Presentation to the Association of Mining Analysts' Gold Seminar (London) by Mark Wellesley-Wood, Chairman & CEO 23 May 2002

Transcription

1 Presentation to the Association of Mining Analysts' Gold Seminar (London) by Mark Wellesley-Wood, Chairman & CEO 23 May

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3 Home exchange is Johannesburg, but 75% of turnover is on Nasdaq Shares trade on a number of exchanges covering 22 hours of trading per day Shareholder base is broadly institutional with a large "retail" base Ticker symbol is DROOY 3

4 DRD's base is in South Africa with one operation in Papua New Guinea Our South African operations are in the Klerksdorp and Far West Rand Goldfields Crown, to the south of Johannesburg, reprocesses old mine tailings (dumps) which can be worked more efficiently with modern technology Our Argonaut project on the Central Rand is based on the depth (7 000 ft +) extension of the original mines of the turn of the last century North West operations comprises the merger of Harties and Buffels Harties was acquired from Anglovaal in 1999 Harties is our largest volume producer We have just started to develop open pit mining on the Harties lease area which will lower its costs to around $200/oz 4

5 Blyvoor" is the merger of three previous operations: Blyvoor itself, Doornfontein and part of Western Deep Levels This has been DRD's principal expansion project and is currently our longest life asset Crown is a high volume, low grade business It moves a massive 14 million tons of material a year The business is highly leveraged to the gold price BEE joint venture with Khumo Bathong (Dr Paseka Ncholo s company) approved DRD retains 40% plus management and receives $20 million in proceeds DRD acquired a high grade epithermal gold mine in Papua New Guinea last Year It is located about 70 miles north of Port Moresby Surrounding the mine, DRD has some of the largest exploration coverage in the country 5

6 We are investing heavily in Tolukuma since acquisition as we have: Replaced mobile fleet and equipment Accelerated development and exploration Pushed through a new haulage Changed the underground mining method As a result, we expect Tolukuma's production to increase to oz next year at an average cost of $125/oz an resources to increase to over 1.0 million oz The Saki exploration project is a new deposit some 3.5 km from Tolukuma and will be drilled next year Kunda Vein inferred resource ounces Miliahamba pre-resource ounces Saki pre-resource ounces Nasdaq is also the price setter for the shares DROOY has outperformed its peer group in Johannesburg as a result of its superior leverage to the gold price 6

7 According to Miningweb, DRD is one of the top performing shares in the sector This has been due to past undervaluation and superior leverage DRD had a short dated hedge book of around ounces at start of financial year Committed ounces decline dramatically from current level of 45% of production Management has now initiated an accelerated hedge buyback with a target of being unhedged by June 2002 Hedging is no longer required or appropriate for DRD DRD has commenced a programme of buying back its forward gold sales This is being affected by way of a cashflow sweep from our enhanced results and financing from asset sales and debt/equity issues With unit production costs now below $US200 hedging is no longer appropriate for DRD Our projections show that we will be unhedged by June this year This will increase revenues by around $30/oz and preserve the upside in the gold price for our shareholders 7

8 The rise in the Rand gold price has had a dramatic impact on our reserves Over the last three quarters our reserves have increased by nearly 7.0 million oz As we embark on new projects reserves will increase over time as well Most of our reserves are already predeveloped and thus accessible for low capital cost The arsenal at R68,000/Kg This diagram shows our reserves and resource as at June 30 last year Within these, our L.O.M. core lasted for around 7 years The opportunity now exists to increase the rate of of resource/reserve conversion due to lower pay limits The arsenal at R100,000/Kg This diagram shows the increase in the P&P reserves resulting from lower paylimits 8

9 The arsenal at R100,000/Kg The key feature to note is the increase in planned mining reserve, which could potentially rise to support a 15year life These are new resources we will be adding to LOM profiles Medium grade project already commenced Production from surface reef outcrops building up to tpm Active exploration budget for Tolukuma next year DRD believes in gold as money Will reconsider WGC membership under new leadership 9

10 We have been retiring debt and restoring balance sheet strength Debt/equity ratio now below 10% Have facilities in place to make new acquisitions 10