The Pure Gold Choice
October 2003
Ian Murray, Deputy CEO & Chief Financial Officer
Disclaimer
Some of the information in this presentation may contain projections or other forward looking statements regarding future
events or other future financial performance. We wish to caution you that these statements are only projections and those
actual events or results may differ materially. In reviewing, please refer to the documents that we file from time to time with the
SEC, specifically to our annual report on Form 20-F. These documents contain and identify important factors that could cause
the actual results to differ materially from those contained in our projections or forward looking statements, including such risks
as difficulties in being a marginal producer of gold, changes and reliability of ore reserve estimates, gold price volatility,
currency fluctuations, problems in the integration of operations, exploration and mining risks and a variety of risks described in
our annual report on Form 20-F. We undertake no obligation to publicly release results of any of these forward looking
statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of
unexpected results.
Cautionary Note to U.S. Investors: the United States Securities and Exchange Commission permits mining companies, in their
filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce.
We use the term "resources" (which includes "measured", "indicated", and "inferred") in our presentation, which the SEC
guidelines strictly prohibit us from including in our filing with the SEC. U.S. Investors are urged to consider closely the
disclosure in our Form 20-F, File No. 0-28800, available from us at 45 Empire Road, Parktown, Johannesburg, 2193, South
Africa. You can also obtain this form from the SEC website at http://www.sec.gov/edgar.shtml
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DRD: The Pure Gold Choice
DRD is focused on five
factors to make DRD
The Pure Gold Choice:
Leverage
to the US$
gold price
Exposure
to the
Rand
Pure
Gold
Choice
Appropriate
acquisitions
Growth
profile
Corporate
governance
3
DRD at a glance
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
Three mines in RSA, one in PNG
40% interest in (and manager of) Crown Gold Recoveries & ERPM
19.8% interest in Emperor
Targeting 400,000 oz production base in Australasia
Unhedged
Annual gold production – ~1 Moz
Reserves – 15.8 Moz
Resources – 63.8 Moz
Cash costs:
ƒ FY 2003 – US$299/oz
ƒ Q4 2003 – US$354/oz
ƒ Earnings (FY 2003) – US$41 M
4
DRD group structure
3%
Durban Roodepoort Deep
m
100%
19.8%
Emperor
22,196 oz
US$379/oz
Australasian
Operations
Aust.
permits
an
Khumo Bathong Holdings
ag
es
60%
40%
100%
SA Operations
Tolukuma
NWO
Blyvoor
84,876 oz
US$250/oz
407,568 oz
US$386/oz
233,288 oz
US$329/0z
Crown Gold Recoveries
Crown
54,115 oz
US$303/oz
ERPM
35,493 oz
US$449/oz
*Figures refer to Q4 2003 ounces (annualised) and Q4 2003 cash costs
*CGR (40%) and EMP (19.8%) Q4 2003 production figures
(annualised) represent proportion attributable to DRD
5
Capital structure and trading data
ƒ Ordinary shares on issue – 211.3 M
ƒ Market capitalisation – ~ A$900 M
ƒ Notional diluted cap (ops, prefs, CNs) – ~ A$1,283 M
ƒ Free float >90%; capital turnover >400% pa
ƒ ADRs (NASDAQ: DROOY) = 90% of turnover
ƒ Included in the Philadelphia Gold Index (18/08/2003)
ƒ Target: increase level of trade on ASX (DRD)
ƒ Recent US$65 M capital raisings via Investec
6
Balance sheet and financial performance
2003
(US$M)
Headline earnings
Basic earnings
Assets
Current assets
Shareholders equity
Non currrent liabilities
Current liabilities
Current ratio
Interest bearing debt to
Enterprise value
2002
(US$M)
2001
(US$M)
43.9
41.0
(50.2)
(50.3)
(35.6)
(31.1)
167.7
75.5
61.1
109.2
72.9
111.3
44.4
42.2
50.8
62.7
123.2
51.5
54.6
34.3
85.8
1.03
0.70
0.6
12.9
5.3
14.2
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Leverage
to the US$
gold price
ƒ Earnings leverage
ƒ Ore reserve leverage
ƒ Throughput leverage
ƒ Leverage emphasised by:
ƒ Diversification potential for US investors
ƒ No hedging
ƒ Cheapest gold in the ground, low overheads
(US$6/oz)
ƒ Market cap per reserve oz = US$35
ƒ Exceptional share tradability and liquidity
(400%+ turnover)
ƒ Growth potential and access to capital
8
NASDAQ volume
DROOY
8/29/2003
8/15/2003
8/1/2003
7/18/2003
7/4/2003
6/20/2003
6/6/2003
5/23/2003
5/9/2003
4/25/2003
4/11/2003
3/28/2003
3/14/2003
2/28/2003
2/14/2003
1/31/2003
1/17/2003
1/3/2003
12/20/2002
12/6/2002
11/22/2002
11/8/2002
10/25/2002
10/11/2002
9/27/2002
9/13/2002
8/30/2002
8/16/2002
8/2/2002
7/19/2002
7/5/2002
6/21/2002
6/7/2002
5/24/2002
5/10/2002
4/26/2002
4/12/2002
3/29/2002
3/15/2002
3/1/2002
Philadelphia Gold Index, volumes
180
ƒ Inclusion in index as of 18 August
14,000,000
160
12,000,000
140
10,000,000
120
