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DRDGold production remains steady

DRDGold’s Ergo
Johannesburg, South Africa — MININGREVIEW.COM — 22 October 2009 – DRDGold Limited “’ South Africa’s fourth biggest gold producer “’ has announced a 1% decrease in gold production to 57 292 oz for the quarter ended 30 September 2009, with an increase in gold from surface sources offsetting the impact of lower underground production.

A statement issued here said gold production from surface sources – 10% higher at 38 870oz – had comprised 68% of the quarter’s total production, and had reflected a 181% increase in ounces from ErgoGold; a 6% increase in ounces from Crown; and a 35% increase in ounces from ERPM. The latter was now functioning solely as a surface retreatment operation.

Underground gold production – for which the underground operations of Blyvoor were now the only source – had been 14% lower, a consequence of 11 production shifts lost due to strike action, the continuing negative impact of high-grade panels damaged by seismicity in June, and a shift in Main Reef mining from the eastern side of No 5 Shaft to the western side.

The statement added that total revenue for the quarter had been 6% higher at R445.2 million, an 8% increase in gold sold off-setting the impact of a 2% drop in the average Rand gold price received to R239 098/kg.

Cash operating costs were 3% higher at R434.2 million, due mainly to power utility Eskom’s 32% general tariff increase effective from 1 July 2009, and to a provision for wage increases.

A net loss of R63.3 million was recorded for the quarter under review, compared with a net profit of R42.6 million in the previous quarter.

Looking ahead, DRDGold CEO Niel Pretorius said that in the face of further electricity price hikes, margins would remain under pressure until the Rand gold price recovered. In the near term, the company’s focus would be on optimisation of the ErgoGold surface retreatment operation and reduction of Blyvoor’s fixed overhead costs through restructuring.