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DRD - DRDGOLD Limited - Report to shareholders for the quarter and year ended 30
June 2011
DRDGOLD LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1895/000926/06)
JSE trading symbol: DRD
ISIN: ZAE 000058723
Issuer code: DUSM
NASDAQ trading symbol: DROOY
("DRDGOLD" or "the Group")
REPORT TO SHAREHOLDERS FOR THE QUARTER AND YEAR ENDED 30 JUNE 2011
GROUP RESULTS
KEY FEATURES FOR THE YEAR
- Dividend declared of 7.5 cents, up 50%
- Gold production up 10% to 265 179 oz
- Ergo`s gold production up 37%
- Revenue up 29% to R 2 565.3 million
- Operating profit up 76% to R 477.0 million
- Headline earnings per share up 115% to 28 cents per share
- Net cash inflow from operations up 504% to R323.9 million
- Crown/Ergo pipeline project on schedule and within budget, to be
completed in December 2011
- Net asset value of Blyvoor written down to nil
REVIEW OF OPERATIONS
GROUP Quarter Quarter % Quarter
Jun 11 Mar 11 Change Jun 10
Gold production oz 63 079 67 387 (6) 61 632
kg 1 962 2 096 (6) 1 917
Gold sold oz 61 150 67 387 (9) 57 293
kg 1 902 2 096 (9) 1 782
Cash operating costs US$/oz 1 283 1 090 18 1 004
ZAR/kg 280 240 241 563 16 244 331
Gold price received US$/oz 1 522 1 411 8 1 204
ZAR/kg 331 372 312 913 6 292 769
Capital expenditure US$ million 13.8 12.3 12 8.9
ZAR million 93.6 85.2 10 67.5
12 months to 12 months to %
30 Jun 11 30 Jun 10 Change
Gold production oz 265 179 241 194 10
kg 8 248 7 502 10
Gold sold oz 267 590 239 427 12
kg 8 323 7 447 12
Cash operating costs US$/oz 1 119 953 17
ZAR/kg 251 296 233 112 8
Gold price received US$/oz 1 372 1 092 26
ZAR/kg 308 221 267 292 15
Capital expenditure US$ million 45.3 25.5 78
ZAR million 315.8 193.9 63
STOCK
ISSUED CAPITAL
384 884 379 ordinary no par value shares
5 000 000 cumulative preference shares
Total ordinary no par value shares issued and committed: 406 467 306
STOCK TRADED JSE NASDAQ*
Average volume for the quarter per day (000) 700 1 641
% of issued stock traded (annualised) 47 111
Price - High R4.00 US$0.623
- Low R2.98 US$0.426
- Close R3.27 US$0.484
*This data represents per share data and not per American Depositary
Share("ADS") data - one ADS reflects ten ordinary shares.
FORWARD-LOOKING STATEMENTS
Many factors could cause the actual results, performance or achievements of
DRDGOLD 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 DRDGOLD serves, a drop in the gold price, a sustained
strengthening of the Rand against the Dollar, regulatory developments adverse to
DRDGOLD or difficulties in maintaining necessary licences 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 the annual report for the fiscal year ended 30 June
2010 which was filed with the United States Securities and Exchange Commission
on 29 October 2010 on Form 20-F. Shareholders should not place undue reliance
on these forward-looking statements, which speak only as of the date thereof.
DRDGOLD does 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. Any forward-looking
statements included in this report have not been reviewed and reported on by
DRDGOLD`s auditors.
OVERVIEW
Dear shareholder
I am pleased to report that our long commitment to a consistent set of strategic
goals, is increasingly showing the desired outcomes. Our stated strategy
involves measures to reduce risk, manage costs and to increase margin. I have
always believed that the true measure of the health of a business is its net
cash flow. This year our company generated net cash of R323.9 million from
operations, up 504% from last year. Our operating profit was R477.0 million, or
38% of our market capitalisation as at 30 June 2011 and we managed R315.8
million worth of capital reinvestment in our operations, without diluting
shareholder equity.
Gold production from our mechanised, 24/7 recycling circuits comprised 66% of
production. Importantly, we also gave credence to earlier statements that our
underground operation is a ring-fenced risk, when we suspended financial
assistance to Blyvooruitzicht Gold Mining Company Limited ("Blyvoor") in June.
Blyvoor has been fully impaired in the year under review, which of course has a
once off, non-cash impact on profit. Headline earnings per share ("HEPS") is not
affected by this accounting adjustment, and is up 115% year on year.
We are also delighted to declare a dividend for the fourth year in a row. This
year`s 7.5 cents per share dividend is up 50% from the previous year, and our
stock offers the second highest dividend yield amongst South African gold mining
companies.
Safety, health and environment
The Group`s safety, health and environmental performance for FY2011 will be
reported comprehensively in its Sustainable Development Report, to be published
on or about 30 September 2011.
It is pleasing to report, in the meantime, that the Group recorded its second
fatality-free quarter in succession.
Good progress continues to be made with the behavior-based safety initiative: a
steering committee has been elected and trained; a list of critical behaviors
compiled from analysis of accidents; observer checklists prepared for critical
behaviors; observers selected and trained and safety officers trained to observe
observers.
During the quarter, a total of R12.8 million was spent on environmental
management issues.
