As filed with the Securities and Exchange Commission December 22, 2006
 UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 
 WASHINGTON, D.C. 20549
 
 FORM 20-F
 
 
 
  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
 
 
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
 
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
 
  SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 1934
 For the fiscal year ended June 30, 2006
 
 Commission file number 0-28800
 
 DRDGOLD LIMITED
      REPUBLIC OF SOUTH AFRICA
  299 PENDORING AVENUE, BLACKHEATH, RANDBURG, 2195, SOUTH AFRICA
       None
   
 None
   
 None
   covered by the annual report.
 
 As of June 30, 2006 the Registrant had outstanding 320,035,078 ordinary shares, of no par value.
 
 
 
 Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.   Yes
   No
 
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13  or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for past 90 days.    Yes
   No
 
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. Large accelerated filer
   Accelerated filer 
  Non-accelerated filer


TABLE OF CONTENTS
  
 
 
 
 
 Page
 PART I
 ITEM 1.
 IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS......................................................
 6
 ITEM 2.
 OFFER STATISTICS AND EXPECTED TIMETABLE .........................................................................................
 6
 ITEM 3.
 KEY
  INFORMATION...............................................................................................................................................
 6
 
 3A.
 Selected Financial Data ...............................................................................................................................................
 6
 
 3B.
 Capitalization and Indebtedness ..................................................................................................................................
 8
 
 3C.
 Reasons For The Offer And The Use Of Proceeds.....................................................................................................
 8
 
 3D.
 Risk
  Factors.................................................................................................................................................................
 8
 ITEM 4.
 INFORMATION ON THE
  COMPANY...................................................................................................................
 21
 
 4A.
 History And Development Of The Company .............................................................................................................
 21
 
 4B.
 Business Overview
  .....................................................................................................................................................
 26
 
 4C.
 Organizational Structure..............................................................................................................................................
 38
 
 4D.
 Property, Plants And Equipment
  ................................................................................................................................
 39
 ITEM 4A.
 UNRESOLVED STAFF COMMENTS
  ...................................................................................................................
 76
 ITEM 5.
 OPERATING AND FINANCIAL REVIEW AND PROSPECTS
  ..........................................................................
 77
 
 5A.
 Operating Results
  .......................................................................................................................................................
 78
 
 5B.
 Liquidity And Capital Resources ................................................................................................................................
 106
 
 5C.
 Research And Development, Patents And Licenses Etc.............................................................................................
 111
 
 5D.
 Trend Information........................................................................................................................................................
 111
 
 5E.
 Off-Balance Sheet Items..............................................................................................................................................
 111
 
 5F.
 Tabular Disclosure Of Contractual Obligations..........................................................................................................
 112
 
 5G.
 Safe Harbor
  ................................................................................................................................................................
 112
 ITEM 6.
 DIRECTORS, SENIOR MANAGEMENT AND
  EMPLOYEES............................................................................
 113
 
 6A.
 Directors And Senior Management.............................................................................................................................
 113
 
 6B.
 Compensation
  .............................................................................................................................................................
 117
 
 6C.
 Board Practices
  ...........................................................................................................................................................
 119
 
 6D.
 Employees....................................................................................................................................................................
 122
 
 6E.
 Share Ownership..........................................................................................................................................................
 124
 ITEM 7.
 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS ..........................................................
 126
 
 7A.
 Major Shareholders......................................................................................................................................................
 126
 
 7B.
 Related Party Transactions ..........................................................................................................................................
 127
 
 7C.
 Interest Of Experts And Counsel.................................................................................................................................
 131
 ITEM 8.
 FINANCIAL INFORMATION
  .................................................................................................................................
 132
 
 8A.
 Consolidated Statements And Other Financial
  Information.........................................................................................
 132
 
 8B.
 Significant Changes
  .....................................................................................................................................................
 132
 ITEM 9.
 THE OFFER AND LISTING
  ....................................................................................................................................
 133
 
 9A.
 Offer And Listing Details
  ...........................................................................................................................................
 133
 
 9B.
 Plan Of
  Distribution....................................................................................................................................................
 134
 
 9C.
 Markets........................................................................................................................................................................
 134
 
 9D.
 Selling Shareholders
  ....................................................................................................................................................
 135
 
 9E.
 Dilution
  .......................................................................................................................................................................
 135
 
 9F.
 Expenses Of The
  Issue................................................................................................................................................
 135
 ITEM 10.
 ADDITIONAL
  INFORMATION.............................................................................................................................
 136
 
 10A.
 Share
  Capital...............................................................................................................................................................
 136
 
 10B.
 Memorandum And Articles Of Association
  ..............................................................................................................
 136
 
 10C.
 Material
  Contracts......................................................................................................................................................
 138
 
 10D.
 Exchange
  Controls.......................................................................................................................................................
 143
 
 10E.
 Taxation
  ......................................................................................................................................................................
 145
 
 10F.
 Dividends And Paying Agents
  ...................................................................................................................................
 149
 
 10G.
 Statement By Experts
  ................................................................................................................................................
 150
 
 10H.
 Documents On
  Display..............................................................................................................................................
 150
 
 10I.
 Subsidiary Information
  ..............................................................................................................................................
 150
 ITEM 11.
 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
  RISK........................................
 151
 ITEM 12.
 DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
  .........................................................
 154


PART II
 ITEM 13.
 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES ...................................................................
 155
 ITEM 14.
 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS ..
 155
 ITEM 15.
 CONTROLS AND PROCEDURES...........................................................................................................................
 155
 ITEM 16A.
 AUDIT COMMITTEE FINANCIAL EXPERT ........................................................................................................
 156
 ITEM 16B.
 CODE OF ETHICS
  ....................................................................................................................................................
 156
 ITEM 16C.
 PRINCIPAL ACCOUNTANT FEES AND SERVICES...........................................................................................
 156
 ITEM 16D.
 EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES .........................................
 157
 ITEM 16E.
 PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASES........................
 157
 
 
 
 PART III
 ITEM 17.
 FINANCIAL STATEMENTS ....................................................................................................................................
 158
 ITEM 18.
 FINANCIAL STATEMENTS ....................................................................................................................................
 F-pages
 ITEM 19.
 EXHIBITS ...................................................................................................................................................................
 159
 Explanatory Note Regarding the
Omission from this Annual Report of Certain Financial Statements Required by
Rule 3-09 of Regulation S-X Prior to April 6, 2006, our shareholding in Emperor
Mines Limited was 39.52% and consequently our investment in Emperor Mines
Limited was accounted for by the equity method in our consolidated financial
statements. On April 6, 2006 our shareholding in Emperor increased to 88.27% at
which time it became a subsidiary of the Company and its results of operations
were consolidated with the Group from that date. Rule 3-09 of Regulation S-X requires us to include in this Annual
Report separate consolidated financial statements of Emperor Mines Limited as
at April 6, 2006 and for the period from July 1, 2005 to April 6, 2006
(together, the "Emperor Financial Statements"). The Emperor Financial
Statements are currently unavailable and have been omitted from this report.
Upon the Emperor Financial Statements becoming available we will file an
amendment to this Annual Report to include such financial statements. For
financial information regarding Emperor Mines Limited during the period prior
to it becoming a subsidiary, see Note 15 - Investments in Associates in our
consolidated financial statements included elsewhere in this Annual Report and
the consolidated financial statements of Emperor Mines Limited for the years
ended June 30, 2005, 2004 and 2003 included elsewhere in this Annual Report. Prior to December 1, 2005, our shareholding in
Crown Gold Recoveries (Pty) Limited was 40% and consequently our investment in
Crown Gold Recoveries (Pty) Limited was accounted for by the equity method in
our consolidated financial statements. On December 1, 2005 our shareholding in
Crown increased to 85% at which time it became a subsidiary of the Company and
its results of operations were consolidated with the Group from that date. Rule
3-09 of Regulation S-X requires us to include in this Annual Report separate
consolidated financial statements of Crown Gold Recoveries (Pty) Limited as at
December 1, 2005 and for the period from July 1, 2005 to December 1, 2005
(together, the "Crown Financial Statements"). The Crown Financial Statements
are currently unavailable and have been omitted from this report. Upon the
Crown Financial Statements becoming available we will file an amendment to this
Annual Report to include such financial statements. For financial information
regarding Crown Gold Recoveries (Pty) Limited during the period prior to it
becoming a subsidiary, see Note 15 - Investments in Associates in our
consolidated financial statements included elsewhere in this Annual Report and
the consolidated financial statements of Crown Gold Recoveries (Pty) Limited
for the years ended June 30, 2005, 2004 and 2003 included elsewhere in this
Annual Report.


2
 Preparation of Financial Information
 
  there. Accordingly, our books of account are maintained in South African Rand. Our financial statements attached hereto are presented in United States Dollars and in accordance with generally accepted accounting principles in the United States, or US GAAP. All references to “Dollars” or “$” herein are to United States Dollars, references to “Rand” or “R” are to South African Rands, references to “A$” are to Australian Dollars, references to “F$” are to Fiji Dollars, and references to “Kina” or “K” are to Papua New Guinean Kinas.
  been translated into Dollars. Unless otherwise stated, the conversion rates for currency translations for the 2006 fiscal year are R7.270 per $1.00, A$1.370 per $1.00 and K2.853 per $1.00, which reflect the noon buying rate in New York City at June 30, 2006. For statement of operations amounts, the average conversion rate for Rand during the 2006 fiscal year of R6.428 per $1.00, A$1.337 per $1.00 and K2.932 per $1.00 is used. The rates used for currency translations for transactions occurring during the 2005 and 2004 fiscal years are the respective year end exchange rates for balance sheet amounts and the average exchange rate for that year for statements of operations amounts. By including convenience currency translations in this Annual Report, we are not representing that the Rand, Australian Dollar, Kina or Fiji Dollar amounts actually represent amounts shown in Dollars or that these amounts could be converted at the rates indicated into Dollars.
 DRDGOLD Limited
 
  “the Group” refer to the Company and its subsidiaries, associates and joint venture, as appropriate in the context.
 Special Note Regarding Forward-Looking Statements
 
  Exchange Act of 1934 (the “Exchange Act”), regarding future events or other future financial performance and information relating to us that are based on the beliefs of our management, as well as assumptions made by and information currently available to our management. Some of these forward-looking statements include phrases such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “should,” or “will continue,” or similar expressions or the negatives thereof or other variations on these expressions, or similar terminology, or discussions of strategy, plans or intentions.
          
  Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others:
              
  causing these results to differ materially from these expressed in any forward-looking statements. These factors are not necessarily all of the important factors that could cause our results to differ materially from those expressed in any forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on future results.
  We do not undertake any obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events.


3
 Imperial units of measure and metric equivalents
 
   
 
 
 
 Metric
 Imperial
 Imperial
 Metric


Glossary of Terms and Explanations
 
 Adularia ............................................  
  A transparent or translucent variety of common feldspar. Archaean...........................................   
  A period of the geological time scale between 2.5 and 4.6 billion years ago, the earliest part of the
 Precambrian.
 Assaying ...........................................  
  The chemical testing process of rock samples to determine mineral content. Auriferous.........................................   
  Containing gold. Bonanza  ...........................................   
  Unexpected high-grade occurrences. Care and maintenance ......................   
  Cease active mining activity at a shaft, but continue to incur costs to ensure that the Ore Reserves
 are open, serviceable and legally compliant.
 Cash costs per ounce ........................  Cash costs are production costs incurred directly in the production of gold and include labor
 costs, contractor and other  related costs, inventory costs and electricity costs. Cash costs per ounce are calculated by dividing cash costs by ounces of gold produced. Cash costs per ounce have been calculated on a consistent basis for all periods presented. This is a non-US GAAP financial measure and should not be considered a substitute measure of costs and expenses reported by us in accordance with US GAAP.
 Caving...............................................  A type of mining in which the ore is blasted and drawn in a manner causing the overhead rock to
 cave in.
 Conglomerate ...................................   
  A coarse-grained sedimentary rock consisting of rounded or sub-rounded pebbles. Cut-and-fill .......................................   
  A mining method in which a slice of rock is removed after blasting and replaced with a slice of
 fill material to provide workers with a platform to mine the next slice of rock.
 Cut-off grade.....................................  The minimum in-situ grade of ore blocks for which the cash costs per ounce, excluding overhead
 costs, are equal to a projected gold price per ounce.
 Depletion ..........................................  The decrease in the quantity of ore in a deposit or property resulting from extraction or
 production.
 Dilution.............................................  Broken rock entering the ore flow at zero or minimal grade and therefore diluting the gold
 content per ton.
 Diorite...............................................   
  An igneous rock formed by the solidification of molten material. Doré ..................................................  Unrefined gold and silver bullion bars consisting of approximately 90% precious metals which
 will be further refined to almost pure metal.
 Electrowinning .................................  The process of recovering metal from an ore by means of electro-chemical processes Grade.................................................  The amount of gold contained within auriferous material generally expressed in ounces per ton or
 grams per ton of ore.
 g/t ......................................................  Grams per ton. Horizon .............................................  A plane indicating a particular position in a stratigraphic sequence. This may be a theoretical
 surface with no thickness or a distinctive bed.
 Igneous rock .....................................  Rock which is magmatic in origin. Intrusive ............................................  Rock which while molten, penetrated into or between other rocks, but solidified before reaching
 the surface.
 Life of mine ......................................  Projected life of a mining operation based on the Proven and Probable Ore Reserves. Metallurgical plant ...........................  A processing plant (mill) erected to treat ore and extract the contained gold. Mine call factor.................................  This is the gold content recovered expressed as a percentage of the gold content called. Mill....................................................  Material passed through the metallurgical plant for processing. Mt......................................................  Million tons. Opening up .......................................  The potential that previously abandoned shafts have to be reopened and mined Ore ....................................................  A mixture of valuable and worthless minerals from which the extraction of at least one mineral is
 technically and economically viable.
 Ore Reserves.....................................  Attributable total Ore Reserves of subsidiaries and our  16% attributable share of the Ore
 Reserves from the Porgera Joint Venture.
 Pay-limit ...........................................  The minimum in-situ grade of ore blocks for which cash costs, including all overhead costs, are
 equal to a projected gold price per ounce.
 Proven Ore Reserves ........................
 Reserves for which (a) the quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth, and mineral content of Ore Reserves are well-established.


5
 
 
 that used for Proven Ore Reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for Proven Ore Reserves, is high enough to assume continuity between points of observation.
 oz/t ....................................................  Ounces per ton. Reef...................................................  A gold-bearing sedimentary horizon, normally a conglomerate band that may contain economic
  Refining ............................................  The final purification process of a metal or mineral. Rehabilitation....................................  The process of restoring mined land to a condition approximating its original state. Reserves............................................  That part of a mineral deposit which could be economically and legally extracted or produced at
  
  
 shaft is also used for ventilation and as an auxiliary exit. It is equipped with a hoist system that lowers and raises a cage in the shaft, transporting equipment, personnel, materials, ore and waste. A shaft generally has more than one compartment.
 
 make room for subsequent mining activities. Most of the blasted ore is left to accumulate in the stope and is drawn after the stope is completely mined.
 
  Sloughing..........................................  The localized failure of part of the slimes dam wall caused by a build up of water within the dam. Stope .................................................  Underground production working area on the Ore Horizon. Sub-level stoping..............................  A method of mining in which the ore is blasted, on multiple levels in one stope, and drawn off as
  
  
  
 reserves of gold-bearing material in-situ or quantities of ore and waste material mined, transported or milled.
 
 between revenues from gold bullion delivered to refineries and profits or losses before taxation. Total costs per ounce are calculated by dividing total costs by ounces of gold produced. Total cots per ounce have been calculated on a consistent basis for all periods presented. This is a non-US GAAP financial measure and should not be considered a substitute measure of costs and expenses reported by us in accordance with US GAAP.
 Tpm...................................................  Tons per month. Up-dip mining ..................................  A mining method in which the drilled and blasted ore gravitates into slushers or gullies leaving
  Waste rock ........................................  Non-auriferous rock. Yield .................................................  The amount of recovered gold from production generally expressed in ounces or grams per ton of


6
 PART I
 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
 
   ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
 
   ITEM 3. KEY INFORMATION
  3A. SELECTED FINANCIAL DATA
 
  and 2004 are derived from our consolidated financial statements set forth elsewhere in this Annual Report, which have been prepared in accordance with US GAAP. These consolidated financial statements have been audited by KPMG Inc. as of June 30, 2006 and 2005 and for the years ended June 30, 2006, 2005 and 2004. The selected consolidated financial data as of June 30, 2003 and 2002 and for the years ended June 30, 2003 and 2002 are derived from audited consolidated financial statements not appearing in this Annual Report which have been prepared in accordance with US GAAP. The selected consolidated financial data set forth below should be read in conjunction with Item 5.: “Operating and Financial Review and Prospects” and with the consolidated financial statements and the notes thereto and the other financial information appearing elsewhere in this Annual Report.


Selected Consolidated Financial Data
 (in thousands, except share, per share and ounce data)
 
 Year ended June 30,
 
 2006
 2005
 2004
 2003
 
 2002
 
 
 $’000
 $’000
 $’000
 $’000
 $’000
 Consolidated Statement of Operations Data
       Revenues........................................................................
 245,301
 183,609
 183,254
 109,419
 143,262
 Production costs.............................................................
 (211,559)
 (136,520)
 (143,026)
 (90,761)
 (99,791)
 Net operating (loss)/income ..........................................
 (3,434)
 6,597
 (16,110)
 47,237
 (24,919)
 (Loss)/profit from continuing operations before tax and
 other items ..................................................................
 (2,587)
 (11,155)
 (11,882)
 59,406
 (24,839)
 Income and mining tax (expense)/ benefit....................
 (3,299)
 (5,762)
 (14,230)
 (15,830)
 21,092
 Equity in loss from associates .......................................
 (19,943)
 (20,511)
 (11,975)
 (6,867)
 -
 Minority interest ............................................................
 (25)
 (2)
 (7)
 -
 -
 Net (loss)/profit from continuing operations applicable
 to common stockholders.............................................
 (25,854)
 (37,430)
 (38,094)
 36,709
 (3,747)
 Profit/(loss) from discontinued operation, net of taxes
 2,023
 (44,359)
 (20,804)
 (22,577)
 (47,962)
 Net (loss)/profit applicable to common stockholders...
 (23,831)
 (81,789)
 (58,898)
 13,959
 (51,709)
 Basic (loss)/profit per share - continuing operations
 (cents)..........................................................................
 (9)
 (15)
 (17)
 20
 (2)
 Basic profit/(loss) per share - discontinued operation
 (cents)..........................................................................
 1
 (17)
 (10)
 (12)
 (30)
 Basic (loss)/profit per share (cents)...............................
 (8)
 (32)
 (27)
 8
 (32)
 Diluted (loss)/profit per share - continuing operations
 (cents)..........................................................................
 (9)
 (15)
 (17)
 18
 (2)
 Diluted profit/(loss) per share (cents) - discontinued
 operation .....................................................................
 1
 (17)
 (10)
 (12)
 (30)
 Diluted (loss)/profit per share (cents) ...........................
 (8)
 (32)
 (27)
 6
 (32)
 Consolidated Balance Sheet Data
 
 
 
 
 
 Cash and cash equivalents.............................................
 54,912
 36,085
 22,453
 44,423
 23,852
 Total
  assets....................................................................
 406,221
 238,257
 282,735
 207,335
 197,306
 Total liabilities...............................................................
 (272,336)
 (158,330)
 (200,194)
 (197,145)
 (212,777)
 Long-term
  loans............................................................
 (50,252)
 (69,314)
 (59,865)
 (63,149)
 (25,368)
 Stockholders' (equity)/deficit
  .......................................
 (103,014)
 (79,053)
 (81,612)
 (10,190)
 15,471
 Total liabilities and stockholders' equity.......................
 (406,221)
 (238,257)
 (282,735)
 (207,335)
 (197,306)
 Number of shares issued as at June
  30.........................
 320,035,078  
  296,206,048
 233,307,667
 184,222,073
 177,173,485
 Non-US GAAP Financial Data
 
 
 
 
 
 Working capital (deficit)/surplus ..................................
 (45,468)
 11,597
 (24,993)
 2,419
 (34,311)
 Cash costs per ounce
 1
 - continuing operations .............
 458
 315
 307
 275
 205
 Cash costs per ounce
 1
 - discontinued operation............
 -
 504
 393
 312
 219
 Cash costs per ounce
 1
 ..................................................
 458
 374
 343
 297
 212
 Total costs per ounce
 2
 - continuing operations.............
 536
 449
 418
 151
 345
 Total costs per ounce
 2
 - discontinued operation ...........
 -
 630
 441
 321
 426
 Total costs per ounce
 2
 ...................................................
 536
 506
 428
 250
 388
  1
 Cash costs per ounce is a non-US  GAAP financial measure of performance that we use to determine cash generating capacities of the mines and to monitor
 performance of our mining operations.  For a reconciliation to production costs see Item 5A.: “Operating Results.”
 2
 Total costs  per ounce is a non-US  GAAP financial measure of performance that we use to determine cash generating capacities of the mines and to monitor
 performance of our mining operations.  For a reconciliation to production costs see Item 5A.:  “Operating Results.”


8
 3B. CAPITALIZATION AND INDEBTEDNESS
    3C. REASONS FOR THE OFFER AND THE USE OF PROCEEDS
    3D. RISK FACTORS
  operational processes, while others relate to our business environment. It is important to understand the nature of these risks and the impact they may have on our business, financial condition and operating results.
           Risks related to our business and operations
 A strong Rand and a weak gold price negatively affect our operations.
   and could be materially harmed in the future by an appreciation in the value of the Rand. Although the Rand depreciated against the Dollar slightly in fiscal 2006 (based on the average exchange rate at June 30, 2006 and 2005), it has   revenue received by us in Rands. These circumstances most adversely affected the North West Operations during fiscal 2005. Due to the marginal nature of our mines in South Africa, any sustained decline in the market price of gold below the cost of production, could result in the closure of our other South African mines which would result in significant costs and expenditure, for example, incurring retrenchment costs earlier than expected,  that would negatively and adversely affect our business, operating results and financial condition.
 Changes in the market price for gold, which in the past has fluctuated widely, and exchange rate fluctuations affect the
 profitability of our operations and the cash flows generated by those operations.
   exchange rate movements of the Rand, Kina and Fiji Dollar. We sell our gold and trade our foreign currency at the spot price in the market on the date of trade. If the Dollar gold price should fall and the regional functional currencies should strengthen against the Dollar, resulting in revenue below our cost of production and remain at such levels for any sustained period, we may experience losses and may be forced to curtail or suspend some or all of our operations. In addition, we might not be able to recover any losses we may incur during that period or maintain adequate gold reserves for future exploitation.
  appreciated against the Dollar by 9.8% and 23.9%, respectively, but in fiscal 2006, the Rand depreciated against the Dollar by 3.3% (based on average exchange rates at June 30 of each year). As at June 30, 2006, even though the Rand depreciated against the Dollar during the fiscal year, it has appreciated by 45.9% since reaching R13.44 = $1.00 in December 2001 (based on closing rates). In fiscal 2006, 2005 and 2004, the Kina appreciated against the Dollar by 3.1%, 3.9% and 13.7% respectively (based on average exchange rates at June 30 of each year). The Fiji Dollar also depreciated against the Dollar by 2.4% in fiscal 2006, however appreciated against the Dollar in fiscal 2005 and 2004 by 5.0% and 11.4%, respectively (based on average exchange rates at June 30 of each year).
  could continue to result in a decrease in profitability. In fiscal 2006 and 2005, 60% and 57% of production (including the discontinued operation), respectively, was from South African mines providing significant exposure to the strengthening of the Rand and a decrease in profitability. If the Rand continues to appreciate in such a manner, our South African Operations could continue to experience a reduction in cash flow and profitability.


9
  We have a history of losses and may incur losses in the future
 
  may continue to incur losses in the future. Our profits and cash flows of the South African Operations are directly exposed to the strength of the Rand and higher input costs as we generally do not hedge. These mines are also regarded as older, higher cost and lower-grade gold producers. In addition to our ability to identify Ore Reserves that can be mined economically and to maintain sufficient controls on production and other costs, the exchange rate fluctuations will have a material influence on the future viability of these mines. Our profits and cash flows of the Australasian Operations have been negatively impacted by the decrease in production at all of these operations during fiscal 2006. Production at the Australasian Operations decreased in fiscal 2006 mainly as a result of remediation work on the West Wall of the open pit at Porgera, production problems at Tolukuma and a six-week shut down of operations at Vatukoula. Our profits and cash flows of the Australasian Operations are dependant  on resolving these production problems and  on returning  Tolukuma and Vatukoula to profitability. On December 5, 2006, after an extensive three-month review of Vatukoula, we determined that continued mining operations  at Vatukoula  were no longer economically viable and  that the mine would  therefore  cease production.  Pending completion of a strategic review to optimize the value of Vatukoula and other Fijian land holdings, the mine has been placed on a care and maintenance program.
 We may not be able to meet our cash requirements because of a number of factors, many of which are beyond our control.
 
  requirements out of cash flows generated from our operations, we would need to fund our cash requirements from alternative financing and we cannot guarantee that any such financing would be on acceptable terms, or would be permitted under the terms of our existing financing arrangements. In the absence of such financing, our ability to respond to changing business and economic conditions, make future acquisitions, react to adverse operating results, meet out debt service obligations and fund required capital expenditures or increased working capital requirements may be adversely affected.
 The failure to discover or acquire new Ore Reserves could negatively affect our cash flow, results of operations and financial
 condition.
  acquisition efforts in the regions in which we operate and any new regions that we identify. In fiscal 2006, our ore reserves increased with the acquisition of Crown Gold Recoveries (Pty) Limited, or Crown, East Rand Proprietary Mines Limited, or ERPM and Emperor Mines Limited, or Emperor. In fiscal 2005 however, our Ore Reserves decreased primarily as a result of placing the North West Operations into provisional liquidation and losing access to its ore reserves. Additionally, the strength of the rand caused a decline in the Rand gold price in fiscal 2005. Mining higher grade reserves in our South African mines is likely to be more difficult in the future and could result in increased production costs and reduced profitability. A failure to discover or acquire new reserves in sufficient quantities to maintain or grow the current level of our reserves will negatively affect our future cash flow, results  of operations  and financial condition. We can make no assurances that any new or ongoing exploration programs will result in new mineral producing operations that will sustain or increase our Ore Reserves.
  
 To the extent that we seek to expand through acquisitions, we may experience difficulty in managing these acquisitions and
 integrating them with our existing operations.
  disclosed in Item 4.: “Information on the Company,” and our success in acquiring control over potential future acquisitions of new gold mining operations involves a number of risks including:
        unifying our periodic and year-end financial audit processes if the acquired operation engages a public accounting firm different from the one that we engage;
    to the extent that we make an acquisition outside of markets in which we have previously operated, conducting and managing operations in a new operating environment.
 Any difficulties or time delays in achieving successful integration of new acquisitions could have a material adverse effect on our business, operating results and financial condition.


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 The ability to grow through acquisitions, particularly outside South Africa, may be restricted by not successfully achieving
 our acquisition strategy.
  From time to time we consider the acquisition of mining assets including Ore Reserves, development properties, operating mines or mining companies. Successfully acquiring mining assets may be hindered by the following:
  the market for acquisitions is competitive and we may not always be successful in identifying and purchasing assets that fit our strategy;
    we may need to use a combination of historical and projected data in order to evaluate the financial and operational feasibility of the target assets. These analyses are based on a variety of factors including historical operating results, estimates of and assumptions about future reserves, cash and other operating costs, metal prices and projected economic returns and evaluations of existing or potential liabilities associated with the property and its operations. Other than historical operating results, all of these parameters could differ significantly from the estimates and assumptions used in the evaluation process, which could result in an incorrect evaluation of the quality of the assets to be acquired;
  our inability to make suitable acquisitions at an appropriate price could adversely affect our ongoing business and financial position, particularly if the Rand strengthens against the Dollar;
        acquisitions financed through the issue of shares may result in a dilution in the value of our shares if the value of the business acquired is not realized;
  as a marginal gold producer, in the past we have acquired, and we plan to continue to acquire, marginal mines with relatively higher production costs and lower returns. We may not be able to reduce the production costs or increase the returns on these mines in the short to medium term, due to:
          we could experience financial loss through costs incurred in evaluating and pursuing failed acquisitions or overpaying for an acquisition.
   adverse effect on our business, operating results and financial condition.
 Because we do not use forward sale arrangements to protect against low gold prices with respect to most of our production,
 we are exposed to the impact of any significant drop in the gold price.
 
  Accordingly, with respect to most of our production, we are not protected against decreases in the gold price therefore if the gold price decreases significantly we run the risk of reduced revenues.
 We do not control the operation at the Porgera Joint Venture.
 
   dividends or repay indebtedness, including debt held by us. Because we do not control this entity, its current management may not continue to manage these entities in a manner that is favorable to us. With a minority interest stake in this entity, our ability to raise funding is dependent on access to capital from its shareholders, other joint venture partners or third party financiers. Decisions which reduce gold production, revenues or profitability, over which we have no control, may serve to reduce our cash flows and decrease our profitability.


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  We may need to improve our internal controls over financial reporting and our independent auditors may not be able to attest
 to their effectiveness.
 
  our independent auditors to attest to, the effectiveness of these controls, as required by Section 404 of the United States Sarbanes-Oxley Act of 2002. During the course of our ongoing evaluation, we have identified areas within our internal controls over the financial reporting process that need improvement. As we design the appropriate remediation steps to address any deficiencies already identified, we may identify other conditions that may result in significant deficiencies or material weaknesses in the future. This could impact our ability to comply with Section 404 in a timely manner and in turn our independent auditors may not be able to attest to the effectiveness of our internal controls over financial reporting. As a result, we could experience a negative reaction in the financial markets and incur additional costs in improving the condition of our internal controls.
 Failure to discover and remediate material weaknesses in our internal controls in relation to our US GAAP financial
 reporting could have an adverse effect on our business.
 
  provide reliable US GAAP financial reports. Failure to prevent these material weaknesses from reoccurring and to provide reliable US GAAP financial reports could have an adverse effect on our share price. Within the areas where our operations and accounting functions are located in South Africa, Australia, but more particularly Papua New Guinea and Fiji,  remedying these material weaknesses is challenging in light of the limited availability of internal accounting employee candidates who have sufficient knowledge and experience regarding the application of US GAAP and the United States Securities and Exchange Commission, or SEC, requirements and of potential external advisers with US GAAP expertise to supplement our internal resources.
  areas of compliance with US GAAP and SEC reporting requirements. We documented these efforts in the form of a US GAAP Action Plan (see Item 15: “Controls and Procedures”) which we implemented during fiscal 2005. If we encounter any difficulties in sustaining the application of our US GAAP Action Plan going forward, we could fail to meet our US GAAP reporting obligations. If we are unable to sustain our US GAAP Action Plan, investors could lose confidence in our reported financial information, which could have a negative effect on the trading price of our shares.
 Our production costs may fluctuate and have an adverse effect on our results of operations.
 