8,000,000
100
6,000,000
80
4,000,000
60
2,000,000
40
0
XAU index
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Reserve sensitivity to US$ gold price
Group Proven & Probable Reserves
Moz
20
19
18
17
16
15
14
13
$350
$380
$390
$400
$410
$420
$450
$500
US$/oz
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ƒ South African operating margin target :
20% minimum
Exposure
to the
Rand
ƒ DRD FY 2002 budget:
R10.20:US$1; actual: R7.73/US$1
ƒ DRD has addressed strong Rand by:
ƒ Restructuring North West Operations
ƒ Reducing overheads
ƒ Reviewing capex programmes
(R242 M; US$28 M)
11
US$ gold price vs Rand gold price
R/kg
US$/oz
380
115000
US$ gold price
↑ 20% y-y
370
105000
360
350
95000
340
330
85000
75000
Sep-02
320
R gold price
↓ 20% y-y
Oct-02
Nov-02
Dec-02
Jan-03
Feb-03
Mar -03
Apr -03
May-03
Jun-03
Jul -03
310
Aug-03
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Restructure of North West Operations
ƒ Review process now complete – approx 3,000 redundancies
ƒ Company fully resourced to fund retrenchments
ƒ Negotiations with NUM continue
ƒ A commercial response to economic realities:
ƒ R/kg gold price
ƒ Productivity and structure
ƒ Costs
ƒ Important element to the group:
ƒ NWO (Harties and Buffels) are a high grade reserve
ƒ At current gold price, LOM 15 years
ƒ Estimate six months to turnaround
13
Costs in South Africa
R/kg costs vs inflation
160
Labour
Costs have peaked
Consumables
Electricity & Water
Contractors & Services
600
150
500
140
400
130
120
300
110
200
100
100
90
0
80
Jan-02 Feb02
Mar02
Apr- May- Jun-02 Jul-02 Aug- Sep- Oct-02 Nov- Dec- Jan-03 Feb02
02
02
02
02
02
03
Mar03
Apr- May- Jun-03
03
03
Rm
Dec '01
Mar '02
Jun '02
Sep '02
Dec '02
Mar '02
Jun '02
↑10% y-y
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ƒ South Africa:
ƒ Sustain 750,000 oz of annual production
Growth
profile
ƒ Focus on margin (20%)
ƒ Australasia:
ƒ Target: 400,000 ounces at <US$250/oz
ƒ Established presence through Tolukuma
ƒ Participate in regional consolidation
Appropriate
acquisitions
ƒ Black Economic Empowerment (BEE)
ƒ 26% of current production in HDSA hands
ƒ BEE Charter compliant
ƒ RSA acquisition vehicle
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DRD’s role in gold
Extend life of mine
16
Australasian opportunity
Australasian gold companies by 2002 gold production
(ounces)
700,000
600,000
Target
500,000
400,000
300,000
200,000
100,000
0
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Australasian expansion
ƒ Growth potential:
ƒ Disappearance of major Australian gold companies
ƒ Keen investor interest for mid-tier gold companies
ƒ Maintain leverage to US$ gold price
ƒ Target of 400,000 oz a year
ƒ DRD is a consolidator of pre-owned mines:
ƒ Focus now on the Pacific Rim and Australia
ƒ Aiming for production over exploration
ƒ Mines with growth opportunities (~100,000 oz)
ƒ Regional experience through Tolukuma turnaround
18
ƒ DRD seeking recovery for civil wrongs:
ƒ Litigation in Australia
ƒ Litigation in South Africa
Corporate
governance
ƒ SEPARATE fraud charges in South Africa against Roger
Kebble (former exec chairman)
ƒ Management focused on operations, not litigation
ƒ Kebbles have NO association with DRD, but perceptions
linger
ƒ For DRD, this means educating the market about:
ƒ Clean up of past corporate and governance misadventures
ƒ Board & management structures in place
ƒ Quality of management and operational teams
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Board and exco
ƒ Board:
ƒ Exec mgt committee:
ƒ Mark Wellesley-Wood
(Chairman & CEO)
ƒ Ian Murray
(Deputy CEO & CFO)
ƒ David Baker*#
ƒ Dr Paseka Ncholo
ƒ Rob Hume*
(Audit C’tee Chair)
ƒ Geoffrey Campbell *#
(Remuneration C’tee Chair)
*Audit C’tee member
#Remuneration
ƒ Richard Johnson (Australasia)
ƒ Deon van der Mescht (RSA)
(Alternate director)
ƒ Grant Dempsey (CGR)
ƒ Johan Engels (HR)
ƒ Kobus Dissel (Finance)
ƒ Anton Lubbe (Growth &
Services) (Alternate director)
ƒ Ilja Graulich
(Investor Relations)
C’tee Member
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Milestones to monitor
ƒ South Africa:
ƒ Return NWO to profitability
By end Q4 2004
ƒ Return margins in RSA to 20%
By end FY 2004
ƒ Australasia:
ƒ Acquire further assets in region
By end H1 2004
ƒ Build FY 2004 production to 150,000+ oz
By end FY 2004
ƒ Continue to build production profile
By end FY 2004
ƒ Corporate:
ƒ Split the roles of CEO and Chairman
By end H1 2004
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DRD’s competitive advantages
ƒ Proven operational experience
ƒ Mid-tier player with strong balance sheet
ƒ Cheapest gold in the ground
ƒ Profit turnaround leading to growth
ƒ Vast reserves and resources
ƒ Leveraged to both the US$ gold price and R/US$ exchange
rate
www.durbans.com
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