Review of operations

Total gold production for the year under review rose by 10% to 265 179 ounces from 241 194 ounces in the previous year.

This reflected further recovery of the underground circuit of Blyvoor from the negative impact of seismicity-induced damage to high-grade production areas at No 5 Shaft and continued bedding down of the Ergo surface retreatment circuit.

Cash operating unit costs for the year were 8% higher at R251 296/kg, a consequence mainly of electricity price increases and higher winter tariffs imposed by Eskom.

Operating profit rose by 76% to R477.0 million while actual capital expenditure (excluding capitalised exploration and rehabilitation costs) went up by 60% to R299.7 million, chiefly because of continued investment in development of the Crown/Ergo pipeline to more fully exploit synergies between the two surface circuits.

Blyvoor

Description

Blyvoor, which mined its first ore in 1942, is situated on the north-western edge of South Africa’s Witwatersrand Basin to the south of Carletonville and 70km south-west of Johannesburg in North West Province. About 76% of production comes from underground mining and the balance from surface tailings retreatment. Blyvoor’s carbon-in-pulp (CIP) plant has the capacity to treat some 400 000 tonnes per month (tpm).

The mine has two main gold-bearing horizons: the Carbon Leader Reef and the Main Reef, the latter located some 75m above the former. The reefs vary in thickness from 5cm to 20cm. In recent times there has been a shift in focus to mining the Main Reef for greater flexibility. Ore is currently mined from three underground shaft systems using the traditional narrow-reef drill, blast and scrape method.

While Blyvoor’s life of mine is projected until 2030, its resource is widespread and production could extend for many years beyond this, depending on gold price and exchange rate performance among other factors.

Operating and financial review

Total gold production for the year was 121 114 ounces, up by 14% from 106 452 ounces. This reflected continued recovery of the underground operations from the effects of substantial seismic damage in the high-grade areas of No 5 Shaft and a protracted, wage-related strike in the previous year. Underground production rose by 18% to 91 469 ounces from 77 226 ounces, while surface production was stable, rising by 1% to 29 645 ounces from 29 226 ounces.

Total cash operating unit costs went up by 9% to R289 870/kg from R265 445/kg, a consequence mainly of power utility Eskom’s price increases and higher winter tariffs. Underground cash operating unit costs rose by 5% to R342 123/kg from R324 736/kg and surface cash operating unit costs by 18% to R128 636/kg from R108 771/kg.

Operating profit rose substantially to R70.0 million from R16.3 million due to improved gold production and a higher average rand gold price received.

Actual capital expenditure, 20% higher at R95.7 million (FY2010: R79.6 million), was directed mainly towards the relocation and installation of a compressor from ERPM, and to opening up and development.

Crown

Description

Crown, together with Ergo, is the world’s largest gold surface tailings retreatment facility. The operation extracts gold by reprocessing the large and numerous sand and slimes dumps along the reefs that stretch from east to west just to the south of Johannesburg’s central business district. This includes the Cason dump at ERPM in Boksburg.

Dump material is mixed with water and this slurry is then pumped to one of Crown’s three metallurgical plants – Crown Mines, City Deep and Knights, situated in the central Witwatersrand – where modern milling and carbon-in-leach (CIL) technology are used to recover much of the remaining gold. The plants have a total retreatment capacity of 950 000tpm.

Operating and financial review

Total gold production for the year was down by 4% to 95 713 ounces from 99 410 ounces in FY2010. This was as a consequence of a 2% decline in average grade from 0.43 grams per tonne (g/t) to 0.42g/t. Throughput was stable at 7 120 000 tonnes.

Total cash operating unit costs increased by 13% to R225 653/kg from R199 135/kg, reflecting lower gold production and the effect of Eskom electricity price increases.

Operating profit increased by 18% to R248.6 million (FY2010: R210.0 million), a substantially higher average rand gold price received offsetting the impact of lower production.

Actual capital expenditure, substantially higher at R148.2 million (FY2010: R45.9 million), was directed mainly towards the Crown/ Ergo pipeline project.

This 50km pipeline will link the Crown Mines and City Deep plants to Ergo’s Brakpan tailings surface facility, the capacity of which is being increased by 150 million tonnes (Mt) to 200Mt. In recent years Crown’s production has been restricted because of a reduction in the on-site capacity available for depositing tailings. When the pipeline is completed during the fourth quarter of calendar 2011, Crown will be able to restore its treatment capacity to 600 000tpm, providing the operation with the opportunity to bring to account potential new resources on the western and central Witwatersrand.

Ergo

Description

Ergo was re-established in 2007 as a joint venture between DRDGOLD and Mintails Limited, primarily to recover and treat – over a period of 12 years – some 186Mt of surface tailings contained in the Elsburg Tailings Complex. Now wholly owned by the DRDGOLD group and operated by Crown, Ergo has a network of surface rights that provide access to a further 600Mt of surface tailings deposited across the western, central and eastern Witwatersrand. Its metallurgical plant, situated near Brakpan, has a current capacity of 1.2Mtpm, which will rise to 1.8Mtpm when refurbishment of a second CIL circuit is completed during the fourth quarter of calendar 2011.

Ergo is licensed to produce uranium and sulphuric acid, and a feasibility study to assess the potential of these by-products from the Ergo resource is ongoing.

Operating and financial review

Total gold production for the year under review was 37% higher at 48 352 ounces (FY2010: 35 332 ounces). This reflects an 11% rise in throughput to 13 206 000 tonnes (FY2010: 11 867 000 tonnes) and a 22% rise in average grade to 0.11g/t (FY2010: 0.09g/t), resulting from continued build-up of slimes recovery from the Elsburg Tailings Complex.

Total cash operating unit costs dropped by 11% to R205 436/kg (FY2010: R231 294/kg) due mainly to the marked increase in gold production.

Operating profit leapt to R158.4 million from R45.3 million, the result of higher gold production, lower costs and a higher rand gold price received.

Lower capital expenditure of R57.1 million (FY2010: R62.2 million), reflecting completion of pumping and pipeline infrastructure to bring the Elsburg Tailings Complex fully on line, was directed mainly towards refurbishment of the second CIL circuit at the Brakpan plant and expanding the capacity of the Brakpan tailings deposition site.

50km pipeline linking Crown and Ergo

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