mar 2005
(20% of the Joint
Venture)
Ore milled t"000 241 270 (11) 792 297
Yield g/t 3.15 3.83 (18) 3.97 5.07
Gold produced oz 24 410 33 218 (26) 101 023 48 406
kg 760 1 034 (26) 3 144 1 506
Cash operating costs
US$/oz 455 288 (58) 318 191
ZAR/kg 90 457 60 685 (49) 65 605 37 073
Capital expenditure
US$ million 1.1 6.8 84 9.8 0.9
ZAR million 5.8 44.4 87 63.0 5.0
An 11% decline in ore milled to 241 000 tonnes ("t") and a planned 18% drop in
yield to 3.15 grams per tonne ("g/t") arising from increased treatment of
stockpile led to a 26% decline in attributable gold production to 24 410 oz.
Major factors contributing to lower throughput were the continued utilisation of
resources for the removal of slip material from the West Wall failure which is
now 36% complete; power outages due to vandalism of pylons (7days lost); and the
disruption of fuel supplies arising from damage to a bridge caused by heavy
rains. This bridge has since been repaired. Six full days and six half days were
also lost due to a strike by the local workforce during the take-over bid of
Placer Dome by Barrick Gold.
Cash operating costs were 58% higher at US$455 per ounce as a consequence of
lower production.
Tolukuma Quarter Quarter % 9 mnths to Quarter
Mar 2006 Dec 2005 Change Mar 2006 Mar 2005
Ore milled t"000 47 54 (13) 148 52
Yield g/t 7.70 9.52 (19) 8.91 11.27
Gold produced oz 11 659 16 524 (29) 42 382 18 878
kg 362 514 (29) 1 318 586
Cash operating costs
US$/oz 637 447 (43) 497 321
ZAR/kg 127 122 94 105 (35) 102 624 62 404
Capital expenditure
US$ million 1.3 2.5 48 4.9 0.5
ZAR million 8.0 16.4 51 31.7 3.2
Gold production was 29% lower at 11 659 oz, reflecting a 13% decline in ore
milled to 47 000 t and a 19% drop in yield to 7.70 g/t.
Production for the period was severely impacted by the loss of the hydro on two
separate occasions: the first when a landslide resulting from excessive rain
severed the headrace pipeline and the second when non ML104 landowners aired an
unfounded grievance by blocking the intake. These resulted in the loss of 10
days of production. Flooding of the main production area, resulting from the
same rains, forced production to be moved to the upper areas of the mine with
delays incurred due to ordered pumps arriving late on site. Total development
increased by 13% quarter on quarter.
The lower production was the main contributor to a 43% increase in cash
operating costs to US$637 per ounce.
Emperor
39.52% attributable from 5 December 2005 (previously 45.33%)
Quarter Quarter % 9 mnths to Quarter
Mar 2006 Dec 2005 Change Mar 2006 Mar 2005
Ore milled t"000 36 48 (25) 138 63
Yield g/t 5.97 5.92 1 5.94 5.95
Gold produced oz 6 910 9 108 (24) 26 344 12 050
kg 215 284 (24) 820 375
Attributable gold production from the company"s Vatukoula mine was 24% lower,
reflecting a 25% decline in ore milled to 36 000 t. Lower tonnage resulted from
restricted access to high-grade areas due to water in-flow, de-watering and
deteriorating ground conditions. DRDGOLD"s attributable tons and gold were also
affected by the reduction of the company"s equity holding in Emperor from 45.33%
to 39.52% with effect 5 December 2005. New support standards have been
introduced to improve conditions while the issue of dewatering will be addressed
through the new capital project plan as part of the accelerated development and
training programme. Yield increased by 1% to 5.97 g/t.
Total development decreased from 3 009 metres to 2 915 metres quarter on
quarter.
Cash operating costs rose by 18% to US$691 per ounce, reflecting lower gold
production.