   Production costs are affected by, amongst other things:
                    pollution.  Significant increases in our production costs caused by one or more of these factors could have an adverse effect on our


12
 Increased production costs would affect profitability.
   products. The production costs incurred at our South African Operations have, and could in the future, increase at rates in excess of our annual expected inflationary increase and result in the restructuring of these operations at substantial cost. The majority of our South African labor force is unionized and their wage increase demands are usually above the then prevailing rates of inflation. In 2005, we entered into a two year wage agreement with the National Union of Mine Workers, or NUM, that provided wage increases of 6% as of July 1, 2005 and 6.5% as of July 1, 2006. Similar two year wage agreements were entered into at Crown and ERPM, which provided increases on October 1, 2005 of 6.5% and 11%, respectively. In addition, we have received notification of price increases, far in excess of the current rate of inflation, to be imposed by our South African steel suppliers and parastatal entities which supply us with electricity and water. These, combined with the increase in labor costs, could result in our costs of production increasing above the gold price received. Discussions with suppliers to moderate price increases have so far been unsuccessful.
    increase in the cost of crude oil in global markets. Due to the location of Tolukuma in the  highlands of Papua New Guinea, all transportation to the mine site is by heavy lift helicopters. Approximately $104 per ounce, or 17%, of production costs relate to transportation, including the cost of JET A1 fuel for the helicopters. In the event that the increase in crude oil prices continues, this will have a significant impact on production costs at Tolukuma and will increase the cost of mining at our other operations.
  approximately 23% of the operating costs at Vatukoula. Increasing production costs at this operation will negatively impact on the profitability of the Company. On December 5, 2006, after an extensive three-month review of Vatukoula, we determined that continued mining operations at Vatukoula were no longer economically viable and that the mine would therefore cease production. Pending completion of a strategic review to optimize the value of Vatukoula and other Fijian land holdings, the mine has been placed on a care and maintenance program.
  our business, operating results and financial condition.
 Our operations are subject to extensive environmental regulations which could impose significant costs and liabilities.
 
  various state, provincial and local laws, which regulate air and water quality, hazardous waste management and environmental rehabilitation and reclamation.  environment near the mining sites. Delays in obtaining, or failures to obtain government permits and approvals may adversely impact our operations. In addition, the regulatory environment in which we operate could change in ways that could substantially increase costs to achieve compliance, therefore having a material adverse effect on our profitability.
  these liabilities at $82.0 million and included them in the discounted provision for the Group’s environmental rehabilitation, reclamation and closure costs of $46.8 million on our balance sheet as at June 30, 2006. However, the ultimate amount of rehabilitation costs may in the future exceed the current estimates due to influences beyond our control, such as changing legislation or unidentified rehabilitation costs. The closure of mining operations, without sufficient financial provision for the funding of rehabilitation liabilities, or unacceptable damage to the environment, including pollution or environmental degradation, may expose us and our directors to litigation and potentially significant liabilities.
 Seismicity and other natural disasters could impact the going concern of our operations.
 
  continue production. On March 9, 2005, the North West Operations suffered the effects of an earthquake of 5.3 on the Richter scale. As a consequence of the extensive damage caused by the earthquake, the No. 5 Shaft of the North West Operations was closed. There was continuing seismic activity in the area and on March 16, 2005, the Company closed the No. 2 Shaft because of concerns for the safety of employees. Seismic activity has had, and may continue to have, a harmful effect on our business, operating results and financial condition.


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 Our Papua New Guinea Operations are subject to environmental risks associated with tailings discharge.
 
  routinely discharged into the surrounding river systems in accordance with approved environmental water discharge permits issued by the Papua New Guinea Department of the Environment and Conservation under the Papua New Guinea Environmental Act 2000 and Regulations 2000. The Papua New Guinea Government has approved disposal into certain natural rivers as the most appropriate method for treated tailings and soft incompetent waste rock because the mines are located in extremely rugged mountainous terrain, subject to seismic activity, high rainfall and landslides, so construction of a tailings impoundment would be very difficult and the risk of an engineering failure high.
  discharges are monitored in accordance with the terms of our approved environmental management monitoring program. Cyanide associated with the tailings deposited is detoxified and cyanide levels are monitored daily. However, should we be unable to control the levels of lead, mercury, arsenic or cyanide, it could pose potential adverse health risks to the surrounding communities and may result in us violating our environmental water discharge permit and may expose us to civil and criminal liability. While our Papua New Guinea Operations currently comply with the applicable license conditions  established  by the Papua New Guinea Government, the eventual, cumulative environmental impacts could be greater than the estimates in, or contemplated by, the environmental plans and environmental management monitoring programs approved by the Papua New Guinea Government. In such event the Papua New Guinea Government could require us to remedy such consequences and the costs of such remediation could be material. We have also encountered opposition from local people and landowners regarding our discharge of tailings. This opposition could cause delays or stoppages which could reduce our production capacity and have an adverse effect on our business, operating results and financial condition.
  operational disruptions, especially if the government changes the method it requires for us to test tailings discharges, and may have a material adverse affect on profitability, as additional costs may need to be incurred to facilitate other waste discharge methods.
 Flooding at our operations may cause us to incur liabilities for environmental damage.
 
   controlled, water from our workings could potentially rise to the surface or decant into surrounding underground workings or natural underground water sources.
  active pumping of underground water at these mines. We expect that the progressive flooding where these operations are located could eventually cause the discharge of polluted water to the surface and to local water sources.
    underground water levels not reach a natural subterranean equilibrium, and in the event that underground water rises to the surface, we may
  material adverse effect on our business, operating results and financial condition.
  the mines may result in the death of, or personal injury to, miners, the loss of mining equipment, damage to or destruction of mineral properties or production facilities, monetary losses, delays and unanticipated fluctuations in production, environmental damage and potential legal liabilities. As a result, these events may have a material adverse effect on our business, operating results  and financial condition.
 We have ageing assets in South Africa, which exposes us to greater risk of our infrastructure failing, higher maintenance
 costs and potentially greater health, safety and environmental liabilities.
 Our South African assets are made up predominantly of mature assets, which we acquired after they had reached the end of the
 planned production cycle under their previous owners, and our strategy has been to revive these assets through specialist planning and mining techniques. The ageing infrastructure and installations typical of these operations require constant maintenance and continuing capital expenditure. This materially increases our operational costs. The mature state of these assets, coupled with the technology applied in many of our installations was not regularly updated and accordingly has become obsolete compared to the technology used in more modern mines. As a result the risk of technology failure is high, and the maintenance of these installations, costly.
 Due to the nature of the business, particularly in South Africa where our marginal mines predominantly are comprised of aged
 infrastructures, we inherently run the risk of exposure to greater health, safety and environmental liabilities which we closely monitor but are unable to fully mitigate.


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 Due to the nature of our business, our employees face health and safety risks.
 Regrettably  seven  people died in work-related incidents during fiscal year 2006. These fatalities were largely attributable to
 seismicity-related rockfalls. While seismic monitoring continues to be an invaluable tool in the management of seismicity, there is still risk of seismic induced fatalities occurring which we may not be able to prevent. Preventing occupational diseases such as tuberculosis and noise-induced hearing loss is a priority and is addressed through close adherence to legislated requirements. Mine and safety regulations of the countries in which we conduct our operations impose various duties on us at our mines and grant the authorities broad powers to, among other things, close unsafe mines and order corrective action relating to health and safety matters. In the event of any future accidents at any of our mines, regulatory authorities could take steps which could increase our costs  or reduce our production capacity. This could have a material adverse effect on our business, operating results and financial condition.
 Events may occur for which we are not insured which could affect our cash flows and profitability.
 
  respect of past mining activities. Our existing property and liability insurance contains certain exclusions and limitations on coverage. We have insured property, including loss of profits due to business interruption in the amount of $1.2 billion (R9.0 billion). Claims for each and every event are limited by the insurers to $68.8 million (R500.0 million). This policy is limited by initial deductible amounts covering the loss of surface and underground assets, and losses due to seismic events, machinery breakdown, flooding, fire and accidents. Business interruption is only covered from the time the loss actually occurs. The deductible amounts vary between categories with the maximum deductible of $5.5 million (R40.0 million). A specific limitation of $13.8 million (R100.0 million) applies for loss suffered or claims as a result of landslides at Tolukuma, as well as a $13.8 million (R100.0 million) limitation for any seismic event smaller than 4.5 on the Richter scale. General liability insurance cover is in the amount of $90.8 million (R660.0 million).
  pollution related accidents, for which coverage is not available. If we are required to meet the costs of claims which exceed our insurance coverage, our costs may increase which could decrease our profitability.
 If we are unable to attract and retain key personnel our business may be harmed.
 
  personnel including our Chief Executive Officer and our Chief Financial Officer. Factors critical to retaining our present staff and attracting additional highly qualified personnel include our ability to provide these individuals with competitive compensation arrangements, equity participation and other benefits. If we are not successful in retaining or attracting highly qualified individuals in key management positions, our business may be harmed. We do not maintain “key man” life insurance policies on any members of our executive team. The loss of any of our key personnel could prevent us from executing our business plans, which may result in decreased production, increased costs and decreased profitability.  Risks related to the gold mining industry
 Changes in the price of gold, which in the past has fluctuated widely, is beyond our control.
 
  including:
  the physical supply of gold from world-wide production and scrap sales, and the purchase, sale or divestment by central banks of their gold holdings;
                 
  extended period.


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 The exploration of mineral properties is highly speculative in nature, involves substantial expenditures, and is frequently
 unproductive.
    ore reserves from our North West Operations since Buffelsfontein, which owns the North West Operations, was placed into provisional liquidation on March 22, 2005. With effect from December 1, 2005, previously 40% owned mines, ERPM and Crown, are now fully consolidated operations which consequently increased our Ore Reserves. Our future growth and profitability will depend, in part, on our ability to identify and acquire additional mineral rights, and on the costs and results of our continued exploration and development programs.  Gold mining companies may undertake exploration activities to discover gold mineralization, which in turn may give rise to new gold bearing ore bodies. Exploration is highly speculative in nature and requires substantial expenditure for drilling, sampling and analysis of ore bodies in order to quantify the extent of the gold reserve. Many exploration programs, including some of ours, do not result in the discovery of mineralization and any mineralization discovered may not be of sufficient quantity or quality to be mined profitably. If we discover a viable deposit, it usually takes several years from the initial phases of exploration until production is possible. During this time, the economic feasibility of production may change.  Moreover, we rely on the evaluations of professional geologists, geophysicists, and engineers for estimates in determining whether to commence or continue mining. These estimates generally rely on scientific and economic assumptions, which in some instances may not be correct, and could result in the expenditure of substantial amounts of money on a deposit before it can be determined with any degree of accuracy whether or not the deposit contains economically recoverable mineralization. Uncertainties as to the metallurgical recovery of any gold discovered may not warrant mining on the basis of available technology. As a result of these uncertainties, we may not successfully acquire additional mineral rights, or identify new Proven and Probable Ore Reserves in sufficient quantities to justify commercial operations in any of our properties. Our mineral exploration rights may also not contain commercially exploitable reserves of gold.  The costs incurred on unsuccessful exploration activities are, as a result, not likely to be recovered and we could incur a write-down on our investment in that interest or the irrecoverable loss of funds spent.
 There is uncertainty with our Ore Reserve estimates.
 
  and are reported in accordance with the requirements of Industry Guide 7 of the SEC. These estimates may be imprecise and may not reflect actual reserves or future production.
  examinations, reserve estimates may have to be adjusted and mining plans may have to be altered in a way that might ultimately cause our results of operations and financial condition to decline. Moreover, if the price of gold declines, or stabilizes at a price that is lower than recent levels, or if our production costs, and in particular our labor costs, increase or recovery rates decrease, it may become uneconomical to recover Ore Reserves containing relatively lower grades of mineralization. Under these circumstances, we would be required to re-evaluate our Ore Reserves. Short-term operating factors relating to the Ore Reserves, such as the need for sequential development of ore bodies and the processing of new or different grades, may increase our production costs and decrease our profitability during any given period. These factors have and could result in reductions in our Ore Reserve estimates, which could in turn adversely impact upon the total value of our mining asset base and our business, operating results and financial condition.
 Gold mining is susceptible to numerous events that could have an adverse impact on a gold mining business.
 
  dumps and tailings dams. These operations are exposed to numerous risks and events, the occurrence of which may result in the death of, or personal injury to, employees, the loss of mining equipment, damage to or destruction of mineral properties or production facilities, monetary losses, delays in production, environmental damage, loss of the license to mine and potential legal claims. The risks and events associated with the business of gold mining include, but are not limited to:
  environmental hazards and pollution, including the discharge of gases, toxic chemicals, pollutants, radioactive materials and other hazardous material into the air and water;
  seismic activity which could lead to rock bursts, cave-ins, pit slope failures or, in the event of a significant event, total closure of sections or an entire underground mine;
        accidents caused from and related to drilling, blasting, removing, transporting and processing material, and the collapse of pit walls and tailings dams; and


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  and hazards not associated with open pit or surface rock dump and tailings dam retreatment operations. The level of seismic activity in a deep level gold mine varies based on the rock formation and geological structures in the mine. The occurrence of any of these hazards could delay production, increase production costs and may result in legal claims.
  excessive annual rainfall. The transport of supplies and employees to and from the mine site may be inhibited by incessant rain and damage to roads. In addition, excessive land movement caused by excessive rain may destabilize existing building and plant infrastructure and restrict access into the mines.
  states, rising sea levels caused by the greenhouse effect are a major concern. Natural disasters of this nature could potentially disrupt our business for an extended period of time and this is of particular concern in Fiji due to the island’s exposure to such disasters in the past. Tropical cyclone Ami hit Fiji on January 13, 2003, killing at least 15 people and leaving thousands more devastated. Risks related to doing business in South Africa, Papua New Guinea and Fiji
 Political or economic instability in the regions in which we operate may reduce our production and profitability.
 
  reduce our production and profitability. Large parts of the South African population are unemployed and do not have access to adequate education, health care, housing and other services, including water and electricity. Government policies aimed at alleviating and redressing the disadvantages suffered by the majority of citizens under previous governments may increase our costs and reduce our profitability. In recent years, South Africa has experienced high levels of crime. These problems have impeded fixed inward investment into South Africa and have prompted emigration of skilled workers. As a result, we may have difficulties attracting and retaining qualified employees.
  comparison with developed countries, and foreign currency reserves have been low relative to other emerging market countries. In the late 1980s and early 1990s, inflation in South Africa reached record highs of 20.6%. This increase in inflation resulted in considerable year on year increases in operational costs. In recent years, the inflation rate has decreased however, as of June 2006, the Consumer Price Inflation Index, or CPIX, stood at 4.8%, up from 3.5% since June 2005. Analysts expect inflation to decrease slightly over the next few months but remain within the target band of 3-6%, partly due to the rapid growth in the private sector. A return to high levels of inflation in South Africa, without a concurrent devaluation of the Rand or increase in the price of gold, could result in an increase in our costs which could reduce our profitability.
  countries in the world. For example, open pit operations at Porgera were suspended from August 27, 2002 to October 12, 2002, due to interruptions in the electrical power supply as a result of election-related vandalism in Papua New Guinea. The next general election will take place in 2007 and if volatile could adversely affect production. There is also a risk that social unrest and government intervention could be exacerbated during the mine closure process. Mine infrastructure, including power, water and fuel, may be at risk of sabotage.
  Papua New Guinea registered entity, Mineral Resources Enga, or MRE, had an expectation of receiving from us a 5% stake in the Porgera Joint Venture. This expectation arose from an undertaking we gave at the time of acquiring our interest in Porgera, to sell a 5% stake to MRE on commercial terms, which was subsequently cancelled as MRE failed to meet certain conditions precedent after renegotiated, extended deadlines. This issue may become the subject of some political campaigning and canvassing in the 2007 election.
  this mine to conduct its operations. If at any time in the future permits essential to operations are not obtained, or exemptions not granted, there is a risk that the Porgera mine may not be able to operate for a period of time. Future government actions, or actions of other quasi-government or landowner groups, cannot be predicted but may impact on the operations and regulation of mines including the Porgera Joint Venture. Any suspension of operations at the Porgera Joint Venture would decrease our attributable production and profitability.


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  been deferred by macro-economic instability, prohibitive regulation, and poor human and physical capital. Additionally, Fiji has also experienced periodic political volatility in recent years. The country experienced a coup d’etat in March 2000 but the country’s political environment has stabilized since 2000 following the first free and fair general election held in late 2001. The most recent general election took place in May 2006 and the same government was re-elected.
 Republic of Fiji Military Forces declared a state of emergency. He also declared he had assumed control of the country and had dismissed the elected Prime Minister and Government. Changes to the country’s constitution or government regulations in the future and continued political instability could affect our operations in Fiji.
  
 AIDS poses risks to us in terms of productivity and costs.
 
  is exacerbated in the presence of HIV/AIDS, represents a very serious health care challenge in the mining industry. Human Immunodeficiency Virus, or HIV, is the virus that causes AIDS and South Africa has one of the highest HIV infection rates in the world. It is estimated that approximately 30%  - 40% of the mining industry workforce in South Africa are HIV positive. The exact extent to which our mining workforce both within and outside South Africa is infected with HIV/AIDS is unknown at this stage. Papua New Guinea has also been identified as a high risk country for the HIV/AIDS pandemic and this could have a direct impact on our workforce and productivity in that country. The exact impact of increased mortality rates due to AIDS-related deaths on the cost of doing business is as yet undefined. The only available treatments for HIV/AIDS are anti-retroviral drugs, which slow down the advancement of the disease but do not present a complete cure for the disease. The cost and availability of anti-retroviral drugs could inhibit the introduction of treatment programs at our mines in South Africa and Papua New Guinea to reduce the impact of HIV/AIDS on our mining workforce and our businesses. The existence of the disease poses a risk to us in terms of the potential reduction in productivity and increase in medical costs.
 Government policies in South Africa may adversely impact our operations and profits.
 
 Government Regulation
 
  administrative bodies. These involve directives in respect of health and safety, the mining and exploration of minerals, and managing the impact of mining operations on the environment. A variety of permits and authorities are required to mine lawfully, and government enforces its regulations through the various government departments.
  
 The Mineral and Petroleum Resources Development Act, 2002
 
  all mineral and petroleum resources under the custodianship of the state. Private title and ownership in minerals, or the “old order rights,” are to be converted to “new order rights,” essentially the right to mine. The MPRD Act allows the existing holders of mineral rights a period of five years to apply for the conversion of used old order rights, and one year for the conversion of unused old order rights. Once these periods have lapsed, the holders may have to compete to acquire the right to mine minerals previously held under old order rights. During fiscal 2007,  described below. To the extent that we are unable to convert some of our old order rights, we may have a claim for compensation based on expropriation. It is not possible to forecast with any degree of certainty whether a claim will be enforceable against the State, and the extent to which we may be compensated. Factors that are taken into account are market value, as well as the history of acquisition of these rights.
   The area covered by the new order rights may be reduced by the state if it finds that the prospecting or mining work program submitted by an applicant does not substantiate the need to retain the area covered by the old order rights. The duration of the new order rights will no longer be perpetual but rather, in the case of new order mining rights, for a maximum of 30 years with renewals of up to 30 years each and, in the case of prospecting rights, up to five years with one renewal of up to three years. In addition, the new order rights will only be transferable subject to the approval of the Minister of Minerals and Energy. Mining or prospecting must commence within one year or 120 days, respectively, of the mining right or prospecting right becoming effective, and must be
  conducted continuously and actively thereafter. The new rights can be suspended or cancelled by the Minister of Minerals and Energy in the event of a breach of or, in the case of mining rights, of non-optimal mining in accordance with the mining work program.


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   that we are unable to convert some of our old order rights to new order rights, and that the exclusive rights to minerals we enjoyed under the previous statutory regime are diminished, the operations of the MPRD Act may result in significant adjustments to our property ownership structure, which in turn could have a material adverse effect on the underlying value of our operations.
 Possible taxation reform and mining royalties
      The South African gold mining industry is taxed under the gold taxation formula which recognizes the high level of capital expenditure required to sustain a mining operation over the life of the mine. This results in an additional tax benefit not afforded to other commercial companies. In addition, the South African Government has indicated that it is looking at a revenue based royalty for mining companies, as outlined in the draft Mineral and Petroleum Royalty Bill, 2003, or Royalty Bill, which was released in March 2003 for comment. The Royalty Bill proposed a three percent royalty on gross revenue for gold mining companies. In conjunction with the South African Mining Development Association we have made submissions to the government outlining our concerns about a revenue based royalty and recommended a profit based royalty be introduced instead. In his budget speech in February 2004, the South African Finance Minister acknowledged that the draft Royalty Bill may need some refinement, but also stated that government’s preference is for a revenue based royalty, with introduction of the royalty as of 2009. After extensive consultations, the Royalty Bill was revised to reflect a significant reduction of royalty rates compared to the proposals in the first draft but still proposes a revenue based royalty payment system. In October 2006, the second draft of the Royalty Bill was approved and is open for comment until January 31, 2007. The introduction of the proposed revenue based royalty would have an adverse effect on the business, operating results and financial condition of our South African Operations.
 The Broad Based Socio-Economic Empowerment Charter
 
  certain numerical goals and timeframes to transform equity participation in the mining industry in South Africa  and is effective from May 1, 2004.
  disadvantaged South Africans of its South African mining assets within five years and 26 percent ownership within ten years from May 1, 2004. This is to be achieved by, among other methods, the sale of assets to historically disadvantaged persons on a willing seller/willing buyer basis at fair market value.  “scorecard” approach, evaluating the commitments of each company to the different facets of promoting the objectives of the Mining Charter. Failure on our part to comply with the requirements of the Mining Charter and the “scorecard” could subject us to negative consequences. We may incur expenses in giving additional effect to the Mining Charter and the “scorecard”, including costs which we may incur in facilitating the financing of initiatives towards ownership  by historically disadvantaged persons. There is also no guarantee that any steps we might take to comply with the Mining Charter would ensure that we could successfully acquire new order mining rights in place of our existing rights. In addition, the terms of such new order rights may not be as favorable to us as the terms applicable to our existing rights. We run the risk of losing our mining rights if we do not comply with the requirements stipulated in the Mining Charter. This could have an adverse affect on our business, operating results and financial condition.
 Land claims
 
  Land Rights Act, 1994 (as amended), or Land Rights Act. Under the Land Rights Act, any person who was dispossessed of rights to land in South Africa as a result of past racially discriminatory laws or practices is granted certain remedies, including the restoration of the land. The initial deadline for such claims was December 31, 1998. We have not been notified of any land claims, but it is possible that administrative delays in the processing of claims could have delayed such notification. Any claims of which we are notified in the future could have a material adverse effect on our right to the properties to which the claims relate and prevent us using that land and exploiting any mineral reserves located there. This could have an adverse affect on our business, operating results and financial condition.


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 Since our South African labor force has substantial trade union participation, we face the risk of disruption from labor
 disputes and new South African labor laws.
   June 30, 2006, we employ and contract 10,393 people. Of these, 7,740 are employed in our South African Operations, of whom, approximately 70% are members of trade unions or employee associations. We have entered into various agreements regulating wages and working conditions at our South African mines. For Blyvoor, we concluded agreements which are effective until June 2007 and for ERPM and Crown, the current agreements are effective until October 2007. Unreasonable wage demands could increase production costs to levels where our South African Operations are no longer profitable. This could lead to accelerated mine closures and labor disruptions. We may also experience labor unrest at our operations. In particular, during October and November 2002, ERPM experienced some labor unrest during which several striking contract workers were wounded and two workers were killed by employees of a private security company. A repeat of such activities could have an adverse effect on our business, operating results and financial condition.
    provide for mandatory compensation in the event of termination of employment for operational reasons and that impose large monetary penalties for non-compliance with the administrative and reporting requirements of affirmative action policies could result in significant costs to us. In addition, future South African legislation and regulations relating to labor may further increase our costs or alter our relationship with our employees. Labor cost increases could have an adverse effect on our business, operating results and financial condition.
 
 Our financial flexibility could be materially constrained by South African currency restrictions.
 
  Area, including South Africa. The Exchange Control Department of the South African Reserve Bank, or SARB, is responsible for the administration of exchange control regulations. In particular, South African companies:
       
  will further relax or abolish exchange control measures in the future. For further information see Item 10D.: “Exchange Controls.” Risks related to ownership of our ordinary shares or ADSs
 Your ability to sell a substantial number of ordinary shares may be restricted by the limited liquidity of ordinary shares
 traded on JSE Limited, or JSE.
  only the JSE. The principal trading market for our ADSs is the Nasdaq Capital Market (formerly the Nasdaq SmallCap Market). On a historical basis, the trading volumes and liquidity of shares listed on the JSE have been low in comparison with the Nasdaq Capital Market. For the 12 months ended June 30, 2006, only 13% of the ordinary shares publicly traded were traded on the JSE. The limited liquidity of the ordinary shares traded on the JSE could limit your ability to sell a substantial number of ordinary shares on the JSE in a timely manner, especially by means of a large block trade.
 Sales of large volumes of our ordinary shares or ADSs or the perception that these sales may occur, could adversely affect
 the prevailing market price of such securities.
  stockholders, or there is the perception in the marketplace that such sales could occur. Current holders of our ordinary shares or ADSs may decide to sell them at any time. Sales of our ordinary shares or ADSs, if substantial, or the perception that these sales may occur and be substantial, could exert downward pressure on the prevailing market prices for our ordinary shares or ADSs, causing their market prices to decline. Trading activity of hedge funds and the ability to borrow script in the market place will increase trading volumes and may place our share price under pressure.


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 Your rights as a shareholder are governed by South African law, which differs in material respects from the rights of
 shareholders under the laws of other jurisdictions.
 
  holders of our ordinary shares, and therefore many of the rights of our ADS holders, are governed by our memorandum and articles of association and by South African law. These rights differ in material respects from the rights of shareholders in companies incorporated elsewhere, such as in the United States. In particular, South African law significantly limits the circumstances under which shareholders of South African companies may institute litigation on behalf of a company.
 
 We may be subject to an increase in compliance costs with our continued efforts to increase the transparency of our
 reporting requirements and changing corporate governance initiatives.
 
  requirements that have over recent years emphasized an increase in the transparency of public disclosure. The associated regulatory standards set forth by the exchanges’ governing bodies may change over time and may be subject to interpretation. As a result we may not execute the application of these standards properly and will congruently experience an increase in the cost of our compliance efforts. For example, management’s required assessment of our internal controls over the financial reporting process stipulated by Section 404 of the Sarbanes-Oxley Act of 2002 commands the need for resources from management in addition to our external auditors who are required to attest to our assessment. Maintaining high standards of corporate governance and public disclosure is highly prioritized in our organization and with our continued efforts to comply with these laws currently effective and any future legislative introductions or changes, we will continue to incur the related costs.
 
 It may not be possible for you to effect service of legal process, enforce judgments of courts outside of South Africa or
 bring actions based on securities laws of jurisdictions other than South Africa against us or against members of our board.
 
   cash producing assets are located outside the United States and a major portion of the assets of members of our board of directors and executive officers are either wholly or substantially located outside the United States. As a result, it may not be possible for you to effect service of legal process, within the United States or elsewhere outside South Africa, upon most of our directors or officers, including matters arising under United States federal securities laws or applicable United States state securities laws.
 
   officers judgments obtained in courts outside South Africa, including the United States, based on the civil liability provisions of the securities laws of those countries, including those of the United States. A foreign judgment is not directly enforceable in South Africa, but constitutes a cause of action which will be enforced by South African courts provided that:
  the court which pronounced the judgment had jurisdiction to entertain the case according to the principles recognized by South African law with reference to the jurisdiction of foreign courts;
      the recognition and enforcement of the judgment by South African courts would not be contrary to public policy, including observance of the rules of natural justice which require that no award is enforceable unless the defendant was duly served with documents initiating proceedings, that he was given a fair opportunity to be heard and that he enjoyed the right to be legally represented in a free and fair trial before an impartial tribunal;
      the enforcement of the judgment is not otherwise precluded by the provisions of the Protection of Business Act, 1978 (as amended), of South Africa.
 
   the compensation is awarded. Although the award of punitive damages is generally unknown to the South African legal system that does not mean that such awards are necessarily contrary to public policy. Whether a judgment was contrary to public policy depends on the facts of each case. Exorbitant, unconscionable, or excessive awards will generally be contrary to public policy. South African courts cannot enter into the merits of a foreign judgment and cannot act as a court of appeal or review over the foreign court. South African courts will usually implement their own procedural laws and, where an action based on an international contract is brought before a South African court, the capacity of the parties to the contract will usually be determined in accordance with South African law. It is doubtful whether an original action based on United States federal securities laws may be brought before South African courts. A plaintiff who is not resident in South Africa may be required to provide security for costs in the event of proceedings being initiated in South Africa. Furthermore, the Rules of the High Court of South Africa require that documents executed outside South Africa must be authenticated for the purpose of use in South African courts. It is not possible therefore for an investor to seek to impose criminal liability on us in a South African court arising from a violation of United States federal securities laws.


ITEM 4. INFORMATION ON THE COMPANY
 4A. HISTORY AND DEVELOPMENT OF THE COMPANY
 Introduction
 DRDGOLD Limited is a gold mining company engaged in underground and surface gold mining including exploration,
 extraction, processing and smelting. In South Africa, we have an 85% interest in DRDGOLD South African Operations (Pty) Limited, or DRDGOLD SA, the balance of which is held by our Black Economic Empowerment, or BEE, partner Khumo Gold SPV (Pty) Limited, or Khumo Gold. DRDGOLD SA wholly owns and operates Blyvooruitzicht Gold Mining Company Limited, or Blyvoor, East Rand Proprietary Mines Limited, or ERPM, and Crown Gold Recoveries (Pty) Limited, or Crown. In Australasia, we have a 78.72% interest in Emperor Mines Limited, or Emperor, which owns and operates the Tolukuma gold mine in Papua New Guinea, or PNG, and the Vatukoula gold mine in Fiji. Emperor also has a 20% interest in the unincorporated Porgera Joint Venture in PNG, managed by Barrick Gold Corporation, or Barrick. We also have exploration projects in South Africa, Papua New Guinea and Australia, though our principal focus is on our operations in South Africa, PNG and Fiji.
 We are a public company, incorporated on February 16, 1895, as Durban Roodepoort Deep, Limited, and our shares were listed
 on the JSE in that same year. In 1898, our milling operations commenced with 30 stamp mills and we treated 38,728 tons of ore and produced 22,958 ounces of gold. In South Africa, we have focused our operations on the West Witwatersrand basin which has been a gold production region for over 100 years.
 Blyvoor, acquired on September 15, 1997, in exchange for 12,693,279 of our ordinary shares, is a predominantly underground
 operating mine located within the Witwatersrand Basin, exploiting gently to moderately dipping gold bearing quartz pebble conglomerates in addition to certain surface sources. Crown (acquired on September 14, 1998, in exchange for 5,925,139 of our ordinary shares), also located within the Witwatersrand Basin, exploits various surface sources, including sand and slime tailings deposited as part of previous mining operations. ERPM which consists of an underground section and the Cason Dump surface retreatment operation was initially acquired on October 10, 2002, by Crown. During fiscal 2006, we restructured our South African operations so that we hold an 85% interest in our newly created company, DRDGOLD SA, which in turn holds a 100% stake in ERPM, Crown and Blyvoor.
 Since 1999, our focus has been to expand our operations outside South Africa and increase production from our Australasian
 Operations. The Tolukuma mine (acquired from September 1999 to June 2001, in exchange for 8,125,082 shares and $3.3 million in cash) provided an initial base in that region, and led to the acquisition of a 20% interest in the unincorporated Porgera Joint Venture (acquired in October 2003, in exchange for 6,643,902 shares and $60.3 million in cash). During fiscal 2006, we concluded a sale and purchase agreement with Emperor, where DRDGOLD initially held 88.3% of Emperor which in turn holds a 100% interest in Tolukuma, a 100% stake in the Vatukoula mine in Fiji, a 20% interest in the Porgera Joint Venture and all of our exploration tenements in PNG. Subsequently, our shareholding was diluted to 78.72%, following a number of share issues in which we did not participate.
 To ensure access to global markets our shares and/or related instruments trade on the JSE, Nasdaq Capital Market (formerly the
 Nasdaq SmallCap Market), London Stock Exchange, the Marche Libre on the Paris Bourse, the Brussels Bourse in the form of International Depository Receipts, the Over The Counter, or OTC, market in Berlin and Stuttgart and the Regulated Unofficial Market on the Frankfurt Stock Exchange. As a result of the Emperor transaction, since Emperor was  already listed on the Australian Stock Exchange, or ASX, DRDGOLD Limited delisted from the ASX and the Port Moresby Stock Exchange in July 2006.
 Our registered office and business address is 299 Pendoring Avenue, Blackheath, Randburg, South Africa, 2195. The postal
 address is P.O. Box 390, Maraisburg 1700, South Africa. Our telephone number is (+27 11) 219-8700 and our facsimile number is (+27 11) 476-2637. We are registered under the South African Companies Act, 1973 (as amended) under registration number 1895/000926/06. For our ADSs, The Bank of New York, at 101 Barclay Street, New York, NY 10286, United States, has been appointed as agent.


