DRDGOLD LTD — Interim / Quarterly Report 2015

Feb 19, 2015

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Name: Themba Gwebu Title: Company Secretary

REPORT TO SHAREHOLDERS

FOR THE SECOND Q UARTER AND SIX MONTHS ENDED 31 DECEMBER 2014

31 Dec 2014

R cents per share

Registration No.1895/000926/06

DEAR SHAREHOLDER

The previously-announced, planned test work on the flotation/fine-grind (FFG) circuit dominated the work programme at Ergo’s Brakpan plant in the three months to December 2014. The return of our operating circuits to steady state in the preceding five months provided both a base case from which we could track the performance of the FFG circuit, and allowed us to do the required work in a measured way.extends over four different load-shedding zones. We have since managed to agree with Eskom a consumption curtailment agreement in terms of which we reduce, on request, total consumption by an agreed percentage during load-shedding hours. This means that, on the whole, we are able to maintain uninterrupted tonnage throughput but recoveries may reduce due to certain parts of the operating line going down during the load reduction periods.

From the outset, the float circuit performed well, while the mills – although not fully optimised – managed to break down the composition of the float concentrate to a sufficiently small fraction to achieve the increase in soluble gold that we had set out to achieve. Actual gold production that we could separately measure, having isolated the high-grade throughput from the remainder of the plant, was consistent with the increase in dissolved gold. Residue values – a key efficiency indicator – decreased by the desired 0.03g/t.

An important risk-mitigating measure that we implemented in the months after the suspension of the FFG in April 2014 was the installation of back-up power and other engineering upgrades to ensure that the plant is kept in a state of readiness during power interruptions. These measures have been put to the test several times during the last few months, and have all performed to specification. We have been able to resume full production without any delay after each power interruption.
We were particularly pleased that the test work had no adverse impact on gold production, in spite of the fact that one-third of total throughput – consisting mainly of higher grade material – was diverted into the FFG circuit for test work. Inventory or lock-up stabilised within the first month, while the remainder of test work had very little impact on gold output. We obtained valuable data from the trends we saw emerge. This helped us to decide on further ways to optimise the performance of the FFG circuit and the configuration of the plant, and we were able to re-start the remaining two lines of the FFG circuit in January 2015.

HALF YEAR TO 31 DECEMBER 2014 vs HALF YEAR TO 31 DECEMBER 2013

Towards the end of the quarter, the combined impact of electricity cuts by power utility Eskom and the flooding of one of the reclamation sites after a heavy summer downpour caused a slight drop in forecast production in a quarter that was otherwise, by and large, consistent with expectations.Operational review
Gold production for the first six months of FY2015 was 6% higher at 73 015oz, compared with the first six months of FY2014. This was due to a 9% increase in the average yield to 0.196g/t, reflecting the restoration of metallurgical efficiencies and operating business improvements following the temporary suspension of the company’s new FFG circuit in April 2014. Throughput for the six months under review was 3% lower at 11 591 000t due mainly to heavy summer rainfall and Eskom power cuts.

This letter would not be complete without some input on the impact on us of the afore-mentioned power cuts. These were a consequence of ”load-shedding” by Eskom – the term used by the power utility to describe its practice of cyclically switching off power to consumers in order to balance supply and demand while undertaking urgent and necessary maintenance.

Cash operating costs were 5% higher at R370 101/kg, a consequence of additional costs associated with the running of one stream of the FFG circuit and the processing of sand material at the City Deep plant, and of general inflationary increases averaging 8.3% year-on- year. The same factors drove

In December, over a period of five days, the load-shedding roster caused a loss of 67 hours of production due to the fact that our operating footprint

FOR THE SECOND QUARTER AND SIX MONTHS ENDED 31 DECEMBER 2014

The operating margin strengthened to 17.3% from 15.1% and the all-in sustaining costs margin to 4.5% from 3.6%, a consequence of the factors outlined above.

Revenue was 8% lower at R487.0 million, reflecting lower gold sales and a 2% decline in the average Rand gold price received to R434 802/kg.

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