In line with a change to the mine plan announced in the previous quarter, in
terms of which production is being re-directed from the lower grade Smith Shaft
areas to high-grade Philip Shaft sources, work on various infrastructure-related
improvements continued at Philip Shaft during the quarter. Production from Smith
Shaft has now been ceased.
The implementation of the new "Accelerated development and training plan" is
designed to introduce flexibility to production areas, to improve infrastructure
and increase the productivity of the workforce. The plan includes development
of higher grade areas in the vicinity of Philip Shaft and upgrading of
associated shaft infrastructure. In addition, the entire workforce will undergo
a comprehensive assessment, re-skilling and retraining programme.
Over the next 18-months, Emperor will invest F$27 million in capital
expenditure.
A Workers Relief Fund of F$300 000 has been committed by the Fijian Government
to assist employees.
South African operations
Blyvoor Quarter Quarter % 9 mnths to Quarter
Mar 2006 Dec 2005 Change Mar 2006 Mar 2005
Area mined m2 000 36 33 9 104 36
Development m 679 579 17 1 987 453
Face length m 1 413 1 193 18 1 278 1 234
Stoping width cm 110 106 (4) 108 108
Ore milled
Underground t"000 171 152 13 496 140
Surface t"000 927 914 1 2 714 780
Total t"000 1 098 1 066 3 3 210 920
Yield
Underground g/t 4.59 6.18 (26) 5.65 7.36
Surface g/t 0.38 0.32 19 0.34 0.27
Total g/t 1.03 1.15 (10) 1.16 1.35
Gold produced
Underground oz 25 238 30 190 (16) 90 054 33 115
kg 785 939 (16) 2 801 1 030
Surface oz 11 221 9 292 21 29 709 6 880
kg 349 289 21 924 214
Total oz 36 459 39 482 (8) 119 763 39 995
kg 1 134 1 228 (8) 3 725 1 244
Cash operating costs
US$/oz 551 454 (21) 459 422
ZAR/kg 109 914 95 564 (15) 94 699 81 606
Capital expenditure
US$ million 2.4 2.0 (21) 6.6 (0.1)
ZAR million 15.1 13.1 (15) 42.5 (0.6)
Total gold production was 8% lower at 36 459 oz, due to a 16% decrease in gold
production from underground to 25 238 oz. Surface gold production increased by
21% to 11 221 oz.
A 13% increase in underground ore milled to 171 000 t was insufficient to offset
the impact of a 26% decline in underground yield to 4.59 g/t. Both an increase
in tonnage and a decline in yield were anticipated in terms of the new mine plan
announced at the end of the previous quarter, implementation of which began
during the quarter under review. However, interception of the Alpha Dyke in the
No 5 Shaft high grade area earlier than anticipated negatively affected output.
Drilling to better determine the location and extent of the dyke has begun.
Seismicity also negatively affected production in the area. Damaged stoping has
had to be re-opened in order that mining can be resumed. Faulting encountered in
the high-grade S section in the No 5 Shaft area led to a higher than expected
level of off-reef mining and, consequently, lower yield.
In terms of the new mine plan, mining in the seismically active high-grade B5A
area has been reduced in the interests of employee safety and is being increased
in the No 4 Shaft and lower-grade No 6 Shaft areas. Overall production from
underground is expected to reach 70 000 t by September 2006.
Phase 1 of the No 2 Sub-shaft Project - involving the re-establishment of access
to No 2 Shaft from No 5 Shaft and development and stoping of mining areas en
route - was completed during the quarter, some three months ahead of schedule.
Phase 2 of the project - involving the re-equipping of the sub-shaft - is under
review.
While heavy rainfall reduced recoveries from the slimes retreatment project and
gold production was 2% lower as a consequence, gold production from the
treatment of rock dump material increased by 90%, resulting in the overall
increase in gold production from surface sources.