22
 Important Events in Our Development Generally and in the Current YearCrown Gold Recoveries (Pty) Limited, East Rand Proprietary Mines Limited and Blyvooruitzicht Gold Mining Company Limited
  incorporated in South Africa on May 23, 1997. Pursuant to a scheme of arrangement, we acquired 100% of CCGR on September 14, 1998.
  black economic empowerment  partner,  Khumo Bathong Holdings (Pty) Limited, or KBH, and CCGR whereby, with effect from July 1, 2002, we sold 3% of the entire issued share capital of and shareholders loans held in Crown to KBH and 57% of the entire issued share capital of and shareholders loans held in Crown to the IDC, for a total amount of $10.1 million. As part of this transaction, we loaned KBH R5.3 million ($0.7 million) to fund its initial purchase of 3% interest in Crown. According to the terms of the shareholders agreement entered into between these parties, the parties agreed that  the  IDC would not remain a shareholder in Crown, but would transfer its shares and claims held in Crown to KBH. Accordingly, the IDC granted an option to KBH to purchase its shares and claims held by it in Crown subject to certain terms and conditions. The option was exercised by KBH in July 2002 and KBH became the owner of 60% of the entire issued share capital of and shareholders loans held in Crown. CCGR held 40% of the issued share capital of Crown, which had four wholly-owned subsidiaries, Crown Mines Limited, City Deep Limited, Consolidated Main Reef Mines and Estate Limited and ERPM.
  shareholders’ claims of ERPM for a purchase price of $11.0 million. Crown’s acquisition of ERPM was approved by the South African competition authorities. ERPM is predominantly an underground mining operation located near the town of Boksburg on the East Rand, which is east of Johannesburg and approximately 60 miles (97 kilometers) from Blyvoor. We loaned Crown the sum of R60.0 million ($8.0 million) to facilitate its acquisition of ERPM. We subsequently loaned Crown an additional R9.9 million ($1.3 million), which Crown in turn loaned to ERPM as working capital.
  stake in our South African Operations. The intention of the transaction was to bring us into full compliance with the 10-year, 26% black economic empowerment equity requirement as stipulated in the Mining Charter in South Africa.
  settled through the issue of 4,451,219 of our ordinary shares, which at the date of issue, represented approximately $4.3 million (R28.9 million).
  Khumo Gold to cover all of our South African assets. The transaction was facilitated by the IDC, which agreed to a debt restructuring in Crown. The new structure resulted in Khumo Gold acquiring, as a first step, a 15% interest in a newly created vehicle, DRDGOLD SA, which holds a 100% interest in ERPM, Crown and Blyvoor. We have retained an 85% interest.
  these preference shares were used by Khumo Gold to settle an existing loan to KBH of $1.2 million (R7.9 million), subscribe for $0.6 million (R4.1 million) new preference shares in ERPM, subscribe $0.4 million (R2.7 million) new preference shares in Crown, subscribe for $0.6 million (R3.9 million) new preference shares in Blyvoor and subscribe for an initial 15% of the issued ordinary shares in DRDGOLD SA for $2.0 million (R13.2 million). Khumo Gold has been granted an option, exercisable over three years, to acquire a further 11% interest in DRDGOLD SA for the payment consideration of $1.4 million (R9.3 million). This further equity tranche will include a 6% stake to be placed in a new employee trust.
  us and  Khumo Gold in October 2005. Khumo Gold acquired from  us a further 50,000 ordinary shares in DRDGOLD SA for $0.6 million (R4.3 million). After exercising the option, Khumo Gold's shareholding in DRDGOLD SA increased by 5% to 20%. In addition, Khumo Gold, as promoter for an employee trust, exercised the option for an employee trust to acquire from  us 60,000 ordinary shares in DRDGOLD SA for a consideration of $0.7 million (R5.1 million). After exercising the option, the trust's shareholding in DRDGOLD SA is 6%. We will finance the transaction, on condition that the terms of the finance are determined by independent experts to be fair and reasonable to our shareholders. It is proposed that we will subscribe for preference shares in Khumo Gold and extend a loan to the trustees of the trust.


23
 Emperor Mines Limited
  company with a single gold mine based in Vatukoula, Fiji and exploration assets in Fiji.
  Emperor for approximately A$11.9 million ($6.7 million). By April 2003, we had increased our percentage holding in Emperor through additional purchases on the open market to 19.81% at a total additional cost of A$4.3 million ($2.6 million). At June 30, 2004, our effective holding had decreased to 19.78% as a result of additional shares issued by Emperor during fiscal 2004. Given the size of our holding, Emperor appointed two of our representatives to its board of directors in January 2003.
  already owned by us for a consideration of one of our shares for every five shares in Emperor held. At that time, the offer valued Emperor at approximately A$105.0 million ($79.8 million). On June 10, 2004, we announced a revised final offer of five of our shares for every twenty two shares in Emperor held. The revised offer represented a 14% increase over the previous offer. On July 30, 2004, our offer to Emperor’s shareholders closed with us having received acceptances from Emperor’s shareholders representing approximately 25.55% of Emperor’s issued capital, thereby increasing our shareholding in Emperor to 45.33%. Accordingly, we issued 6,612,676 shares in exchange for the 29,097,269 Emperor shares to the value of $16.6 million, based on the market value of our shares on the date issued, with share issue and transaction costs associated with the take over offer, amounting to $1.7 million.
  Emperor and our Divisional Director: Australasian Operations at the time, Mr. R.L. Johnson as a Non-Executive Director of Emperor. With effect from October 5, 2005, Emperor’s Board appointed our former Chief  Operating Officer, DRDGOLD Australasia, Mr. M.P. Marriott, as an Executive Director. Subsequently, Mr. M.P. Marriott resigned on March 9, 2006, Mr. M.M. Wellesley-Wood and Mr. R.L. Johnson resigned on June 26, 2006.
  them to positive cash flow and creating a sustainable, long-term future for the company and its operations. An A$10.0 million Convertible Loan Facility was negotiated by the independent directors of Emperor. The financing package also included an agreement with ANZ Bank, subject to a number of conditions, to a restructuring of Emperor’s debt servicing obligations to assist them with their restructuring plan. The ANZ Bank  also consented to the Convertible Loan Facility and the related security. The Convertible Loan Facility was approved by the shareholders of Emperor on August 29, 2005 (we did not participate in the voting). In addition, in July 2005 we entered into an operational support agreement negotiated on behalf of Emperor’s independent directors, pursuant to which we  would  provide Emperor with management and technical services.
  time as Emperor completed its financial and operational restructuring package, there remained a significant uncertainty as to whether Emperor would continue as a going concern and, therefore, whether it would realize its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the annual report. In Emperor’s fiscal 2006 annual report, its auditors issued an unqualified audit report.
  Emperor acquired our wholly owned subsidiary, DRD (Isle of Man) Limited, or DRD (Isle of Man), which in turn holds our PNG assets, comprising of the 20% interest in the Porgera Joint Venture, the 100% interest in Tolukuma Gold Mines Limited and all of our exploration tenements in PNG. The purchase consideration of $237.3 million was subject to certain completion adjustments to reflect the change in the capital position of both Emperor and DRD Isle of Man between October 1, 2005, which was the effective date, and April 6, 2006, the date that the transaction was completed. The purchase consideration included 751,879,699 new Emperor shares issued to DRD (Offshore) Limited, or DRD (Offshore), and  a cash consideration of $37.3 million payable to  DRD (Offshore).  An amount of $5.0 million is outstanding on the cash consideration and is repayable in two installments to DRD (Offshore) on March 30, 2007 and June 30, 2007. This outstanding amount attracts interest at the London Inter-bank Offered Rate, or LIBOR, plus 2% per annum and has been entered into on market related terms. Subsequent to June 30, 2006, the board of DRD (Offshore) has agreed to convert this loan to equity. After the issue of the new Emperor shares, we held 88.3% of Emperor. Subsequently, our shareholding was diluted to 78.7%, following a number of share issues in which we did not participate.
  advanced funds to Emperor under this facility of $2.0 million on October 5, 2006, $5.0 million on November 6, 2006 and $3.0 million on November 27, 2006. The loan bears interest at LIBOR plus 3% per annum and is repayable on December 31, 2007.


24
  temporary shutdown of the mine on April 20, 2006 and a gradual start-up early in June 2006. The ACDTP was designed to introduce flexibility to production areas, improve infrastructure and increase the productivity of the workforce. The plan includes development of higher grade areas at Philip Shaft and upgrading of associated shaft infrastructure. In addition, the entire workforce was to undergo comprehensive assessment, re-skilling and retraining.
 On October 14, 2006, a serious incident involving a mine shaft conveyance occurred in the Philip Shaft at the Vatukoula
 mine when during testing of the shaft conveyance following maintenance, a skip-cage fell down the shaft, causing damage to the surface winder mechanism. The Philip shaft was closed following the incident, while investigations and repairs were undertaken. Production at Philip Shaft recommenced on November 14, 2006.
 On December 5, 2006, after an extensive three-month review of Vatukoula, we determined that continued mining operations
 at Vatukoula  were no longer economically viable and  that the mine would  therefore  cease production.  Pending completion  of a strategic review to optimize the value of Vatukoula and other Fijian land holdings, the mine  has been placed on a care and maintenance program.
 
 June 26, 2006, as Chairman; Mr. B. Gordon, Emperor’s Chief Executive Officer appointed on April 26, 2006, as an Executive Director; Mr. C. Moore, Emperor’s Chief Financial Officer appointed on February 20, 2006, as an Executive Director; Mr. R. McDonald, a Non-Executive Director appointed on April 6, 2006; and Mr. I.D. Graulich, our Group Strategic Development Officer, appointed on June 26, 2006, as a Non-Executive Director. On November 13, 2006, Mr. J.W.C. Sayers  – Chief Financial Officer and Executive Director of DRDGOLD Limited was appointed as a Non-Executive Director of Emperor. On November 22, 2006, Mr. C. Moore announced his resignation from Emperor. Mr. J.W.C. Sayers is the acting Chief Financial Officer of Emperor. Porgera Joint Venture (Papua New Guinea)
  Porgera Limited, or MRP, from Oil Search Limited, or OSL. The transaction was effected through the amalgamation of OML and MRP and our wholly-owned subsidiary, Dome Resources (PNG) Limited which was subsequently renamed DRD (Porgera) Limited.
  Joint Venture, that has fifteen mineral tenements which form part of the Porgera mine located in Papua New Guinea. The final purchase price of $77.1 million comprised $60.3 million in cash and 6,643,902 ($16.7 million) of our ordinary shares based on the prevailing market value on November 22, 2003, being the final settlement date. As at June 30, 2006, the Porgera Joint Venture is owned by Barrick (75%), DRD (Porgera) Limited (20%) and the MRE, on behalf of the Enga Provincial Governments and landowners in Papua New Guinea (5%). Barrick acquired Placer Dome Inc. and by default its affiliate, Placer (PNG) Limited and took over as operator of the Porgera Joint Venture in December 2005. Porgera is subject to the control of a management committee made up of representatives of the joint venture partners, including one of our representatives. The management committee is governed by an operating agreement that prevents the partners from acting unilaterally. Buffelsfontein Gold Mines Limited
  a consequence of the extensive damage caused by the earthquake, the No. 5 Shaft of the North West Operations was closed. There was continuing seismic activity in the area and on March 16, 2005, we closed the No. 2 Shaft because of concerns for the safety of employees. On March 22, 2005, application was made to the High Court of South Africa for the provisional liquidation of Buffelsfontein Gold Mines Limited, or Buffelsfontein (which owned the North West Operations), which order was granted on the same day.
  (R27.9 million), and continued the essential services at the mine until such time as the liquidator had taken control of the mine, which amounted to $0.8 million (R5.1 million). We incurred expenses of approximately $0.08 million (R0.5 million) during fiscal 2006 for a social plan for employees, which included counseling and re-skilling programs, and we incurred legal and other costs of $0.5 million (R3.2 million). We were reimbursed approximately $2.6 million (R16.7 million) by the liquidators for costs we incurred from the inception of the liquidation. Additionally, an insurance claim was submitted for damage caused by the earthquake and as a result approximately $16.2 million (R104.0 million) was paid out to the liquidators.


25
  Buffelsfontein subject to certain conditions. These include indemnifying us against any liabilities or obligations that could arise relating to environmental rehabilitation and the management and pumping of underground water. The proposed scheme of arrangement was conditional upon the following:
   Department of Water Affairs and Forestry, or DWAF, agreeing to substitute us with S&J to the extent that DWAF envisaged imposing further responsibility on us;
  the acceptance by the High Court of South Africa and the majority of Buffelsfontein’s creditors of a scheme arrangement proposed by S&J; and
   On October 21, 2005, the scheme of arrangement for the acquisition of Buffelsfontein proposed by S&J and accepted by the
 majority of Buffelsfontein’s creditors, including us, was approved and sanctioned by the High Court of South Africa. Buffelsfontein applied to the High Court for the lifting of its provisional liquidation, which order was granted on November 1, 2005. Other
  payment of a non-refundable fee of R1.5 million ($0.2 million), was granted an option to acquire Durban Deep’s mine village for R15.0 million ($2.2 million). On the exercise of the option, the option fee would be deemed part payment of the purchase consideration.
  transfer occurring, we were notified by Rand Leases Properties Limited (formerly JCI Properties Limited) of an alleged pre-emptive right in respect of the property in terms of an agreement dated December 1996, pursuant to which the property should be sold to them on similar terms. We have since repudiated our agreement with M5 and have notified Rand Leases Properties Limited that we do not intend offering the property to them. Both parties have indicated to us their intentions to institute legal proceedings for the sale and transfer of the property. To date we have received no service of legal process related to this matter .
  
  “Property, Plant and Equipment,” and Item 5B: “Liquidity and Capital Resources.”


26
 4B. BUSINESS OVERVIEW
 Description of Our Mining Business Exploration
  sites and at undeveloped sites. Once a potential ore body has been discovered, exploration is extended and intensified in order to enable clearer definition of the ore body and the portions with the potential to be mined. Geological techniques are constantly refined to improve the economic viability of exploration and exploitation.  Mining
  previously abandoned Ore Reserves, which require a high degree of opening up of these previously abandoned Ore Reserves.
 
 Our Metallurgical Plants and Processes
  “Property, Plant and Equipment.” Market
  Physical demand for gold is primarily for manufacturing purposes, and gold is traded on a world-wide basis. Refined gold has a variety of uses, including jewelry, electronics, dentistry, decorations, medals and official coins. In addition, central banks, financial institutions and private individuals buy, sell and hold gold bullion as an investment and as a store of value (due to the tendency of gold to retain its value in relative terms against basic goods and in times of inflation and monetary crises).
  have meant that historically the potential total supply of gold has been far greater than demand. Thus, while current supply and demand play some part in determining the price of gold, this does not occur to the same extent as in the case of other commodities. Instead, the gold price has from time to time been significantly affected by macro-economic factors such as expectations of inflation, interest rates, exchange rates, changes in reserve policy by central banks, and global or regional political and economic crises. In times of inflation and currency devaluation, gold is often seen as a safe haven, leading to increased purchases of gold and support for its price.
  gold price soared from $550 per ounce to over $700 per ounce in a matter of weeks and remarkably gained by 37%. There was some considerable correction after that, but the price started tending upwards again in June 2006. One of the reasons for the significant rise in the gold price has been the growth in Exchange Traded Funds, or ETFs, securities that allow investors to buy and sell gold in the form of listed paper without the trouble of storing or insuring the product. These funds now hold some 16.6 million ounces of gold in vaults – that is almost double the annual gold output (10.5 million ounces in 2005) of South Africa, the world’s biggest gold producer. Stated in different terms, ETFs accounted for 5.2 million ounces, or 11% of the 46.76 million ounces of gold bought by investors in 2005. We believe these investment vehicles have facilitated institutional investors’ move into gold, bringing a new group of investors to the market. We have supported the growing trend to expand gold ownership and accessibility through our investment in the internet-based gold investment company, Net-Gold Services Limited, which now holds gold and silver in circulation to the value of around $157.0 million.


27
  revenue from continuing operations by geographic market is as follows:
 
 Year ended June 30,
 
 2006
 2005
 2004
 1
 
 
 $’000
 $’000
 $’000
 
            
 245,301
 183,609
 183,254
 
  with a refining agreement  entered into in October 2001. At our various operations the gold bars which are produced consist of approximately 85% gold, 7-8% silver and the balance comprises copper and other common elements. The gold bars are sent to the RRL for assaying and final refining where the gold is purified to 99.9% and cast into troy ounce bars of varying weights. RRL then sells the gold on the same day as delivery, for the London afternoon fixed Dollar price on the day the gold is sold, with the proceeds remitted to us in Rand within two days. In exchange for this service, we pay RRL a variable refining fee plus fixed marketing, loan and administration fees. We currently own 4.1% (2005: 3.0%) of RRL (which is jointly owned by South African mining companies). Mr. D.J. Pretorius, our Group Legal Counsel and Chief Executive Officer of DRDGOLD SA, is a director of RRL.
  gold sold are received within two days of sale. The selling price is determined by the London Bullion Market Association spot price and we are paid in Dollars. We do not have an interest in AGR Matthey.
  Proceeds for gold sold are received within two days from the swap confirmation report released by the refiners, AGR Matthey. The selling price is determined by the spot price at the time of sale and we are paid in Dollars.
  sale. The selling price is determined by Reuters quoted “London Spot Bid Price” which means the London bid price as published by Reuters for two day settlement and we are paid in Dollars.
  be approximately 100% refined and none of our locations are able to refine gold to this saleable level.
 Ore Reserves
 
  
 as our 16% attributable share of the Ore Reserves of the Porgera Joint Venture. Our attributable 16% share of the Ore Reserves of the Porgera Joint Venture is based on the information disclosed by Placer Dome Inc. in a news release for its Fourth Quarter Results for the period ended December 31, 2005 released on February 20, 2006
 2
  December 31, 2005 and adjusted for depletion to June 30, 2006, using appropriate cut-off grades associated with an average long-term gold price of $400 per ounce, and on the Australian Dollar and Kina average long-term exchange rates to the US Dollar of A$1.39 = $1.00 and K3.33 = $1.00.
 Ore Reserve estimates in this Annual Report are reported in accordance with the requirements of the SEC’s Industry Guide 7.
 Accordingly, as of the date of reporting, all reserves are planned to be mined out under the life of mine plans within the period of our existing rights to mine, or within the time period of assured renewal periods of our rights to mine. In addition, as of the date of reporting, all reserves are covered by required permits and governmental approvals. See Item 4D: “Property, Plant and Equipment” for a description of the rights in relation to each mine.
 
 1
  2
  of being acquired by Barrick Gold Corporation. As a result, Placer Dome did not expect to have any statutory financial reporting requirements for fiscal 2005, however, their Fourth Quarter Results Release was prepared in accordance with US generally accepted accounting principles, or US GAAP.


28
   African Code for the Reporting of Mineral Resources and Ore Reserves, or SAMREC Code. The SEC’s Industry Guide 7 does not recognize Mineral Resources. Accordingly, we do not include estimates of Mineral Resources in this Annual Report.
  calculations included in the geological models and input parameters of the reserve estimation procedures, were checked. In addition, visual inspection of the planning to deliver an individual block to the metallurgical plant, and the recovery, and deposition of the tails, took place. A check is also made of the financial input into the costs and revenue to affirm that they are within reasonable limits.
  Reserve tons, grade and content are quoted as delivered to the gold plant. There are two types of methods available to select ore for mining. The first is pay-limit, which includes cash costs, including overhead costs, to calculate the pay-limit grade. The second is the cut-off grade which includes cash costs, excluding fixed overhead costs, to calculate the cut-off grade, resulting in a lower figure than the full pay-limit grade. The cut-off grade is based upon direct costs from the mining plan, taking into consideration production levels, production efficiencies and the expected costs. We use the pay-limit to determine which areas to mine, as an overhead inclusive amount that is indicative of the break-even position, especially for marginal mining operations.
  overhead costs, including head office charges, are equal to a three-year historical average gold price per ounce for that year. This calculation also considers the previous three years’ mining and milling efficiencies, which includes metallurgical and other mining factors and the production plan for the next twelve months. Only blocks above the pay-limit grade are considered for mining. The pay-limit grade is higher than the cut-off grade, because this includes overhead costs, which indicates the break-even position of the operation, especially significant for marginal mines.
    The potential ore to be mined is well defined by an externally verified and approved geological model created using our mining software;
     
  figures in accordance with industry practice, converting mineral deposits to an Ore Reserve through the preparation of a mining plan. The Ore Reserve estimates contained herein inherently includes a degree of uncertainty and depends to some extent on statistical inferences which may ultimately prove to have been unreliable.
  mineralization or formations different from those predicted by past drilling, sampling and similar examinations, reserve estimates may have to be adjusted and mining plans may have to be altered in a way that might adversely affect our operations. Moreover, if the price of gold declines, or stabilizes at a price that is lower than recent levels, or if our production costs increase or recovery rates decrease, it may become uneconomical to recover Ore Reserves containing relatively lower grades of mineralization.
         Ore Reserves in respect of our 16% attributable interest in the Porgera Joint Venture, are as determined by Placer Dome as set forth in its news release for its Fourth Quarter Results for the period ended December 31, 2005 as was released February 20, 2006, assuming an average long-term gold price of $400 per ounce and average long-term exchange rates of A$1.39 = $1.00 and K3.33 = $1.00.


29
   approximately R88,960 per kilogram. The assumed Dollar gold price was approximately $381 per ounce. In respect of our Australasian assets, Ore Reserves for Tolukuma were determined assuming a gold price of $381 per ounce at an exchange rate of K3.44 = $1.00. Ore Reserves in respect of our 20% attributable interest in the Porgera Joint Venture, were as determined by Placer Dome and set forth in its annual report for the fiscal year ended December 31, 2004, and filed with the SEC on Form 40-F on March 3, 2005, assuming a gold price of $350 per ounce and exchange rates of A$1.54 = $1.00 and K3.33 = $1.00.
  1
     as follows:
 Underground
 Surface
 Mine
 2006
 2005
 2006
 2005
 South Africa
 
 
 
 
  1
       1
       1
      Australasia
      2
       2
       2
      Our Ore Reserves as of June 30, 2006 and 2005 are set forth in the table below.
  
  1
  2


30
   At June 30, 2006
 At June 30, 2005
  Proven Ore Reserves
 Probable Ore Reserves
 Proven Ore Reserves
 Probable Ore Reserves
  Tons
 Grade
 Gold
 Content
 Tons
 Grade
 Gold
 Content
 Tons
 Grade
 Gold
 Content
 Tons
 Grade
 Gold
 Content
  (mill)
 (oz/ton)
 ('000 ozs)
 (mill)  (oz/ton)  ('000 ozs)  (mill)  (oz/ton)  ('000 ozs.)
 (mill)
 (oz/ton)  ('000 ozs)
 South African Operations:
 
 
 
 
 
 
 
 
 
 
 
 
  1
                                        Total Blyvoor
 39.30
 0.10
 4,045
 7.61
 0.16
 1,210
 38.53
 0.08
 3,173
 4.57
 0.18
 825
  1
                                        Total ERPM
 16.32
 0.04
 586
 1.92
 0.22
 417
 
 
 
 
 
 
  1
                          Total Crown
 17.99
 0.02
 274
 9.48
 0.02
 150
 
 
 
 
 
 
 Australasian Operations:
              2
 
              
 
 
 
 
 
 
 
 
 
 
 
 
            Total Porgera
 9.01
 0.09
 841
 2.95
 0.15
 437
 10.17
 0.10
 980
 2.05
 0.18
 371
  3
                     
 
 
 
 
 
              Total Tolukuma
 0.18
 0.55
 97
 0.23
 0.42
 98
 0.18
 0.52
 96
 0.28
 0.18
 122
  3
                           Total Vatukoula  1.07
 0.36
 383
 0.97
 0.30
 295
 
 
 
 
 
 
 Total Group
 
 
 
 
 
 
 
 
 
 
 
 
                           Total
 4
  83.87
 0.07
 6,225
 23.1
  0.11
 2,608
 48.88
 0.09
 4,249
 6.90
 0.19
 1,318
 
  1
  2
  Dome in its news release for the period ended December 31, 2005, as released on February 20, 2006 in accordance with US GAAP. At December 31, 2005, Placer Dome held a 75% stake in the Porgera Joint Venture, acquired subsequently by Barrick.
 3
  4


31
   At June 30, 2006
 At June 30, 2005
  Proven Ore Reserves
 Probable Ore Reserves
 Proven Ore Reserves
 Probable Ore Reserves
  Tonnes
 Grade
 Gold
 Content
 Tonnes
 Grade
 Gold
 Content
 Tonnes
 Grade
 Gold
 Content Tonnes
 Grade
 Gold
 Content
  (mill)
 (g/tonne)
 (tonnes)
 (mill)
 (g/tonne)
 (tonnes)
 (mill)
 (g/tonne)
 (tonnes)
 (mill)
 (g/tonne)
 (tonnes)
 South African Operations:
              1
              
            
            Total Blyvoor
 
 
 
 
 
 
      1
  
             
                         Total ERPM  14.81
 1.23
 18.20
 1.74
 7.45
 12.962
 
 
 
 
 
 
  1
                          Total Crown
 16.33
 0.52
 8.51
 8.60
 0.54
 4.683
 
 
 
 
 
 
 Australasian Operations:
              2
 
             
            
            Total Porgera
              7
  
 
 
 
 
 
 
 
 
     
                         Total Tolukuma
 
 
 
 
 
        7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Total Vatukoula  0.97
 12.33
 11.93
 0.88
 10.45
 9.177
 
 
 
 
 
 
 Total Group
 
 
 
 
 
 
 
 
 
 
 
 
 
     
      
     
      76.09
 2.54
 193.636
 21.02
 3.86
 81.060  44.342
 2.98  132.160
 6.261
 6.55
 40.987
 
  1
  2
  Dome in its news release for the period ended December 31, 2005, as released on February 20, 2006 in accordance with US GAAP. At December 31, 2005, Placer Dome held a 75% stake in the Porgera Joint Venture, acquired subsequently by Barrick.
 7
  8


32
 
  we look at gold prices different from the gold price of R117,055 per kilogram ($582 per ounce) used to estimate our attributable  Ore Reserves  of 8.8 million ounces of gold as of June 30, 2006 per the above Imperial schedule, we would have significantly different reserves. Using the same methodology and assumptions as were used to estimate our Ore Reserves as of June 30, 2006 but with different gold prices that are 10% above and below the R117,055 per kilogram ($582 per ounce) gold price used to estimate our attributable gold reserves per our above schedules, our attributable gold reserves would be as follows:  Rand gold price per kilogram
 R93,800
 1
 
 R105,300
 R117,055
 R128,700
  $453
 1
 
 $524
 $582
 $640
      The approximate mining recovery factors for the 2006 Ore Reserves shown in the above table are as follows:
  Underground
 Surface
 Mine
 Dilution
 (Sundries,
 Shortfall and
 Development)
 (%)
 Mine Call Factor
 (%)
 Metallurgical and
 recovery factor
 (%)
 Mine Call Factor
 (%)
 Metallurgical and
 recovery factor
 (%)
       
                       
     The approximate mining recovery factors for the 2005 Ore Reserves shown in the above table are as follows:
 
 Underground
 Surface
 Mine
 Dilution
 (Sundries,
 Shortfall and
 Development)
 (%)
 Mine Call Factor
 (%)
 Metallurgical and
 recovery factor
 (%)
 Mine Call Factor
 (%)
 Metallurgical and
 recovery factor
 (%)
             
     The following table shows the average drill/sample spacing (rounded to the nearest foot), as at June 30, 2006, for each category of Ore Reserves at our mines:
 Mine
 Proven
 Reserves
 Probable
 Reserves
 South Africa
            Australasia
            
   
 1


33
 Governmental regulations and their effects on our business South Africa Common Law Mineral Rights and Statutory Mining Rights
  
  the right to mine such minerals.  With effect from May 1, 2004, all minerals have been placed  under the custodianship of the South African government under the provisions of the MPRD Act, and old order proprietary rights, need to be converted to new order rights of use within certain prescribed periods, as dealt with in more detail below.  Old Order Rights - Mining Authorizations
  prospect or mine for minerals without being granted a prospecting or mining authorization. Prior to granting a prospecting or mining authorization, two requirements had to be fulfilled. First, the mining entity must either be the registered holder of the mineral rights or have obtained the written consent of the registered holder of the mineral rights to mine the minerals concerned for its own account. Second, the Department of Minerals and Energy, or the DME, must be satisfied with the scale, manner and duration of the intended prospecting or mining operations and must approve an Environmental Management Program, or EMP. A prospecting permit was issued for a limited period but could be renewed on application. A mining license was generally issued until such time that the minerals could no longer be mined in an economically viable manner. The rights enjoyed under these authorities will endure until they are converted within the period of time prescribed in the MPRD Act. Thereafter, such rights will lapse. Conversion of Rights under the Mineral and Petroleum Resources Development Act, 2002
  order to ensure exclusive access to the mineral for which rights existed at the time of the enactment of the MPRD Act.
  statutory criteria. These include the submission of a mining works program, demonstrable technical and financial capability to give effect to the program, provision for environmental management and rehabilitation, and compliance with certain black economic empowerment and the social and  labor plan. These applications need to be submitted within five years after the promulgation of the MPRD Act on May 1, 2004. Similar procedures apply where we hold prospecting rights and a prospecting permit and conduct prospecting operations. Where we hold unused old order rights however, the application for conversion to mining or prospecting rights had to be submitted within one year from May 1, 2004. The requirements for unused old order rights are more stringent than for used old order rights, particularly insofar as the percentage of ownership from historically disadvantaged groups is concerned.  perpetual, but endure for a maximum of thirty years, after which they may be renewed for a further thirty years. Prospecting rights are limited to five years, with one renewal of three years. Applications for conversion are in the process of being prepared and we plan to submit them during the fiscal year 2007.
  the State. The DME may attach specific conditions and limitations to the exercise of new order rights. It may, for example, reduce the area over which the new order right applies, if it is of the view that the prospecting or mining works programs submitted by an applicant do not justify the extent of the area covered by the old order right. They may also be suspended or cancelled by the Minister of Minerals and Energy in the event of a breach or, in the case of mining rights, of non-optimal mining in accordance with the mining works program.


34
   The South African gold mining industry is taxed under the gold tax formula which recognizes the high level of capital expenditure required to sustain a mining operation over the life of mine. This results in an additional tax benefit, not afforded to other commercial
 companies. In addition, the South African Government has indicated that it is looking at a revenue based royalty for mining companies, as outlined in the draft Royalty Bill, which was released in March 2003 for comment. The  draft  Royalty Bill proposed a three percent royalty on gross revenue for gold mining companies. In conjunction with the South African Mining Development Association we have made submissions to the government outlining our concerns about a revenue based royalty and recommended a profit based royalty be introduced instead. In his budget speech in February 2004, the South African Finance Minister acknowledged that the draft Royalty Bill may need some refinement, but also stated that government’s preference is for a revenue based royalty, with introduction of the revenue based royalty as of 2009. After extensive consultations, the Royalty Bill was revised to reflect a significant reduction of royalty rates compared to the proposals in the first draft but still proposes a revenue based royalty payment system. In October 2006, the second draft of the Royalty Bill was approved and is open for comment until January 31, 2007. The introduction of the proposed royalty would have an adverse effect on the profitability of our South African Operations. We are currently evaluating the impact of the proposed royalty.
  
  developed by the Minister within six months of commencement of the MPRD Act, beginning May 1, 2004. The Mining Charter came into effect in August 2004. In its current format its objectives include:
      expansion of the skills base of such persons, the promotion of employment and advancement of the social and economic welfare of mining communities; and
   
  Africans of South African mining assets. It recommends that these are achieved by, among other methods, disposal of assets by mining companies to historically disadvantaged persons on a willing seller, willing buyer basis at fair market value. The goals set by the Mining Charter require each mining company to achieve 15 percent ownership by historically disadvantaged South Africans of its South African mining assets within five years and 26 percent ownership within ten years from May 1, 2004. It also sets out guidelines and goals in respect of employment equity at management level with a view to achieving 40 percent participation by historically disadvantaged persons in management and ten percent participation by women in the mining industry, each within five years  from May 1, 2004. Compliance with these objectives is measured on the weighted average “scorecard” approach in accordance with a scorecard which was first published by the government in February 2003.
  empowerment structure with Khumo Gold. The new structure resulted in Khumo Gold acquiring, as a first step, a 15% interest in a newly created vehicle, DRDGOLD SA, which holds 100%  of ERPM, Crown and Blyvoor. (See Item 4A.: “History and Development of the Company”). However, at this point we are unable to set out a definitive timeline of when we will comply with our objectives before the expiration of the 10 year time limit. We are also unable to identify any permits, rights or investments which we may lose as a result of any non-compliance. The provisions of the Mining Charter apply to each mining company individually. Accordingly, it is not possible for us to meet our obligations by disposing of our less profitable operations which would undermine the objectives of the Mining Charter. As transactions, to comply with the Mining Charter, are to be at fair market value, we do not anticipate incurring any loss in fulfilling our obligations provided that we are able to identify suitable partners that are able to obtain adequate funding. Mine and Safety Regulation
   January 1997. The principal object of the Mine Health and Safety Act is to improve health and safety at South African mines and to this end, imposes various duties on us at our mines, and grants the authorities broad powers to, among other things, close unsafe mines and order corrective action relating to health and safety matters. In the event of any future accidents at any of our mines, regulatory authorities could take steps which could increase our costs or reduce our production capacity.


