DRDGOLD LTD — Interim / Quarterly Report 2014

Oct 24, 2014

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87% to R48.0 million

•gold production improved by another 8%, quarter-on-quarter. Compared to the March quarter (30 126oz) the positive swing was 23% or 6 879oz;

•net cash inflow from operations rose to R86.6 million. This enabled us to pay down R73.3 million in debt that was due in July, and maintain a cash balance of R204 million; and

•Q1 2015 VS Q4 2014 Operational review Gold production rose by 8% quarter on quarter to 37 005oz, benefiting from a 12% increase in the average yield to 0.194g/t that offset a small reduction in volume throughput.
The carbon adsorption inefficiencies and throughput issues that plagued the initial start-up of the flotation and fine-grind circuit (FFG) did not manifest this time round, and inventory build-up in the FFG impacted gold output exactly as anticipated.

Gold sold was 17% higher at 38 291oz, a consequence of the sale during the September quarter of 1 286oz of gold produced in the June quarter.

We track five important indicators in the FFG test-work:
Cash operating costs were 1% lower at R375 044/kg mainly due to higher gold production, notwithstanding an increase in the local authority’s power tariff from 1 July and annual wage increments.
•the efficiency of the float circuit, targeting a mass pull of 3.5% to 4% of throughput and containing at least 40% of the gold contained in the feed. This target was achieved early on in test work and is being maintained;

All-in sustaining costs were 26% higher at R427 631/kg. This increase is due mainly to the impact of a favourable R94.7 million decrease in environmental costs, credited to the statement of profit and loss in the previous quarter. This is explained in greater detail in note 7, below.

•the efficiency of the mills, targeting a reduction in size of the mill feed to between 20 and 22 microns, while not exceeding a certain grinding media consumption rate. Although the grind is within specification, the media consumption rate is still higher than we are targeting and we intend to run a number of further tests in this regard;

Total all-inclusive cash expenditure for the quarter, including all operational and corporate cash costs and capital expenditure, excluding only the R73.3 million loan note repayment in July, was R478.4 million. This translates into all-inclusive cash expenditure of R415 659/kg of gold produced, down from R430 234/kg in the previous quarter.

•leach and carbon adsorption efficiency. Our carbon efficiencies are trending very favourably and dissolved losses are within specification. We do believe that the combined leach and carbon efficiency will benefit from a different leach and adsorption configuration. We will test this assumption during October and if this turns out to be correct, a minor engineering adjustment will be made to bring about the re-configuration;

We consider this to be an important measure to enable us to track all in break-even costs and the net cash flows of the business.

Capital expenditure was 18% lower at R16.6 million, reflecting both completion of all major projects and specific planning to reduce capital expenditure during the winter months.
•the effect of the FFG on the down-stream low grade CIL circuit. An initial concern was that the reagents used in the float cells could impact carbon adsorption efficiencies downstream. We have not, as yet, seen any adverse effects and are closely monitoring this to keep the low grade CIL in steady state; and

Financial review Revenue increased by 18% to R528.5 million due to the increases in gold production and gold sold, and a 1% rise in the average rand gold price received to R443 760/kg.
•washed residue value trends. Ultimately the purpose of the FFG

After accounting for other expenses and taxation, a loss of R4.7 million was recorded, compared with a profit of R7.9 million in the previous quarter.

REPORT TO SHAREHOLDERS FOR THE QUARTER ENDED 30 SEPTEMBER 2014: Q1 FY2015

Sep 2014Jun 2014 UnauditedUnaudited

As at 30 Sep 201431 Jun 2014

Unaudited

QuarterQuarter
Sep 2014Jun 2014
RmRm

QuarterQuarter Sep 2014Jun 2014 RmRm UnauditedUnauditedUnaudited

REPORT TO SHAREHOLDERS FOR THE QUARTER ENDED 30 SEPTEMBER 2014: Q1 FY2015

Period ended 30 Sep 2013

ADJUSTMENTS TO THE GROUP STATEMENT OF CASH FLOWS

Period ended 30 Sep 2013

REPORT TO SHAREHOLDERS FOR THE QUARTER ENDED 30 SEPTEMBER 2014: Q1 FY2015

REPORT TO SHAREHOLDERS FOR THE QUARTER ENDED 30 SEPTEMBER 2014: Q1 FY2015

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 2013, which we filed with the United States Securities and Exchange Commission on 25 October 2013 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. Any forward-looking statement included in this report have not been reviewed and reported on by DRDGOLD’s auditors.