Overall cash operating costs increased by 21% to US$551 per ounce, reflecting a
34% increase in underground cash operating costs to US$692 per ounce due to
lower underground gold production. Surface cash operating costs decreased by 8%
to US$233 per ounce.
Crown
100% attributable from 1 Dec 2005(Previously 40%)
Quarter Quarter % 9 mnths to Quarter
Mar 2006 Dec 2005 Change Mar 2006 Mar 2005
Ore milled t"000 1 946 1 255 55 4 095 841
Yield g/t 0.37 0.41 (10) 0.40 0.39
Gold produced oz 23 213 16 635 40 52 136 10 643
kg 722 517 40 1 621 331
Cash operating costs #
US$/oz 502 391 (28) 416 428
ZAR/kg 99 841 82 486 (21) 85 809 82 723
Capital expenditure #
US$ million 1.3 1.5 13 3.3 0.7
ZAR million 7.8 10.0 22 21.0 4.4
# Represents total operation
Gold production for the operation as a whole was 18% lower at 23 213 oz,
reflecting a 7% decline in ore milled to 1 946 000 t. Heavy rainfall during
January and February 2006 and piping infrastructure failures on the CMR
reclamation site and on the residue disposal system impacted negatively on
throughput at the Crown plant in particular. Yield was 12% lower at 0.37 g/t,
reflecting depletion of higher grade material from the CMR reclamation site and
an increase in production from the lower grade Robertson Deep reclamation site.
Replacement of high-risk sections of the CMR pipeline is scheduled for
completion during the fourth quarter and planning for the replacement of one of
the two residue pipelines is well advanced. The Minister of Minerals and Energy
has given consent that an application for a mining license in respect of the Top
Star dump to the south of Johannesburg"s Central Business District be submitted.
This brings to three, the number of approvals considered favourably by the
Department of Minerals and Energy since DRDGOLD South African Operations (Pty)
Limited ("DRDSA") concluded its Black Economic Empowerment ("BEE") transaction
in December 2005.
Due to lower gold production, cash operating costs increased by 28% to US$502
per ounce.
ERPM
100% attributable from 1 Dec 2005(Previously 40%)
Quarter Quarter % 9 mnths to Quarter
Mar 2006 Dec 2005 Change Mar 2006 Mar 2005
Area mined m2 # 000 16 16 - 50 16
Development # m 157 413 (62) 906 253
Face length # m 725 723 - 715 694
Stoping width # cm 135 132 (2) 133 126
Ore milled
Underground t"000 72 42 71 148 30
Surface t"000 537 381 41 1 124 197
Total t"000 609 423 44 1 272 227
Yield
Underground g/t 8.86 7.81 13 8.36 7.61
Surface g/t 0.38 0.38 (1) 0.39 0.42
Total g/t 1.38 1.13 23 1.32 1.38
Gold produced
Underground oz 20 512 10 545 96 39 776 7 433
kg 638 328 96 1 237 231
Surface oz 6 494 4 745 37 14 120 2 662
kg 202 148 37 440 83
Total oz 27 006 15 290 77 53 896 10 095
kg 840 476 77 1 677 314
Cash operating costs #
US$/oz 493 491 - 464 462
ZAR/kg 98 045 103 518 5 95 678 89 408
Capital expenditure #
US$ million 0.7 0.7 - 1.4 -
ZAR million 4.4 4.3 (2) 8.9 -
# Represents total operation.
Total gold production was 2% higher at 27 006 oz, reflecting an 11% increase in
gold production from underground to 20 512 oz. Production from the Cason
surface operation was 18% lower at 6 494 oz.
Higher gold production from underground resulted from a 1% increase in ore
milled to 72 000 t and a 9% increase in yield to 8.86 g/t. Traversing of the 16-
metre, up-throw fault on the eastern side of the mine is now 90% complete; in-
situ grades continue to be very pleasing and separation of reef and waste
underground is substantially improving recoveries.