35
   employers are required to contribute to a fund specifically created for the purpose of compensating employees or their dependants for disability or death arising in the course of their work. Employees who are incapacitated in the course of their work have no claim for compensation directly from the employer and must claim compensation from the COID Act fund. Employees are entitled to compensation without having to prove that the injury or disease was caused by negligence on the part of the employer, although if negligence is involved, increased compensation may be payable by this fund. The COID Act relieves employers from the prospect of costly damages, but does not relieve employers from liability for negligent acts caused to third parties outside the scope of employment. In fiscal 2006, we contributed approximately $0.7 million under the COID Act to a multi-employer industry fund administered by Rand Mutual Assurance Limited.
  employer fund pays compensation to employees of mines performing “risk work,” usually in circumstances where the employee is exposed to dust, gases, vapors, chemical substances or other working conditions which are potentially harmful,  or  if the employee contracts a “compensatable disease,” which includes pneumoconiosis, tuberculosis,  or  a permanent obstruction of the airways. No employee is entitled to benefits under the Occupational Diseases Act for any disease for which compensation has been received or is still to be received under the COID Act. Currently the Group is compliant with these payment requirements, which are based on a combination of the employee costs and claims made during the fiscal year.
  potential risks for radiation exposure of workers at those operations and the public to radiation in the nearby vicinity. We monitor our uranium and radon emissions and believe that we are currently in compliance with all local laws and regulations pertaining to uranium and radon management and that we are within the current legislative exposure limits prescribed for workers and the public, under the Nuclear Energy Act, 1999 (as amended) and Regulations from the National Nuclear Regulator.  Environmental Regulation in South Africa
  enactments set compliance standards both generally, in the case of the National Environmental Management Act, and in respect of specific areas of environment impact, as in the case of the Air Quality Act 2004, the National Water Act (managing effluent), and the Nuclear Regulator Act 1999. Liability for environmental damage is also extended beyond the corporate veil to impose personal liability on managers and directors of mining corporations that are found to have violated applicable laws.
  has onerous provisions for personal liability of directors of companies whose mining operations have an unacceptable impact on the environment.
  and all potentially affected parties have been given an opportunity to comment on the proposed mining. Mining companies are also required to demonstrate both the technical and financial ability to sustain an ongoing environmental management program, and achieve ultimate rehabilitation, the particulars of which are to be incorporated in an EMP. This program is required to be submitted and approved by the DME as a prerequisite for the issue of a new order mining right. Various funding mechanisms are in place, including trust funds and concurrent rehabilitation budgets, to fund the rehabilitation liability.
  mining rights.
  environmental risks vary from site to site. These risks have been addressed in EMPs which have been submitted to the DME for approval. In November 2006, amended EMPs to conform to the required format of the MPRD Act were submitted for all operations in South Africa for approval. Additionally, the key environmental issues have been prioritized and are being addressed through active management input and support as well as progress measured in terms of activity schedules and timescales determined for each activity. Two environmental compliance assessments have been conducted at Blyvoor and Crown, which both show that these mines are in substantial compliance with the conditions of their EMPs.
  MPRD Act.


36
 Papua New Guinea
         
  this lease was for a period of 8 years, which was renewed for a further 10 years, expiring in 2012. The mining lease may be renewed for further periods not exceeding 10 years in accordance with applicable laws. Current exploration activities are covered by a number of exploration licenses. These licenses have been granted for a term not to exceed two years but can be renewed for further two-year periods. In total, there are 11 exploration licenses or applications covering Tolukuma.
  Porgera Mining Development Contract, or the Porgera Contract, between the Government of Papua New Guinea and the members of the Porgera Joint Venture. The Porgera Contract specifies, among other matters, the annual rents that must be paid for the Special Mining Lease and the various classes of compensation that are payable to the landowners for the various land uses. The Special Mining Lease, which expires in 2019, encompasses approximately 5,530 acres (2,240 hectares) including the mine area and the areas in which the project infrastructure is located. There is no expiration date for the Porgera Contract, but it is tied to the continuation of the Special Mining Lease. Leases for mining purposes have also been awarded by the Government of Papua New Guinea for land use associated with the mining operation such as waste dumps, campsite, and an airstrip. Permits are held for water use, including run-off from unconsolidated surfaces, such as the open pit, the underground mine and the waste dumps. These permits are renewable on a regular basis and are subject to public hearing before approval.
  and Regulations as applied by the Papua New Guinea Government. We believe all requisite licenses and permits are in good standing.  The Mining Safety Act and Regulations
  the conditions a mining operation has to comply with to ensure that the health and safety of all workers is protected. It includes requirements pertaining to worker training, risk assessment and safe working procedures with regard to all activities associated with mining.  Environmental Regulations in Papua New Guinea
  Environmental Act and Regulations provide for objective criteria for regulating the impact of activities on the environment, as well as the regulation of air and water pollution. Both Tolukuma and Porgera have a number of licenses and permits with which those respective operations are required to comply.
  because of the size and complexity of their processes. Level 3 activities are subject to more rigorous regulation as they are regarded as being more likely to create an adverse impact on the environment. Pursuant to the grandfathering provisions of the Environmental Act and Regulations, both Tolukuma and Porgera are able to continue to operate under their existing environmental plans and permits.
  Conservation, or DEC, in Papua New Guinea, in November 1993 and was approved, subject to certain conditions, on May 24, 1994. The three principal conditions were:
         
  requirements.


37
   
  Plant and Equipment  – Description of Significant Subsidiaries, Properties and Mining Operations” under “Environmental and Closure Aspects.” Fiji
 Environmental Regulation in Fiji
  mining-related activities and the effect that they may have upon the environment.
  alia:
  the Director of Mines grants mining permits and leases under the Fijian Mining Act and has the power to attach conditions to those permits or leases. In addition, the Director of Mines has power to cancel a lease or permit where the holder of that lease or permit has failed to comply with certain requirements of the Fijian Mining Act;
  the Fijian Mining Act places an obligation on the owners of mining leases in Fiji to take all necessary actions to restore land once mining operations cease. There is also a requirement to pay compensation to land owners for any damage to the surface of land caused by the mining operations; and
  pollution of a watercourse is an offense, although permits can be obtained to authorize the deposit of sludge and tailings. The Fijian Mining Act further requires all areas of subsidence to be clearly marked and fenced off with warning signs posted.
  The Fijian Mining Act also contains provisions regulating the storage and protection of chemicals and poisons and accompanying washes and antidotes, dust abatement requirements and the construction of dams.
   six months imprisonment or both.
  Act imposes a penalty of F$100 for polluting a water supply.
  explosions and to render safe hazardous conditions and materials.
  the existing mining and environmental protection legislation are relatively small compared to international standards. However, in September 2006, the Fijian government announced that it would soon enact the Environment Management Bill, or the Bill, first introduced on July 28, 2004. When passed, the Bill will introduce a number of environmental protection measures, many of which will impact the mining industry. The Bill contains provisions imposing liability upon directors for offenses committed by a company.
 Financial Provision for Rehabilitation
  once the mining operations cease. In South Africa we have funded these environmental rehabilitation costs by making contributions over the life of the mine to environmental trust funds established for each operation. Funds are irrevocably contributed to trusts that function under the authority of trustees that have been appointed by, and who owe a statutory duty of trust, to the Master of the High Court of South Africa. The funds held in these trusts are invested primarily in interest bearing debt securities and equity-limited unit trusts. As of June 30, 2006, we held a total of $8.3 million in trust, the balance held in each fund being $1.8 million (2005: $1.8 million) for West Wits, $2.8 million (2005: $2.5 million) for Blyvoor, $2.1 million (2005: $2.1 million) for Durban Deep, $0.9 million (2005: $0.9 million) for Crown and $0.7 million (2005: $0.2 million) for ERPM. Trustee meetings are held as required, and quarterly reports on the financial status of the funds, are submitted to our board of directors.
  funds by accruing trust investment income for the benefit of the funds and by replenishing it with the proceeds from the sale of redundant mining equipment at the end of the life of the mine. If any of the operations are prematurely closed, the rehabilitation funds may be insufficient to meet all the rehabilitation obligations of those operations.


38
   MPRD Act assumes a fully compliant fund at any given time in the production life of a mine. The DME appears to have taken a practical approach in dealing with this change, and has indicated that the traditional ring fencing of funds may, for investment purposes be relaxed, and that insurance instruments may also be received subject to the DME’s consent, to make up the shortfall in available cash funds.
  increased substantially from $22.6 million on June 30, 2005. The increase is attributable to the inclusion of the financial rehabilitation provision for Crown, ERPM and Vatukoula.
 4C. ORGANIZATIONAL STRUCTURE
 
  incorporated in South Africa unless otherwise indicated. We hold the majority of the investments directly or indirectly as indicated below. Refer to Exhibit 8.1 for a list of our directly held subsidiaries.
 South African Operations
 100%
 85%
 100%
 100%
 100%
 100%
 100%
 100%
 Australasian Operations
 79%
 100%
 100%
 20%
 100%
 1
 All shafts at Durban Deep have been closed.
 2
 West Wits will be used going forward to extract and dispose of underground water.
 DRDGOLD Limited
 West Witswatersrand Gold
 Holdings Limited
 Durban Deep
 1
 Crown Consolidated Gold
 Recoveries Limited
 Crown Gold Recoveried (Pty)
 Limited
 East Rand Proprietary Mines
 Limited
 Blyvooruitzicht Gold Mining
 Company Limited
 West Witwatersrand Gold
 Mines Limited
 2
 DRDGOLD South African
 Operations (Pty) Ltd
 Emperor Mines Limited
 (Australia)
 Tolukuma Gold Mines Ltd
 (Papua New Guinea)
 Vatukoula Mine (Fiji)
 DRD (Porgera) Limited (Papua
 New Guinea)
 Porgera Joint Venture (Papua
 New Guinea)


39
 4D. PROPERTY, PLANT AND EQUIPMENT
 
  
 
 DRDGOLD’s South African Operations
 
  
 DRDGOLD’s Australasian Operations


40
 Description of Significant Subsidiaries, Properties and Mining Operations South Africa Witwatersrand Basin Geology
  Basin, exploiting gold bearing reefs in addition to certain surface sources. Crown and ERPM are also located within the Witwatersrand Basin. Crown exploits various surface sources, including sand and slime tailings deposited as part of historical mining operations. ERPM is predominantly an underground mining operation with a surface operation for the processing of sand from the Cason Dump. Our underground operations are typical of the many gold mining operations in the area which together have produced approximately 1.5 billion ounces of gold over a period of more than 100 years.
  Craton, extending laterally for approximately 186 miles (299 kilometers) east-northeast and 62 miles (100 kilometers) south-southeast. The sedimentary rocks generally dip at shallow angles towards the center of the basin though locally this may vary. The Witwatersrand Basin is Achaean in age and the sedimentary rocks are considered to be approximately 2.7 to 2.8 billion years old.
  goldfields located along the eastern, northern and western margins of the basin. These goldfields are known as the Evander Goldfield, the East Rand Goldfield, the West Rand Goldfield, the Far West Rand Goldfield, the Central Rand Goldfield, the Klerksdorp Goldfield and the Free State Goldfield. As a result of faulting and other primary controls of mineralization, the goldfields are not continuous and are characterized by the presence or dominance of different reef units. The reefs are generally less than 6 feet (2 meters) thick but in certain instances, these deposits form stacked elastic wedges which are hundreds of feet thick.
  Blyvoor Overview
  turn owns 100% of the Doornfontein Gold Mining Company Limited. The consolidated mining operation, referred to as Blyvoor, consists of the adjacent mines of Blyvooruitzicht and Doornfontein which are located within the Far West Rand Goldfields on the northwestern edge of the Witwatersrand Basin. Blyvoor was the first mine in the “West Wits” line. Together, these two operations have produced over 35 million ounces of gold since inception. The net book value of the mining assets at Blyvoor is $48.0 million at June 30, 2006, with 5.3 million ounces of Ore Reserves.
  day review was extended to September 13, 2004. By October 5, 2004, 1,619 employees had been retrenched at a cost of $3.1 million, with possible future restructuring initiatives depending on the economic circumstances. In terms of the agreement, organized labor recorded its commitment to certain production targets, and undertook not to disrupt production for at least six months for reasons related to restructuring of the operations. As of June 30, 2006, the mine has 4,520 employees, including contractors.
    phases at a total capital cost of $12.5 million (R80.5 million). In total, the No. 2 Sub-Shaft Project, is expected to yield some 770,491 ounces of gold from 2.4 million tons of ore with an average delivered grade of 8.18 g/t, over a 20 year period. This project has been re-designed in two phases now called the Way-Ahead Project, or WAP. Phase 1 of the No. 2 Sub-Shaft Project - involving the re-establishment of access to No. 2 Shaft from No. 5 Shaft and development and stoping of mining areas en route – was completed in the first half of fiscal 2006. Phase 2 – involving the re-equipping of the sub-shaft has been reviewed. As a consequence of this review, it has been decided, instead, to access the orebody between 27 and 35 levels from No. 5 Shaft. This approach is expected to lower the capital cost of the project to $6.2 million (R40.0 million). Phase 2 is scheduled for completion in two years.
  completed by the end of December 2005. This expansion involves the installation of an additional pump and wider gauge pipes in order to ease congestion and further improve plant efficiency, together with the implementation of a number of in-plant process upgrades to ease maintenance demands. A 24% increase in volume, a 12% increase in gold production, and a slight reduction in operating costs are expected. The capital cost of the expansion was minimized by acquiring pipes, pumps and valves second-hand from AngloGold Ashanti’s Ergo surface reclamation operation which closed in 2005.


41
 Property
  Basin, near the town of Carletonville, Gauteng Province, about 50.0 miles (80.5 kilometers) south-west of Johannesburg and is reached via the R528 road to Carletonville on the N12 Johannesburg-Potchefstroom-Kimberly highway.
  situated, is humid continental with warm summers and cold winters. Temperatures range from a minimum of 23 degrees Fahrenheit (-5 degrees Celsius) in June and July to a maximum of 93 degrees Fahrenheit (34 degrees Celsius) in December and January.
  for the managerial, administrative, financial and technical disciplines, extensive workshops and consumable stores, the  metallurgical plants, tailings dams and waste rock dumps. Blyvoor also houses the majority of its employees in Blyvoor-owned houses on the property and in the town of Carletonville. The normal support structures, including training, security, sport and recreational facilities, schools and churches are situated on the property. Blyvoor has mining title to 16,242 acres (6,573 hectares) and owns 5,138 acres (2,079 hectares) of freehold property.
  are in the process of converting these old order property rights to new order rights under the MPRD Act. History 1937
 Blyvooruitzicht Gold Mining Company Limited was incorporated and registered as a public company in South Africa on June 10, 1937.
 1942
  1995
  1996
  1997
  2001
  2003
  2004
 On June 28, 2004, we entered into a 60-day review period on Blyvoor. The 60-day review was extended to September 13, 2004. By October 5, 2004 1,619 employees had been retrenched at a cost of approximately $3.1 million.
 2005
 In August 2005, our Board of Directors approved No. 2 Sub-Shaft Project (now called the WAP project) and the Slimes Dam Project to establish mining operations from the No. 2 Shaft and expansion to further improve plant efficiency, respectively.  On July 6, 2005 we signed a Memorandum of Understanding with KBH regarding the acquisition by Khumo Gold of a 15% stake in our South African Operations. On October 27, 2005, our Board of Directors approved the transaction with Khumo Gold. The new structure resulted in Khumo Gold acquiring a 15% interest in a newly created vehicle, DRDGOLD SA, which includes ERPM, Crown and Blyvoor. We own an 85% interest in DRDGOLD SA.
 2006
 On December 11, 2006, Khumo Gold, on behalf of itself and an employee trust, exercised the option granted by us pursuant to the option agreement concluded between us and Khumo Gold in October 2005 to acquire a further 11% in DRDGOLD SA.
 Geology and Mineralization
  the principal ore bodies in the goldfield, and the Middelvlei Reef horizons which occur in discrete channels over parts of the lease area approximately 246 feet (75 meters) vertically above the Carbon Leader Reef horizon. The Carbon Leader Reef is the principal economic horizon across the lease area and is a planar single sheet conglomerate. The Carbon Leader Reef typically comprises basal carbon seam, overlain by a thin, small pebble conglomerate, enriched in carbon in the lower portion. The grade of the Carbon Leader Reef is more variable than the Middelvlei Reef. The Middelvlei Reef consists of a variable number of polymictic quartz conglomerate bands, interbedded with coarse grain quartzite. The grade of the Middelvlei Reef is more erratic, with distinctive payshoots forming as southward-orientated linear zones.
  continued existence of mining operations was dependent upon the mining of scattered Carbon Leader Reef remnants and limited sections of the lower grade Middelvlei Reef.


42
 Mining and Processing
  situated at the Blyvoor and Doornfontein mines. Doornfontein was previously a separate mine adjacent to the Blyvoor mine but has since been merged to form Blyvoor. The shaft system consists of four vertical shafts from the surface, thirteen sub-incline shafts and two sub-vertical shafts underground. Of these thirteen sub-incline shafts, only nine are in operation and are used for the conveyance of personnel, pumping and hoisting of mined ore and waste.
  (purchased in 1996 from Western Deep Levels Limited) to allow ore from the bottom of the Blyvoor workings to be trammed across and hoisted up via the Blyvoor No. 5 Shaft, from where it is trucked to the gold plant. The average mining depth at Blyvoor is 10,541 feet (3,213 meters), 5,292 feet (1,613 meters) below mean sea level.
  The loosened rock is removed from the stope panels and is conveyed to the shaft, tipped into the ore-pass systems, hoisted to the surface and transported to the metallurgical plant for gold extraction.
  conventional flowsheet comprising multi-stage crushing, open circuit primary and closed circuit secondary milling with hydrocyclones, thickening and cyanide leaching in a Carbon-in-Pulp, or CIP, carousel arrangement. The gold is recovered through electrowinning followed by smelting to doré. The circuit was recently modified by the closure of the filtration system and the commissioning of a modern carbon Kemix pumpcell plant.
    from the IDC loan granted to Blyvoor, for this purpose. This project was to facilitate the commissioning of additional infrastructure and the opening up of additional mining areas to further enable the effective mining of reserves at Blyvoor.
    tpm from surface rock  dumps. With the depletion of the surface rock dumps, only remnant amounts are available for processing. Processing of material from the No. 4 and 5 slimes dam project, which was commissioned in December 2003, is building up to the planned processing capacity of 240,000 tpm and will replace the processing of the surface rock dump material which has been depleted. Initial processing of material took place from the No. 4 Slimes Dam and the recovery grades were below expectation. From August 2004, the processing of material from the No. 5 Slimes Dam commenced and the recovery grade improved. With the conclusion of the 60-day review entered into on June 28, 2004, certain shafts were placed on a “care and maintenance” program, resulting in a decrease to a total of seven vertical and decline shafts.
  grade Carbon Leader Reef at No. 5 Shaft. Accelerated development, however, has ensured that the mine is well positioned to restore Main Reef mining to appropriate levels at No. 5 and No. 6 Shafts in response to gold price fluctuations.
  Consequently concerns for employee safety prompted the development of a volume-driven mine plan involving less mining from the affected high-grade No. 5 Shaft and more from the lower-grade No. 6 Shaft areas. By the end of fiscal 2006, implementation of the new plan was under way with ore milled of 70,000 tons per month targeted. Earlier than expected interceptions of the Alpha Dyke in the high-grade No. 5 Shaft area during the third quarter of fiscal 2006, had a negative impact on production. Drilling to determine the extent of the dyke was under way at year end and early indications were that it is at least 98 feet (30 meters) thick.
  Africa. In South Africa, Eskom operates a national power supply grid consisting of 24 power stations across the country. Electricity to Blyvoor is provided from the West Wits substation outside Carletonville at 44,000 volts. Further substations, located on mine site, transform the power to 6,600 volts or 22,000 volts for direct supply to the shaft winder and air compressors. The power supply is further reduced to 525 volts for smaller devices and equipment used on the mine. The average annual power consumption is about 432 GWHr and the maximum demand is about 66 MW.
  extension of Slimes Dams No. 4, 5 and 6 ($7.6 million), underground expansion projects ($1.5 million) and a water project ($0.4 million). In fiscal 2006, approximately $8.8 million was spent mainly on opening-up and development at Blyvoor.


43
 Exploration and Development
  material from the No. 4 and 5 Slimes Dam Project. The project was commissioned during November 2003 and completed at a cost of $6.9 million including the  conversion of leaching tanks, linear screens, pipes and site construction. The No. 6 Slimes Dam has been extended to provide additional capacity for the tailings from this project at a cost of $0.7 million. The project involves the reclamation of approximately 24 million tonnes of slime material at a rate of 240,000 tpm by high water monitoring and processed through a CIP circuit. The project has an estimated life of 8 years and an average recovery grade of 0.02 ounces per ton at a cash cost of $200 per ounce of gold produced. The project costs were funded from the R65.0 million ($10.4 million) loan facility from the IDC.  Environmental and Closure Aspects
  and subsidences, exposes Blyvoor to relatively unique environmental risks and costs associated with the remediation and filling of these sinkholes.
  level of underground workings. The required rate is in the order of 4 million gallons (14 million liters) per day. Water not used in the operations is discharged into the Wonderfonteinspruit and the Doorndraai Dam. In order to address the risk of contamination of ground water, streams and wetlands, water is sampled and the level of contaminants monitored in accordance with Blyvoor’s water management plan. Fissure water at Blyvoor is generally of a good quality, therefore we believe that the contribution of this water to pollution of water in the area is minimal.
  This is because the impact of our discharge cannot be addressed without addressing the impact from the discharge of other neighboring mining operations. The Far West Rand Technical Forum has been established to address water issues in this area. The DWAF are chairing this forum. The forum consists of government departments, NGO’s, mining companies and other interested and affected parties. The Wonderfonteinspruit Action committee, of which Blyvoor is a member, has been established to look at the feasibility of cleaning up the spruit. This committee reports to the main forum.
  collapse in the rock structure. Dolomitic rock could be dissolved, resulting in an increased risk of sinkholes and possible pollution of fresh water resources stored in the dolomitic formations. The occurrence of sinkholes is limited to a particular area of Blyvoor, which requires an active program in water management and control. Water from leaking pipes is reported to a monitoring committee and the necessary repairs are undertaken immediately. Ground subsidence surveys are undertaken to timely identify any possible sinkholes. Sinkholes that do occur are filled to prevent further inflow of surface water and potential enlargement of the hole. Sinkholes which form outside of our property are repaired by the Far West Rand Dolomitic Water Association.
  accomplished through ridge ploughing the top surface of dormant tailings dams. Environmentally friendly dust suppressants, such as molasses, are also applied when deemed necessary. In the long-term, dust suppression and water pollution is managed through a program of progressive vegetation of the tailings complexes followed by the application of lime, to neutralize the natural acidic conditions, and fertilizer as the organic growth medium.
  amendments to Blyvoor's EMP have had to be made by the relevant regulator. The environmental management program identified the impacts associated with the reclamation of the dams and the extension of the No. 6 return water dam and identified remedial measures to minimize the risk. The DWAF visited the site in August 2004 and was satisfied with our environmental performance.
  the DME for approval by the end of calendar 2006. Blyvoor is currently demolishing and rehabilitating redundant surface infrastructures, including the defunct Uranium plant.
  for Blyvoor, in current monetary terms as at June 30, 2006, is $4.8 million. This has been included in the provision for environmental rehabilitation, restoration and closure costs on our balance sheet. A total of $2.8 million has been contributed to a Rehabilitation Trust Fund. This is an irrevocable trust, managed by specific responsible people who we nominated and who are appointed as trustees by the Master of the High Court of South Africa.


44
 Life of Mine
    Ore Reserves of Blyvoor were 5.3 million ounces. In fiscal 2005, based upon a gold price of approximately R88,960 per kilogram at June 30, 2005, the Proven and Probable Ore Reserves of Blyvoor were 4.0 million ounces. The increase of 1.3 million ounces emphasizes the sensitivity of the operation to the gold price. A Mineral Resource competent person is appointed at each operation to review our Ore Reserve calculations for accuracy. For Blyvoor, Mr. David Edwin James Whittaker (SACNASP) is the appointed Mineral Resource competent person.
     Current Production
    39,515 ounces from surface areas. This represents 30% of our production from continuing operations of 527,401 ounces based on our subsidiaries.
   were closed but increasing levels of seismicity were experienced in the high-grade No. 5 Shaft area in the first half of  fiscal 2006. Consequently concerns for employee safety prompted the development of a volume-driven mine plan involving less mining from the affected high-grade No. 5 Shaft and more from the lower-grade No. 6 Shaft areas. Surface gold production increased from 23,920 ounces in fiscal 2005 to 39,515 ounces in fiscal 2006.
    Rand gold price, price increases in key consumables, operational difficulties, increased lock-up in the plant due to the ending of surface rock dump feed to the mill and poor initial recoveries from the Slimes Dam Project. As a result of operational difficulties, we also announced a 60-day review of the operations on July 28, 2004 in order to restore profitability.
   operations declined by approximately 30% to 137,958 ounces year on year, productivity improved by 32% to 125 grams per total employee costed. Cash costs of $482 per ounce in fiscal 2006 increased from $456 per ounce in fiscal 2005. Total costs for fiscal 2006 of $520 per ounce also show an increase compared to $498 per ounce in fiscal 2005.
        
 Year ended June 30,
 
 2006
 2005
 2004
 Production
                                    Results of Operations ($)
            Non-US GAAP Financial Data
     1
      1
     
 1
  generating capacities of the mines and to monitor performance of our mining operations. For a reconciliation to production costs see Item 5A: “Operating Results.”


45
 Crown
 
 Overview
  Pursuant to a scheme of arrangement, we acquired 100% of CCGR on September 14, 1998. Additionally, in October 2002, we entered into an agreement with third parties to purchase the entire issued share capital and all shareholders’ claims of ERPM for a purchase price of $11.0 million. Until November 30, 2005 we accounted for our 40% interest in Crown under the equity method. On July 6, 2005, we signed a Memorandum of Understanding with KBH regarding the acquisition by Khumo Gold of a 15% stake in our South African Operations. On October 27, 2005, our board of directors approved the transaction with Khumo Gold. The new structure resulted in Khumo Gold acquiring a 15% interest in a newly created vehicle, DRDGOLD SA, which includes 100% of ERPM, Crown and Blyvoor. We  currently  own 85% of Crown, which we  consolidated as a subsidiary from December 1, 2005, through our 85% holding in DRDGOLD SA.
  the parties in October 2005. Khumo Gold acquired from  us a further 50,000 ordinary shares in DRDGOLD SA for $0.6 million (R4.3 million). After exercising the option, Khumo Gold's shareholding in DRDGOLD SA increased by 5% to 20%.  In addition, Khumo Gold, as promoter for an employee trust, exercised the option for an employee trust to acquire from us 60,000 ordinary shares in DRDGOLD SA for a consideration of $0.7 million (R5.1 million). After exercising the option, the trust's shareholding in DRDGOLD SA is 6%.  We will finance the transaction, on condition that the terms of the finance are determined by independent experts to be fair and reasonable to our shareholders. It is proposed that we will subscribe for preference shares in Khumo Gold and extend a loan to the trustees of the trust. For a full description of the transactions associated with our acquisition of Crown, see Item 4A: “History and Development of the Company.”
  collectively referred to as Crown. ERPM’s Cason Dump surface re-treatment operation is expected to continue to operate until 2013 under the management of Crown based on the current rate of production of approximately 178,000tpm. Crown undertakes the retreatment of surface sources deposited as tailing from non-operating mining sites across central Johannesburg.
  Property
    5,787 acres (2,342 hectares) and has the right to occupy 1,490 acres (603 hectares) of freehold property. Crown is in the process of converting these old order property rights to new order rights under the MPRD Act.
 
   approximately 6 miles (10 kilometers) west of the Johannesburg central business district in the province of Gauteng. Access is via Xavier Road on the M1 Johannesburg-Kimberley-Bloemfontein highway. The City Deep operation is located on the West Wits line within the Central Goldfields of the Witwatersrand Basin, approximately 3  miles (5 kilometers) south-east of the Johannesburg central business district in the province of Gauteng. Access is via the Heidelberg Road on the M2 Johannesburg-Germiston motorway. The Knights operation is located at Stanley and Knights Road Germiston off the R29 Main Reef Road.


46
 History
 
 1979
 Rand Mines Limited directors approved the formation of the company Rand Mines Milling & Mining Limited (RM3) to treat the surface gold tailings created from the underground section of the original Crown Mines, which had been in operation since the start of gold mining on the Witwatersrand in the late 1800's.
 1982
  1986
  1997
 Randgold Exploration Limited and Continental Goldfields of Australia entered into a joint venture with the intention to establish a company that would acquire dump retreatment operations on the Witwatersrand. This resulted in the formation of CCGR, which was incorporated as a public company in South Africa in May 1997. Crown was a wholly owned subsidiary of CCGR and consists of the surface retreatment operations of Crown Central, City Deep and Knights.
 1998
  2002
  2005
 On July 6, 2005 we signed a Memorandum of Understanding with KBH regarding the acquisition by  Khumo Gold  of a 15% stake in our South African Operations. On October 27, 2005, our board of directors approved the transaction with  Khumo Gold. The new structure resulted in Khumo Gold acquiring a 15% interest in a newly created vehicle, DRDGOLD SA, which includes 100% of ERPM, Crown and Blyvoor. We own an 85% interest in DRDGOLD SA.
 2006
 On December 11, 2006, Khumo Gold, on behalf of itself and an employee trust, exercised the option granted by us pursuant to the option agreement concluded between us and Khumo Goldin October 2005 to acquire a further 11% in DRDGOLD SA.
 Mining and Processing
 
   
  sources have generally undergone a complex depositional history resulting in grade variations associated with improvements in plant recovery over the period of time the material was deposited. Archive material is a secondary source of gold bearing material. This material is generally made up of old gold metallurgical plant sites as well as “river bed” material.
 
   approximately 11.0 million tons of material per year. Up to fiscal 2003, Crown also operated the West Wits gold plant for the processing of sand and slime. Crown also operates the ERPM surface operations with ore being treated at the Knights plant. All of the plants have undergone various modifications during recent years resulting in significant changes to the processing circuits.
 
 
    to Crown is supplied to the Crown Central and City Deep business units from separate substations referred to as Jupiter and No. 15 Shaft Crown Mines, and for the Knights by the Ekhurhuleni Town Council. Electricity is supplied directly from the national power grid to the substation and town council at 44,000 volts. Substations, located on mine sites, transform the power to 6,600 volts for direct supply to the plants. The power supply is further reduced to 525 volts for smaller devices and equipment.
 
   
  1 million tpm, yielding approximately 0.01 oz/t (0.4 g/t). The feed stock is made up of sand and slime which are reclaimed separately. Sand is reclaimed using mechanical front-end loaders, re-pulped with water and pumped to the plant. Slime is reclaimed using high pressure water monitoring guns. The re-pulped slime is pumped to the plant and the reclaimed material is treated using screens, cyclones, ball mills and CIL technology to extract the gold. As at June 30, 2006, the overall plant utilization was 95%.
 