Production
Total gold production for the year under review rose by 10% to
265 179oz from 241 194oz in the previous year. This reflected continued recovery
of the underground circuit of Blyvoor from the negative impact of seismicity-
induced damage to high-grade production areas at No 5 Shaft and continued
bedding down of the Ergo surface retreatment circuit.
Total gold production for the quarter under review was 2% higher at
63 079oz compared with 61 632oz produced in the comparable quarter of FY2010 as
a result of strong performances by the Blyvoor surface retreatment circuit and
the Ergo circuit offsetting the impact of lower production from the Blyvoor
underground and Crown circuits, the circumstances of which are commented upon in
greater detail under the Detailed operational review below.
Reserves and resources
Attributable mineral reserves remained unchanged at 7.3Moz in FY2011. The
attributable mineral resource increased slightly to 60.2Moz.
The FY2011 reserve and resource information was prepared in compliance with the
South African Code for Reporting of Exploration Results, Mineral Resources and
Mineral Reserves ("SAMREC") by DRDGOLD`s designated competent persons, Nr R.
Botha and Mr V. Labuschagne, who are both employees of DRDGOLD.
Financial
Year on year
Revenue for the year increased by 29% to R2 565.3 million (FY2010:
R1 990.5 million) reflecting higher gold production and a 15% increase in the
average Rand gold price received to R308 221/kg (FY2010:
R267 292/kg).
Cash operating unit costs for the year were 8% higher at R251 296/kg (FY2010:
R233 122/kg), a consequence mainly of electricity price increases and higher
winter tariffs imposed by power utility Eskom.
Operating profit was 76% higher at R477.0 million (FY2010: R271.6 million). HEPS
was 115% higher at 28 SA cents (FY2010: 13 SA cents).
Capital expenditure was 63% higher at R315.8 million (FY2010: R193.9 million),
reflective mainly of continued investment in development of the Crown/Ergo
pipeline to more fully exploit synergies between the two surface circuits.
Q42011 v Q42010
Revenue for the quarter was 21% higher at R630.2 million compared with R521.7
million in the comparable quarter of FY2010 reflecting higher gold production
and a higher average Rand gold price received.
Cash operating unit costs were 15% higher at R280 240/kg (Q4 2010: R244 331/kg),
due mainly to the aforementioned higher electricity costs.
Operating profit was 21% higher at R111.0 million (Q4 2010: R91.5 million). HEPS
was 67% lower at 8 SA cents (Q4 2010: 24 SA cents). Loss before taxation for the
quarter was R523.1 million mainly due to a R546.6 million impairment of
Blyvoor`s property, plant and equipment, consequent upon that operation`s
previously reported current financially distressed position (see below under
Corporate activity).
Corporate activity
On 23 June 2011, DRDGOLD`s Board of Directors ("DRDGOLD Board") announced its
decision to suspend any further financial assistance to Blyvoor, pointing out
that Blyvoor`s operating and consequent financial difficulties were continuing;
that the internal revolving credit facility for Blyvoor was fully drawn down and
that the operation needed an estimated R80 million in financial assistance
through to December 2011. The Board of Directors of Blyvoor announced
simultaneously its decision to start business rescue proceedings for Blyvoor in
terms of Chapter 6 of South Africa`s new Companies Act.
Subsequent to this, on 14 July 2011, DRDGOLD announced that Blyvoor had accepted
an offer of assistance from AngloGold Ashanti Limited ("AGA"), subject to
finalisation of a binding agreement, in terms of which AGA would sell to
Blyvoor some 390 000mSquared of its neighbouring Savuka mining area for R35
million. Pending the necessary regulatory approvals and subject to the afore-
mentioned finalisation of a binding agreement, Blyvoor will mine the area under
contract.
The DRDGOLD Board believes that there may be potential for Blyvoor to generate
significant free cashflow by mining the Savuka ground, which will assist in
respect of discussions between DRDGOLD and prospective lenders to Blyvoor and
suitors for DRDGOLD`s 74% interest in the operation.
Meanwhile, the Blyvoor business rescue process, led by a registered business
rescue practitioner, has been continuing. On 17 August 2011, the High Court
granted an extension until 1 November for the publication of a business rescue
plan. Blyvoor sought the extension so that various processes currently under
way, critical to the finalisation of the plan could be concluded. These
processes include; discussions on terms with creditors; wage negotiations with
unions and associations; negotiations with neighbouring mines regarding further
asset acquisitions and on-mine measures to improve labour, energy and water
efficiencies.
Detailed operational review
Blyvoor
Year on year
Total gold production for the year was 121 114oz, up 14% from
106 452oz. This reflected continued recovery of the underground operations from
the effects of substantial seismic damage in the high-grade areas of No 5 Shaft
and a protracted, wage-related strike in the previous year. Underground
production rose by 18% to 91 470oz from
77 226oz, while surface production was stable, rising by 1% to
29 644oz from 29 226oz.
Total cash operating unit costs increased by 9% to R289 870/kg from R265 445/kg,
a consequence mainly of power utility Eskom`s price increases and higher winter
tariffs. Underground cash operating unit costs rose by 5% to R342 123/kg from
R324 736/kg and surface cash operating unit costs by 18% to R128 636/kg from
R108 771/kg.
Operating profit rose substantially to R70.0 million from R16.3 million due to
improved gold production and a higher average Rand gold price received.