Refurbishment of the Far East Vertical ("FEV") Shaft decline conveyor continues
and is scheduled for completion by the end of the June quarter. The design and
modification of the conveyor in order to split the belt into two sections, thus
reducing tension and the incidence of breakdowns, is under consideration. A belt
splicing issue, which resulted in 206 hours of downtime during the quarter, has
been resolved by a switch from cold- to hot-splicing.
Opening up and development above 70 level in order to reduce dependence on
production via the decline is progressing well and is expected to provide 150
metres of extra face length. Production from 66 level is scheduled to begin
during May 2006.
Planning for the exploration drilling programme of the ERPM extension (Sallies
lease area) has been completed and the contract has been placed. Exploration
drilling will begin during May 2006.
Design and costing of the pumping upgrade project - intended to both increase
water pumping levels and create mud pumping capacity, which will impact
positively on gold recovery - have been completed. The project will begin once
funding arrangements are in place.
Phase 2 of the plugging project continues and is scheduled for completion by the
end of June 2007.
Lower gold production from the Cason surface operation resulted from a 14%
decrease in throughput to 537 000 t. Yield was unchanged at 0.38 g/t. A mill
bearing failure in the ERPM plant during the quarter under review, which
negatively affected throughput, has been repaired. Commissioning of two
additional mills at the Knights plant during the June quarter is expected to
significantly improve surface throughput and recovery efficiencies.
Overall cash operating costs increased slightly to US$493 per ounce with cash
operating costs from underground 7% lower at US$470 per ounce.
Discontinued operations
North West
(Hartebeestfontein and Buffelsfontein mines)
Quarter Quarter % 9 mnths to Quarter
Mar 2006 Dec 2005 Change Mar 2006 Mar 2005
Ore milled t"000 - - - - 566
Yield g/t - - - - 2.61
Gold produced oz - - - - 47 584
kg - - - - 1 480
Cash operating costs
US$/oz - - - - 665
ZAR/kg - - - - 133 275
Capital expenditure
US$ million - - - - (0.1)
ZAR million - - - - (0.7)
EXPLORATION - TOLUKUMA
Exploration activities in the quarter have focused on drilling targets
peripheral to the main mineralised centres at Tolukuma, with drilling and
surface sampling targeting extensions to the main structures. This focus will
change in the coming quarter with the availability of three underground drill
rigs. These rigs will target the highest priority targets within the Tolukuma
Mine Corridor, being the Tolimi, Tolukuma, Fundoot and Gulbadi structures at
depth, and the highly prospective Zine structure, which has returned bonanza
style grades from recent exploration development.
Zine Underground Development
Exploration development along the Zine 1525 south level commenced in late
February to determine what potential for mineralisation existed at the
intersection of the Zine and high grade Tinnabar structures. Previous data
suggested that there may be potential if the correct controls of mineralisation
could be intersected. This recent development has shown that the Zine structure
does indeed have significant potential to host bonanza style mineralisation,
along a significant vertical and strike extent.
Selected results from development channel sampling on the 1525 south level are
listed below.
Channel No. Width Grade
282 1.5 m 13.3 g/t Au and 117 g/t Ag
285 1.7 m 21.7 g/t Au and 100 g/t Ag
288 1.9 m 49.0 g/t Au and 35 g/t Ag
291 1.9 m 50.4 g/t Au and 92 g/t Ag
292 2.0 m 84.6 g/t Au and 31 g/t Ag
295 1.9 m 25.9 g/t Au and 44 g/t Ag
The average value of continuous mineralised drive development completed on this
structure during the quarter is 32 metres advanced with an average vein width of
1.9m and values of 37.5g/t Au and 97g/t Ag respectively.
These bonanza style values have been further supported by recent development
along the Zine structure, with the tenor and width of the structure continuing
to provide highly encouraging results from channel sampling. This structure is
being targeted this coming quarter with a program of drilling to determine the
resource potential along this structure.