 
 City Deep Plant:
 secondary and tertiary cycloning in closed circuit milling, thickening, oxygen preconditioning, CIL, elution and zinc precipitation followed by calcining and smelting to doré. In 1998, the plant was converted to a slimes only operation. However, due to operational difficulties caused by the particulate nature of the slimes, the  milling circuit has subsequently been recommissioned to facilitate the treatment of sand.


47
 
 Crown Mines Plant:
 circuit including screening, primary cycloning, open circuit milling, thickening, oxygen preconditioning, CIP and CIL, elution, zinc precipitation followed by calcining and smelting to doré.
 
 
 Knights Plant:
 cycloning, spiral pre-concentration, milling in closed circuit with hydrocyclones, thickening, oxygen preconditioning, CIL, elution, electrowinning and smelting to doré.
 
 Exploration and Development
 
    
 Environmental and Closure Aspects
 
   development. The major environmental risks are associated with dust from various recovery sites, and effective management of relocated process material on certain tailings dams. The impact of windblown dust on the surrounding environment and community is addressed through a scientific monitoring and evaluation process, with active input from the University of Witwatersrand and appropriate community involvement. Environmental management programs, addressing a wide range of environmental issues, have been prepared by specialist environmental consultants and applied specifically to each dust sample recovery monitoring site and integrated into Crown’s internal environmental assessment process. Although Crown completed a project for thickening re-processed tailings, there also remains a risk of localized sloughing which can result in that section of the tailings dam being closed temporarily, with repair work being done to the dam wall. Water pollution is controlled by means of a comprehensive system of return water dams which allow for used water to be recycled for use in Crown’s metallurgical plant. Overflows of return water dams may, depending on their location, pollute surrounding streams and wetlands. Crown has an ongoing monitoring program to ensure that its water balances (in its reticulation system, on its tailings and its return water dams) are maintained at levels that are sensitive to that capacity of return water dams.
  and organic dust suppression on recovery sites. Short-term dust control is accomplished through ridge ploughing the top surface of dormant tailings dams. Additionally, environmentally friendly dust suppressants, such as molasses, are applied. Dust fall-out is also monitored. In the long-term, dust suppression and water pollution is managed through a program of progressive vegetation of the tailings followed by the application of lime, to reduce the natural acidic conditions, and fertilizer to assist in the growth of vegetation planted on the tailings dam.
  of the mine is in place. The surface reclamation process at Crown has several environmental merits as it has removed a potential pollution source and opens up land for development. Crown has conducted its environmental management program performance assessment, which was submitted to and approved by the DME during fiscal 2005.
  the DME for approval by the end of calendar 2006.
  Crown, in current monetary terms as at June 30, 2006, is approximately $17.7 million. A total of $0.9 million has been contributed to the Crown Rehabilitation Trust Fund. This is an irrevocable trust, managed by specific responsible people who we nominated and who are appointed as trustees by the Master of the High Court of South Africa.Life of Mine
  Proven and Probable Ore Reserves of Crown was 0.4 million ounces. In fiscal 2005, based upon a gold price of approximately R88,960 per kilogram, our 40% share of Proven and Probable Ore Reserves of Crown was 0.3 million ounces. Crown’s Ore Reserves have not changed from the previous year. A Mineral Resource competent person is appointed at each operation to review our Ore Reserve calculations for accuracy. For Crown Surface, Mr. William John Laing (PLATO) is the appointed Mineral Resource competent person. The current life-of-mine is estimated to be eight years.


48
 Current Production
  gold production of 45,424 ounces in fiscal 2005 and 51,982 ounces for fiscal 2004. The increase in fiscal 2006 is  mainly  due to the incorporation of Crown into DRDGOLD SA as a wholly owed subsidiary with effect from December 1, 2005.
  
 Year ended June 30,
 
 2006
 2005
 1
 
 2004
 1
  Production
        
   
      Results of Operations ($)
        
   Non-US GAAP Financial Data
     2
      2
 ......
    ERPM
 
 Overview
 
 
  Memorandum of Understanding with KBH regarding the acquisition by Khumo Gold of a 15% stake in our South African Operations. On October 27, 2005, our board of directors approved the transaction with Khumo Gold. The new structure resulted in Khumo Gold acquiring a 15% interest in a newly created vehicle, DRDGOLD SA, which includes 100% of ERPM, Crown and Blyvoor. We own 85% of ERPM, which is consolidated as a subsidiary from December 1, 2005, through our 85% holding in DRDGOLD SA.
 
  the parties in October 2005. Khumo Gold acquired from  us a further 50,000 ordinary shares in DRDGOLD SA for $0.6 million (R4.3 million). After exercising the option, Khumo Gold's shareholding in DRDGOLD SA increased by 5% to 20%.  In addition, Khumo Gold, as promoter for an employee trust, exercised the option for an employee trust to acquire from us 60,000 ordinary shares in DRDGOLD SA for a consideration of $0.7 million (R5.1 million). After exercising the option, the trust's shareholding in DRDGOLD SA is 6%.  We will finance the transaction, on condition that the terms  of the finance are determined by independent experts to be fair and reasonable to our shareholders. It is proposed that we will subscribe for preference shares in Khumo Gold and extend a loan to the trustees of the trust.
       productivity. As a result, the original planned closure of the underground section was prevented. The Cason Dump surface re-treatment operation will continue to operate until 2013 under the management of Crown based on the current rate of production of approximately 178,000tpm.
 
   
 
 1
   2
  generating capacities of the mines and to monitor performance of our mining operations. For a reconciliation to production costs see Item 5A: “Operating Results.”


49
 Property
 
  the town of Boksburg, 20 miles (32 kilometers) east of Johannesburg. Access is via Jet Park Road on the N12 Boksburg-Benoni highway. Underground mining and recovery operations  comprise relatively shallow remnant pillar mining in the central area and conventional longwall mining in the south-eastern area. Surface reclamation operations including the treatment of sand from the Cason Dump, is conducted through the metallurgical plant, tailings deposition facilities and associated facilities.
 
   
  
  
  Shaft was maintained for hoisting and pumping, the Central Shaft was placed on care and maintenance and the Hercules Shaft was decommissioned resulting in the retrenchment of 806 employees in August 2004. At FEV, there has been a drive on development and a focus on effective grade control. Improvements in production, efficient cost controls, a better Rand gold price received and the re-institution of State assistance with pumping have all contributed to restoring the mine’s underground operations to profitability.
 
  
 History
 
 1895
  1991
  1999
 The company was liquidated in August 1999. The mine was run by a small number of employees during liquidation. Underground flooding continued during liquidation.
 2000
 KBH took over control of the mine in January 2000. Operating as Enderbrooke Investments (Pty) Limited, or Enderbrooke, and employing an outside contractor, the mine re-commenced mining operations in February 2000.
 2002
  2003
 An underground fire occurred at FEV Shaft, in February 2003. There was also a loss of Hercules Shaft in June 2003 and the loss of secondary outlet at the FEV shaft in November 2003.
 2004
 In July 2004 it was determined that the underground section would undergo a controlled closure program ending March 2005. The closure program was prevented by a reduction in costs and improved productivity at the mine.
 2005
 Central Shaft placed on care and maintenance. On July 6, 2005, we signed a Memorandum of Understanding with KBH regarding the acquisition by  Khumo Gold  of a 15% stake in our South African Operations. On October 27, 2005, our board of directors approved the transaction with  Khumo Gold. The new structure resulted in Khumo Gold acquiring a 15% interest in a newly created vehicle, DRDGOLD SA, which includes 100% of ERPM, Crown and Blyvoor. We own an 85% interest in DRDGOLD SA.
 2006
 On December 11, 2006, Khumo Gold, on behalf of itself and an employee trust, exercised the option granted by us pursuant to the option agreement concluded between us and Khumo Goldin October 2005 to acquire a further 11% in DRDGOLD SA.


50
 Mining and Processing
  are also three additional shafts namely the South East Vertical Shaft, or SEV Shaft, used for the transport of employees and materials and the hoisting of rock, the SWV Shaft and the Hercules Shaft that are used for water pumping only. The Cason Dump Project is used for the retreatment of surface material mined from the defunct Cason shaft.
  African Labor Relations Act was issued on May 4, 2004, which required a review period of no less than 60 days to assess the operational performance of the ERPM underground operations to consider options to restore the operations to profitability. A task team comprising management, union representatives and labor was established to assess the proposals and make a final recommendation.
  Rand-gold price of R2,650 per ounce. As a result, a controlled closure program of the underground section was implemented and was expected to be completed by March 2005.  (R3.7 million), the mine achieved a reduction in costs coupled with improved productivity. As a result, the original planned closure of the underground section was prevented.
  work to traverse this continued for the remainder of the year. Refurbishment of the Far East Vertical, or FEV, Shaft decline and decline conveyor was another key focus of attention during the year. Production build-up from newly opened-up, lower grade areas above 70 level – both to relieve pressure on the decline conveyor and as a safety response to increasing seismicity in higher grade areas below 70 level began during the last quarter of fiscal 2006.
  to ERPM is provided to the Cason Dump, SEV and FEV Shafts from the Bremmer substation, located in close proximity to the mine in Boksburg. Transmission is at the rate of 88,000 volts. The Simmer Pan substation, located approximately 10 miles (16 kilometers) away from the mine site in Germiston, supplies the SWV and Hercules Shafts. Transmission is at the rate of 44,000 volts. The two substations, located on mine site, transform the power to 6,600 volts for direct supply to the shaft winder and air compressors. The power supply is further reduced to 525 volts for smaller devices and equipment used on the mine. The average annual power consumption is about 240 GWHr and the maximum demand is about 52 MW.
  potential fire hazards and are subject to regular maintenance which includes the inspection of the settings, blades and changing the transformer oil in the circuit breakers.
  Exploration and Development
 
 date depending on prevailing circumstances. Looking ahead, it will be necessary to extend the FEV decline from 75 to 78 level to replace face length. There is also the prospect of extending ERPM’s Ore Reserves into the neighboring Sallies lease area and significantly increasing the life of the mine’s underground operations. A prospecting right permit has been issued to ERPM covering the Sallies lease area.  The first prospect borehole of a four-year exploration drilling program in this area, now known as ERPM Extension 1, was completed during fiscal 2006 and preliminary results indicate that the reef is well developed.Environmental and Closure Aspects
  the underground section. On May 31, 2004, ERPM stopped continuous pumping of water from the underground section for financial reasons due to the withdrawal of the pumping subsidy and the low Rand gold price making the cost of full time pumping unaffordable, with occasional pumping to surface conducted on weekends. In December 2004 the mine received the pumping subsidy funds and continuous pumping was reinstated. Studies on the estimates of the probable rate of rise of water have been inconsistent, with certain theories suggesting that the underground water might reach a natural subterranean equilibrium, whilst other theories maintain that the water could decant or surface. A program is in place to routinely monitor the rise in water level in the various underground compartments and there has been a substantial increase in the subsurface water levels. ERPM is currently pumping the Central Basin water out of the South West Vertical, or SWV, Shaft. The ‘plugging’ program undertaken by ERPM will ensure that ERPM will  not be dependant on pumping this water after December 2006.


51
  the conceptual closure objectives. Surface holings are being filled, with 24 of the 154 holings remaining. Redundant surface infrastructure is being demolished and rehabilitated. ERPM is in the process of updating its EMP to include all the requirements to the MPRD Act. The updated EMP will be submitted to the DME for approval by the end of calendar 2006.
    cost for ERPM, in current monetary terms as at June 30, 2006, is $5.4 million. A total of $0.7 million has been contributed to the ERPM Rehabilitation Trust Fund. This is an irrevocable trust, managed by specific responsible people who we nominated and who are appointed as trustees by the Master of the High Court of South Africa. Life of Mine
  and Probable Ore Reserves of ERPM was 1.0 million ounces, of which 0.7 million ounces relate to the underground section. The remaining 0.3 million ounces relate to the Cason Dump surface material which, based on the estimated rate of production, will be processed over a remaining 7 year period ending in fiscal 2013. Based upon a gold price of approximately R88,960 per kilogram, at June 30, 2005, our 40% share of Proven and Probable Ore Reserves of ERPM were 0.4 million ounces. The year on year increase is mostly attributable to the continuation of mining operations which were planned to be suspended in March 2005 and the increase in our attributable share from 40% to 85%. A Mineral Resource competent person is appointed at each operation to review our Ore Reserve calculations for accuracy. For ERPM, Mr. Johan Smit (PLATO) is the appointed Mineral Resource competent person. The current underground life-of-mine is five years. Current Production Our attributable share of gold production for ERPM was 80,324 ounces in fiscal 2006 compared to our 40% attributable share of gold production of 44,600 ounces in fiscal 2005 and 44,896 ounces for fiscal 2004. The increase in fiscal 2006 is due to the incorporation of ERPM into DRDGOLD SA as a wholly owned subsidiary with effect from December 1, 2005.
   
 Year ended June 30,
 
 2006
 2005
 1
 
 2004
 1
 
 Production
                                        Results of Operations ($)
            Non-US GAAP Financial Data
     2
      2
      
 1
   2
  generating capacities of the mines and to monitor performance of our mining operations. For a reconciliation to production costs see Item 5A: “Operating Results.”


52
 Papua New GuineaPorgera Overview
  holds certain mining leases, easements and exploration licenses which form part of the Porgera gold mine, or Porgera, in the highlands of PNG. We purchased this interest in October 2003 for a purchase consideration of $77.1 million. Barrick is the owner of a 75% interest. The remaining  5%  interest is held by Mineral Resources Enga Limited, or MRE (on behalf of Enga Provincial Government and landowners in PNG). All of the various mineral tenements making up Porgera are exploited collectively by the joint venture partners.
  joint venture partners. Decisions regarding the assets which comprise Porgera, including any sale thereof, are made collectively by the parties through the management committee. The parties also have a right of first refusal with regard to certain assignments of assets which make up Porgera. Each party has the right to own and to take in kind and dispose of its share of all ores, concentrates and refined products produced by Porgera. Each party also pays for its proportionate share of the costs associated with the mining activities.
 The net book value of our share of property, plant and equipment, deferred stripping and purchased undeveloped mineral
 interests is $63.7 million at June 30, 2006.
  addition, there are approximately 1,000 contractors of whom 97 are PNG nationals. Of the total workforce of 2,389, 75% are local residents, while the remainder work on a “fly-in-fly-out” basis.
 Production from Porgera is subject to a 2% net smelter royalty payable to the National Government Department of Mining
 which then distributes it to the Enga Provincial Government, the Porgera District Authority and local landowners. Property
  meters) to 8,910 feet (2,716 meters) above mean sea level, about 82 miles (132 kilometers) west of the established town of Mount Hagen, 275 miles (443 kilometers) northwest of Port Moresby, and about 425 miles (684 kilometers) by road from the coastal port of Lae from which all materials are freighted. The road is partly paved and passes through unstable mountainous terrain with many major river crossings. Personnel are transported to mine site by bus, fixed wing aircraft and helicopter.
  vegetation is largely rainforest below an elevation of 7,920 feet (2,414 meters).
  the Porgera Mining Development Contract, or the Porgera Contract, between the Government of PNG and the joint venturers. The Porgera Contract specifies, amongst other matters, the annual rents that must be paid for the Special Mining Lease, and the various classes of compensation that are payable to the landowners for the various land uses. The Special Mining Lease, which expires in 2019, encompasses approximately 2,240 hectares including the mine area and the areas in which the project infrastructure is located. There is no expiration date for the Porgera Contract, but it is tied to the continuation of the Special Mining Lease. Leases for Mining Purposes have also been awarded by the Government for land use associated with the mining operation such as waste dumps, campsites, water supply, power generation and an airstrip. The Porgera Joint Venture holds a mining lease for the operation of a limestone quarry for the supply of lime to the process plant. Permits are held for water use, including run-off from unconsolidated surfaces, such as the open pit, the underground mine and the waste dumps. These water use permits are renewable on a regular basis and are subject to a public hearing before approval. The Porgera Joint Venture runs an environmental monitoring program to ensure compliance with the requirements of these permits.


53
  power transmission lines and water supply pipelines and other activities incidental to the main mining activity. Separate from the mining tenements, there are two Exploration Licenses adjacent to the Porgera Mine, namely EL454 and EL858, which we assert we have 20% ownership of as joint venture assets. Barrick asserts we do not have a 20% interest in these Exploration Licenses and that the Exploration Licenses are not joint venture property. On August 9, 2004, we placed a caveat on the title register in order to prevent changes taking place without notification to us. The dispute between us and Barrick regarding these Exploration Licenses is the subject of ongoing discussion and the tenements are the subject of ongoing exploration expenditure.
 Porgera has on a number of occasions experienced delays in the granting of operating permits and licenses necessary  to
 conduct its operations. Although there has never been an interruption to operations due to an issue of this nature, if at any time in the future permits essential to lawful operations are not obtained, or exemptions not granted, there is a risk that Porgera may not be able to operate for a period of time. Future government actions cannot be predicted, but may  impact the operation and regulation of mines including Porgera.
  Inspectorate.  History  1938
  1975
 Placer (PNG) Limited, or Placer (PNG), a wholly owned subsidiary of Placer Dome Inc., became the operator and owner of a two-third interest in an exploration venture with Mount Isa Mines Limited (now MIM Holdings Limited.), or MIM.
 1979
 A Joint Venture Agreement was signed whereby Placer (PNG), MIM and New Guinea Goldfields Limited. (a subsidiary of Goldfields Limited) each held a one third interest and the Independent State of Papua New Guinea, or the State, had the right to acquire at cost up to a 10% interest in the project if developed.
 1989
 The joint venturers' application for a Special Mining Lease was approved in May and construction began immediately. The State accepted its full 10% entitlement (inclusive of 5% on behalf of the Enga Provincial Government), thus diluting each of the other joint ventures down to 30% each. The State took its interest in the name of a corporate nominee, Mineral Resources Porgera Limited.
 1990
 Commercial production commenced in August. MIM sold its 30% interest to Highlands Gold  Limited., or Highlands Gold.
 1993
 Placer (PNG), Goldfields and Highland Gold each sold a further 5% to the State (15%). The additional 15% was taken by the State in the name of a corporate nominee, Orogen Minerals (Porgera) Limited.
 1997
 Placer Dome’s joint venture interest was increased from 25% to 50% as of January 1, 1997 following the completion of the acquisition of Highlands Gold.
 1999
 The State reorganized the holding of Mineral Resources Porgera Limited by transferring a 5% direct interest in the Joint Venture to Mineral Resources Enga Limited owned by the Enga Provincial Government and project area landowners.
 2002
 Placer Dome’s joint venture interest in Porgera was increased from 50% to 75% through the acquisition of AurionGold. The State reorganized its holdings in the Joint Venture such that Oil Search Limited then held a 20% direct interest in the Joint Venture through two subsidiaries.
 2003
 We acquired the shares of Oil Search Limited in Orogen Minerals (Porgera)  Limited and Mineral Resources Porgera Limited through the amalgamation of Mineral Resources Porgera Limited with Orogen Minerals (Porgera) Limited and Dome Resources (PNG) Limited, our wholly-owned subsidiary.
 2004
  2005
  2006
 Barrick acquired Placer Dome’s 75% stake in Porgera. We concluded a sale and purchase agreement with Emperor, where effectively we held 88.3% of Emperor who in turn holds the 20% interest in the Porgera Joint Venture.
 Geology and Mineralization
   The Porgera ore body is an epithermal style ore body hosted within thermally metamorphosed sediments. The known ore
 body extends for up to 3,050 feet (930 meters) along strike. The maximum width across strike is 330 feet (101 meters), but the width is commonly no more than 65 to 98 feet (20 to 30 meters). The intrusive diorite complex has many individual stocks and dykes. The rocks are competent however they tend to be brittle, and in the vicinity of the ore body, are extensively veined and brecciated. The intrusive bodies tend to be concentrated towards the footwall of the deposit.


54
  occurs as submicroscopic gold intimately associated with and disseminated throughout pyrite. Mining and Processing
  basis, was sourced 88% from open pit and run of mine stockpiled ore, and 12% from underground. Underground ore accounted for 14% of the contained gold in mill feed.
  hole drills, O&K RH200 hydraulic face shovels and Caterpillar 789 haul trucks, gives a nominal capacity in the order of 80 million tonnes per annum. Waste stripping requirements will reduce as the open pit mining operation approaches closure in calendar 2008, allowing a progressive retirement of the mining fleet.
  expected to continue through to late 2008. Currently, ore is being mined from the 2,210 meter level in Stage 4, and waste is being mined from the 2,390 meter level in Stage 5. Stage 5 is the final open pit development stage and will be completed in late 2008 at 2,050 meter level. Stockpiled low grade ore will form the basis of ongoing gold production from mid 2008 until 2015. Remediation work following the failure of the West Wall during the previous fiscal year continued during fiscal 2006, leading to reliance on low-grade, long-term stockpile material as the primary feed. This together with damage to access infrastructure caused by heavy rainfall, power failures and a strike related to a change of management from Placer Dome to Barrick had a negative impact on gold production during fiscal 2006.
 On completion of the open pit operation, the mill will continue to process accumulated lower grade ore stockpiles through to
 2015, supplemented by the underground ore until 2008. Gold production from the open pit and underground from 2008 onward will fall, as lower grade stockpile ore replaces the open pit ore feed.
  first commissioned in September 1990. The last expansion was completed in 1996 with the installation of additional milling, flotation and leaching capacity increasing the nominal throughput from 10,000 tonnes per day to 17,700 tonnes per day. Further improvements were made in 1999 with the addition of further flotation capacity and the installation of gravity concentrators to remove free gold and to improve overall recoveries.
  Water for the grinding circuit is also extracted from Kogai Creek, which is located adjacent to the grinding circuit. The mine operates four water treatment plants for potable water and five sewage treatment plants.
  Power Station. The station has a total output of 62 MW. A back up diesel power station is located at the mine and has an output of 13MW. The average power requirement of the mine is about 60 MW. Average annual power consumption is 518 GWHr.
 The most significant capital expenditure during fiscal 2006 related to deferred stripping, and our 20% share amounted to
 $12.9 million. Exploration and Development
  underground mining exploitation. This zone is an eastward continuation of the North Zone, which is now in production and which shares the same characteristics. Drilling also was carried out in the later part of 2004 on the Lower Central Zone. Both these zones are hosted within diorite bodies and surrounding altered sediments and consist of continuous or on echelon quartz roscoelite veins. There is still further resource potential in these zones, as they are not completely closed off. Drilling will continue to further define these targets as suitable for development. A small amount of open pit delineation drilling has been carried from underground in order to upgrade the geological model.


55
  adjacent to the current mine infrastructure. There are a total of seven known targets where at least some previous drilling has taken place. This drilling is designed to bring these target ounces to an indicated Mineral Resource status. There are also some targets that are less well known and more conceptual in nature.
 In addition, during fiscal 2005 a project termed Porgera Deep Minex was initiated and continued into fiscal 2006. This
 project was part of the mine’s ongoing existing exploration projects however was newly termed Project Deep Minex because this particular part of the exploration process consists of a multi-disciplinary approach to determine targets and test the volume of ground below the known Porgera deposits. This approach involves the building of an integrated geological and geophysical model, various geochemistry techniques, and the use of seismics is to be investigated. Much of this will be the “mining” and integrating of existing data. Drilling will be carried out with a prime target being the intersection of the Roamane Fault and the North Zone shear in depth.
 The Stage 6 program was completed in September 2006 and work continued on modeling the Stage 6 data and preliminary
  Regionally, drilling planned at Tupagai is awaiting finalization of the drill contract. Landowner clearances for drill pads and
 access tracks were obtained during July 2006. Assays from earlier rock chip sampling at Tupagai returned some significant values. Target areas have now been identified for further assessment. Results of earlier field work at Liawin area have also been encouraging.
 Elsewhere, three target areas have been identified and follow-up field work has commenced. The targets identified were
   Life of Mine
  ounces of gold with a projected life of 11 years. Our 16% attributable share of estimated Proven and Probable Ore Reserves as at December 31, 2005, before Ore Reserve depletion, is 1.3 million ounces. Our attributable 16% share of the Proven and Probable Ore Reserves in the Porgera Joint Venture is based on the Ore Reserve information disclosed by Placer Dome Inc. in its earnings release for the period ended December 31, 2005, as released on February 20, 2006 in accordance with US GAAP. At December 31, 2005, Placer Dome held a 75% stake in the Porgera Joint Venture pending being acquired subsequently by Barrick. At June 30, 2006, our attributable Ore Reserves decreased by 5.4%, or 0.1 million ounces, from fiscal 2005 and Ore Reserves decreased by 6.0%, or 0.1 million ounces, from fiscal 2004, mainly due to the open pit mining depletion. For Porgera, the reserve information was provided by Barrick and was reviewed by Mr. Richard Johnson (AusIMM). Environmental and Closure Aspects
  conditions construction of a tailings impoundment would be very difficult and the risk of an engineering failure high. Therefore the Papua New Guinea Government approved riverine disposal as the most appropriate method for treated tailing and soft incompetent waste rock. Competent rock is stored in stable waste dumps. The mine follows a government approved Environmental Management and Monitoring Program.
  an Australian based independent research organization, to assess the mine's impact on the downstream river system and local people. In its report CSIRO made certain recommendations to the Porgera Joint Venture that have either been implemented or are in the advanced stages of implementation. An advisory group, called the Porgera Environmental Advisory Komiti, or PEAK, was formed as a result of the CSIRO recommendations. PEAK comprises representatives from the Papua New Guinea Government and international non-governmental organization groups,  Barrick and independent technical experts. The primary function of PEAK is to enhance understanding and provide transparency of Porgera's environmental (physical and social) issues with external stakeholders and to assist in reviewing its environmental performance and public accountability. In 2002, PEAK had its terms of reference expanded to include mine closure.
  portion of total costs for Porgera, based on information provided by the operator, Barrick, in current monetary terms as at June 30, 2006, is $7.6 million. This has been included in the provision for environmental rehabilitation, reclamation and closure costs.


56
 Current Production
  June 30, 2006 amounted to 128,238 ounces at a cash cost and total cost per ounce of $289 and $467, respectively. Barrick, 75% owner of the mine, had predicted lower production in calendar 2006 due to a shift of operations from Stage 4 to Stage 5 of the open pit, which has harder ore and lower grades.  Performance in fiscal 2006 has been negatively affected, however, by the impact of heavy rains on the stability of the pit’s West Wall. Work on the West wall cutback as at November 30, 2006 was 72% complete and the joint venture expects mining of ore from the open pit to begin in calendar 2007.
   
 Year ended June 30,
 
 2006
 2005
 2004
 Production
        
    
    
   Results of Operations ($)
    ...
    
   Non-US GAAP Financial Data
     1
      1
     Tolukuma Overview
  owned and operated the Tolukuma gold and silver mine in PNG. During September 1999, we purchased 28,693,002 (19.93%) of Dome’s ordinary shares for A$0.30 ($0.19) per share. In June 2001 we acquired all the shares in Dome which we did not already own.
  kilometers north of Port Moresby in Central Province, Papua New Guinea. The mine is in an area of steep mountainous terrain in the headwaters of Iwu Creek, which drains into the Auga River. Elevations in the mine lease area range from 1,100 meters above sea level (asl) at the Auga River to 1,750 meters asl at the top of Tolukuma hill.
  employs 778 people, including 143 contractors.
 
 1
  generating capacities of the mines and to monitor performance of our mining operations. For a reconciliation to production costs see Item 5A: “Operating Results.”


57
 Property
  covering an area of approximately 513,962 acres (208,000 hectares), two licenses under renewal covering 125,525 acres (50,800 hectares) and four licenses under application totaling 1,073,884 acres (434,600 hectares). The total exploration area amounts to approximately 2,456,144 acres (994,000 hectares). For a summary of our exploration licenses see “Exploration Projects” in Item 4D: “Property, Plant and Equipment.”
  Papua New Guinea Mining Act of 1992 and Mining Regulations 1992. The lease is granted for a term of 20 years expiring on August 29, 2012, and is renewable for further periods not exceeding 10 years each.
  elevation of 5,115 feet (1,560 meters) above mean sea level. The mine is situated in very steep mountainous terrain that is not accessible by road. All transport of employees, materials and equipment to and from the mine is by helicopter. As a result, approximately 17% of the production costs of the mine are spent on transportation and logistics, including the cost of jet fuel. Tolukuma is worked on a “fly-in-fly-out basis,” with all staff being accommodated in quarters when at the mine.
  Fahrenheit (10 to 25 degrees Celsius) and rainfall averages 144 inches (3,650 millimeters) per year. The vegetation is largely rainforest and thick vegetation associated with high rainfall and mountainous regions.
  There are three clans and at the head of each clan is a chief. The population around the mine is approximately 2,700, with 700 being landowners and the rest made up of outsiders coming into the area to seek employment. There is a Memorandum of Agreement, or MOA, between National Government, Provincial Government, the landowners and Tolukuma. The MOA is a working document which indicates the responsibilities of each party and their role in the sustainable development of the community. The MOA is reviewed every two years, with an MOA to be mutually agreed by the parties if revised. Currently, there is an agreed MOA in place.
  fund, a landowners’ association, the landowners, and to a Central Provincial Government fund for projects outside the mine area. History 1984
  1987
  1993
  1999
  2001
  2006
 We concluded a sale and purchase agreement with Emperor, where effectively we held 88.3% of Emperor who in turn holds the 100% interest in Tolukuma.
  Exploration and Development
 
  drill rigs, including one with long hole capability, and an additional rig for surface drilling. This brought the number of rigs on site to five. An air-driven Kempe rig, commissioned in December 2003, is used for short holes underground, currently targeting the down dip extension of the Tinabar ore body and an LMA90 drill rig, commissioned in January 2004, is used for longer exploration holes, initially in the Gulbadi south area and the Milaihamba structural target. Another manportable DT600P was purchased to support the existing manportable DT250P on surface drilling of ML104 and later the Saki, Sere Sere, Taula and Taula North prospects in Exploration License 580 followed by other regional targets. The LY44 is also currently drilling ML104 targets.
  as the Zine, 120, Gulbadi, Tolukuma, and Tinabar veins, with the aim of delineating and defining additional mineralized materials for mill feed. Drilling in fiscal 2005 continued at new structures that have been identified for drill testing including the Loch, Tofun, and Banana vein structures.


58
  significant regional structure that is parallel to the main Tolukuma structure. We continued to maintain eleven Exploration Licenses, or EL, covering 8,183 square kilometers. Seven tenements have been granted namely EL683, 1297, 1379, 1284, 1271, 1352 and 1366; and four tenements EL580, 894, 1264 and 1327 awaiting renewal.
  Geology and Mineralization
  grade “bonanza” style mineralization. The primary structures extend 4.4 miles (7 kilometers) on strike with economic mineralization usually occurring in well-defined zones on dip and along strike.
 The Tolukuma deposit is comprised of two sub-parallel structures that are connected by a series of linked structures trending
 generally from north west to south east. Individual quartz veins average 0.6 feet to 6.6 feet (0.2 meters to 2.0 meters) in width over a strike length of more than 0.9 mile (1.4 kilometers). Likewise, the Zine and 120 veins located approximately 250 meters to the east, have similar geological features. These are connected by a series of linked structures tending generally in a south east to north west direction.
 All the current Ore Reserves are located within these veins in five sections that have different geological characteristics.
 These zones include from north to south, Tolukuma, Tolimi, Tinabar and Gulbadi. The Gulbadi zone includes the Gulbadi and Gulbadi X-veins. Clay zones of variable width are located in the intersections on two or more structures. Minor loops off the main veins, minor splay veins and minor cross veins are excluded from the potential reserves, although they are mined at times. Infill diamond drilling of the Zine and 120 veins is continuing and an underground diamond drilling program has commenced.  Mining and Processing
  mining is currently carried out. Ore is currently sourced primarily from underground mining with mill feed supplemented by ore recovered from low grade stockpiles.  All mining is conducted using mining plant and equipment owned by Tolukuma. The average mining depth at Tolukuma is 490 feet (150 meters) below surface or approximately 4,760 feet (1,450 meters) above mean sea level. Access to underground workings is via decline shafts. Mining methods vary according to local ground conditions and are generally mechanized cut and fill shrinkage methods.
  milled and treated through a conventional gravity and CIL circuit. The plant consists of a closed circuit semi-autogenous mill that at June 30, 2006 is capable of processing 18,000 tpm. Cyanide in the residue is neutralized in a detoxification plant prior to riverine discharge.
  Power is generated through a combination of diesel driven generator sets and hydro-turbine driven generator sets. Three hydro units are installed, capable of generating 1.8 MW of power. These units are dependant on the supply of adequate water. These generators supply 32,000 volts via overhead lines to the mine, where it is transformed down to either 6,600 volts, 1,000 volts or 525 volts, depending on the requirement. On average the mine consumes 30 MW of power. Any shortfall from the hydro units is made up by the diesel units (a total of 3.2 MW of diesel generating power is installed).
  additions to equipment in the plant and acquisition of plant and equipment. Mine development during fiscal 2006 amounted to $2.8 million and $1.5 million was spent on heavy equipment.