Capital expenditure, 19% higher at R94.4 million (FY2010: R79.6 million), was
directed mainly towards the relocation and installation of an ERPM compressor,
and to opening up and development.
Q42011 v Q42010
Total gold production for the quarter under review was 27 715oz, an improvement
of 4% on the 26 685oz achieved in the comparable quarter of FY2010. The key
driver of this was substantially higher surface gold production.
Underground gold production was 7% lower at 19 548oz (Q4 2010:
21 027oz). This reflected the negative impact of six production shifts lost due
to unscheduled Eskom power outages; voluntary suspension of production from some
high-grade No 5 Shaft areas in the interests of safety because of elevated
levels of seismicity; six production shifts lost due to a Section 54 safety-
related stoppage at No 6 Shaft; and an explosion at an explosives supplier`s
site necessitating the use of sub-optimal explosives for some weeks, resulting
in too much fragmentation and gold loss. Surface gold production increased by
44% to 8 167oz (Q4 2010: 5 658oz), a consequence of both higher throughput and
grade in respect of surface sources, and a general surface clean-up operation
conducted during the quarter.
Total cash operating unit costs were 17% higher at R344 006/kg
(Q4 2010: R293 034/kg) due mainly to the combined effect of Eskom`s 28.2%
electricity price increase and higher winter tariffs. The combined effect of
this and Eskom`s winter tariff was a cash operating unit cost rise of R28
000/kg. Underground cash operating unit costs rose by 30% to R432 910/kg (Q4
2010: R333 986/kg), while surface cash operating unit costs dropped by 7% to
R131 197/kg (Q4 2010:
R140 858/kg).
An operating loss of R0.6 million was incurred compared with a R4.6 million
operating profit in the comparable quarter of FY2010, reflecting the impact of
higher costs.
Capital expenditure, 35% higher at R26.5 million (Q4 2010: R19.6 million), was
directed mainly towards opening up and development.
Crown
Year on year
Total gold production for the year was down 4% to 95 713oz from
99 410oz in FY2010. This was as a consequence of a 2% decline in average grade
from 0.43g/t to 0.42g/t. Throughput was stable at
7 120 000t.
Total cash operating unit costs increased by 13% to R225 653/kg from R199
135/kg, reflecting lower gold production and the effect of Eskom electricity
price increases.
Operating profit increased by 18% to R248.5 million (FY2010: R210.0 million), a
substantially higher average Rand gold price received offsetting the impact of
lower production.
Capital expenditure, substantially higher at R148.2 million (FY2010: R45.8
million), was directed mainly towards the Crown/Ergo pipeline project.
Q42011 v Q42010
Gold production for the quarter under review was 22 152oz compared with 24 081oz
for the comparable quarter in FY2010, a decline of 8%. This was due to a 12%
decline in grade to 0.38g/t from 0.43g/t, mainly reflecting the conclusion of
recovery of surface material from the Top Star site. Throughput was 4% higher at
1 834 000t (Q4 2010:
1 760 000t).
Cash operating unit costs were 17% higher at R247 673/kg (Q4 2010: R211 216/kg),
a consequence of lower gold production and the combined effect of Eskom`s 28.2%
electricity increase and higher winter tariff.
Operating profit was virtually unchanged at R55.4 million, the higher average
Rand gold price received offsetting the impact of lower production.
Capital expenditure was R40.6 million (Q4 2010: R34.0 million), reflecting on-
going development of the Crown/Ergo pipeline.
Ergo
Year on year
Total gold production for the year under review was 37% higher at
48 352oz (FY2010: 35 332oz). This reflects an 11% rise in throughput to 13 206
000t (FY2010: 11 867 000t) and a 22% rise in average grade to 0.11g/t (FY2010:
0.09g/t), resulting from continued build-up of slimes recovery from the Elsburg
Tailings Complex.
Total cash operating unit costs dropped by 11% to R205 436/kg (FY2010: R231
294/kg) due mainly to the marked increase in gold production
Operating profit leapt to R158.5 million from R45.3 million, the result of
higher gold production, lower costs and a higher Rand gold price received.
Lower capital expenditure of R57.1 million (FY2010: R62.2 million), reflecting
completion of pumping and pipeline infrastructure to bring the Elsburg Tailings
Complex fully on line, was directed mainly towards refurbishment of the second
carbon in leach ("CIL") circuit at the Brakpan plant and increasing the capacity
of the Brakpan tailings deposition site.
Q42011 v Q42010
Gold production for the quarter under review was 13 212oz, up 22% on the 10
866oz produced in the comparable quarter of FY2010. This reflects an improvement
of 11% in throughput to 3 617 000t (Q4 2010:
3 269 000t) and of 10% in average grade to 0.11g/t (Q4 2010: 0.10g/t), both
indicative of continued optimisation of the Ergo circuit.
Higher gold production contained an increase in cash operating unit costs by 2%
at R201 095/kg (Q4 2010: R198 118/kg).
Operating profit was up 77% at R56.2 million (Q4 2010: R31.8 million) due to
higher gold production, well controlled costs and a higher Rand gold price
received.
Capital expenditure was R18.5 million (Q4 2010: R11.4 million), reflecting on-
going refurbishment of the Brakpan plant`s second CIL circuit and work to
increase the Brakpan tailings deposition facility`s capacity.