Surface Exploration
Ridge and Spur sampling ML 104
As part of the increased understanding on the controls of mineralisation at
Tolukuma, a program of ridge and spur sampling and creek traversing was
completed between the Gulbadi and Kunda prospects. This work involved sampling
across the interpreted extensions of the mine corridor which had not been
subject to this style of exploration. This data will be used to define the
location of the multiple vein corridors in the area and generate further targets
for trenching and drilling. Results as yet remain outstanding.
Surface Drilling
Gufinis
Seven holes were completed on the Gufinis structure in the period. No
significant intersections were returned, and it appears that with the current
knowledge base that little prospectivity remains. No further work is planned for
this area.
120 North Structure
Three holes targeted the 120 North vein below a 150m long zone of strong
mineralisation delineated by surface trenching. This drilling, whilst
intersecting encouraging epithermal textures, failed to deliver any significant
results with values returned all less than 4g/t Au.
Tolukuma Footwall
Thirteen short holes tested the extent of the Tolukuma footwall mineralisation
for a total of 1,177.9m drilling. Results returned indicate that whilst
mineralisation does exist i.e. TFW007 1.0m @ 27.2 g/t Au, it does not occur over
either a significant vertical or lateral extent to make it economically viable.
This area will also be reviewed to determine what potential remains.
Banana West/Wossa Ridge
Two holes were drilled into the Wossa Ridge structure below high grade trench
and grab sample results of up to 580g/t Au. The results returned so far do not
support the tenor of mineralisation encountered at the surface, and this
localised enrichment is most likely a product of weathering and mechanical
enrichment. Further geochemical and textural analysis will be completed on the
drill core to determine if any prospectivity remains. Importantly the Banana
West structure continues to the northwest of Tolukuma and the structure is
interpreted to intersect a large vegetation anomaly similar to the one which
covered the original Tolukuma mineralisation. This area will be mapped and
trenched to determine what is the causative factor of this anomaly.
Kunda
Four holes were completed at Kunda over a three hundred metre strike length.
Results returned were disappointing. Three of the four holes intersected
encouraging thicknesses of epithermal quartz, with widths up to 6m, however only
low grade gold and silver values were returned with a maximum result returned in
KD016 of 1.3m @ 1.4 g/t Au and 22.9 g/t Ag. Fluid inclusion and petrographical
analysis will be carried out to determine if any potential remains along this
structure.
Underground Drilling
Underground drilling in the period was significantly reduced due to rig
accessibility. This resulted in severely reduced output by the LMA-90 drill rig,
with only two holes being completed.
Gulbadi Red
Two holes were drilled in the period to the south of the main zone of
mineralisation at Gulbadi Red. No significant results were returned. However,
this may be in part due to the poor core recovery encountered in TU066. Further
work is planned for this area to follow up the high grade intersections
encountered in previous drill holes.
Diamond Drilling Summary
During this quarter a total of 3,923.8m were drilled from 24 drillholes compared
to 4,936.5m in the previous quarter. The reduced meterage was due to a planned
rebuild being completed on the Longyear 44 drill rig and the inaccessibility,
due to flooding, of the underground drill rigs. It is expected that during this
quarter an LM-75 drill rig will be commissioned at Tolukuma. This drill rig will
be used to target the high priority exploration targets which exist at depth and
along strike of the current mineralised centres at Tolukuma.
Regional Exploration
The company continued to maintain eleven Exploration Licences ("EL") covering
9,114 sq km. Seven tenements are granted, namely EL"s 683, 1297, 1379, 1271,
1352 and 1366 with four tenements, EL"s 580, 894, 1264, 1327 awaiting renewal.
Activity for the quarter included maintenance of tenure matters, commencement of
field work in EL"s 1284 and EL 1297, and, completion of a major technical
exploration review of all tenements.