59
 Environmental and Closure Aspects
 
  1994. Tolukuma is compliant with the Papua New Guinea Government’s regulatory requirements. To ensure continuing compliance with the government’s regulatory requirements, Tolukuma has implemented a broad-based Environmental Management and Monitoring Program, or EMMP. The measures we have taken to implement this program include addressing water quality, population dietary surveys and aquatic fauna and metals-in-tissue surveys. These surveys were conducted during July and September of 2003. During March 2003, an environmental audit was concluded at Tolukuma which found the operations to be in substantial compliance with applicable Papua New Guinea legislation and the EMMP environmental plan. The studies conducted in 2003 confirmed existing trends that had been established over recent years. The water quality meets legal requirements, as per the criteria set by the water license.
 Tailings are routinely discharged into the Auga/Angabanga river system. The discharging of tailings into riverine and marine
 systems in Papua New Guinea is an acceptable practice due to the seismic instability of the area and the dangers this poses for the stability of conventional tailings dams. Due to the fact that ore mined at the Tolukuma Mine, and the surrounding land in general is high in mercury, the potential does exist that levels of mercury discharged into the river system might expose us to criminal liability under Papua New Guinea legislation. As a result of an internal study of the Tolukuma Mine in 2000, in order to ensure that mercury discharges remain within allowable limits, the following program is being followed:
          and is discharged into the riverine system as a result of the inability of Tolukuma to use conventional tailings dams. Prior to discharge, the cyanide is degraded in a detoxification process and levels are monitored daily.
 Through visits with local communities by mine staff members, we have been informed that communities located downstream from
 the Tolukuma Mine do not generally use water from the Auga/Angabanga river system for consumption as these communities rely on water from creeks, tributaries and strategically placed wells, many of which we have provided, and we are not aware of any adverse health effects on communities associated with the Tolukuma Mine.
 Furthermore, we are not aware of any scientific or engineering report that states that the level of mercury discharges from the
 Tolukuma Mine into the Auga/Angabanga river system are harmful to human life. In November 2002, Oxfam Community Aid Abroad released their “Mining Ombudsman Annual Report 2001-2002” which we believe made inaccurate and unsubstantiated references to mercury output and other findings contained in an internally prepared study on Tolukuma done in 2000. This study was not conclusive on the mercury output at Tolukuma and the results of this study were not scientifically tested. Nonetheless, as discussed above, we increased our environmental management systems in response to this study.
 Two water quality and geochemical investigations were conducted by an independent consultant in July 2000 and June 2002. These
 investigations concluded that there was little difference between mercury concentrations in mining sediment from the Tolukuma Mine being dumped into the Auga/Angabanga river system and the naturally occurring sediments in the area. Although mercury is detectable in the mining derived sediments immediately adjacent to the discharge point, these levels are immediately diluted to levels below detectable limits upon meeting with the Alabule River. This area consists of steep gorges and fast, turbid currents. The result is a high dilution of mining sediments and, therefore, negligible impact on the lower Angabanga floodplain and oxbow lakes which are located downstream from the Tolukuma Mine. An additional study took place during June 2003, reinforcing earlier findings. Further  water quality and geochemical  monitoring performed by  an independent consultant  in December 2005 on the  Auga/Angabanga river system, reported findings to be within compliance.  The mill tailings analyzed by the Australian Laboratory Services in Brisbane for filtered metals, ammonia, cyanide, conductivity and total suspended solids are also within compliance criteria.
   for Tolukuma, in current monetary terms as at June 30, 2006, is $1.5 million. This has been included in the provision for environmental rehabilitation, reclamation and closure costs on our balance sheet.


60
 Life of Mine
  assuming a gold price of K1,840 per ounce ($582 per ounce). Based on a gold price of $381 per ounce and an exchange rate of K3.45 = $1.00, at June 30, 2005, the Proven and Probable Ore Reserves of Tolukuma were 0.22 million ounces. The decrease in Ore Reserves is primarily due to the reduction in our attributable portion of ounces from 100% to 79% as a result of the purchase and sale agreement with Emperor.
  Tolukuma, Mr. Richard Johnson (AusIMM) is the appointed Mineral Resource competent person. As at June 30, 2006, Tolukuma has been assessed with a two year life of mine for its underground operations. Current Production
  117,636 ounces of silver in fiscal 2006 compared to 168,314 ounces of silver in fiscal 2005. Gold production was adversely affected by a lack of available face in the first half of fiscal 2006 and the consequent treatment of low-grade underground stockpiles. Extensive underground development from the second half of fiscal 2006 began to redress this issue by the end of fiscal 2006. Cash costs increased to $610 per ounce of gold in fiscal 2006 from $331 per ounce of gold in fiscal 2005, primarily due to lower gold production, the higher cost of fuel and the logistics involved in keeping the mine supplied with consumables and services. Inclement weather also affected logistics, in particular helicopter access to the mine. As a consequence, supplies of critical consumables such as diesel were disrupted. Going forward, a second hydro plant will reduce the level of dependence on diesel fuel as a power source. In fiscal 2006 the total cost per ounce increased to $767 per ounce from $434 per ounce in fiscal 2005.
   
 Year ended June 30,
 
 2006
 2005
 2004
 Production
                    Results of Operations ($)
            Non US GAAP Financial Data
     1
      1
     
 1
  generating capacities of the mines and to monitor performance of our mining operations. For a reconciliation to production costs see Item 5A: “Operating Results.”


61
 Fiji
 
 Vatukoula
 
 Overview
 
   located at Vatukoula on the South Pacific island nation of Fiji, has been in operation since 1933 with 6.8 million ounces of gold produced since operations commenced. The Vatukoula Mine is a multi-shaft underground mine. The Vatukoula Mine is Fiji's second largest private employer with 1,856 employees at June 30, 2006.
 
   Emperor  to positive cash flow and creating a sustainable, long-term future for the company and its operations.  An A$10.0 million Convertible Loan Facility was negotiated by the independent directors of Emperor. The financing package also included an agreement with ANZ Bank, subject to a number of conditions, to a restructuring of Emperor’s debt servicing obligations to assist them with their restructuring plan. The ANZ Bank also consented to the Convertible Loan Facility and the related security. The Convertible Loan Facility was approved by the shareholders of Emperor on August 29, 2005 (we did not participate in the voting). In addition, in July 2005 we entered into an operational support agreement negotiated on behalf of Emperor’s independent directors, pursuant to which we provided Emperor with management and technical services.
 
   mine in Fiji. Pursuant to this agreement, on April 6, 2006, Emperor acquired our wholly owned subsidiary, DRD (Isle of Man), which in turn holds our PNG assets, comprising of the 20% interest in the Porgera Joint Venture, the 100% interest in Tolukuma and all of our exploration tenements in PNG. We held 88.3% of Emperor and subsequently, our shareholding was diluted to 78.72%, following a number of share issues in which we did not participate.
  
  under this facility of $2.0 million on October 5, 2006, $5.0 million on November 6, 2006 and $3.0 million on November 27, 2006. The loan bears interest at LIBOR plus 3% per annum and is repayable on December 31, 2007.
 
  at Vatukoula  were no longer economically viable and  that the mine would  therefore  cease production.  Pending completion  of a strategic review to optimize the value of Vatukoula and other Fijian land holdings, the mine  has been  placed on a care and maintenance program.
 
 Property
 
  island of Fiji. Gold mineralization is associated with a volcanic caldera, and occurs in both flat-lying and steeply-dipping structures, typically less than a meter in width, principally on the western fringe of the caldera. The mine can be accessed via the highway from Nadi to the Vatukoula Mine. Mining is conducted underground from four main shafts exploiting the ore bodies in the southwest portion of the volcanic margin to the Tavua Caldera, a large shield volcano about 9 miles (15 kilometers) in diameter and the recently accessed R1 ore bodies situated within the caldera. The main mining licenses include Special Mining Lease 54, 55 and 56.
 
 History
 
 1930
  1933
  1950s
  1992
  2003
  2004
 In July 2004, we increased our shareholding in Emperor to 45.33% through a conditional takeover offer. Emperor appointed our Executive Chairman,  Mr. M.M.  Wellesley-Wood as Managing Director and our Divisional Director: Australasia, Mr. R Johnson as Non-Executive Director, both with effect from August 3, 2004. In November 2004, Emperor’s rights offer closed and we subscribed for our entitlement under the rights offer.
 2005
 In August 2005, the shareholders approved a convertible loan facility to assist with Emperor’s restructuring plan. An operational and support agreement was also signed pursuant to which we will provide Emperor with management and technical services.
 2006
 We concluded a sale and purchase agreement with Emperor, where effectively we held 88.3% of Emperor. On December 5, 2006, after an extensive three-month review of Vatukoula, the mine ceased production. Pending completion of a strategic review to optimize the value of Vatukoula and other Fijian land holdings, the mine has been placed on a care and maintenance program.


62
 Geology and Mineralization
  volcanic setting and rock type is typical of several major gold mines in the southwest Pacific region, such as Porgera. The ore deposits lie along the margin of Tavua volcanic caldera and consist of various types of quartz-adularia-telluride-auriferous-pyrite fillings deposited in fractured, faulted and shattered volcanic rocks.
  volcanic caldera, a large shield volcano about 9 miles (15 kilometers) in diameter. The R1 ore bodies are, however, situated within the caldera.
  geological event and mineralized fractures persist throughout the very late stage sediments that filled in the central part of the caldera. The gold is found as native gold, auriferous pyrite, and as gold tellurides. Mining and Processing
  methods. They are now mined predominantly by longwall stoping, although throughout the mine a number of other mining methods, such as sub-level stoping and caving, cut-and-fill, shrinkage stoping and up-dip mining, are also practiced. The remnants of 50 years of room and pillar mining are also currently being successfully exploited.
  drive access: Smith Shaft, Philip Shaft, R1-Cayzer Shaft and the Emperor Decline Shaft. In April 2006, production from all sections was shutdown following which Philip Shaft production was gradually restarted in June 2006.
  Morgardshammer mill. There are also two flotation circuits, one for slimes washed from the ore, and a conventional sulphide circuit for the grinding circuit product. Both circuits are combined in a thickener and roasted before passing through a CIP circuit. Loaded carbon is stripped and the gold-rich solution is combined with the calcine rich solution for zinc precipitation and to be able to smelt into bars.
 Implementation of the mine’s new ACDTP during fiscal 2006, involved a temporary shutdown of the mine on April 20, 2006
 and a gradual start-up early in June 2006. The ACDTP has been designed to introduce flexibility to production areas, improve infrastructure and increase the productivity of the workforce. The plan includes development of higher grade areas at Philip Shaft and upgrading of associated shaft infrastructure. In addition, the entire workforce will undergo comprehensive assessment, re-skilling and retraining. On December 5, 2006, the mine was placed on a care and maintenance program.
 
 Exploration and Development
      
    
    
      Environmental and Closure Aspects
    board of directors is to work with Government environmental protection agencies to ensure compliance with all relevant regulations. In addition, Emperor undertakes environmental projects to ensure compliance with all relevant regulations.
     provide monthly updates on performance to the Managing Director who brings, and allows, operational managers to bring, major issues to the attention of the full board of directors.


63
   rivers, the Dakavono dam discharge and the Dakavono creek. We are not aware of any environmental issues in Emperor that could have a material adverse impact on the Group’s business.
    for Vatukoula, in current monetary terms as at June 30, 2006, is $1.0 million. This has been included in the provision for environmental rehabilitation, reclamation and closure costs on our balance sheet.
  Life of Mine
 
 
  our attributable share of the Proven and Probable Ore Reserves of Emperor was 0.7 million ounces.  Vatukoula’s life-of-mine plan  at June 30, 2006 reflected 8 years, however  on December 5, 2006, the mine  was placed on a care and maintenance program. A Mineral Resource competent person is appointed at each operation to review our Ore Reserves calculations for accuracy. For Emperor, Mr. Greg MacDonald (AusIMM) is the appointed Mineral Resource competent person.
 
 Current Production
    production in fiscal 2006 was 28,397 ounces compared with 45,426 ounces in fiscal 2005. The decrease in production resulted primarily from the temporary shut down of the mine to implement the ACDTP.  On December 5, 2006, the mine  was  placed on a care and maintenance program, which will further impact production for fiscal 2007.
  The following table details our attributable share of the production results from Vatukoula for fiscal 2006:
 Period ended June 30
 
 2006
 2005
 1
 
 Production
      
   
   
   Results of Operations ($)
         Non US GAAP Financial Data
    2
     2
    
 1
  (previously accounted for using the  equity method).  As a result we have not disclosed the attributable portion of Vatukoula’s production results for fiscal 2004.
 2
  generating capacities of the mines and to monitor performance of our mining operations. For a reconciliation to production costs see Item 5A: “Operating Results.”


64
 Exploration Projects
  Tolukuma (through both brownfields and greenfields exploration). Total exploration and project expenditure for fiscal 2006 was $2.1 million for Tolukuma. During fiscal 2006, we lodged an application for a prospecting right in respect of the Argonaut area in South Africa. ERPM also lodged an application for a prospecting right over the Sallies area in South Africa. Both these applications were approved and prospecting permits issued by the DME.  South AfricaArgonaut Project
  covered by the mineral rights covers approximately 19 miles (30 kilometers) from Durban Deep in the west to ERPM in the east with the possible exploitation of part of the potential mineralized material striking 3 miles (5 kilometers) east/west from City Deep Mine to Robinson Deep Mine and extending from 9,900 feet to 13,200 feet (3,018 meters to 4,023 meters) below surface. Most of the main exploration target area incorporated by our 42 square kilometers of mineral rights above the 5,000 meter depth contour of the Main Reef Leader is covered by urban residential development. The mining activity may, as a result, give rise to an increase in seismicity and associated environmental pollution in the immediate proximity of the mine. If operated, this would be the first mine in  the world to operate at such depths and the seismicity associated with the mining activity and the impact on the health and safety of the mine employees working in the underground section are unknown at this stage.
 In utilizing a comprehensive computerized database of historical underground sample and borehole core assay values of the
 Main Reef and Main Reef Leader, sedimentological and structural interpretations of these major gold-bearing ore bodies across the former Central Rand have been undertaken with the objective of defining sedimentological facies trends and delineating geozones for statistical and geostatistical estimation purposes and predictive analysis. A log-linear extrapolation technique was applied to the trend directions exhibited within the data for each geodomain, enabling the calculation of the likely distances over which the gold accumulation decreases within the respective geodomains down the palaeoslope. The end product is a grade block model for the Main Reef Leader showing the rapid downdip decrease in the gold accumulation in all of the defined geodomains.
  target area and valuation model. The results were a substantial downgrading of the estimated mineralized material from that previously reported. Due to unreliable data, no estimate of mineralized material was deduced for the Main Reef. Future work will include the drilling of three additional boreholes to test the model and extrapolations and estimates,  as well as  upgrade and increase the mineralized material estimate within our mineral rights area.
 During fiscal 2004, progress on advancing the Argonaut Project towards a bankable feasibility study was hampered by the
 low Rand gold price and the enactment of the MPRD Act which delayed the issuing of a prospecting permit by the DME. Under the MPRD Act, the prospecting permit is classified as a pending application and, as a result, only geological modeling and resource estimation took place.
  prospecting right covering an area of 969 hectares in respect of the Argonaut area, which was issued by the DME on February 6, 2006. The Argonaut Project still represents a promising, yet challenging deep-level mining development opportunity which is dependent on significant increases in the Rand gold price before becoming viable.
  In order to support drilling, an application for an extension to the current prospecting right by an additional 4,002 hectares has been submitted to the DME. On approval, a Mineral Resource for the revised area will be declared.


65
 ERPM Extension
 On January 14, 2006, DRDGOLD SA  obtained a four-year prospecting right covering an area of 1,252 hectares of  the
 adjacent Sallies Mine, referred to as ERPM Extension 1. The rationale behind the application is to pursue the high-grade Composite Reef payshoot currently being exploited at ERPM through the existing mine boundary.
 The regional geology of the area indicates that there will be a strike change owing 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 the  development situated 50 meters in the  footwall. Owing to the high induced stress experienced at depth, it will be  necessary to protect the excavation by  means of concurrent over-stoping on  the reef plane. Although this is the safest option, permission must first be sought from the DME.
 The development will be supplemented by 1,340 meters of exploration diamond drilling, conducted from exploration cross-
 cut drilling platforms. As a consequence of Measured and Indicated Resources being defined by grade extrapolation, an application to convert the prospecting right to a mining right will be submitted in fiscal 2007. On approval, the Measured and Indicated Resource will be upgraded to Ore Reserves. An application to extend ERPM’s existing prospecting right eastwards into the Rooikraal/Withok area,  incorporating the southern sections of  the old Van Dyk mining lease area and  a small portion of  the  Sallies Mine has been submitted to the DME. The additional area, referred to as ERPM Extension 2, totals 5,500 hectares, with a potential exploration target of some 7.0 million ounces to 11.0 million ounces of gold and could result in a deep level mine with a life in excess of 15 years.
  Papua New Guinea Tolukuma
  well as one new EL application and a Mining Lease 104, or ML104. The ML104 covers an area of 7.68 square kilometers and has extensive exploration tenements in the vicinity of the mine covering approximately 9,937 square kilometers and within 40 minutes flying radius of the mine site. Tolukuma is being explored using geophysical surveys, interpretation of satellite images, mapping and sampling of streams. This is followed up by detailed mapping, trenching and drilling of prospective target areas.
  with long hole capability, and an additional rig for surface drilling. This brought the number of rigs on site to five in fiscal 2004. No new drills were added during fiscals 2005 and 2006. The short-term focus will continue to be on increasing the resource base at and around Tolukuma.
  diamond drilling concentrated mostly within ML104. A total of 68 holes have been drilled for a total of 23,487 meters. Some regional exploration was also carried out in a few of the outer ELs.
 The short-term exploration focus will continue to be on increasing the resource base at and around Tolukuma. In fiscal 2006,
 exploration via an underground exploration drive extending from current operations has discovered two zones of high grade gold mineralization in the Zine Structure, a significant regional structure that is parallel to the main Tolukuma Structure and approximately 350 meters to the east.
 Based on the model that structures at Tolukuma host bonanza grade gold mineralization, underground exploration has
 commenced along the Zine Structure. Significant mineralization has been intersected in the vicinity of a cross structure called the Tinabar Structure. Intersecting structures often form dilation zones where gold can precipitate.
 Most recent exploration activities have focused on the drilling of Zine, with minor work being completed on the Banana
 West-Wossa Ridge and Fundoot areas. Encouraging results have continued to be returned on the Zine Structure, whilst a recently discovered vein set in the Fundoot area has returned encouraging results from trenching across this structure.


66
  mineralization on the Zine Structure, as well as in a newly discovered splay off the Zine Structure. The Zine Structure is now being developed in two drives on the 1,525 meter RL and 1,495 meter RL levels respectively. To date more than 140 meters of strike length of the Zine Structure has been sampled as mineralized on 1,525 meter RL level and 30 meters on 1,495 RL meter level. An exploration drive along the new Zine Splay structure has sampled 97 meters of mineralized strike length. This discovery of the mineralized splay structure off the main Zine Structure is considered very significant as it is the first high grade mineralized vein to be found extending eastwards from the known vein array that has been mined at Tolukuma. It indicates the potential for an entirely new mineralized corridor to the east, as well as a new internal target area along the potential north-west extension.
   traversing was completed between the Gulbadi and Kunda prospects, to define surface anomalism that would be associated with the continuation of these known structures. This data will be used to define the location of the multiple vein corridors in the area and generate further targets for trenching and drilling. Several significant geochemical anomalies found will be followed up by trenching and drilling.
   parallel to the Fundoot Structure. Rock chip samples of this vein have returned encouraging values of up to 404 g/t, most likely as result of supergene enrichment. This area is currently being mapped and trenched and will be targeted with drilling in the near future.
   technical exploration review of all eleven tenements. The major technical review of all exploration tenements which began in July 2005 has neared completion. Much of the “modern” exploration from the past (1960s onward), has been sourced, reviewed and synthesized and has greatly assisted in defining individual prospects, their potential and the broader regional opportunity. Together with recently acquired Landsat 7 thematic images and an Aster (15m) digital terrain model, a comprehensive base now exists for future exploration planning on the existing tenements and the immediate regions.
   Tolukuma epithermal vein (gold) system. These evaluations have highlighted and ranked in excess of 30 separate prospects with several at an advanced stage requiring major drilling and exploration. This exploration review establishes the basis for the aggressive $11.0 million (A$15 million) exploration program.
   creek mapping as a follow up of the discovery of intrusive (diorite) float with encouraging gold values from an inferred porphyry source. The most significant exposure to date is a vegetation anomaly (similar to the Tolukuma vegetation anomaly) on a prominent hill. Trenching and detailed sampling of this wider area has been conducted and interpretation of the results is in progress.
   porphyry or intrusion related anomaly. Prospecting along extensive areas of the Oi and Milton Creeks encountered pervasive alluvial gold throughout and in perched alluvial banks but failed to realize significant zones of hydrothermal alteration to indicate a major primary mineralization source. Future work includes completion of soil lines and reconnaissance sampling of the Gira Circular Structure as well as the Green Creek prospect in EL 1366 to the south and the Baranuma Prospect area in EL 1327 to the northwest of Ioma.
     EL No
 No of Sub blocks
 Area under EL (sq km)
 Status
 Expiry date
                                                        Totals
 2,417
 8,183


67
 Closed Operations North West Operations Overview
  which in turn owns 100% of Hartebeestfontein Gold Mining Company Limited and Duff Scott Hospital (Pty) Limited. The consolidated mining operations of the North West Operations consisted of Buffels and Harties, which lie adjacent to each other within the Klerksdorp Goldfield on the northwestern rim of the Witwatersrand Basin.
  of uranium as a by-product.
 Mining activity at Harties, including exploration, development and production dates back to 1949 with gold production from the
 area totaling over 38 million ounces, with uranium oxide, sulfuric acid, pyrite and silver being recovered as by-products.
  profitability. An agreement was reached with all labor organizations and the process was completed on September 21, 2003, with approximately 3,000 employees retrenched and the placing of No. 6 Shaft of Harties on a “care and maintenance” program, effectively suspending the use of the asset. On March 16, 2004, we reopened the No. 6 Shaft at Harties to mine high grade areas on a selective basis. We recalled approximately 800 employees previously retrenched from the North West Operations to man this shaft. On February 18, 2004, we announced the closure of the No. 11 Shaft at Buffels after the revised work practices implemented based on the operational review proved to be unsustainable. As a result, approximately 1,000 employees were retrenched. The total cost of the July 21, 2003 and March 16, 2004 retrenchments was $7.1 million.
  Buffels at our North West Operations on June 26, 2004, in order to restore profitability. An agreement was reached with all the relevant parties early in August 2004 to close the No. 9 Shaft, but to keep the No. 10 and 12 Shafts in operation, on the condition that certain defined sustainability thresholds are met. This agreement resulted in the retrenchment of 120 employees at this mining operation during fiscal 2005, at a cost of R 3.7 million ($0.6 million). At October 31, 2004, approximately 600 employees were employed at No. 10 and 12 Shafts.
  consequence of the extensive damage caused by the earthquake, the No. 5 Shaft of the North West Operations was closed. There was continuing seismic activity in the area and on March 16, 2005, we closed the No. 2 Shaft because of concerns for the safety of employees. On March 22, 2005, application was made to the High Court of South Africa for the provisional liquidation of Buffelsfontein Gold Mines Limited, which order was granted on the same day. For further details, see the “Legal Proceedings” section of Item 4D: “Property Plant and Equipment.”
   Buffelsfontein subject to certain conditions. These include indemnifying us against any liabilities or obligations that could arise relating to environmental rehabilitation and the management and pumping of underground water. The proposed scheme of arrangement was conditional upon the following:
   Department of Water Affairs and Forestry, or DWAF, agreeing to substitute us with S&J to the extent that DWAF envisaged imposing further responsibility on us;
  the acceptance by the High Court of South Africa and the majority of Buffelsfontein’s creditors of a scheme arrangement proposed by S&J; and
     majority of Buffelsfontein creditors, including us, was approved and sanctioned by the High Court of South Africa. Buffelsfontein applied to the High Court for the lifting of its provisional liquidation which was granted on November 1, 2005.


68
 Property
  kilometers) southwest of Johannesburg near the towns of Stilfontein and Klerksdorp, North West Province, and are reached via the R12 Johannesburg-Potchefstroom-Kimberley highway.
  situated, is humid continental with warm summers and cold winters. Temperatures range from a minimum of 23 degrees Fahrenheit (-5 degrees Celsius) in June and July to a maximum of 93 degrees Fahrenheit (34 degrees Celsius) in December and January.
  dams. Buffels had mining title to 17,575 acres (7,113 hectares) and freehold title to 4,893 acres (1,980 hectares). Harties had mining title to 15,560 acres (6,297 hectares) and freehold title to 375 acres (152 hectares), all held in the name of Buffels. Buffels consisted of one mining license, ML4/2001 in respect of statutory mining rights, and one prospecting permit, RP54/2002 in respect of statutory mining rights and mineral rights held by Buffels.
  addition to mining its lease area, Buffelsfontein operated and mined the adjoining Harties mineral rights areas and another area pursuant to royalty-based tribute agreements with Lucas Block Minerals Limited, a South African company, and Harties.
  was 6,099 feet (1,859 meters), 1,790 feet (546 meters) below mean sea level.  History 1949
 Hartebeestfontein Gold Mining Company Limited, or Hartebeestfontein, was incorporated as a public company in South Africa on June 20, 1949. The company is dormant and no longer trades.
 1995
 Buffelsfontein Gold Mines Limited was incorporated and registered as a public company in South Africa on September 20, 1995, under the name Camelian Investments (Pty) Limited. Camelian Investments changed its name to Buffelsfontein Gold Mines  Limited on December 29, 1995. As of December 31, 1995, Buffels acquired the assets and liabilities of the Buffelsfontein mine division of Buffelsfontein Gold Mines Company Limited previously managed by Gencor Limited, a South African mining company.
 1997
  1999
  2003
 On July 21, 2003, we entered into a 60-day review period of our North West Operations. The process was completed on September 21, 2003, with approximately 3,000 employees retrenched at a cost of $6.5 million and the placing of certain infrastructure (No. 6 Shaft at Harties) on a “care and maintenance” program.
 2004
 In March 2004, the No. 6 Shaft at Harties was reopened to mine high grade areas on a selective basis. We recruited 800 staff previously retrenched to man this shaft. In April 2004, the No. 11 Shaft at Buffels was closed as the shaft reached the end of its economic life. Approximately 1,000 employees were retrenched at a cost of $0.6 million.  In September 2004, the No. 9 Shaft at Buffels was closed as the shaft reached the end of its economic life.
 2005
 On March 9, 2005, the North West Operations suffered the effects of an earthquake of 5.3 on the Richter scale. On March 16, 2005, further seismic activity in the area occurred and we closed the No. 2 Shaft because of concerns for the employees’ safety.  On March 22, 2005, an application was made to the High Court of South Africa for the provisional liquidation of Buffelsfontein Gold Mines Limited, which order was granted on the same day. On October 6, 2005, we concluded an agreement with Simmer and Jack Limited, or S&J for the sale of its shareholding in Buffelsfontein Gold Mines Limited subject to certain conditions. On October 21, 2005, the scheme of arrangement for the acquisition of Buffelsfontein Gold Mines Limited proposed by S&J and accepted by the majority of Buffelsfontein creditors, including us, was approved and sanctioned by the High Court of South Africa. Buffelsfontein applied to the High Court for the lifting of its provisional liquidation which was granted on November 1, 2005.
 2006
 On October 21, 2005, the scheme of arrangement for the acquisition of Buffelsfontein proposed by S&J and accepted by the majority of Buffelsfontein creditors, including us, was approved and sanctioned by the High Court of South Africa. Buffelsfontein applied to the High Court for the lifting of its provisional liquidation which was granted on November 1, 2005.


69
 Geology and Mineralization
 Buffels and Harties, were predominantly underground operating mines located within a geographical region known as the
 Witwatersrand Basin, that exploit gold bearing reefs consisting of Vaal Reef ore and surface sources from previously discarded low-grade rock dumps.  The Vaal Reef is an oligomictic, quartz-pebble conglomerate no more than 20 inches (50 centimeters) thick. Gold is present throughout the reef horizon, but is concentrated on the bottom contact, where carbon commonly forms as a thin seam.
  the Strathmore formation. The bulk of Buffels Ore Reserves had been mined-out but the infrastructure is being used to access remnant reserves and blocks originally bypassed because of structural complexity. Access from the surface to the underground workings of the mine was through vertical and underground incline shafts. Mining of the reef took place in stope panels. Holes were drilled into the solid rock and were charged with explosives and blasted. The loosened rock was removed from the stope panels and was conveyed to the shaft, tipped into the ore-pass systems, hoisted to the surface and conveyed to the metallurgical plant for gold extraction.
  production at Harties started in 1955 on the Vaal Reef. By the late 1990s the mine had reached a position where its life was dependent on the mining of shaft pillars and scattered remnants. Harties has been converted from a high-grade mine with a short life to a medium-grade mine with a longer life. This has been achieved in three stages, firstly, by the conversion of the previous owners' mine plan and operating method, secondly, by dropping the pay limits and putting in place a medium-term operational plan including the opening up of old mining areas for remnant mining, and thirdly, developing a sustainable life of mine plan that will be supported by areas not included in the previous owners' mining plan due to high pay limits. Mining and Processing
  processed by the Buffels or South Plant. All the surface material was processed in the North Plant previously known as the Low Grade Gold Plant, or LGGP, with limited underground material. These plants had a combined operating capacity of 260,000tpm.
  Africa. In South Africa, Eskom operates a national power supply grid consisting of 24 power stations across the country. Electricity to the North West Operations is provided from the Kardell and Hermies substation located between Stilfontein and Orkney in the Buffels area. Electricity is supplied directly from the national power grid to these substations at 88,000 volts. Further substations, located on mine site, transform the power to 6,600 volts for direct supply to the shaft winder and air compressors. The power supply is further reduced to 525 volts for smaller devices and equipment used on the mine. The average annual power consumption is about 852 gigawatt hours, or GWHr and the maximum demand is about 92 megawatts.
  Environmental and Closure Aspects
  rehabilitation. The vegetation program for the tailings dams was preceded by a detailed  scientific and site-specific evaluation of the tailings complex. Based on the results of geo-chemical analyses performed, the tailings medium was prepared for vegetation by the addition of lime to neutralize the natural acidic conditions and fertilizer. Vegetation was then established and care  was taken to select species endemic to the area. A variety of species selected were then planted to ensure species diversity using either the leaching (irrigation) or dry land method. Regular monitoring was conducted. To address dust pollution in unvegetated areas, in the short-term, the open surface areas on top of the tailings dam were ridge ploughed mechanically. This method significantly reduced dust re-suspension. As an additional measure in inaccessible areas, environmentally friendly chemical and organic dust suppressants were employed, where necessary.
  Buffelsfontein, as well as the management and pumping of underground water are the responsibility of S&J. S&J will have the benefit, however, of drawing down against the rehabilitation trust fund which was transferred to the DME upon the provisional liquidation of Buffelsfontein.