Zimbabwe
At the 610ha Leny exploration site, opening up of the quartz veins is
continuing. By the end of the quarter, 150m had been opened up along strike at a
depth of 8m, with grades varying considerably from 1-33g/t. Results of a soil
geochem survey, which will inform a decision whether or not to proceed with a
second drilling programme are expected by the end of September 2011.
At the 310ha Ascot exploration site, a soil geochem survey and selective
trenching have been completed. Results of these are expected during September
and will inform a decision whether or not to proceed with a drilling programme.
At the 110ha Dilcap (John Bull) exploration site, a decision on a drilling
programme will depend on results from magnetic, IP and soil geochem surveys -
all completed - which are expected during September.
At Zhombe, 21 new claims covering 210ha have been pegged. Magnetic, IP and soil
geochem surveys are to be carried out over these. Other claims in the area show
very high grade.
At Gweru we have secured a two year option over a leasehold spanning
approximately 21 000 hectares where drilling is currently underway.
Dividend
The DRDGOLD Board has declared a final dividend of 7.5 South African cents per
ordinary share for the year ended 30 June 2011, which amounts to a total final
dividend payout of R28.9 million. The dividend is declared in Rands.
In compliance with the requirements of Strate, given the company`s primary
listing on the JSE Limited, the salient dates for payment of the dividend are as
follows:
2011
Last date to trade ordinary shares cum dividend Friday, 7 October
Ordinary shares trade ex dividend Monday, 10 October
Record date Friday, 14 October
Payment date Monday, 17 October
On payment date, dividends due to holders of certificated securities on the
South African share register will either be electronically transferred to the
shareholders` bank accounts or, in the absence of suitable mandates, dividend
cheques will be posted to such shareholders.
Dividends in respect of dematerialised shareholdings will be credited to
shareholders` accounts with the relevant CSDP or broker.
To comply with the further requirements of Strate, between Monday, 10 October
2011 and Friday 14 October 2011, both days inclusive, no transfers between the
South African and any other share register will be permitted and no ordinary
shares pertaining to the South African share register may be dematerialised or
rematerialised.
The currency conversion date for the Australian and United Kingdom registers
will be Monday, 17 October 2011.
To holders of ADSs
Each ADS represents ten ordinary shares
2011
ADSs trade ex dividend on NASDAQ Wednesday, 12 October
Record date Friday, 14 October
Approximate date for currency conversion Friday, 21 October
Approximate payment date of dividend Monday, 31 October
Assuming an exchange rate of R7.20/$1, the dividend payable per ADS is
equivalent to 10.42 US cents. However, the actual rate of payment will depend on
the exchange rate on the date for currency conversion.
Looking ahead
We are now in a position to add a level of detail to our statement of strategic
objectives. Reducing risk means further growing surface recovery exposure and
phasing out our deep level underground mining operation.
Improving margin and managing costs means optimising recoveries at Crown and
Ergo whilst improving efficiencies. In this regard we are encouraged by recent
findings in the ongoing research at Ergo. We intend to build on this and match
its science to appropriate technology to increase recoveries from current
throughput.
Responsible growth means that our internal growth will be focused on organic
business enhancement with near term payback. External growth will remain focused
on exploration opportunities in Zimbabwe, and possibly Mozambique.
At Blyvoor the Business Rescue Practitioner is preparing a business plan that
will facilitate divestiture on appropriate terms. Progress has been encouraging.
Our objective is to have certainty on a new Blyvoor structure by the end of this
calendar year.
We intend to appoint a dedicated management team to ERPM 1 and 2. Their key task
will be to take it up the value curve and position it appropriately to unlock
the potential of this 18 million ounce resource.
Niel Pretorius
Chief Executive Officer
NOTE REGARDING FINANCIAL INFORMATION
The condensed consolidated preliminary financial statements are prepared in
accordance with the recognition and measurement principles of International
Financial Reporting Standards ("IFRS") and presented in accordance with the
minimum content, including disclosures, prescribed by IAS 34 Interim Financial
Reporting applied to year end reporting, and South African Statements and
Interpretations of Statements of Generally Accepted Accounting Practice (AC 500
Series). The accounting policies adopted are in line with IFRS and are
consistent with those applied in the annual financial statements for the year
ended 30 June 2010.
The condensed consolidated financial statements of DRDGOLD Limited for the year
ended 30 June 2011 have been reviewed by Mr R Davel of KPMG Inc, the group`s
auditor. In their review report dated 29 August 2011, which is available for
inspection at the Company`s Registered Office, KPMG Inc state that their review
was conducted in accordance with the International Standard on Review
Engagements 2410, Review of Interim Information Performed by the Independent
Auditor of the Entity, which applies to a review of group preliminary financial
information, and have expressed an unmodified conclusion on the condensed
consolidated preliminary financial statements.
