DRDGOLD LTD — Interim / Quarterly Report 2014

Feb 11, 2014

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(Q2 2014 V Q1 2014)

Gold production upOperating profit up to

first gold produced4% to 35 043oz

Quarter%6 months to6 months to 30 Jun 2013 Dec 201331 Dec 2013

1 090

330 585| 46.3 | | | | |
| --- | --- | --- | --- | --- |
| – | (3)107 | 25 | (3) | (107) |

As at 31 Dec 2013 (ZARm)	1 441.3	As at 30 Sept 2013 (ZARm)	2 254.5		768
As at 31 Dec 2013 (US$m)	142.2	As at 30 Sept 2013 (US$m)	220.4
					52	96
	SHAREHOLDER				R 5.85	$0.575
				• Low	R 3.10	$0.316
				• Close	R 3.74	$0.369

Cash operating unit costs rose by 19% to R351 557/kg and all-in sustaining costs by 14%, from R405 450/kg.

Capital expenditure at Ergo was 42% lower at R107.8 million, as we neared the end of construction of the FFG circuit.

The operating margin weakened to 16% from 36% and the all-in sustaining costs margin from 23% to 4%.

Q2 2014 v Q1 2014EBITDA declined by 74% to R73.9 million and headline loss of
OPERATING REVIEWR11.6 million (3 South African cents per share) was recorded, compared with headline earnings of R170.2 million (45 South African cents per share).
Although there was a 4% decline in throughput to 5 856 000t compared with the first quarter, the new circuit contributed marginally to a 9% increase in the average yield to 0.186g/t. Gold production was thus 4% higher at 35 043oz.
Applying our established guideline of distributing approximately 30% of free cash flow, there is no room for considering a distribution at this time. The board has therefore decided not to declare an interim dividend.

Higher gold production resulted in an 11% decrease in cash operating unit costs to R330 585/kg. All-in sustaining costs were 14% lower at R375 246/kg.
COMMISSIONING OF FFG
Capital expenditure at Ergo Mining (Proprietary) Limited (“Ergo”) rose by 6% to R55.6 million due to costs incurred to bring on line the FFG circuit’s third thickener.

FINANCIAL REVIEW Revenue was 7% lower at R450.6 million due both to a decline of 4% in gold sold to 35 043oz and of 3% in the average gold price received to R413 359/kg. However, after accounting for net operating costs – 11% lower at R366.5 million – operating profit was 17% higher at R84.1 million.

Now, with each component of the new circuit up and running, our objective over the next few months will be to further synchronise the operation of all the components of our plant. A simple leach and elution process now has an added four layers. These components all interact and need to be co-ordinated to achieve and maintain steady state. We are confident that this is within reach and we will provide regular updates on progress.

The operating margin improved from 13% to 20% and the all-in sustaining costs margin from -2% to 9%.

APPOINTMENT OF CHIEF FINANCIAL OFFICER Earnings before interest, taxes, depreciation and amortisation (“EBITDA”) increased by 68% to R46.3 million. Headline earnings were R0.9 million (0 South African cents) compared with the previous quarter’s headline loss of R12.5 million (3 South African cents).
With effect from 1 January 2014, Francois van der Westhuizen assumed the role of Chief Financial Officer of DRDGold succeeding Craig Barnes, who relocated to Australia as previously announced. The board is grateful to Craig for the contribution he made during his tenure.

Six months to 31 December 2013 v six months to 31 December 2012LOOKING AHEAD The lower than planned gold production this year, due to the late commissioning of the FFG and the fact that we are only now easing into steady state, means that for the near term our approach to costs and capital expenditure will remain conservative in order to preserve an adequate cash buffer. By and large the measures required to achieve steady state are operational and within our control though. That will continue to be our main priority.
OPERATING REVIEW Gold production for the first six months of FY2014 was down 8% to 68 640oz compared with the first six months of FY2013 due to an 11% decline in the average yield to 0.179g/t. Throughput was 2% higher at 11 954 000t.

The condensed consolidated interim 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 interim reporting and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council. 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 2013.

84.1

(36.8)
(1.6)
(10.8)
– (3.6)
(2.5)

190.3

379 178 208 379 190 980 379 178 208 379 178 208

continued

The technical information referred to in this report has been reviewed by Vivian Labuschagne (PLATO), mineral and resource manager, a full time employee of the company. He approved this information in writing before the publication of this report.

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 sustained 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.