70
 Prior Years’ Production
  noting that the fiscal 2005 results are represented up until March 22, 2005, the date that Buffelsfontein was placed into provisional liquidation:
 
 
 Year ended June 30,
 
 
 2005
 1
 
 2004
 Production
        
   
   
       
   
   
      Results of Operations ($)
          Non-US GAAP Financial Data
     2
     2
    Durban Deep Overview
  Witwatersrand Basin immediately to the west of Johannesburg. Mining had been taking place within the lease area since the discovery of the Witwatersrand Goldfield in 1886 at nearby Langlaagte.
  underground pumping subsidy, the deeper sections of the mine were flooded. On a combined basis, Durban Deep produced more than 37 million ounces of gold prior to the cessation of operations.
  payment of a non-refundable fee of R1.5 million ($0.2 million), was granted an option to acquire Durban Deep’s mine village for R15.0 million ($2.2 million). The option lapsed on November 19, 2005. On the exercising of the option the option fee would be deemed part payment of the purchase consideration. If not, the option fee would be forfeited to us.
  transfer occurring, we were notified by Rand Leases Properties Limited (formerly JCI Properties Limited) of an alleged pre-emptive right in respect of the property in terms of an agreement dated December 1996, pursuant to which the property should be sold to them on similar terms. We have since repudiated our agreement with M5 and have notified Rand Leases Properties Limited that we do not intend offering the property to them. Both parties have indicated to us their intentions to institute legal proceedings for the sale and transfer of the property. To date we have received no service of legal process related to this matter
 .
  
 
 1
   2
  generating capacities of the mines and to monitor performance of our mining operations. For a reconciliation to production costs see Item 5A: “Operating Results.”


71
 Property
  east. Durban Deep is situated 9.3 miles (15 kilometers) west of Johannesburg and contains mining title to 14,262 acres (5,772 hectares) and owns 3,667 acres (1,484 hectares) of freehold property. These include administrative buildings, hospital, recreation complexes, housing in both hostel and free-standing houses and a security complex. We have title to substantial land tracts on the outskirts of the City of Roodepoort, which is located in this section. We do not intend to convert our rights under the MPRD Act. Mining and Processing
  depth of 9,200 feet (2,804 meters) and the reefs are known to persist to 13,000 feet (3,962.4 meters) below the surface within the lease area.  Environmental and Closure Aspects
  DME in December 2000. The drafting of the program was preceded by a comprehensive risk assessment process, during which both residual and latent environmental risks and impacts were identified and prioritized. The risks identified are currently being addressed in accordance with the closure program.
  
  term dust suppression methods are currently being employed. In addition to dust suppression, amelioration and vegetation of the tailings dams, the closure program is also focused on the sealing of shafts and openings to the surface, the demolition and rehabilitation of shaft infrastructure and the rehabilitation of open surface areas.
  Western Basin and the Central Basin. Underground water is of poor quality, containing heavy metals, sulphates and other pollutants. The Central Basin water level is being maintained by pumping operations at ERPM, approximately 900 meters below surface.
  and environmental closure efforts continued in pursuit of the objectives of the mine’s Environmental Management Program. A total of 41 hectares of additional vegetation was established on 2L24 Dump and, with the exception of Circular Shaft, all previously operational shafts have now been closed and filled. All plugs used have been approved by the DME which also performs periodic inspections during the sealing phase to monitor progress. However, despite these sealing programs, naturally occurring water conduits and other geological features which are not mine-related and may not be located on mine property will allow surface water, especially storm runoff, to reach underground aquifers. This will eventually cause water levels to rise.
  cost for Durban Deep, in current monetary terms as at June 30, 2006, is $7.0 million. This has been included in the provision for environmental rehabilitation, restoration and closure costs on the balance sheet. A total of $2.1 million has been contributed to the Environmental Trust Fund. This is an irrevocable trust, managed by specific responsible people who we nominated and who are appointed as trustees by the Master of the High Court of South Africa. West Wits Overview
  Mines Limited, or West Wits. We acquired the entire share capital of WWGH, as well as Consolidated Mining Corporation Limited's loan to WWGH, on April 1, 1996. We also acquired the entire issued share capital and the shareholders' claim and loan account of East Champ d'Or Gold Mine Limited, a gold mining company with mining title in the West Rand. The mining assets were sold to Bophelo Trading (Pty) Limited, subsequently renamed, Mogale Gold (Pty) Limited, or Mogale, during fiscal 2004, effectively leading to the closure of the mining operation.


72
 Property
  (35 kilometers) west of Johannesburg, Gauteng Province. The mine is reached via the R28 Johannesburg-Krugersdorp highway.
  Luipaardsvlei. West Wits had mining title to 8,364 acres (3,790 hectares) and owns 72 acres (29 hectares) of freehold property on which all of its mining operations were situated. These rights were sold to Mogale during fiscal 2004.
  situated, is humid continental with warm summers and cold winters. Temperatures range from a minimum of 23 degrees Fahrenheit (-5 degrees Celsius) in June and July to a maximum of 93 degrees Fahrenheit (34 degrees Celsius) in December and January.
  Atomaer (Pty) Limited, for the establishment of a regional underground water management vehicle. The ultimate objective of this initiative is to collectively collect, process and report environmentally sensitive information relating to the impact of underground water seepage on to surface to DWAF. It has set itself the objective of putting in place the requisite infrastructure and technology to establish a commercially self-sustainable entity to extract underground water, treat the same and to dispose of it either for commercial or agricultural use. Representations to DWAF to allow the treatment and disposal of water on commercial terms were favorably received.
  resources, considering the predominantly dry climate of South Africa, and also from an environmental perspective  – a program that captures and treats underground water before it decants into the Tweelopiesspruit area and the Krugersdorp Game Reserve (which is just upstream from the Sterkfontein Caves system) is in place. If the above initiatives fail and the ingress of water and the subsequent flooding into sensitive areas occur, and to the extent that liability is attributed to us, and not only to West Wits, the amounts involved could be significant.  History 1967
  1996
  2000
  2002
 We entered into an agreement with  Bophelo Trading (Pty) Limited, subsequently renamed Mogale Gold (Pty) Limited, or Mogale, for the sale of the West Wits gold plant, freehold areas, surface rights permits and certain related assets.
 2003
   2004
   2005
 West Wits entered into an agreement with Randfontein Estates Gold Mines Limited and Atomaer (Pty) Limited, for the establishment of a regional underground water management vehicle.
 Mining and Processing
  was taken after the South African government withdrew the water pumping subsidy. Without the subsidy, mining at West Wits became prohibitively expensive. The mining operation is an agglomeration of old mines on the Randfontein Basin separated from the main part of the Witwatersrand Basin by a geological structure known as the Witpoortjie Horst. Over fifteen different gold-bearing pebble horizons have been mined. Ore has been mined from outcrops at the surface down to a maximum depth of 5,900 feet (1,798.3 meters).
  conglomerates and quartzites dipping at an average of 18 degrees. The combined West Wits produced more than 1.0 million ounces of gold since inception, before the cessation of underground and open-pit operations at the end of August 2000. Subsequent to the cessation of mining operations, the metallurgical plant at West Wits was taken over by Crown for the processing of sand dumps only.


73
 Environmental and Closure Aspects
  although certain aspects of this have been assumed by Mogale. Commensurate with the decision to close these operations, a detailed closure program was prepared and submitted to the DME in December 2000. The drafting of the program was preceded by a comprehensive risk assessment process, during which both residual and latent environmental risks and impacts were identified and prioritized. The risks identified are currently being addressed by the West Wits, in accordance with the closure program submitted to the DME. In order to mitigate the impact of windblown dust from dormant tailings dams in proximity to surrounding communities, dust monitoring and mitigating measures are implemented as required. These surface deposits have been purchased by Mogale, who are actively prospecting to determine mining potential and are therefore not being vegetated at present.
 Shaft rehabilitation is continuing. This will in effect reduce the ingress of surface water to the groundwater system. While the ultimate amount of rehabilitation costs to be incurred in the future is uncertain, we have estimated that the remaining
 cost for West Wits, in current monetary terms as at June 30, 2006, is $1.6 million. This has been included in the provision for environmental rehabilitation, restoration and closure costs on the balance sheet. A total of $1.8 million has been contributed to the Environmental Trust Fund. This is an irrevocable trust, managed by specific responsible people who we nominated and who are appointed as trustees by the Master of the High Court of South Africa. Legal Proceedings Securities class action
  against us and two of our officers. Since then, four nearly identical securities class action complaints have been filed against us and the same officers. The cases have been consolidated and a consolidated amended complaint has been filed. To date, neither us, nor the individual defendants have been formally served with any complaint regarding these matters.
  October 23, 2003 to February 25, 2005. The complaints allege generally that we and the individual defendants made false and misleading public statements regarding, among other things:
         our officers named in the complaints. Our attorneys have filed an application to dismiss the plaintiffs’ case. We are currently awaiting direction from court on a date to present argument on the application, if the judge decides to hear oral argument, or for a ruling on the application, should he decide not to hear argument.
  Invalid Issuance of Ordinary Shares in Connection with the Rawas Acquisition
    Nominees Pty Limited, Maxidrill Pty Limited, PT Petrosea TBK, Repadre International Corporation, Minproc Engineering Pty Limited, Rio Tinto Rawas Holdings Limited, Continental Goldfields Limited, Consolidated African Mines Limited, JCI (Isle of Man) Limited, Weston Inv.   Limited and Consolidated African Mines Australia Pty Limited, all of which were creditors of Laverton or Laverton subsidiaries, below the average stated capital price. At the time, our then executive chairman, Mr. R.A.R. Kebble, was a director of Laverton Gold NL and JCI Gold Limited. These ordinary shares were ostensibly issued pursuant to the planned acquisition of Rawas, a gold mine located in Indonesia, in consideration for, or in anticipation of receiving, shares in and claims against various companies with ownership interests in Rawas and its mining rights. Evidence came to light revealing that the ordinary shares were issued without our legal authority and suggesting that this occurred as a result of a transaction entered into for the benefit of certain third parties. However, because of subsequent trades, splits and consolidations, it was no longer possible to distinguish the affected shares from all of the other ordinary shares resulting in their identity being lost. This meant that it was no longer possible to identify the invalidly issued shares or their holders. Accordingly, it was not possible to remove these invalidly issued shares from our members' register. Under the South African Companies Act, 1973 (as amended), the High Court of South Africa is permitted to validate an invalid share issuance. During a shareholders' meeting in 2002, our shareholders, by special resolution, resolved to ratify the share issuance. We subsequently made an application to the High Court of South Africa to validate the invalid issuance. This application was successful and the High Court validated the issuance in July 2002.


74
   their claims against the companies in the Rawas group in exchange for those shares. In July 2003, DRDGOLD Limited, Australasia (Pty) Limited  and DRD Australasia Aps instituted action in the High Court of South Africa, against Messrs. R.A.R. Kebble, M. Prinsloo, J. Stratton and H. C. Buitendag and JCI Limited. The following claims are being pursued:
     
  Fields Limited, CAM Australia, (Pty) Limited, Weston Investments (Pty) Limited, CAM Jersey Limited, and JCI (Isle of Man) Limited for:
       R4.7 million (0.8 million) being costs incurred to validate the shares invalidly issued.
   allocation of a trial date which has not yet been set by the High Court of South Africa.
  Liquidation of Buffelsfontein
  earthquake damaged its No. 5 Shaft. Buffelsfontein had up until the date of provisional liquidation, maintained the underground water levels in the area by pumping water from underground to surface at three of its own shafts, as well as the Margaret Shaft of the neighboring Stilfontein Gold Mines Limited, or Stilfontein. The latter arrangement occurred in terms of an agreement entered into in 1992 between Stilfontein and Hartebeestfontein Gold Mines Limited, or Hartebeestfontein. Hartebeestfontein became a wholly-owned subsidiary of Buffelsfontein when Buffelsfontein subsequently acquired Hartebeestfontein.
  for an order to compel us to continue with the pumping operations after it was announced that Buffelsfontein had been placed into provisional liquidation. Relief was also sought against the relevant government departments to either assume responsibility for, or contribute to the pumping of underground water. These proceedings were postponed after the DWAF issued various directives under Section 19 of the Water Affairs Act against us, the provisional liquidators of Buffelsfontein, Harmony Gold, AngloGold Ashanti and Stilfontein to continue with pumping operations and to contribute to pumping costs in equal shares. A total of three directives have been issued, the last of which expired on October 21, 2005.
  conditions and  approval by the High Court of South Africa. These conditions included indemnifying us against any liabilities or obligations that could arise relating to environmental rehabilitation and the management and pumping of underground water. The proposed scheme of arrangement was conditional upon DWAF agreeing to substitute us with S&J to the extent that DWAF envisaged imposing further responsibility on us. On October 21, 2005, the scheme of arrangement for the acquisition of Buffelsfontein proposed by S&J and accepted by the majority of Buffelsfontein creditors, including us, was approved and sanctioned by the High Court of South Africa. Buffelsfontein applied to the High Court for the lifting of its provisional liquidation which was granted on November 1, 2005.
  approximately R8.2 million ($1.3 million).


75
 Other Proceedings
  these irregular transactions through legal claims.
    On June 12, 2002, DRD Australasia Aps and DRD Australia Pty Limited instituted proceedings against Mr. J. Stratton in the Supreme Court of Western Australia for payment of A$3.3 million ($1.9 million) plus interest in respect of dishonestly assisting Mr. C. Mostert in making payments referred to below and receiving part of the proceeds of these wrongful actions.
   On May 3, 2003, DRD Australasia Aps instituted proceedings against Mr. C. Mostert, Newshore Nominees (Pty) Limited and Mr. R. Bryer in the Supreme Court of Western Australia for payment of A$378,000 ($238,560) in respect of undue payments made to Newshore Nominees (Pty) Limited.
   On June 7, 2002, we instituted action against Mr. C. Mostert, Mr. J. Stratton,  Advent Investors (Pty)  Limited, Leadenhall Australia Limited, Noble Investments (Pty) Limited and Mr. T. Lebbon for unauthorized and undue payment of A$5.9 million ($3.4 million) in connection with the purchase of 11,150,000 shares, of Continental Goldfields Limited, a publicly traded company in Australia.
   In March 21, 2003, DRD Australasia Aps and DRD Australia (Pty) Limited instituted action against Mr. C. Mostert in relation to the over payment to Goldspark Limited of A$260,000 ($0.2 million) pursuant to an agreement for the purchase of 7,140,000 shares in Dome from Goldspark Limited as well as an undue and unauthorized payment to Transit Securities Inc of A$2.0 million ($1.2 million).
 
  Australia seeking to enforce a contract under which Dome agreed to pay, and we agreed to guarantee, a payment of $475,000 to Mr. M. Silver upon his retirement from the board of directors of Dome. Mr. M. Silver retired from Dome's board of directors in May 2000. The contract was also entered into in May 2000. However, we believe that this contract is not enforceable as it was not authorized by our directors or shareholders nor was it authorized by Dome's directors or shareholders. Therefore, we and Dome have not made any payment to Mr. M. Silver. We believe that this action is without merit and will continue to vigorously defend against it. The trial on the matter was heard on April 4 and 15, 2005 and September 12 to 14, 2005. At this stage it is not certain when judgment will be delivered.
  our executive chairman, Mr. M.M. Wellesley-Wood and Associated Intelligence Network (Pty) Limited, or AIN. AIN is a private investigator firm. Their claim is based on allegations that we hired AIN to invade their privacy by obtaining personal information about them and to cause them embarrassment and commercial harm. They seek compensation for damages suffered as a result of these alleged actions in an amount of R1.0 million ($0.2 million) each from us, Mr. M.M. Wellesley-Wood and AIN jointly and severally. In addition, they seek punitive damages in a total amount of R10 million ($1.6 million) from us and AIN jointly and severally. The punitive damages claim is unique under South African law. Initial hearings have taken place to decide a preliminary point raised by us that no such claim exists in South African law. The court has ruled against us on a technicality, making a ruling to the effect that the trial court will hear and adjudicate this issue. We will continue to defend against these claims. We are currently awaiting the allocation of a trial date.
  payment of R3.2 million ($0.5 million) plus interest. This amount represents a sum paid to Mr. R.A.R. Kebble by us during the period beginning in September 1999, and ending in April 2000, under a restraint of trade agreement entered into between us and Mr. R.A.R. Kebble. We believe that Mr. R.A.R. Kebble has repudiated and/or materially breached the provisions of this agreement. We have, accordingly, cancelled the agreement and we seek restitution of the amounts paid.  Mr. R.A.R. Kebble has lodged a counterclaim, claiming cancellation of an agreement providing for the payment of retirement benefits ($0.3 million), and challenging the cancellation of share-options that he held at the time of his resignation from the our board. Both these claims are being defended.


76
   of R21.6 million ($3.4 million) plus interest for option fees on shares that we held in Randgold & Exploration Limited, and in respect of which we extended an option to purchase to JCI Limited and CAM Limited against payment of an agreed option fee, plus a further claim for the reimbursement of costs, totaling R3.0 million ($0.5 million) which we had incurred on behalf of the defendants in the attempted corporate reconstruction of Western Areas  Limited and Randfontein Estates Gold Mine  Limited. The matter was heard on August 30, 2004. At this date partial settlement of certain small claims related to the larger JCI Limited and CAM Limited claim, to the value of R2.4 million ($0.4 million), was awarded to us by the High Court of Johannesburg. On October 21, 2004,  the High Court of Johannesburg ordered JCI Limited and CAM Limited to pay us an amount of R35.7 million ($5.5 million), plus interest and costs, including the costs of two of our legal counsel. JCI Limited’s and CAM Limited’s counterclaim to recover the earlier part-payment was also dismissed with costs. JCI Limited and CAM Limited made an application to the High Court of Johannesburg for leave to appeal, which was rejected. In fiscal 2005, we received full payment of this claim.
  complaint with the South African Competition Commission against Mittal Steel (previously Iscor), a South African steel producer. The complaint alleges that Mittal is abusing its dominant position by charging excessive prices for its local flat steel products and providing inducements for steel purchasers to refrain from importing competing steel products. The Competition Commission dismissed our claim, and the matter has since been referred to the Competition Tribunal, who has the authority to overrule the determination of the commission. Evidence by a number of witnesses was adduced before the Competition Tribunal during March and April 2006 and the matter was set down for November 29 and 30, 2006, for argument. At the Tribunal all parties presented their arguments and the Tribunal will reserve judgment to be delivered on a later date.
  directors for relief under the MPRD Act, by the Legal Resources Centre on behalf of the residents of two communities, Davidsonville and Kagiso, who reside adjacent to tailings deposition sites of the now dormant Durban Deep mine, and at West Wits mine, respectively. Whilst no financial compensation is sought, the communities are seeking orders for the revision of the EMPs of both sites, and for the sites to be rehabilitated and closed in accordance with the standards of the MPRD Act. Whilst we are challenging the sustainability of the legal basis on which the claims have been brought, as well the extent of the relief sought we have:
   In respect of the Davidsonville action, accelerated certain rehabilitation measures which would effectively address dust issues; and
  In respect of Kagiso, engaged the new owners of deposition sites, Mogale who recognize these tailings as an inferred resource, in discussion to and in collaboration with us, implement interim dust suppression measures pending Mogale’s initiatives to obtain prospecting and mining permits for these sites.
 We concluded an agreement with M5 on July 21, 2005, pursuant to which M5, against payment of a non-refundable fee of R1.5 million ($0.2 million), was granted an option to acquire Durban Deep’s mine village for R15.0 million ($2.2 million). On November 18, 2005, M5 exercised the option and provided a guarantee for payment. Prior to the registration of the transfer occurring, we were notified by Rand Leases Properties Limited (formerly JCI Properties Limited) of an alleged pre-emptive right in respect of the property in terms of an agreement dated December 1996,  pursuant to which the property  should be sold to them on similar terms. We have since repudiated our agreement with M5 and have notified Rand Leases Properties Limited that we do not intend offering the property to them. Both parties have indicated to us their intentions to institute legal proceedings for the sale and transfer of the property. To date we have received no service of legal process related to this matter
 .
   ITEM 4A. UNRESOLVED STAFF COMMENTS
 Not applicable.


77
 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
   that have affected the Company's financial condition and results of operations for the historical period covered by the financial statements and management's assessment of factors and trends which are anticipated to have a material effect on the Company's financial condition and results in future periods. This section is provided as a supplement to, and should be read in conjunction with, our audited financial statements and the other financial information contained elsewhere in this Annual Report. Our financial statements have been prepared in accordance with US GAAP. Our discussion contains forward looking information based on current expectations that involve risks and uncertainties, such as our plans, objectives and intentions. Our actual results may differ from those indicated in such forward looking statements.
 
 The Operating and Financial Review and Prospects include the following sections:
     Business overview
   Key drivers of our operating results and principal factors affecting our operating results, a general description of the principal uncertainties and variables facing our business and the primary factors that have a significant impact on our operating performance.
   Recent acquisitions and dispositions, a description of the recent acquisitions and other transactions that have impacted, or will impact, our performance.
   Key financial and operating indicators, a presentation of the key financial measures we use to track our operating performance.
   Application of critical accounting policies, a discussion of accounting policies that require critical judgments and estimates.
   Operating results, an analysis of our consolidated results of operations during the three fiscal years presented in our financial statements. The analysis is presented both on a consolidated basis, and by geographic segment.
   Liquidity and capital resources, an analysis of our cash flows, borrowings and our anticipated funding requirements and sources.


78
 5A. OPERATING RESULTS
 Business overview
  processing and smelting. We have operations comprising underground and open-pit mining and surface retreatment operations, including the requisite infrastructure and metallurgical processing plants. Our operations are located in South Africa, Papua New Guinea and Fiji. We divide our worldwide operations into two geographic regions, based on revenue generated from the location of the seller, as follows:
   South Africa comprising the deep-level Blyvoor and ERPM operations, in addition to the Crown surface retreatment operation.
  Australasia comprising Tolukuma, a 20% interest in the unincorporated Porgera Joint Venture, or Porgera, and Vatukoula.
 In fiscal 2006, the South African Operations accounted for 60% of our attributable production, 76% of our Ore Reserves, a
 $16.3 million net loss after tax and 28% of our total assets. The Australasian Operations accounted for 40% of our production, 24% of our Ore Reserves, a net loss after tax of $10.3 million and 72% of our total assets.
 Exploration activities are undertaken in South Africa, Papua New Guinea, Fiji and Australia. From 1895 to 1997, our principal mining operation was the Durban Deep mine. Up to 1999, our general growth strategy was
 to acquire existing under-performing mines in South Africa at relatively low acquisition costs, and turn them into profitable business units by introducing low-cost mining methods and reducing costs through employing our experience in managing marginal gold mines to more efficiently utilize existing infrastructures. Since 1999 our focus has been to expand our operations outside of South Africa by acquiring lower cash cost and higher margin mines than those in South Africa, through the acquisition of Tolukuma, our 20% interest in Porgera and our 78.9% interest in Emperor (Vatukoula).
  in an improvement in our results for fiscal 2006 in comparison to fiscals 2005 and 2004. In fiscal 2006, there was a notable increase in our mining assets, following the acquisition of Crown, ERPM and Emperor, as well as $41.0 million spent on capital expenditure during the year. Our working capital deficit in fiscal 2006 has, however, increased primarily as a result of the classification of the Senior Convertible Notes as current liabilities.
 As at June 30, 2006, we had Ore Reserves of approximately 8.8 million ounces, compared to 5.6 million ounces as at
 June 30, 2005.  Key drivers of our operating results and principal factors affecting our operating results
          General economic factors, such as exchange rate fluctuations and inflation, and factors affecting mining operations in the developing countries in which we operate.


79
 Gold price
   related to the price of gold which can fluctuate widely and is affected by numerous factors beyond our control, including industrial and jewellery demand, expectations with respect to the rate of inflation, the strength of the Dollar (the currency in which the price of gold is generally quoted) and of other currencies, interest rates, actual or expected gold sales by central banks, forward sales by producers, global or regional political or economic events, and production and cost levels in major gold-producing regions such as South Africa. In addition, the price of gold sometimes is subject to rapid short-term changes because of speculative activities. The demand for and supply of gold may affect gold prices, but not necessarily in the same manner that supply and demand affect the prices of other commodities. The supply of gold consists of a combination of new production from mining and existing  stocks of bullion and fabricated gold held by governments, public and private financial institutions, industrial organizations and private individuals. As a general rule we sell the gold produced at market prices to obtain the maximum benefit from prevailing gold prices.
 The following table indicates the movement in the Dollar gold spot price for the 2006, 2005 and 2004 fiscal years:
  2006 fiscal year
 2005 fiscal year
 % increase
                       2005 fiscal year
 2004 fiscal year
 % increase
                     
 2004 fiscal year
 2003 fiscal year
 % increase
                       sourced from our South African Operations and Australasian Operations, therefore during those three fiscal years, the impact of the relevant exchange rates  has  been significant on our operating results. The average gold price in Rand and Australian Dollars has shown the following movements:
   Rand gold price (based on average prices for the year) has moved from R2,684 per ounce, in fiscal 2004, to R2,619 per ounce in fiscal 2005 (a 2% decrease from fiscal 2004) and R3,381 per ounce in fiscal 2006 (a 29% increase from fiscal 2005).
  Australian gold price (based on average prices for the year) has increased from A$545 per ounce, in fiscal 2004, to A$562 per ounce in fiscal 2005 (a 3% increase from fiscal 2004) and A$705 per ounce in fiscal 2006 (25% increase from fiscal 2005).


80
 Gold production and production costs
  569,036 ounces in fiscal 2005, and 588,088 ounces in fiscal 2004. The North West Operations (our discontinued operation) recorded production of 199,850 in fiscal 2005 and 341,861 in fiscal 2004.
  include labor, contractor services, stores, electricity and other related costs, incurred in the production of gold. Labor is the largest component of production costs, constituting 35% of production costs for fiscal 2006, as the majority of our mining operations are deep level underground mines which are more labor intensive.
  decreased from 329,972 ounces in fiscal 2004, produced from 10.6 million tonnes milled at an average yield of 1.97g/t, to 251,902 ounces in fiscal 2005, produced from 9.8 million tonnes milled at an average yield of 0.80g/t, and then increased to 315,976 ounces produced from 12.3 million tonnes milled at an average yield of 0.80g/t in fiscal 2006. During fiscal 2006, the average Rand gold price strengthened by 28%, in comparison to a declining average Rand gold price recorded over the preceding two fiscal years. This created an opportunity to mine ore grades that were previously seen to be unprofitable. During fiscal 2005, our South African Operations increasingly focused on mining higher grade ore panels, to achieve an increased yield from the tonnages milled, as a result of the declining Rand gold price experienced at that time. Blyvoor produced 159,693 ounces from 4.3 million tonnes milled at an average yield of 1.15g/t in fiscal 2006, in comparison with 161,878 ounces from 3.5 million tonnes milled at an average yield of 1.43g/t in fiscal 2005 and 233,094 ounces, produced from 3.1 million tonnes milled at an average yield of 2.33g/t in fiscal 2004. The decrease in the grade noted in fiscals 2006 and 2005 was due to a decision taken to move out of seismically active areas, resulting in lower grades being mined. Crown produced 75,959 attributable ounces from 6.2 million attributable tonnes milled at an average yield of 0.38g/t in fiscal 2006, in comparison with 45,424 attributable ounces from 3.6 million attributable tonnes milled at an average yield of 0.40g/t in fiscal 2005 and 51,982 attributable ounces, produced from 4.1 million attributable tonnes milled at an average yield of 0.40g/t in fiscal 2004. ERPM produced 80,324 attributable ounces from 1.8 million attributable tonnes milled at an average yield of 1.37g/t in fiscal 2006, in comparison with 44,600 attributable ounces from 0.9 million attributable tonnes milled at an average yield of 1.55g/t in fiscal 2005 and 44,896 attributable ounces, produced from 0.3 million attributable tonnes milled at an average yield of 4.41g/t in fiscal 2004. The fiscal 2006 production at Crown and ERPM represents 100% of the production from December 1, 2005: Prior to this date we owned 40% of Crown and ERPM.
  258,116 ounces in fiscal 2004, produced from 1.1 million tonnes milled at an average yield of 7.06g/t, to 317,134 ounces, produced from 1.6 million tonnes milled at an average yield of 6.07g/t in fiscal 2005, and then decreased to 211,425 ounces, produced from 1.5 million tonnes milled at an average yield of 4.53g/t in fiscal 2006. Our 20% interest in Porgera contributed 128,238 attributable ounces in fiscal 2006, produced from 1.1 million attributable tonnes milled at an average yield of 3.64g/t, in comparison with 195,394 attributable ounces, produced from 1.2 million attributable tonnes milled at an average yield of 5.06g/t in fiscal 2005 and 147,475 attributable ounces, produced from 0.9 million attributable tonnes milled at an average yield of 4.87g/t in fiscal 2004 (acquired October 14, 2003). The decrease in fiscal 2006 was due to structural challenges experienced in the west wall cutback, resulting in delayed production. Tolukuma has performed poorer in fiscal 2006, producing 54,790 ounces from 0.2 million tonnes milled at an average yield of 8.83g/t, in comparison with 76,314 ounces from 0.2 million tonnes milled at an average yield of 11.25 g/t in fiscal 2005 and 85,715 ounces from  0.2 million tonnes milled at an average yield of 13.60g/t in fiscal 2004. This was due to poor weather conditions preventing continuous freight movement to the mine site by helicopter, ultimately resulting in several plant shutdowns and underground flooding caused by heavy rainfall during fiscal 2006. Vatukoula also performed poorer in fiscal 2006, producing 28,397 attributable ounces from 0.2 million attributable tonnes milled at an average yield of 5.49g/t, in comparison with 45,426 attributable ounces from 0.2 million attributable tones milled at an average yield of 6.63 g/t in fiscal 2005 and 24,926 attributable ounces from 0.1 million attributable tonnes milled at an average yield of 6.83g/t in fiscal 2004. Implementation of Vatukoula’s new  Accelerated Development and Training Program, or ACDTP, involved a temporary shutdown of the mine on April 20, 2006, and a gradual start-up early in June 2006. Consequently, gold production for the fourth quarter was 88% lower than that of the comparative period in fiscal 2005. The ACDTP has been designed to introduce flexibility to production areas, improve infrastructure and increase the productivity of the workforce. The plan includes development of higher grade areas at Philip Shaft and upgrading of associated shaft infrastructure. In addition, the entire workforce will undergo comprehensive assessment, re-skilling and retraining. The fiscal 2006 production at Vatukoula represents 100% of the production from April 6, 2006; prior to this we owned 39.52% (2005: 45.33% and 2004: 19.78%).


81
    1
  2
  Operations that produced at a cash cost of $482 per ounce and a total cost of $579 per ounce in fiscal 2006. General economic factors
  exposed to a number of factors, which could impact on our profitability, resulting from exchange rate fluctuations, inflation and other risks relating to these specific countries. In conducting mining operations, we recognize the inherent risks and uncertainties of the industry, and the wasting nature of the assets. Effect of exchange rate fluctuations
  approximately 39% of our total revenues were generated from our Australasian Operations. Most of our production costs, therefore, are denominated in local currencies, such as the South African Rand, the Papua New Guinean Kina and the Fiji Dollar. In fiscal 2006, we derived 100% of our revenues in Dollars and incurred approximately 80% of our production costs in these local currencies. Fiscal 2006 was marked by more consistency in the Dollar, leading to a weakening in the Rand-Dollar exchange rate, which accounted for a $16 per ounce, or 3%, decrease in cash costs per ounce for our South African Operations from fiscal 2005 to fiscal 2006. This follows the trend noted in fiscal 2005 which was marked by a stabilization of the prior year trends of the weakening of the Dollar against the Rand. However, in fiscal 2005, this currency movement still accounted for approximately $4 per ounce, or 6%, of the total increase in cash costs per ounce for our South African Operations from fiscal 2004. As the price of gold is denominated in Dollars and we realize our revenues in Dollars, the depreciation of the Dollar against these local currencies reduces our profitability, whereas the appreciation of the Dollar against these local currencies increases our profitability. Based upon average rates during the respective years, the Rand weakened by 3% against the Dollar in fiscal 2006 compared to fiscal 2005 and strengthened 10% from fiscal 2004 to fiscal 2005. This has led to an effective increase of 4% in the average Rand gold price in comparison to June 30, 2005 and a decrease of 10% in fiscal 2005, compared to fiscal 2004.The Kina, based on average rates in the respective fiscal years, weakened by 7% against the Dollar in fiscal 2006 compared to fiscal 2005 and strengthened by 4% in fiscal 2005 compared to fiscal 2004. The Australian Dollar, based on average rates in the respective fiscal years, strengthened by  1% against the Dollar in fiscal 2006 compared to fiscal 2005 and weakened by 5% in fiscal 2005 compared to fiscal 2004, respectively.
 As a  predominantly unhedged gold producer we do not enter into forward gold sales contracts to reduce our exposure to
 market fluctuations in the Dollar gold price or the exchange rate movements of the Rand, Kina, Fiji Dollar and Australian Dollar. If revenue from gold sales falls for a substantial period below our cost of production at our operations, we could determine that it is not economically feasible to continue commercial production at any or all of our operations or to continue the development of some or all of our projects. Our weighted average total costs per ounce for the continuing operations of our subsidiaries, as well as Porgera, was $525 per ounce of gold produced in fiscal 2006, $449 per ounce in fiscal 2005 and $418 per ounce in fiscal 2004. The average gold price received, from continuing operations, was $531 per ounce in fiscal 2006, $423 per ounce in fiscal 2005 and $393 per ounce in fiscal 2004.
 In addition, to fund local operations and comply with South African exchange controls, we hold funds in local currencies,
 such as the Rand, Kina, Fiji Dollar and Australian Dollar. The Dollar value of these currencies may be affected by exchange rate fluctuations and, as a result, our cash and cash equivalents reported in Dollars could change.At June 30, 2006, approximately 52% of our cash and cash equivalents (including restricted cash), being $35.3 million, were held in such currencies, compared with 64%, or $14.8million, at June 30, 2005, and 66%, or $14.8 million, at June 30, 2004.
  