CONDENSED CONSOLIDATED Quarter Quarter Quarter
Statement of comprehensive Jun 11 Mar 11 Jun 10
income R m R m R m
Unaudited Unaudited Unaudited
Gold and silver revenue 630.2 655.9 521.7
Net operating costs (519.2) (510.8) (430.2)
Cash operating costs (549.8) (506.4) (468.4)
Movement in gold in process 30.6 (4.4) 38.2
Operating profit 111.0 145.1 91.5
Depreciation (34.9) (32.7) (57.7)
Movement in provision for
environmental rehabilitation (note 1)(35.3) (7.8) 110.9
Retrenchment costs - (0.4) (0.5)
Net operating profit 40.8 104.2 144.2
Impairments (note 2) (547.7) - (6.2)
Corporate, administration and other
expenses (59.2) (35.4) (12.0)
Share-based payments (0.9) (0.8) (0.6)
Net gain/(loss) on financial
liabilities measured at amortised
cost (note 3) 33.5 (1.9) 6.2
Profit on disposal of assets 1.6 - 0.9
Profit on disposal of subsidiaries
and joint venture - - 158.2
Finance income 6.4 5.2 7.4
Finance expenses 2.4 (6.5) (7.2)
(Loss)/profit before taxation (523.1) 64.8 290.9
Income tax (0.4) (0.2) 12.4
Deferred tax (note 4) 15.6 (5.5) (55.4)
(Loss)/profit for the period (507.9) 59.1 247.9
Attributable to:
Equity owners of the parent (367.9) 48.1 240.9
Non-controlling interest (140.0) 11.0 7.0
(507.9) 59.1 247.9
Other comprehensive income
Foreign exchange translation reserve 0.8 - (156.8)
Mark to market of available for
sale investments 0.3 - 5.2
Total comprehensive income
for the period (506.8) 59.1 96.3
Attributable to:
Equity owners of the parent (366.9) 48.1 88.0
Non-controlling interest (139.9) 11.0 8.3
(506.8) 59.1 96.3
Reconciliation of headline earnings
(Loss)/profit (367.9) 48.1 240.9
Adjusted for:
Impairments 547.7 - 6.2
Profit on disposal of assets (1.6) - (0.9)
Profit on disposal of subsidiaries
and joint venture - - (158.2)
Non-controlling interest in
headline earnings adjustment (150.0) - 3.5
Taxation thereon 0.8 - -
Headline earnings 29.0 48.1 91.5
Headline earnings per share-cents 8 13 24
Basic (loss)/earnings per share-cents (96) 13 63
Diluted headline earnings per
share-cents 8 13 24
Diluted basic (loss)/earnings per
share - cents (96) 13 63
Calculated on the weighted average
ordinary shares issued of 384 884 379 384 884 379 382 569 557
CONDENSED CONSOLIDATED 12 Months to 12 Months to
Statement of comprehensive Jun 11 Jun 10
income R m R m
Reviewed Reviewed
Gold and silver revenue 2 565.3 1 990.5
Net operating costs (2 088.3) (1 718.9)
Cash operating costs (2 072.7) (1 748.8)
Movement in gold in process (15.6) 29.9
Operating profit 477.0 271.6
Depreciation (130.9) (190.8)
Movement in provision for
environmental rehabilitation (note 1) (52.6) 88.0
Retrenchment costs (0.8) (20.1)
Net operating profit 292.7 148.7
Impairments (note 2) (547.7) (6.2)
Corporate, administration and other expenses (158.5) (116.6)
Share-based payments (3.5) (4.1)
Net gain on financial liabilities
measured at amortised cost (note 3) 17.1 6.2
Profit on disposal of assets 3.3 13.7
Profit on disposal of subsidiaries and
joint venture - 158.2
Finance income 27.8 27.4
Finance expenses (14.4) (15.7)
(Loss)/profit before taxation (383.2) 211.6
Income tax (6.3) (10.3)
Deferred tax (note 4) (25.9) 2.0
(Loss)/profit for the period (415.4) 203.3
Attributable to:
Equity owners of the parent (287.9) 207.8
Non-controlling interest (127.5) (4.5)
(415.4) 203.3
Other comprehensive income
Foreign exchange translation reserve 0.8 (156.5)
Mark to market of available for sale investments 0.3 5.2
Total comprehensive income for the period (414.3) 52.0
Attributable to:
Equity owners of the parent (286.9) 55.2
Non-controlling interest (127.4) (3.2)
(414.3) 52.0
Reconciliation of headline earnings
(Loss)/profit (287.9) 207.8
Adjusted for:
Impairments 547.7 6.2
Profit on disposal of assets (3.3) (13.7)
Profit on the disposal of subsidiaries
and joint venture - (158.2)
Non-controlling interest in headline earnings
adjustment (149.6) 6.8
Taxation thereon 0.8 -
Headline earnings 107.7 48.9
Headline earnings per share-cents 28 13
Basic (loss)/earnings per share-cents (75) 55
Diluted headline earnings per share-cents 28 13
Diluted basic (loss)/earnings per share-cents (75) 55
Calculated on the weighted average
ordinary shares issued of 384 884 379 380 407 239
CONDENSED CONSOLIDATED As at As at As at
Statement of financial 30 Jun 11 31 Mar 11 30 Jun 10
position Rm Rm Rm
Reviewed Unaudited Reviewed
Assets
Non-current assets 1 778.6 2 231.0 2 178.1
Property, plant and
Equipment (note 2) 1 550.1 1 992.6 1 863.2
Non-current investments and
other assets 25.1 24.8 48.1
Environmental rehabilitation
trusts funds 134.2 132.8 126.1
Deferred tax asset 69.2 80.8 140.7
Current assets 510.0 498.4 402.1
Inventories 122.9 95.5 132.6
Trade and other receivables 128.0 119.3 66.3
Cash and cash equivalents 259.1 268.6 188.2
Assets classified as held for sale - 15.0 15.0