Exploration Field Work
EL 1284
A field crew consisting of one contract geologist and one field supervisor
commenced work in mid March 2006 in the Belavista prospect area conducting ridge
and spur soil sampling, trenching and creek mapping as a follow up of an
intrusive (diorite) float with encouraging gold values, from an inferred
porphyry source. The most significant exposure to date is a vegetation anomaly
(similar to the Tolukuma vegetation anomaly) on a prominent hill. Trenching and
detailed sampling of this wider area is planned during April. The planned
program has been hampered by extreme wet weather but is expected to be completed
by the end of April 2006. Details of field work and results will be presented in
the next quarter.
EL1297
A Supervising Geologist, a contract geologist and three field assistants
commenced work in mid March using Popondetta as a landing and supply base, via
Lae. Work commenced on ridge and spur soil sampling, creek mapping and trenching
at Ioma, also investigating a porphyry or intrusion related source. Prospecting
along extensive areas of the Oi and Milton Creeks encountered pervasive alluvial
gold throughout and in perched alluvial banks but failed to realise significant
zones of hydrothermal alteration to indicate a major primary mineralisation
source. Forward work includes completion of soil lines and a reconnaissance
sampling visit to the Gira Circular Structure and to the Green Creek prospect in
EL 1366 to the south and Baranuma Prospect area in EL 1327 to the north west of
Ioma. This work is expected to be completed by mid May and details of field work
and results will be presented in the next quarter.
Exploration Review
A major technical review of all exploration tenements which commenced in July
2005 has neared completion. The technical review phase has been completed and
final edits of eleven EL reports and a Summary Report are being finalised.
TerraSearch completed validating and uploading all geochemical information
across all the tenements and the Tolukuma database is now considered to be up to
date. Together with recently acquired Landsat 7 thematic images and a Aster
(15m) digital terrain model, a comprehensive base now exists for future
exploration planning on the existing tenements and the immediate regions.
The tenements contain mineralisation and anomalies at all scales from individual
porphyry stocks (Cu-Au) to the Tolukuma epithermal vein (Au) system. The
mineralisation is intimately associated with Pliocene volcanic piles and is
expected to be connected to Miocene-Pliocene intrusions. Important controlling
structures also occur, similar to those observed at other important deposits in
PNG.
Much of the "modern" exploration from the past (1960"s onward), has been
sourced, reviewed and synthesised and has greatly assisted in defining
individual prospects, their potential and the broader regional opportunity.
These evaluations have highlighted and high-graded in excess of 30 separate
prospects with several key prospects at an advanced stage requiring major
drilling and exploration. These prospects exhibit large areas of geochemical and
geophysical anomalism. Detailed geological knowledge of the Tolukuma discovery
base to current mining, other PNG deposits and knowledge and comparison to other
deposits worldwide has allowed screens to be applied and a ranking of prospects
undertaken. Priorities for future exploration have been recommended.
This exploration review establishes the basis for the aggressive A$15 million
exploration program unveiled by Emperor at the recent Asia Mining Congress held
in Singapore during March 2006.
EXPLORATION - EMPEROR
A$15m Exploration Program
On 29 March 2006 at the Asia Mining Congress 2006 in Singapore, Emperor unveiled
details of its extensive A$15million, 100 kilometres drilling and exploration
program over its gold tenements in Fiji and Papua New Guinea. The combination of
the PNG gold projects with Emperor"s existing Fijian tenements makes Emperor one
of the biggest gold exploration tenement holders in both countries. The
exploration program for PNG could help lift Tolukuma to world class status.
Speaking at the Congress, CEO Mr Wellesley-Wood said Emperor"s tenement holdings
provided excellent opportunities to increase shareholder value. "We have highly
prospective tenement holdings in `elephant country" with a diversified and well
balanced portfolio of projects ranging from mine ready to green fields. We have
a fully equipped exploration division with six rigs in PNG and 10 in Fiji which
is supported by an extensive database across PNG and Fiji sourced from 35 years
of physical data from full airborne and satellite imagery."
