Despite the disposal of its Australasian operations, DRDGOLD’s attributable Mineral Resources increased from 54.2 million ounces (Moz) in FY07 to 54.7Moz in FY08. This was primarily because of an additional 2.2Moz (attributable) from Ergo.
DRDGOLD’s attributable Ore Reserves went up by 25% from 6.3Moz in FY07 to 7.9Moz in FY08. This was mainly as a result of a rise in ERPM’s underground and surface reserves. ERPM’s Elsburg surface tailings of 1.7Moz, which will be mined by Ergo, contributed significantly to DRDGOLD’s increase in Ore Reserves for FY08.
DRDGOLD’s attributable Mineral Resources from Blyvoor increased by 1% from 20.1Moz in FY07 to 20.4Moz in FY08 following an exploration programme to further define the operation’s surface resources.
Blyvoor’s attributable Ore Reserves for FY08 decreased by 6% to 4.8Moz, mainly because of depletion.
DRDGOLD’s attributable Mineral Resources from ERPM decreased by 5%, from 30.6Moz in FY07 to 29.0Moz in FY08. The reduced Mineral Resource is a function of the updated evaluation model, which uses the latest sampling data to evaluate ERPM and ERPM Extension 1.
DRDGOLD’s attributable Ore Reserves from ERPM increased by 271%, from 0.7Moz in FY07 to 2.6Moz in FY08. ERPM’s underground reserve rose from 0.5Moz to 1.2Moz due to the conversion of the ERPM Extension 1 Measured and Indicated Resource into Proved and Probable Reserves. Permission was obtained from the Department of Minerals and Energy (DME) for the overstoping of the exploration development into ERPM Extension 1 for safety reasons. It is thus more than reasonable to expect that the conversion of the exploration right into a mining right for ERPM Extension 1 will be granted. ERPM’s attributable surface reserves increased from 0.2 Moz in FY07 to 1.5 Moz in FY08 because of the inclusion of the Elsburg tailings complex, which will be mined by Ergo.
DRDGOLD’s attributable Mineral Resources from Crown were largely unchanged at 3.1Moz year-on-year.
DRDGOLD’s attributable Ore Reserves from Crown were also largely unchanged at 0.4Moz in FY08. The Top Star dump is included in the reserve as the mining right for the dump was granted on 21 August 2008.
The Ore Reserves quoted are sensitive to operating costs and the gold price. The official Ore Reserves are quoted at $853/oz, at an exchange rate of R7.8653/$, or R208 287/kg.
DRDGOLD’s statements of its Mineral Resources and Ore Reserves (relating to gold operations at Crown, Blyvoor and ERPM) were independently reviewed by Coffey Mining (formerly RSG Global) for the South African Code for the Reporting of Mineral Resources and Mineral Reserves (SAMREC Code), the Australasian Code for Reporting of Exploration Results (JORC Code), the National Instrument 43-101 and the United States Securities and Exchange Commission (SEC) Industry Guide 7 compliance. Coffey Mining is an exploration, mining and resource consulting firm, which has been providing services and advice to the international mineral industry and financial institutions since 1987.
The review report for the operations was compiled by Mrs Kathleen Body (SACNASP), Mr Frank Bainbridge (FSAIMM) and Dr Jon James (FSAIMM, FSANIRE, Chamber of Mines Rock Mechanics Certificate). They have the appropriate relevant qualifications, experience, competence and independence to be considered independent ‘competent persons’ or ‘qualified persons’ under the definitions provided in the codes and instruments.
Coffey Mining has carried out its review of the data, techniques, procedures and parameters used in the preparation of Mineral Resources and Ore Reserves Statements during site visits to the operations. The current life-of-mine plans are based on the reserves as reviewed by Coffey Mining.
Until 2005, DRDGOLD calculated its Ore Reserves using a three-year average gold price. Given the increase in the gold price since 2006, DRDGOLD believes that the three-year average gold price is unrealistic for planning purposes and hence Ore Reserve calculations. In consultation with Coffey Mining it was decided to use the exchange rate and the gold price on the date – 1 May 2008 – when the process to determine the Ore Reserves and Mineral Resources started. At that date the dollar gold price was $853/oz, the exchange rate was R7.8653/$ and the rand gold price was R208 287/kg. For compliance with the SEC, DRDGOLD’s Form 20-F to be filed with the SEC will quote the Ore Reserves using the three-year average gold price of $664/oz at an exchange rate of R7.8653/$, which equates to R150 622/kg.
The information in this annual report that relates to Mineral Resource, Ore Reserve or exploration results is based on information compiled by the competent persons at each operation as listed below:
These individuals have extensive (more than five years) relevant experience in the mining industry and the type of deposits mined. They are the designated competent persons, in terms of the SAMREC and JORC codes, and are registered members of the recognised statutory organisations.
The competent person responsible for the compilation and reporting of DRDGOLD’s Mineral Resources and Ore Reserves is David Edwin James Whittaker.