Total assets 2 288.6 2 729.4 2 580.2
Equity and Liabilities
Equity 1 219.2 1 725.1 1 649.9
Equity of the owners of the parent 1 247.3 1 613.3 1 550.6
Non-controlling interest (28.1) 111.8 99.3
Non-current liabilities 659.4 687.4 661.1
Loans and borrowings (note 5) 40.4 73.8 59.0
Post retirement and other
employee benefits 6.3 14.1 13.4
Provision for environmental
rehabilitation 490.2 449.8 420.6
Deferred tax liability 122.5 149.7 168.1
Current liabilities 410.0 316.9 269.2
Trade and other payables 330.7 238.1 269.2
Loans and borrowings (note 5) 79.3 78.8 -
Total equity and liabilities 2 288.6 2 729.4 2 580.2
CONDENSED Quarter Quarter Quarter
Statement of changes in equity Jun 11 Mar 11 Jun 10
Rm Rm Rm
Unaudited Unaudited Unaudited
Balance at the beginning of
the period 1 725.1 1 665.5 1 539.7
Share capital issued - (0.3) 13.3
for acquisition finance and cash - - 14.3
for costs - (0.3) (1.0)
Increase in share-based
payment reserve 0.9 0.8 0.6
(Loss)/profit attributable to the
equity owners of the parent (367.9) 48.1 240.9
(Loss)/profit attributable to the
non-controlling interest (140.0) 11.0 7.0
Other comprehensive income 1.1 - (151.6)
Balance as at the end of the
period 1 219.2 1 725.1 1 649.9
CONDENSED 12 months to 12 months to
Statement of changes in equity 30 Jun 11 30 Jun 10
Rm Rm
Reviewed Reviewed
Balance at the beginning of the period 1 649.9 1 584.0
Share capital issued (0.7) 28.8
for acquisition finance and cash - 29.8
for share options exercised - 1.1
for costs (0.7) (2.1)
Increase in share-based payment reserve 3.5 4.1
(Loss)/profit attributable to the equity
owners of the parent (287.9) 207.8
Loss attributable to non-controlling interest (127.5) (4.5)
Dividends paid (19.2) (19.0)
Other comprehensive income 1.1 (151.3)
Balance as at the end of the period 1 219.2 1 649.9
CONDENSED CONSOLIDATED Quarter Quarter Quarter
Statement of cash flows Jun 11 Mar 11 Jun 10
Rm Rm Rm
Unaudited Unaudited Unaudited
Net cash inflow from operations 103.0 120.4 154.1
Net cash outflow from
investing activities (114.6) (85.2) (111.1)
Net cash in/(out)flow from
financing activities 1.3 (0.3) (55.2)
(Decrease)/increase in cash and
cash equivalents (10.3) 34.9 (12.2)
Translation adjustment 0.8 - (0.9)
Opening cash and cash equivalents 268.6 233.7 201.3
Closing cash and cash equivalents 259.1 268.6 188.2
Reconciliation of net cash inflow from operations
(Loss)/profit before taxation (523.1) 64.8 290.9
Adjusted for:
Movement in gold process (30.6) 4.4 (38.2)
Depreciation and impairments 582.6 32.7 63.9
Movement in provision for
environmental rehabilitation 35.3 7.8 (110.9)
Share-based payments 0.9 0.8 0.6
Net (gain)/loss on financial liabilities
measured at amortised cost (33.5) 1.9 (6.2)
Profit on disposal of assets (1.6) - (0.9)
Profit on disposal of subsidiaries
and joint venture - - (158.2)
Finance expenses and unwinding of
provisions 0.8 2.6 4.8
Growth in environmental trust funds (2.8) (1.7) (2.4)
Other non cash items (11.9) (1.3) (26.0)
Taxation paid (0.4) - (0.5)
Working capital changes 87.3 8.4 137.2
Net cash inflow from operations 103.0 120.4 154.1
CONDENSED CONSOLIDATED 12 months to 12 months to
Statement of cash flows 30 Jun 11 30 Jun 10
Rm Rm
Reviewed Reviewed
Net cash inflow from operations 323.9 53.6
Net cash outflow from investing activities (335.1) (226.4)
Net cash inflow from financing activities 81.3 7.8
Increase/(decrease)in cash and cash equivalents 70.1 (165.0)
Translation adjustment 0.8 (0.4)
Opening cash and cash equivalents 188.2 353.6
Closing cash and cash equivalents 259.1 188.2
Reconciliation of net cash inflow from operations
(Loss)/profit before taxation (383.2) 211.6
Adjusted for:
Movement in gold process 15.6 (29.9)
Depreciation and impairments 678.6 197.0
Movement in provision for
environmental rehabilitation 52.6 (88.0)
Share-based payments 3.5 4.1
Net gain on financial instruments measured
at amortised cost (17.1) (6.2)
Profit on disposal of assets (3.3) (13.7)
Profit on disposal of subsidiaries and
joint venture - (158.2)
Finance expenses and unwinding of provisions 9.4 10.8
Growth in environmental trust funds (8.4) (9.5)
Other non cash items (14.3) (25.3)
Taxation paid (6.2) (12.6)
Working capital changes (3.3) (26.5)
Net cash inflow from operations 323.9 53.6
NOTES TO FINANCIAL STATEMENTS
1. Movement in provision for environmental rehabilitation
The current year charge to profit or loss includes a charge of R11.0 million for
East Rand Proprietary Mines Limited ("ERPM"), R27.2 million for Crown, R5.6
million for Blyvoor and R9.2 million for Ergo relating to ongoing mining
activities. The prior year credit to profit and loss includes credits of R63.4
million and R4.8 million relating to the derecognition of the provisions of
Durban Roodepoort Deep and West Witwatersrand Gold Mines (Pty) Ltd respectively.
