CHAIRMAN’S LETTER

DEAR SHAREHOLDER,

During the past year we took the action required to successfully refocus on our core business in South Africa. We sold our investments in Australasia and directed our financial and managerial resources into our South African operations. The two-fold strategy of stabilising the operations and focusing on South Africa has allowed us to build a strong base from which we can grow the company.

The past year was not without its challenges. At our largest operation, Blyvoor, two employees died as a result of accidents at the mine and there were two fatalities at ERPM. Safety is our number one priority and we continue to work throughout the group to ensure all our employees work in a safe environment. We aim to promote a safety culture throughout the organisation. Our safety initiative focusing on the behavioural aspects of safety in the workplace is having an impact and it is good that Blyvoor was the winner of the Regional Safety Shield for the tenth year in a row.

In January of this year state power utility Eskom announced that it was unable to guarantee supply of electricity to our mines and, on safety grounds, we suspended underground production at our operations. Through a number of initiatives, we have been able to reduce our power consumption and at the end of January, Eskom was able to return to normal service. We continue to look at ways to limit our power consumption and the fact that we have significant surface operations reduces the negative impact of power supply disruptions.

Notwithstanding these events, we had a strong operating performance, especially during the second half of the year and our positive cash flow and healthy balance sheet puts us in a good position moving forward. The profitability of our operations ensures the sustainability of DRDGOLD and allows us to extend the life of our mines and develop future mines. Our success is the result of sustained effort at all levels of the organisation to increase our efficiency, to seek out innovative solutions and to work safely.

Working with our black economic empowerment partners, Khumo Gold, we were granted a mining right for the Top Star dump near the centre of Johannesburg. This will be a valuable source of material for our surface operations. Work on the conversion to new order mining rights for our existing operations continues apace.

Our next project to come on stream will be the Ergo dump re-treatment plant which is expected to open late 2008. This exciting project will produce relatively low-cost gold for many years to come and remove massive mine dumps from close to the centre of Johannesburg, thereby creating a better environment and providing development opportunities.

In view of the improved financial position of the company and the positive cash flow, the board has recommended a dividend payment of 10 South African cents per share. In the relatively high-risk business of mining, the support of our shareholders is paramount and we are delighted to be able to pay this return in the form of a dividend.

John Sayers’s contract as CEO finishes at the end of 2008 and the board has appointed Niël Pretorius as CEO Designate. John has led the company through a difficult period of huge change. During his tenure the company has been transformed from a collection of underperforming assets in widespread geographic locations with a weak balance sheet to a focused and profitable company in a very strong financial position. Niël is currently Managing Director of the South African operations and his leadership has played a significant role in improving the performance of our assets.

We are now stronger, leaner and better equipped to grasp the opportunities in South Africa. We look forward to continuing profitable and safe operations at our mines. We are working on exciting plans to develop new areas of production and continue to look at innovative ways to keep our older mines in production. None of this would be possible without the effort and commitment of our employees and I should like to thank them for their hard work during the past year.

Geoffrey Campbell
Chairman
22 September 2008