Johannesburg, South Africa. 21 February 2008. DRDGOLD Limited (JSE: DRD; NASDAQ: DRO0Y) CEO John Sayers said today the company is pushing ahead with all of its South African gold mining and dump retreatment projects, notwithstanding continuing industry concerns regarding the power supply from State utility Eskom.
Commenting on DRDGOLD’s results for the quarter ended 31 December 2007, Sayers said: “We believe the most constructive course of action is for Government, Eskom and key, major consumers such as ourselves to continue to co-operate in both finding and applying workable solutions to the power dilemma.”
He pointed to the company’s recent track record of success in working with Eskom to effect power savings at the Blyvoor operation, and to undertakings from Eskom of advance warning of impending power cuts “which at least allows for a measure of planning and for safety”.
Group gold production from continuing operations for the quarter was 13% lower at 77 259 oz. This was due primarily to the loss of seven production shifts at Blyvoor arising for a stoppage of underground mining operations imposed by the Safety Inspectorate of the Department of Minerals and Energy (DME) following two fatalities in October 2007, and to breakdowns of the main ventilation fan and sub-shaft man-winder at ERPM.
Revenue for the quarter was 4% lower at R416.9 million as a result of the lower gold production and after accounting for cash operating costs, virtually unchanged at R369.3 million, cash operating profit was 24% lower at R47.6 million.
“While we remain firmly of the view that the Safety Inspectorate’s seven-day stoppage at Blyvoor was unnecessary, it is pleasing to report that the parties are now addressing their mutual concern about mine safety in a more constructive and pragmatic manner,” Sayers said.
The ERPM breakdowns demonstrated clearly the importance of ongoing, substantive infrastructure maintenanance, a key element of the drive to return the South African operations to sustainable levels of stability, Sayers said.
“In addition to growth, there is no more sensible application of the company’s healthy cash reserves.”
Sayers reported that, during the quarter, the company had secured two-year wage settlements at each of its operations without recourse to industrial action.
He noted that measures taken to offset the negative impact of the annual Christmas break had paid dividends at both Blyvoor and ERPM with both recording significant year-on- year production improvements for the December month.
Elaborating on DRDGOLD’s continuing projects, Sayers said early, low-level production is expected from Blyvoor’s Way Ahead ore replacement project during the September 2008 quarter and exploration drilling to evaluate the south-west, down-dip extension of the Blyvoor orebody south of the Boulder Dyke is under way.
At ERPM, the Department of Minerals and Energy has approved overstoping of the exploration development into Extension 1, which will permit upgrading from a measured and indicated resource to a proven and probable resource for the June 2008 annual ore reserve declaration.
“At Crown, now that the Gauteng Provincial Heritage Resources Authority has dropped its opposition to the recovery of the Top Star dump, we are ready to begin work almost as soon as a positive response from the DME to our application for a mining licence is received,” Sayers said.
At the Ergo Joint Venture with Mintails, Phase 1 development is progressing, with the start of gold production from the refurbished Brakpan plant expected during the last quarter of 2008 provided there are no regulatory delays.
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