2. Impairments
The current year impairment includes R546.6 million in respect of Blyvoor`s
property, plant and equipment as the result of the uncertainties brought about
by their current distressed financial position.
3. Net gain/(loss) on financial liabilities measured at amortised cost
The net gain/(loss) on financial liabilities measured at amoritised cost in the
statement of comprehensive income comprises the expected cash flows of the
preference shares issued to Khumo Gold SPV (Pty) Limited and the DRDSA
Empowerment Trust. These preference shares are re-assessed on a quarterly basis
and based on the expected future cash flows from ERPM and Blyvoor.
4. Deferred tax
During the year under review the company changed the deferred tax rate from the
maximum statutory rate to the expected average effective tax rate, resulting
from the income tax formula for mining income. This change has been accounted
for as a change in estimate and is therefore applied prospectively. The reason
for the change is to align ourselves with the rest of the gold mining industry
in South Africa. The change reduced the expense through profit or loss and the
net deferred tax liability with R40.1 million.
5. Loans and borrowings
Included in loans and borrowings is a R500 million Domestic Medium Term Note
Programme ("DMTN Programme") under which DRDGOLD may from time to time issue
notes. R108 million was issued on 1 October 2010, consisting of R78 million and
R30 million respectively, under the DMTN Programme and the different notes
issued mature 12 and 24 months from the date of issue and bear interest at the
three month Johannesburg Inter-bank Acceptance Rate plus a margin ranging from
4% to 5% per annum. The DMTN Programme is unsecured.
KEY OPERATING AND FINANCIAL RESULTS (Unaudited)
METRIC/ZAR Blyvoor Crown Ergo Total
Ore milled (`000t)
Underground Jun 11 Qtr 182 - - 182
Mar 11 Qtr 172 - - 172
YTD Jun 11 732 - - 732
Surface Jun 11 Qtr 779 1 834 3 617 6 230
Mar 11 Qtr 828 1 796 3 227 5 851
YTD Jun 11 3 129 7 120 13 206 23 455
Total Jun 11 Qtr 961 1 834 3 617 6 412
Mar 11 Qtr 1 000 1 796 3 227 6 023
YTD Jun 11 3 861 7 120 13 206 24 187
Yield (g/t)
Underground Jun 11 Qtr 3.34 - - 3.34
Mar 11 Qtr 4.19 - - 4.19
YTD Jun 11 3.89 - - 3.89
Surface Jun 11 Qtr 0.33 0.38 0.11 0.22
Mar 11 Qtr 0.28 0.42 0.12 0.24
YTD Jun 11 0.29 0.42 0.11 0.23
Total Jun 11 Qtr 0.90 0.38 0.11 0.31
Mar 11 Qtr 0.95 0.42 0.12 0.35
YTD Jun 11 0.98 0.42 0.11 0.34
Gold Produced (kg)
Underground Jun 11 Qtr 608 - - 608
Mar 11 Qtr 720 - - 720
YTD Jun 11 2 845 - - 2 845
Surface Jun 11 Qtr 254 689 411 1 354
Mar 11 Qtr 229 758 389 1 376
YTD Jun 11 922 2 977 1 504 5 403
Total Jun 11 Qtr 862 689 411 1 962
Mar 11 Qtr 949 758 389 2 096
YTD Jun 11 3 767 2 977 1 504 8 248
Cash operating costs (ZAR per kg)
Underground Jun 11 Qtr 432 910 - - 432 910
Mar 11 Qtr 327 200 - - 327 200
YTD Jun 11 342 123 - - 342 123
Surface Jun 11 Qtr 131 197 247 673 201 095 211 685
Mar 11 Qtr 131 266 219 185 191 594 196 753
YTD Jun 11 128 636 225 653 205 436 203 470
Total Jun 11 Qtr 344 006 247 673 201 095 280 240
Mar 11 Qtr 279 920 219 185 191 594 241 563
YTD Jun 11 289 870 225 653 205 436 251 296
Cash operating costs (ZAR per tonne)
Underground Jun 11 Qtr 1 446 - - 1 446
Mar 11 Qtr 1 370 - - 1 370
YTD Jun 11 1 330 - - 1 330
Surface Jun 11 Qtr 43 93 23 46
Mar 11 Qtr 36 93 23 46
YTD Jun 11 38 94 23 47
Total Jun 11 Qtr 309 93 23 86
Mar 11 Qtr 266 93 23 84
YTD Jun 11 283 94 23 86
Gold and silver revenue (ZAR million)
Jun 11 Qtr 285.6 216.8 127.8 630.2
Mar 11 Qtr 295.9 237.6 122.4 655.9
