DRDGOLD Ltd (DRD) 2007 Q1 法說會逐字稿

Good afternoon and welcome to the DRDGOLD quarterly results. All participants are in listen-only mode. There will 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. Please go ahead, sir.

Thank you, Dylan. Hello, everybody. It's John Sayers here with my team. We would like to just run through the results and then take questions.

We have divested from Australasia and raised ZAR 340 million. Our South African operations were 13% higher at revenue for the quarter. There was 138% higher profit, operating profit, and our after-tax profit increased from-- by 136% to ZAR 18.4 million.

Our overall strategy has been to exit from Australasia, which has been a very unsuccessful investment, to improve the efficiencies in our South African mines, and to develop our uranium and exploration potential and to expand our South African surface retreatment operations.

We have re-strengthened the balance sheet, as you can see from the information we sent out. Australasia destroyed our reserves, put unacceptable debt on our balance sheet, which was, quite frankly, unserviceable with the income from the Australasian activities. We were running at, fundamentally, a ZAR 450 million loss per annum.

We now have a clear strategy forward with close on ZAR 900 million of cash on our balance sheet. We are actively exploring our uranium and sulfur deposits, which I would remind everybody are above-ground and already mined, which I think is incredibly important.

We have had -- and I really need to remind the listening group of this -- that if you recall the last year's numbers we had 85% of reserves and resources. With the BEE deal that we have done with KBH, we've now got 74%. And on that basis, our reserves have moved up to 5.8 million-- from 5.8 million ounces to 6.2 million ounces and our resources have moved from 35.4 million ounces to 55.6 million ounces.

That is attributable-- we are one of the few mining groups that are building up our reserves and resources whilst we carry on mining and I think that indicates the strength of the South African reserves and resources and I think it indicates why we are refocusing into our South African assets.

We have identified 17.5 million pounds of uranium at Blyvoor and we are exploring developing ERPM-1, where we have over-stoping rights already granted, and an exceptional development in ERPM-2, which is contiguous to the ERPM ore body. That will be a long-term project, but is very promising in terms of its development cost per ounce of resource.

We have last week committed to investing ZAR 20 million into the ERPM FEV, the Far East Vertical Shaft, which will considerably enhance the capacity of ERPM and, we think, will lead to ERPM being a stable cash operation on underground operations.

So we do have a strategy going forward. In addition, we have the Ergo Mining JV with Mintails, to which both parties have committed a total of ZAR 400 million capital, ZAR 200 million each, which will contribute 200 kilograms of gold per month to DRD.

We are very confident of the future. We have removed a huge cash drain in Australasia. We have exited gracefully and we have the funds to develop our South African assets.

What we would now do -- and you have seen the presentation -- is take questions and we will answer them as frankly as we can with our full team. Thank you.

Thank you very much, sir. (OPERATOR INSTRUCTIONS) Our first question comes from Charlotte Matthews of Business Day. Please go ahead.

Hello. Could you give us an update on the (inaudible) Mining Joint Venture on the West Rand? Have you established reserves and resources there? Have you started work? What's happening?

Charlotte, that's fundamentally a split between underground and surface. I'll let Niel handle that.

Thank you. Charlotte, this is early days, still. We've established the vehicle through which we intend to unlock the value that we believe might be in there from an exploration perspective.

Currently what we're looking at is a vehicle in terms of which DRDGOLD would hold 45% of the total equity. We're about to launch a prospectus for the initial capital offering, capital raising, and the Mintails crowd are running with that at the moment. They're in London.

I think in about three or four weeks from now you would have a much clearer idea as to where exactly we stand with regarding to capital raising, the prospects going forward, et cetera, et cetera. It's really been incorporated into a prospectus that will be released in the not-too-distant future.

Thank you.

Our next question comes from Allan Seccombe of Miningmx. Please go ahead.

Hi, everyone. John, I wonder if I could get your view on the DME's program now of shutting down mines that maybe they overdid. We saw your statement that you have an issue with the Section 54, and I'm just wondering what it is about this government's approach that you (inaudible)?

We are fully committed to complete safety, as far as we can get. We believe that the DME order to mines, which is proposed, is a good process. We believe it'll take some time. You must remember that Blyvoor has won the DME award for safety for several years now.

And our problem with the DME ruling was that they closed all shafts down and without standard maintenance, safety becomes an issue after around about three days. We, of necessity, finally went to the courts to get a ruling, which we did get. But we do believe -- and the union supported us in terms of the safety standards we were maintaining -- and we believe that we are now back on track to a reasonable-- a reasonable and supportive accord with the DME.

Thanks. I'm trying to get a sense of do you think the mine closures is a good thing? Or is it trying to swat a fly with a sledgehammer kind of approach? Is there another way of, maybe, doing this?

Well, there are regulations and there are government institutions and there are perceptions and, given our safety record, we have nothing to hide.

Okay. Thanks.

(OPERATOR INSTRUCTIONS) Our next question comes from Matthew Hill of Mining Weekly Online. Please go ahead.

Hi. I've just a quick question. I couldn't think of anything better, so I thought I might test you, if you could give us your forecast of where do you see the gold price going in the next few months?

Yes, I appeared on CNBC a while ago with our full-year results and I said $800 by the end of the year, but we're there with two months to go.

Fair enough. Do you see it hanging around that region?

We see it moving to a four-digit number within about 18 months.

Thank you.

(OPERATOR INSTRUCTIONS) Our next question comes from Charlotte Matthews of Business Day. Please go ahead.

The ZAR 340 million that you realized by selling your stake in Emperor Mines, is that a profit or loss on the investment?

That's-- Charlotte, with the IFRS rules that's a profit, because the investment had been written down to just about nothing. So that's a cash inflow and, fundamentally, caused us to break even, a bit of profit.

The ZAR 340 million is basically a cash inflow. Obviously, we still need to consolidate the Emperor until the 22nd of October and only in terms of when the final result has been received from Emperor up to the 22nd of October will we be able to calculate what the profit or the loss has been on the sale. But we think there will probably be a small profit that we'll realize through the income statement.

Yes, but we did realize a profit on the sale of Porgera.

Great, thank you.

Gentlemen, we have no-- my apology. We have a followup question now from Allan Seccombe of Miningmx. Please go ahead.

The sulfur that you have above ground, what's your plan for that? What exactly is that going to mean for the business?

The sulfur only comes out if we treat the uranium.

Would this be to produce sulfuric acid or an acid?

Sulfuric-- it'll be a fluid, an acid.

Okay. And then what kind of production would you look at? How much acid will you be producing?

It depends on the extraction rate and we are still doing tests on that.

Okay.

You do flotation tests and the rest.

Okay.

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

Dylan, I would just say to the audience I think we've got a very vibrant company going forward.

Thank you very much, sir. On behalf of DRDGOLD, that concludes this afternoon's conference. Thank you for joining us. You may now disconnect your lines.