The Ore Reserves of the underground operations of Blyvoor and ERPM were estimated by ordinary kriging. Blyvoor used a block size of 15 metres by 15 metres (15m x 15m) with the maximum limit of the measured resource defined as half the range of the sill, and the maximum extent of indicated resource equating to the range of the sill. ERPM’s measured resource was estimate using a block size of 25m x 25m with only estimates with a positive kriging efficiencies considered as a measured resource. The indicated resource was estimated in a similar manner, using a block size of 50m x 50m.
Crown’s surface resources and reserves were estimated using weighted polygons based on historical information, a drilling density of 100m x 100m or better, with a sample interval of 1.5m and metallurgical test work. The resource classification is based on levels of confidence in the estimate, taking all parameters into consideration.
Exploration and project development during the year continued to enhance DRDGOLD’s growth strategy by extending and replacing existing production ounces.
The exploration drilling programme to evaluate the south-west down-dip extension of the orebody south of the Boulder Dyke started in the second quarter of FY08. To date, drilling has been confined to structural and cover drilling. As development advances, prospecting will be undertaken to locate and define payshoots on both Carbon Leader and Middlevlei reef horizons. If encouraging results are obtained, various mining options will be investigated to exploit the orebody, including the possibility of a trackless decline. Middlevlei Reef development is scheduled for FY09 at Blyvoor’s No. 4 Shaft to locate up-dip and lateral extensions to the ‘B4’ payshoot. At No 5 Shaft the down-dip extension of the Middlevlei Annan payshoot will be developed and exploited. Geological investigations at No 6 Shaft will concentrate on defining extensions to the Middlevlei reserves and the opening up of reserves by the equipping of a decline from 17 to 19 level.
The culmination of the drilling programme, which started at the beginning of FY08, resulted in the declaration of an independent verified Measured and Indicated Mineral Resource for the Blyvoor slimes dams by Coffey Mining. At the end of FY08, an additional 12 holes were drilled on the Blyvoor No 7 slimes dam to confirm gold grades. The assay results as at 30 June 2008 are still outstanding. Once the assay results are received, the dump will be re-evaluated and a feasibility study conducted to convert it to a reserve.
DRDGOLD has a prospecting right covering an area of 1 252ha of the adjacent Sallies mine, referred to as ERPM Extension 1. The estimated total resource for ERPM Extension 1 is 36.5 million tones (Mt) at 8.5g/t (9.97Moz). The regional geology of the area indicates that there will be a strike change due to faulting associated with an east-west trending sinistral tear fault. In order to confirm the anticipated change in the geological structure and hence payshoot orientation, it is envisaged that prospecting will take place through development situated 50m in the footwall. Owing to high induced stress experienced at depth, there will be concurrent over-stoping on the reef plane for safety reasons. The DME has granted permission for 150m of mining face to be stoped through the mine boundary. The development will be supplemented by exploration diamond drilling, conducted from exploration cross-cut drilling platforms.
A pre-feasibility study is being conducted by an external mining consulting firm, Turgis Consulting, to investigate the possibility of exploiting ERPM Extension 1 reserves by means of a trackless decline system.
An application to extend ERPM’s existing prospecting right eastwards into the Rooikraal/Withok area, incorporating the southern section of the old Van Dyk mining lease area and a small portion of Sallies, was granted by the DME. Known as ERPM Extension 2, the additional area is 5 500ha in size.
The resource for ERPM Extension 2 was estimated in 2007 by independent consultants Camden Geoserve and Minxcon, and audited by Coffey Mining. An Inferred Resource of 28.6Mt at 9.06g/t (8.32Moz) at a stope width of 125cm was declared. The payshoot area equates to 17% of the prospecting right after applying geological losses of 4%. The evaluation methodology applied was a global Sichel ‘t’ estimate, based on five historical surface boreholes with grades ranging from 107 centimetre grams per tonne (cmgt) to 3 346cmgt. A sixth hole, drilled from underground and reportedly assaying at 2 479cmgt, was excluded from the estimate as it could not be verified.
Subsequent due diligence exercises will be conducted which could eventually culminate in a deep-level mine with a life in excess of 15 years.
An intensive exploration programme to define an approximate 1.3-billion-tonne SAMREC and National Instrument 43-101 compliant, gold, sulphur and uranium resource has started and is scheduled for completion by the end of the calendar year. As at the 30 June 2008, a total of 7 200m of drilling has been conducted for exploration and metallurgical test work and approximately 3 800 samples submitted for gold, uranium and sulphur assay to accredited laboratories in South Africa and Canada.
Drilling has been completed on the Benoni (gold only) Elsburg, Mooifontein, GMTS, Diepkloof, Daggafontien and Brakpan complexes, with additional drilling scheduled for the Grootvlei, Marievale, Rooikraal and Van Dyke complexes. The total tonnage from these complexes exceeds 1.3 billion tonnes.
Coffey Mining has been appointed as the competent person to provide an independently verified JORC, SAMREC and 43-1-1 Compliant Mineral Resource Report for the tailings complexes and are expected to release their findings during the first half of FY09.