YTD Jun 11 1 185.9 910.9 468.5 2 565.3
Operating profit/(loss) (ZAR million)
Jun 11 Qtr (0.6) 55.4 56.2 111.0
Mar 11 Qtr 25.0 71.6 48.5 145.1
YTD Jun 11 70.0 248.5 158.5 477.0
Capital expenditure (ZAR million)
Jun 11 Qtr 26.5 40.6 18.5 85.6
Mar 11 Qtr 27.1 35.6 20.8 83.5
YTD Jun 11 94.4 148.2 57.1 299.7
IMPERIAL/US$
Gold Produced (oz)
Underground Jun 11 Qtr 19 548 - - 19 548
Mar 11 Qtr 23 149 - - 23 149
YTD Jun 11 91 470 - - 91 470
Surface Jun 11 Qtr 8 167 22 152 13 212 43 531
Mar 11 Qtr 7 362 24 370 12 506 44 238
YTD Jun 11 29 644 95 713 48 352 173 709
Total Jun 11 Qtr 27 715 22 152 13 212 63 079
Mar 11 Qtr 30 511 24 370 12 506 67 387
YTD Jun 11 121 114 95 713 48 352 265 179
Cash operating costs (US$ per oz)
Underground Jun 11 Qtr 1 980 - - 1 980
Mar 11 Qtr 1 476 - - 1 476
YTD Jun 11 1 523 - - 1 523
Surface Jun 11 Qtr 599 1 138 920 970
Mar 11 Qtr 591 975 865 888
YTD Jun 11 573 1 002 915 906
Total Jun 11 Qtr 1 573 1 138 920 1 283
Mar 11 Qtr 1 263 975 865 1 090
YTD Jun 11 1 290 1 002 915 1 119
Gold and silver revenue (US$ million)
Jun 11 Qtr 42.2 32.1 18.8 93.1
Mar 11 Qtr 42.9 34.0 17.7 94.6
YTD Jun 11 169.7 130.1 67.1 366.9
Operating profit (US$ million)
Jun 11 Qtr - 8.2 8.2 16.4
Mar 11 Qtr 3.6 10.1 7.0 20.7
YTD Jun 11 10.0 35.6 22.7 68.3
Cash expenditure (US$ million)
Jun 11 Qtr 3.9 6.0 2.7 12.6
Mar 11 Qtr 3.9 5.2 3.0 12.1
YTD Jun 11 13.5 21.3 8.2 43.0
The disclosures of the different operations will also form the basis on which
the operating segments will be disclosed in the annual report in accordance with
IFRS 8 (Operating Segments).
CASH OPERATING COSTS RECONCILIATION
CONTINUING OPERATIONS (R000 unless otherwise stated)
Blyvoor Crown Ergo Total
Total cash costs
Jun 11 Qtr 293 455 171 614 80 175 545 244
Mar 11 Qtr 277 929 177 286 76 217 531 432
YTD Jun 11 1144 117 703 739 324 451 2172 307
Movement in gold in process
Jun 11 Qtr 10 352 9 339 10 897 30 588
Mar 11 Qtr (5 198) 218 580 (4 400)
YTD Jun 11 (23 878) 9 464 (1 197) (15 611)
Less: Production taxes, rehabilitation and other
Jun 11 Qtr 2 715 4 319 7 692 14 726
Mar 11 Qtr 2 517 7 246 1 640 11 403
YTD Jun 11 9 817 23 097 11 796 44 710
Less: Corporate and general administration costs
Jun 11 Qtr 4 559 5 987 730 11 276
Mar 11 Qtr 4 570 4 116 627 9 313
YTD Jun 11 18 481 18 336 2 482 39 299
Cash operating costs
Jun 11 Qtr 296 533 170 647 82 650 549 830
Mar 11 Qtr 265 644 166 142 74 530 506 316
YTD Jun 11 1091 941 671 770 308 976 2072 687
Gold produced (kg)
Jun 11 Qtr 862 689 411 1 962
Mar 11 Qtr 949 758 389 2 096
YTD Jun 11 3 767 2 977 1 504 8 248
Total cash operating costs (R/kg)
Jun 11 Qtr 344 006 247 673 201 095 280 240
Mar 11 Qtr 279 920 219 185 191 594 241 563
YTD Jun 11 289 870 225 653 205 436 251 296
Total cash operating costs (US$/oz)
Jun 11 Qtr 1 573 1 138 920 1 283
Mar 11 Qtr 1 263 975 865 1 090
YTD Jun 11 1 290 1 002 915 1 119
DIRECTORS - (*British)(**American)
Executive:
DJ (Niel) Pretorius (Chief Executive Officer)
CC Barnes (Chief Financial Officer)
Non-executives:
J Turk **
Independent non-executives:
GC Campbell*(Non-Executive Chairman); RP Hume; EA Jeneker
Company Secretary:
TJ Gwebu
INVESTOR RELATIONS
For further information, contact Niel Pretorius at:
Tel: (+27)(0)11 470 2600, Fax: (+27) (0)11 470 2618,
website: http://www.drdgold.com
Quadrum Office Park, 50 Constantia Boulevard,
Constantia Kloof Ext 28, South Africa.
PO Box 390,
Maraisburg, 1700,
South Africa.
Roodepoort
29 August 2011
JSE LIMITED SPONSOR
One Capital
Date: 29/08/2011 08:00:01 Supplied by www.sharenet.co.za
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