DRDGOLD Ltd (DRD) 2006 Q4 法說會逐字稿

Good afternoon and welcome to the DRDGOLD conference. All participants are in listen-only mode. There'll be an opportunity for you to ask questions at the end of today's presentation. (OPERATOR INSTRUCTIONS). Please also note that this conference is being recorded. I would now like to turn the conference over to John Sayers, CEO of DRDGOLD. Please go ahead, sir.

Thank you. Hello, everybody, and thank you for joining us on this teleconference. We will just run through the presentation we have, and then you are free to ask any questions you may wish.

Firstly, we cover the Group structure to indicate how the Group is composed. We have a 26% BEE involvement in DRDGOLD SA, which in turn owns 100% of Blyvoor, Crown and ERPM. DRDGOLD Limited has 74% in DRDGOLD SA and 100% of DRDGOLD Limited, which owns 13% of GoldMoney. In addition, DRDGOLD Limited Offshore owns 79% of Emperor, with minorities of 21%. Emperor, following the disposals, owns 100% of Tolukuma and 100% of regional exploration in PNG and Fiji.

If we go to the next slide, the key features to date, Emperor has completed the disposal of 20% stake in Porgera JV (inaudible). There has been a 7% increase in DRDGOLD SA quarterly production. DRDGOLD SA made a $55 million annual net profit and there has been a 33% increase in DRDGOLD (inaudible) resources to 53.5 million ounces, making up more than we last through the closure of the Australasian mines. We had an East Rand resurface retreatment JV with Mintails, which we will come back to later on.

If we look at the operational review for the quarter for continued operations, Blyvoor produced US$563 an ounce and produced 38,300 ounces, underground mining stabilizing there. Crown produced cash operating costs for the quarter of $507, produced 22,700, and we have begun the reclamation of 3L2 to bridge the period before Top Star comes on.

ERPM had cash operating costs of $[728], produced 19,500 ounces, but underground volumes are improving, and Niel Pretorius will touch on that. The average cash operating costs for South Africa were US$587 an ounce on a production note of 80,500. In Australasia, the only continuing operations, Tolukuma, for the quarter had cash operating costs of $906 and production of 10.6 [10,600]. They are working toward a great increase, but I am afraid Tolukuma has been adversely affected by a number of issues, including flooding and very fractured ore bodies.

For the year, Blyvoor had a cash operating cost of $547, which is 151,200, and is working towards a lower grade, higher-volume plant. Crown has a cash operating cost of $450, produced 103,000 ounces, and we have invested in infrastructure upgrade at crown, predominantly in the pipeline system, and that had very definitely benefited us by preventing (inaudible).

ERPM is running at $641 for the year, produced 80,200, and is now focusing on volume and value drivers. So for the year, the average cash operating cost for South Africa was $540 with a production of 344,400.

In Australasia, Tolukuma produced at $868, produced 44,200 ounces, and suffered from a number of material problems, including the breakdown of the mill, which [presented] processing. We sold our interest in Porgera produced $450 and produced 71,500. The discontinued operation, Vatukoula, produced at $795 and produced $26,900. That has been close been sold, but the sale involved a significant reduction of potential liabilities in terms of rehabilitation in the environment.

If we look at margin management, we have managed to maintain our margin. June 2006, SA began to improve. In December '06, one can see the impact of the Australian closures. But in June '07, you can see that our margin is maintained. We are continuing the SA improvements and the Porgera [entry], even though the Porgera interest has been sold.

Attributable reserves and resources, you can see our reserves in South Africa are $6.2 million, of which the bulk is in Blyvoor. But it is interesting to see how our resources have grown to $53.9 million with the bulk in ERPM. So we have seen a growth in our resources, and we would expect that trend to continue as we expand our exploration efforts.

I am going to ask Niel Pretorius to take over now to go through the South Africa mines.

I will deal first with Blyvoor. At Blyvoor, we had a mix of assets, both surface and underground. Surface has provided us with an opportunity to do the -- or implement the measures that we thought were necessary to bring up our (inaudible) consistency in underground production. Whilst profit from surface ounces were down for the quarter, total profits were out, which suggests the underground operations kicking in. We look forward -- hope that we will achieve some of the consistency going forward from our underground sources at Blyvoor.