Also speaking at the conference, Emperor Executive Vice-President, Exploration,
Richard Johnson, said it was one of the biggest exploration campaigns commenced
in PNG or Fiji. "This program represents the culmination of many years of
investigation using new exploration technologies. It is now time to start
drilling," Mr Johnson said.
FIJI
Vatukoula
Drilling focus shifted back to the highly prospective Vatukoula Deeps and Basala
Project areas this quarter, following ongoing dewatering below the 17L workings.
This quarter saw a combined total of 4,789 m drilled at Vatukoula
At Philip Shaft, recent underground diamond drilling in the vicinity of the
Philip Shaft has targeted extensions of several flatmake structures within a
zone of inferred resource, which was previously poorly understood and thought to
be geologically complex. This high priority target is referred to as the
Brewster 4-Ways Target. The first hole in this programme, PU-18-074, intersected
both the Prince William and Prince flatmakes with encouraging results. The
second hole, PU-18-075 drilled on the same azimuth but at a steeper angle, has
intersected both the Prince William and Dolphin structures. Program results to
date are as follows:
Hole No. Target From(m) To(m) Width True Grade Remarks
width(m) (g/t)
PU-18-074 PW 181.28 181.67 0.39 0.25 37.82 0.12 @ 77.25
PU-18-074 PW 202.34 202.74 0.40 0.23 23.54 0.10 @ 55.75
PU-18-075 PW 76.30 77.10 0.80 0.27 113.84
PU-18-075 Dolphin 177.33 177.94 0.61 0.35 13.87
Elsewhere in the Philip section, exploration focus expanded to include the
Basala project where previously untested flatmakes are interpreted to occur
within the footwall of Prince William flatmake. Drill testing commenced late in
the quarter and initial results from 16L returning the following intersection:
Hole No. Target From(m) To(m) Width True Grade Remarks
width(m) (g/t)
PU-16-099 PW FW1 48.06 48.28 0.22 0.18 16.73
Fiji Regional
There was no exploration elsewhere in Fiji. An aggressive regional programme
for Tuvatu and Vanua Levu is under review.
SENIOR MANAGEMENT CHANGES
South Africa
Dr Paseka Ncholo resigned as Executive Chairman of DRDSA with effect from
January 2006. Dr Ncholo remains as a Non-Executive Director of DRDSA
representing the interest of Khumo Gold SPV (Pty) Limited ("KBH"). Mr Niel
Pretorius has been appointed as Acting Chief Executive Officer of DRDSA.
Australasia
On 18 January 2006, Mr Clyde Moore was appointed as Chief Financial Officer of
Emperor.
Mr Mike Marriott resigned as Chief Operating Officer of DRD Australasia and
Director of Emperor. Mr Sean O"Connor resigned as General Manager of Vatukoula
Gold Mine. Mr Andre Labuschagne has been appointed Acting Chief Operating
Officer of Emperor and Mr Greg Shay appointed as Acting General Manager
Vatukoula Gold Mine - all effective 31 March 2006.
On 24 April 2006, Mr Brad Gordon was appointed Chief Executive Officer of
Emperor. Mr Gordon is a former Senior Executive of Placer Dome having also held
the position of General Manager Porgera Joint Venture as well as country head of
Placer Dome Australasian region.
Mr Mark Wellesley-Wood remains Chief Executive Officer of DRDGOLD and a Director
of Emperor. This means that executive responsibility for Emperor will pass to Mr
Brad Gordon in due course while Mr Wellesley-Wood will represent DRDGOLD on the
Emperor board.
MARK WELLESLEY-WOOD
Chief Executive Officer
28 April 2006
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* (Non-Executive Chairman)
RP Hume
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.
Date: 28/04/2006 08:00:35 AM Produced by the JSE SENS Department