We did some uranium drilling during the course of the quarter as well. We released those on our Web site earlier in the quarter, indicating the actual SA results from holes that we drilled on the surface (inaudible) Blyvoor, approximately 107 million tons of surface material. We are in the process of having these verified by [SRK] to determine the extent of the uranium stockpile. They are also being consistently replenished because the ore at Blyvoor mines does contain uranium.

ERPM had a particularly (inaudible). However, the measures that we implemented since January in order to address delivery of services into the East (inaudible) Rand in particular, the infrastructure upgrade, development towards the face, (inaudible) to (inaudible) the stability. In fact, a 40% improvement from (technical difficulty) May to June in volume and consistent volumes at that level. Ever since, there are a lot of efforts going into grade management at the moment to determine how and if we could improve recoveries from this ore body. It would seem that a change in blasting regime and short to low velocity explosives might actually do the trick for us, because every other possibility of balancing a grade have just about been excluded through a process of elimination.

Surface operations performed very well once again (inaudible) 25% quarter-on-quarter. The (inaudible) is increasingly resembling that we have at Blyvoor, a mix between surface and underground, (inaudible) (technical difficulty) performed while we invest the capital necessary to bring about, right, the consistency on the yield of the underground operations.

Crown has settled at levels which we believe will continue for the foreseeable future -- revenue and volume levels that is, the reason being that 3L2 has come online. This is a lower value site with lower trades but it is a (inaudible) site and we are achieving satisfactory volumes from this particular reclamation site until such time as we get Top Star approval. [To mine] the Top Star sites, you we don't foresee any significant changes in the [production] profile coming out of Crown.

Thank you, John.

Thanks, Niel. In Australasia, we had completed the $250 million sale of Porgera. All external debt has been repaid, and that is not just Australasia. We have repaid the convertible bond of $30 million as well. We have received repayment of our U.S. dollars -- $25.8 million intercompany loans to Emperor, and there is a capital distribution on September 3 of AUS$0.05 per share. That'll represent a US$33.5 million income to DRDGOLD.

If we turn to the pro forma balance sheet post the sale, you can see that the Group has no debt, has close 1 billion Rand in cash, and has a current ratio of 3.2. This is very different to the situation the Group has been in the past. Previously, long-term liabilities (inaudible) rehabilitation (inaudible) and deferred taxes.

So the balance sheet is now stronger. And we are out of the cash trap that we have been in for so long. As a consequence, where we stand now is a greatly strengthened DRDGOLD balance sheet, which offers a platform for South African growth. DRDGOLD SA operations are becoming increasingly stable in terms of both volume and production. We have increased our SA resources. In South Africa, we have two JVs with Mintails SA, the West Rand and the East Rand. Our uranium potential is encouraging. It is now potentially a project in its own right, and is an attractive byproduct, but not a core asset. We are a gold producing house and will remain so. But we hope that uranium can provide a revenue stream to support the growth on our gold side.

And also, we have the potential to exploit the SA property portfolio by virtue of time. Some of our mines are over 100 years old, and at that time, they were in pretty much (inaudible) open (inaudible) are now in the center of [connovations]. They have golf courses. They offer attractive property potential, and we believe there is value there. We [would point] to the GM to exploit that.

So that is where we stand now, a very different DRDGOLD, I think. Going forward, we have no debt and we are liquid. We have options in South Africa where we have begun to increase our resources and we hope we will increase them again next year.

Thank you. I don't know if we will take all questions now.

(OPERATOR INSTRUCTIONS). [Donald Geide], Private Investor. (OPERATOR INSTRUCTIONS).

Could you please give me your projected profit picture for next year ending June 2008? Thank you.

No, I'm afraid we can't. We are not allowed to issue forecasts under the [JSE] rules.

(OPERATOR INSTRUCTIONS). Gentlemen, we have no further questions. Would you like to make some closing comments?

Just thank you very much, everybody.

Thank you very much. On behalf of DRDGOLD, that concludes this afternoon's conference. Thank you for joining us.