 1
  mines and to monitor performance of our mining operations. For a reconciliation to production costs see Item 5A.: “Operating Results.”
 2
  the mines and to monitor performance of our mining operations. For a reconciliation to production costs see Item 5A.: “Operating Results.”


82
 Effect of inflation
  which our gold is sold, if there is a significant increase in inflation in South Africa, Papua New Guinea and Fiji, without a concurrent devaluation of the local currency or an increase in the price of gold, our costs will increase, negatively affecting our operating results.
 The movement in the Rand/Dollar exchange rate, based upon average rates during the periods presented, and the local annual
 inflation rate, as measured by the South African Consumer Price Index, or CPIX, are set out in the table below:
 Year ended June 30,
 2006
 (%)
 2005
 (%)
 2004
 (%)
         Net effect
      comparison to historical trends. However, historically the effect of the movements in the exchange rate has exacerbated the effect on profitability experienced as a result of the movement in the CPIX inflation rate, as illustrated above.
 The movement in the Kina/Dollar exchange rate, based upon average rates during the respective years, and the local annual
 inflation rate, as measured by the Papua New Guinea CPIX, are set out in the table below:
 Year ended June 30,
 2006
 (%)
 2005
 (%)
 2004
 (%)
         Net effect
      historically the strengthening of the Kina against the Dollar has exacerbated the effect on profitability experienced as a result of the movement in the CPIX inflation rate.
 The movement in the Fiji Dollar/Dollar exchange rate, based upon average rates during the respective years, and the local
 annual inflation rate, as measured by the Fiji Island Bureau of Statistics, are set out in the table below:
 Year ended June 30,
 2006
 (%)
 2005
 (%)
 2004
 (%)
         Net effect
        South African political, economic and other factors
  economic, fiscal, monetary and political factors that affect South African companies generally. South African companies are subject to exchange control regulations. Governmental officials have from time to time stated their intentions to lift South Africa’s exchange control regulations when economic conditions permit such action. Over the last few years, certain aspects of exchange controls for companies and individuals have been incrementally relaxed. It is, however, impossible to predict when the South African Government will remove exchange controls in their entirety. South African companies remain subject to restrictions on their ability to export and deploy capital outside of the Southern African Common Monetary Area, unless dispensation has been granted by the South African Reserve Bank. For a detailed discussion of exchange controls, see Item 10D.: “Exchange controls.”


83
  rights and statutory mining rights in South Africa could be acquired through the common law or by statute. Now, all mineral rights have been placed under the custodianship of the South African government under the provisions of the MPRD Act, and old order proprietary rights need to be converted to new order rights of use within certain prescribed periods. We have submitted certain applications in this regard. This process is described more fully under Item 4B.: “Business Overview – Governmental regulations and their effects on our business - South Africa – Common Law Mineral Rights and Statutory Mining Rights.” Papua New Guinea and Fiji political, economic and other factors
 Our operations based in Papua New Guinea and Fiji are also subject to political and economical uncertainties, including the
 risk of civil rebellion, expropriation, nationalization, renegotiation of existing contracts, mining licenses and permits, changes in laws or taxation policies, currency exchange restrictions and international monetary fluctuations.
 To enable cash surpluses from Papua New Guinea companies to be applied to entities in Australia or Fiji, the exchange
 control and taxation regimes of Papua New Guinea must be complied with.  If a Papua New Guinea operating company is to lend money to, borrow money from or pledge security to, for or on behalf of an Australian or Fiji entity an approval will be required from the Papua New Guinea Central Bank. Whether that approval is granted depends on the precise nature and terms of the proposed transaction. The Papua New Guinea Central Bank does not provide prospective rulings. Before any funds can be remitted out of Papua New Guinea over a limit of Kina 200,000 in any one calendar year a tax clearance must be obtained from the Internal Revenue Commission of Papua New Guinea. This applies to both the remittance of declared dividends and the remittance of advanced funds. If the Papua New Guinea operating company has outstanding filings or taxes due, the approval will be withheld until the taxation affairs are put in order. There is a dividend withholding tax on funds  remitted out of Papua New Guinea as dividends and if funds are borrowed from overseas a withholding tax on interest. There are certain special arrangements applicable to borrowings by mining companies and if structured appropriately the Papua New Guinea operating entities might be able to avail themselves of certain exemptions from interest withholding tax. The Papua New Guinea requirements will be additional to any requirements of Fiji or Australian authorities on the other end of any intercompany transaction.
 Due to a change in Fijian tax legislation, a withholding tax is now payable on interest on intercompany loans.
 Recent acquisitions and dispositions
  Accordingly, we have been, and expect to continue to be, involved in a number of acquisitions and dispositions as part of this global trend and to identify value-adding business combinations and acquisition opportunities. To ensure that our Ore Reserve base is maintained, or increased, we are currently focusing on acquiring low cost, high margin mines in other global regions.
 On November 16, 2005, we concluded a sale and purchase agreement with Emperor, in terms of which Emperor acquired our
 wholly owned subsidiary, DRD (Isle of Man), which in turn holds our Papua New Guinea assets, comprising a 20% interest in the Porgera Joint Venture, a 100% interest in Tolukuma and all of the exploration tenements in Papua New Guinea. Implementation of the transaction required the restructuring of our offshore operations, whereby DRD (Isle of Man) transferred the following material assets to our new wholly owned subsidiary, DRD (Offshore) on January 1, 2006:
      our rights and obligations of a $7.6 million (A$10.0 million) convertible loan facility, which DRD (Isle of Man) advanced to Emperor, in terms of which we can elect to convert such debt facility into additional Emperor shares at $0.23 (A$0.30) per Emperor share.
 On March 31, 2006, we sold DRD (Isle of Man) to DRD (Offshore) and on April 6, 2006, DRD (Offshore) sold DRD (Isle of
 Man) to Emperor. The purchase consideration of $237.3 million was subject to certain completion adjustments to reflect the change in the capital position of both Emperor and DRD (Isle of Man) between October 1, 2005, which was the effective date, and completion of the transaction on April 6, 2006. The purchase consideration was settled by the issue of 751,879,699 new Emperor shares at $0.266 per share (valued at $200.0 million) to DRD (Offshore), a cash consideration of $32.3 million and a short-term loan provided by DRD (Offshore) to the value of $5.0 million.


84
   Man) to Emperor was negotiated in conjunction with the Company obtaining control of Emperor, therefore the sale and purchase transactions could not be separated and are accounted for as one transaction. The transaction has been accounted for by the Company as a partial sale of DRD (Isle of Man) and a partial acquisition of Emperor. Accordingly a profit has been recognized by the Company on the portion of DRD (Isle of Man) sold to minority shareholders. The Company has revalued the assets and liabilities of Emperor to the extent acquired and has revalued the assets and liabilities of DRD (Isle of Man)  to the extent that DRD (Isle of Man)  was acquired by the minority shareholders at the date of acquisition. The purchase consideration is the fair value of the assets transferred to Emperor and the fair value of the additional interest acquired in Emperor.
 On December 5, 2006, after an extensive three-month review of Vatukoula, we determined that continued mining operations
 at Vatukoula  were no longer economically viable and  that the mine would  therefore  cease production.  Pending completion  of a strategic review to optimize the value of Vatukoula and other Fijian land holdings, the mine  has been  placed on a care and maintenance program.
    the acquisition by Khumo Gold of a 15% stake in our South African Operations, with the intention to bring us into full compliance with the 10-year, 26% black economic empowerment equity requirement as stipulated in the Mining Charter. On October 27, 2005, our board of directors approved the black economic empowerment transaction.  In addition, on July 20, 2005, we acquired, from the IDC all of its  Crown and ERPM debt through the issue of 4,451,219 shares, which at the date of issue represented $4.5 million (R28.9 million).
  which includes ERPM, Crown and Blyvoor. We have retained an 85% interest in DRDGOLD SA. In the second step, Khumo Gold has been granted an option, exercisable over the next three years, to acquire a further 11% interest in DRDGOLD SA for the payment consideration of $1.4 million (R9.3 million). This further equity tranche will include a 6% stake to be placed in a new, proposed Employee Trust. The transaction was financed by the  issuance of $4.8 million (R31.8 million) new Khumo Gold preference shares, to which we subscribed.  The proceeds from these preference shares were used by Khumo Gold to settle an existing loan to KBH of  $1.2 million (R7.9 million), subscribe for $0.6 million (R4.1 million) new preference shares in ERPM, subscribe for $0.4 million (R2.7 million) new preference shares in Crown, subscribe for $0.6 million (R3.9 million) new preference shares in Blyvoor and subscribe for an initial 15% of the issued ordinary shares in DRDGOLD SA for $2.0 million (R13.2 million).
    the parties in October 2005. Khumo Gold acquired from  us a further 50,000 ordinary  shares in DRDGOLD SA for $0.6 million (R4.3 million). After exercising the option, Khumo Gold's shareholding in DRDGOLD SA increased by 5% to 20%.  In addition, Khumo Gold, as promoter for an employee trust, exercised the option for an employee trust to acquire from us 60,000 ordinary shares in DRDGOLD SA for a consideration of $0.7 million (R5.1 million). After exercising the option, the trust's shareholding in DRDGOLD SA is 6%.  We will finance the transaction, on condition that the terms of the finance are determined by independent experts to be fair and reasonable to our shareholders. It is proposed that we will subscribe for preference shares in Khumo Gold and extend a loan to the trustees of the trust.
    $0.2 million (R1.5 million), was granted an option to acquire the Durban Deep mine village for $2.2 million (R15.0 million).  On November 18, 2005, M5 exercised the option and provided a guarantee for payment. Prior to registration of transfer occurring, we were notified by Rand Leases Properties Limited (formerly JCI Properties Limited) of an alleged pre-emptive right in respect of the property in terms of an agreement dated December 1996, and demanding that the property be sold to them on similar terms. We have since repudiated the agreement of sale with M5, but have also notified Rand Leases Properties Limited that we do not intend offering the property to them. Both parties have indicated that they intend to institute legal proceedings for the sale and transfer of the property and we await service of legal process
 .


85
 Key financial and operating indicators
 We consider the key performance measures for the growth of our business and its profitability to be gold revenue, production,
 production costs, cash costs per ounce and total costs per ounce, capital expenditure and Ore Reserves. The following table presents the key performance measurement data for the past three fiscal years:
  Operating data Continuing operations
 1
 
 
 Year ended June 30,
  2006
 2005
 2004
 
                2
      3
             Discontinued operation
 4
 
 
 Year ended June 30,
   2005
 2004
           ..
     2
      3
          
  
 1
  associate Crown, which owned ERPM, and our 39.52% (2005: 45.33% and 2004: 19.78%) investment in Emperor, prior to these entities becoming subsidiaries. The operating data includes our 20% attributable interest in the proportionately consolidated Porgera Joint Venture.
 2
  mines and to monitor performance of our mining operations. For a reconciliation to production costs see Item 5A.: “Operating Results.”
 3
  the mines and to monitor performance of our mining operations. For a reconciliation to production costs see Item 5A.: “Operating Results.”
 4


86
 Revenue
   
 Year ended June 30,
 Continuing operations
 2006
 $'000
 2005
 $'000
 2004
 $'000
          1
      1
     
 Total South African Operations
 148,785
 68,370
 90,066
      2
 
        3
     
 Total Australasian Operations
 96,516  115,239
 93,188
 
 
 
 
 
 Total
 245,301  183,609  183,254
     Discontinued operation
 
 
 
  
 
 
  4
  -
 81,538  130,036
 
  average gold price received by us increasing to $531 per ounce, compared to $423 per ounce in fiscal 2005 and production increasing from 433,586 ounces in fiscal 2005 to 462,058 ounces in fiscal 2006. The effect on revenue of the increased gold price was offset marginally by the weakening of local currencies against the Dollar and widespread production problems, especially in the Australasian Operations.
  $183.6 million, with the average gold price received by us increasing to $423 per ounce, compared to $393 per ounce in fiscal 2004. The effect on revenue of the increased gold price was offset by the decrease in production of 32,698 ounces from fiscal 2004. On March 22, 2005 we announced the provisional liquidation of the North West Operations. Revenues from the North West Operations for the period ended March 22, 2005 were $81.5 million compared to $130.0 million in fiscal 2004. These operations have been treated as a discontinued operation.
 
 1
   2
   3
   4
  information as a discontinued operation and all other operations as continuing operations. We have adjusted the results for prior reporting periods accordingly.


87
 Gold production
  The following table analyzes the attributable production per operation:
  Production in ounces
  Year ended June 30,
 Continuing operations
 2006
 2005
 2004
                  1
      1
                 Total South African Operations
 315,976
 251,902
 329,972
      2
      
  3
     Total Australasian Operations
 211,425 317,134 258,116
     Total attributable production
 527,401
 569,036
 588,088
  1 3
     Total production
 462,058
 433,586
 466,284
     Discontinued operation
 
         4
  -
 199,850
 341,861
            Attributable gold production from our continuing South African Operations increased by 25% from 251,902 ounces produced
 in fiscal 2005 to 315,976 ounces in fiscal 2006. This increase was mainly as a result of the restructuring of the South African Operations, which included the acquisition of 60% of Crown and ERPM on December 1, 2005. At Blyvoor an increasing level of seismicity was experienced in the high-grade No. 5 Shaft areas in the first half of fiscal 2006. Consequent concerns for employee safety prompted the development of a volume-driven mine plan involving less mining from the affected high-grade No. 5 Shaft areas and more mining from the lower-grade No. 6 Shaft areas. While rock dump material declined both in volume and grade as forecast, the slimes dam retreatment project at Blyvoor showed improvement both in terms of volume and grade, notwithstanding setbacks due to higher than average summer rainfall.
  
 1
   2
   3
   4
  information as a discontinued operation and all other operations as continuing  operations. We have adjusted the results for prior reporting periods accordingly.


88
  211,425 ounces in fiscal 2006, as a result of a decrease in production at all Australasian Operations. Remediation work following the failure of the west wall at Porgera in fiscal 2005, leading to reliance on low-grade, long-term stockpile material as the primary ore feed, together with damage to access infrastructure caused by heavy rainfall, power failures and a strike related to a change of management from Placer Dome to Barrick, had a negative impact on production at Porgera. At Tolukuma production was adversely affected by a lack of available face in the first half of fiscal 2006 and the consequent treatment of low-grade underground stockpiles, as well as production disruptions caused by underground flooding. At Vatukoula production for fiscal 2006 was adversely affected by an amalgam of factors including a lack of available face, shaft infrastructure problems, ageing underground equipment, inflows of hot water, high underground working temperatures and deteriorating ground conditions.
 For fiscal 2005, our total attributable gold production from continuing operations (including our attributable production from
  Attributable gold production from our continuing South African Operations decreased by 24% from 329,972 ounces
 produced in fiscal 2004 to 251,902 ounces in fiscal 2005. This was as a result of the poor recoveries at the Slimes Dam Project at Blyvoor and the restructuring, which impacted productivity, completed in the second quarter of fiscal 2005 at Blyvoor. At Crown the Knights plant’s absorption of tonnage from ERPM’s Cason surface retreatment operations was relatively smooth, however the Crown plant did not meet expectations largely due to a general decrease in grade, less reclamation site flexibility and pipeline failures.
 Attributable gold production at the Australasian Operations increased by 23% from 258,116 ounces in fiscal 2004 to 317,134
 ounces in fiscal 2005. This was as a result of improved production at Porgera in the first two quarters of fiscal 2005, reflecting higher grades and the installation of a secondary crusher. Vatukoula  faced operational problems during fiscal 2005,  ranging from halted production at the Philip Shaft, where a winder failed, lower than expected grades and delays in the supply of components needed to rebuild the heavy vehicles.
 The North West Operations were placed under provisional liquidation on March 22, 2005, following a series of events
  A more detailed review of gold production at each of our operations is provided under Item 4D.: “Property, Plant and


89
 Cash costs
 1
 and total costs
 2
 per ounce
 
  continuing operations increased to $458 per ounce of gold from $315 per ounce of gold in fiscal 2005. Total costs from our continuing operations increased to $536 per ounce of gold from $449 per ounce of gold in fiscal 2005.
 In fiscal 2006, the cash costs per ounce from our continuing South African Operations increased by 4%, from $464 per ounce
 to $482 per ounce, compared to fiscal 2005. Cash costs per ounce for the Australasian Operations increased by 86%, from $226 per ounce to $421 per ounce, compared to fiscal 2005. The marginal increase in cash costs per ounce at our South African Operations was mainly due to price increases in key consumables (labor, consumables and electricity) and a decrease in production at Blyvoor, partially offset by the relatively lower cash costs per ounce at Crown and ERPM. The increase in cash costs per ounce at our Australasian Operations was primarily  attributable to operational problems at Tolukuma, costs associated with the West Wall remediation at Porgera and a six-week shut down of operations in the fourth quarter of fiscal 2006 at Vatukoula.
 In fiscal 2005, the cash costs per ounce from our continuing South African Operations increased by 18%,  from $393 per
 ounce to $464 per ounce, compared to fiscal 2004. Cash costs per ounce from our Australasian Operations increased by 2%, from $221 per ounce to $226 per ounce, compared to fiscal 2004. The increase in cash costs per ounce at our South African Operations was mainly attributable to the strengthening of the Rand against the Dollar, price increases in key consumables, a decrease in production due to the poor recoveries at the Slimes Dam Project and the restructuring completed in the second quarter of fiscal 2005 at Blyvoor. The increase in cash costs per ounce at our Australasian Operations was due to less efficient mining and increased costs associated with consumables and services, especially the cost of fuel.
   Our total cost per ounce from continuing operations, increased from $418 per ounce in fiscal 2004 to $449 per ounce in fiscal
 2005. This increase was mainly due to employment termination costs of $4.2 million ($10 per ounce) at Blyvoor and our head office in South Africa in fiscal 2005, unrealized foreign exchange losses of $9.3 million ($15 per ounce) recorded in fiscal 2005, compared to unrealized foreign exchange gains of $10.7 million ($26 per ounce) recorded in fiscal 2004.
 
 1
  mines and to monitor performance of our mining operations. For a reconciliation to production costs see Item 5A.: “Operating Results.”
 2
  the mines and to monitor performance of our mining operations. For a reconciliation to production costs see Item 5A.: “Operating Results.”


90
 Reconciliation of cash costs per ounce, total costs and total costs per ounce
  depreciation, depletion and amortization, rehabilitation, employment termination costs, corporate administration costs, capital costs and exploration costs. Cash costs per ounce are calculated by dividing production costs by ounces of gold produced. Cash costs per ounce have been calculated on a consistent basis for all periods presented.
 Total production costs include cash costs of production, depreciation, depletion and amortization and the accretion of
 rehabilitation, reclamation and closure costs.
  finance charges and other operating and non-operating costs, but exclude taxation, minority interest, equity in loss from associates and the cumulative effect of accounting changes. These costs are excluded as the mines do not have control over these costs and they have little or no impact on the day-to-day operating performance of the mines. Total costs per ounce are calculated by dividing total costs by attributable ounces of gold produced. Total costs and total costs per ounce have been calculated on a consistent basis for all periods presented.
  considered by investors in isolation or as alternatives to production costs, net (loss)/profit applicable to common stockholders, (loss)/profit before tax and other items or any other measure of financial performance presented in accordance with US GAAP or as an indicator of our performance. While the Gold Institute has provided definitions for the calculation of cash costs, the calculation of cash costs per ounce, total costs and total costs per ounce may vary significantly among gold mining companies, and these definitions by themselves do not necessarily provide a basis for comparison with other gold mining companies. However, we believe that cash costs per ounce, total costs and total costs per ounce are useful indicators to investors and management of an individual mine's performance and of the performance of our operations as a whole as they provide:
            the period ending June 30, 2006, is presented below. In addition, we have also provided below details of the ounces of gold produced by each mine for each of those periods.


91
 For the year ended June 30, 2006(in $'000, except as otherwise noted)
  Blyvoor
 Crown
 1
 ERPM
 1
  Other
 2
 Total South
 African
 Operations
 Porgera
 3
 Tolukuma Vatukoula
 4
 Other
 2
 Total
 Australasian
 Operations
 Total
 Production costs
 5
      133,637
     77,922  211,559
 Plus:
   
     8,111
     16,665
 24,776
 Movement in rehabilitation provision,  reclamation and closure costs
  .......................
     255
     2,179
 2,434
 Total production costs
     142,003
     96,766  238,769
 Plus:
   -
 -
      153
     722
 875
      256
     (801)
 (545)
      4,240
   ( 16,548)  (12,308)
      10,440
     1,021
 11,461
      3
     -
 3
      1,954
     453
 2,407
    
 (5,388)
     (5,379)  (10,767)
      (16)
     (1,001)
 (1,017)
 Selling, administration and general  charges
  ............................................................
     6,770
   
 12,240
 19,010
 Total costs
     160,415
   
 87,473  247,888
  6
      276,971
    185,087  462,058
      482
     421
 458
      579
     473
 536
 
 1
   2
  3
  4
   5
  6
  (2005: 45.33% and 2004: 19.78%) investment in Emperor, prior to these entities becoming subsidiaries. The operating data includes our 20% attributable interest in the proportionately consolidated Porgera Joint Venture.


92
 For the year ended June 30, 2005(in $'000, except as otherwise noted)
 
 Continuing operations
 Discontinued
 operations
 
 Blyvoor
 Other
 1
 Total South
 African
 Operations
 Porgera
 2
 Tolukuma
 Other
 Total
 Australasian
 Operations
 Total  North West
 3
 Production costs
 4
    75,032
    61,488
 136,520
 100,695
 Plus:
 
  
 
   (57)
    13,854
 13,797
 971
 Movement in rehabilitation provision,  reclamation and closure costs
  ....................  (1,353)
  314
    2,423
 2,737
 1,023
 Total production costs
   75,289
    77,765
 153,054
 102,689
 Plus:
 
  
    4,201
    -
 4,201
 224
    (421)
    (1,296)
 (1,717)
 383
 ...
   2,093
    4,294
 6,387
 (320)
    10,534
    831
 11,365
 70
    664
    -
 664
 39,451
    5,906
    745
 6,651
 -
    (3,616)
    -
 (3,616)
 -
    (2)
    -
 (2)
 -
    -
    -
 -
 (18,105)
 Selling, administration and general  charges
  ........................................................
   6,955
    10,822
 17,777
 1,505
 Total costs
   101,603
    93,161
 194,764
 125,897
  5
    161,878
    271,708
 433,586
 199,850
    464
    226
 315
 504
    628
    343
 449
 630
 
 1
  2
  3
   4
  5


93
 For the year ended June 30, 2004(in $'000, except as otherwise noted)
 
 Continuing operations
 Discontinued
 operation
 
 Blyvoor
 Other
 1
 Total South
 African
 Operations
 Porgera
 2
  Tolukuma
 Other
 Total
 Australasian
 Operations
 Total
 North West
 Operations
 3
 Production costs
 4
 
  91,555
    51,471
 143,026
 134,465
 Plus:
  
   
    1,444
    24,531
 25,975
 4,160
 Movement in rehabilitation provision,  reclamation and closure costs
  .................
   858
    391
 1,249
 2,206
 Total production costs
 
  93,857
    76,393
 170,250
 140,831
 Plus:
  
   
    899
    -
 899
 7,064
    579
 
   (1,499)
 (920)
 (80)
  
  (23,453)
  
 
 11,475
 (11,978)
 (881)
    7,706
 
  
 44
 7,750
 162
    2,990
    -
 2,990
 1,276
    2,048
    400
 2,448
 -
    1,042
    -
 1,042
 124
    55
    -
 55
 -
 Selling, administration and general  charges
  .......................................................
   26,770
   
 (4,170)
 22,600
 2,344
 Total costs
  112,493
 
   82,643
 195,136
 150,840
  5
  
  233,094
    233,190
 466,284
 341,861
    393
 
   221
 307
 393
    483
 
   354
 418
 441
  
 
 1
  2
  3
   4
  5


94
 Capital expenditure
    in fiscal 2005, which represents a $19.7 million, or 92%, increase in capital expenditure on a Group level. At our continuing South African Operations, capital expenditure increased from $0.8 million in fiscal 2005 to $14.1 million in fiscal 2006, mainly due to $8.8 million spent on opening up and development related to implementation of the new mine plan at Blyvoor, infrastructural improvements of $1.6 million at ERPM and $2.0 million towards the installation of the new mills at the Knights plant at Crown. Capital expenditure in the Australasian Operations, increased from $20.5 million in fiscal 2005, to $26.9 million in fiscal 2006. Of this expenditure $17.2 million related to Porgera, as a result of capitalized deferred stripping costs and remediation work following the failure of the west wall in fiscal 2005. In addition, $11.1 million was spent at Vatukoula in the initial phase of upgrading the Philip Shaft infrastructure, $5.2 million of which was in fiscal 2006 since becoming a subsidiary, the replacement of outdated underground equipment, and improved underground environmental control. Tolukuma has spent $2.8 million on mine development and $1.5 million on heavy equipment in fiscal 2006.
   fiscal 2004. At our continuing South African Operations, capital expenditure decreased from $9.2 million in fiscal 2004, to $0.8 million in fiscal 2005, due to an increased focus on efficient utilization of existing assets. This expenditure included the installation of a Knelsen concentrator and Acacia reactor at the Blyvoor plant. Capital expenditure in the Australasian Operations, increased from $12.2 million in fiscal 2004, to $20.5 million in fiscal 2005. Of this expenditure $17.2 million related to Porgera, mostly as a result of capitalized deferred stripping costs of $11.1 million and $3.4 million to Tolukuma.
  Ore Reserves
    approximately 5.6 million ounces at June 30, 2005, representing a 59% increase year-on-year. Excluding the effect of depletion, our Ore Reserves have increased by 3.8 million ounces, or 68%. This is primarily due to the acquisition of Crown and ERPM and the stronger gold price. As at June 30, 2005, our Ore Reserves from continuing operations were estimated at 5.6 million ounces, as compared to approximately 6.0 million ounces at June 30, 2004, representing a 7% decrease. Excluding the effect of depletion, the reserves had in fact increased by 3% due to continued efforts to explore and prove up Ore Reserves at Tolukuma.
      Year ended June 30,
 ('000 ounces)
 2006
 2005
 2004
 Continuing operations
 
 
 
      1
      1
     
 Total South African Operations
 6,682
 4,679
 4,834
  2
          3
     
 Total Australasian Operations
 2,151
 1,874
 1,857
 
 Total attributable Ore Reserves
 8,833
 6,553
 6,691
  1 3
     Total Ore Reserves
 8,833
 5,567
 5,969
 
 
 
 
 Discontinued operation
 
 
 
  4
  -
 -
 5,047
 
 1
   2
   3
   4
  information as a discontinued operation and all other operations as continuing operations. We have adjusted the results for prior reporting periods accordingly.


95
 Application of critical accounting policies
   appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty and are based on our historical  experience, terms of existing contracts, management's view on trends in the gold mining industry and information from outside sources.
  preparation of our consolidated financial statements and could potentially impact our financial results and future financial performance:
                   Mining assets
  capitalized to the specific mine to which the cost relates. Amortization is calculated on a mine-by-mine basis (i.e. the cost pools are the individual mines) using the units of production method. Under the units of production method, we estimate the amortization rate based on actual production over total Proven and Probable Ore Reserves of the particular mine. This rate is then applied to actual costs capitalized to date to arrive at the amortization expense for the period. Proven and Probable Ore Reserves of the particular mine reflect estimated quantities of economically and legally recoverable reserves, as determined in accordance with the SEC's Industry Guide 7 under the US Securities Exchange Act of 1934. The estimate of the total reserves of our mines could be materially different from the actual gold mined due to changes in the factors used in determining our Ore Reserves, such as the gold price, foreign currency exchange rates, labor costs, engineering evaluations of assay values derived from sampling of drill holes and other openings. Any change in management’s estimate of the total Proven and Probable Ore Reserves, would impact the amortization charges recorded in our consolidated financial statements. Deferred stripping costs
  remove additional waste are charged to operating costs on the basis of the average life of mine stripping ratio. For other open-pit operations stripping costs are expensed in the period in which they are incurred. Stripping costs included in mining assets as at June 30, 2006, for Porgera were $23.6 million (June 30, 2005: $12.5 million; June 30, 2004: $3.5 million) with $12.9 million capitalized to mining assets during fiscal 2006 (fiscal 2005: $11.1 million; fiscal 2004: $4.1 million). During fiscal 2006, the average stripping ratio for Porgera was 9.2 in comparison with the life of mine stripping ratio of 10.2. Wedge and mudstone failure on the West Wall of the Stage 5 pit at Porgera at the end of fiscal 2005 created unplanned waste material, which is in the process of being removed, which has negatively affected the life of mine stripping ratio. The stripping ratio is determined based on the life of mine plan. The estimate of the total reserves of a mine could be materially different from the actual gold mined and from the actual usage of a mine due to changes in the factors used in determining the economic value of our mineral reserves and deferred stripping costs, such as the gold price and foreign currency exchange rates. Any change in management’s estimate of the total expected future life of a mine would impact the amortization charge recorded and deferred stripping capitalized in our consolidated financial statements.


96
 Impairment of mining assets
  SFAS, No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” or SFAS 144.
  carrying amount of an asset or group of assets may not be recoverable, including a reduction in the extent to which a gold plant is used, a dramatic change in the manner in which the Ore Reserves are used, a substantial drop in the gold price, a change in the law or environment in the country in which the Ore Reserves are based or gold is sold, forecasts showing lack of long-term profitability or production costs are in excess of an amount originally expected when the asset was acquired or constructed. Recoverability of an asset or asset group is assessed by comparing the carrying amount of an asset or group of assets to the estimated future undiscounted net cash flows of the asset or group of assets. Estimates of future cash flows include estimates of future gold prices and foreign exchange rates. Therefore, changes could occur which may affect the recoverability of our mining assets. If an asset or asset group is considered to be impaired, the impairment which is recognized is measured as the amount by which the carrying amount of the asset or group of assets exceeds the discounted future cash flows expected to be derived from that asset or group of assets. The expected future cash flows are discounted at a market rate commensurate with the risk in the respective geographic locations in which our assets are held. The asset or asset group is the lowest level for which there are identifiable cash flows that are largely independent of other cash flows. In carrying out the economic valuations, an assessment is made of the future cash flows expected to be generated by these assets, taking into account current market conditions and the expected lives of our assets. The lowest level for which there are identifiable cash flows that are largely independent of other cash flows is calculated on a mine-by-mine basis. We make the analysis periodically on a mine-by-mine basis or when indicators of impairment exist. During fiscal 2006, $nil was recorded as an impairment and during fiscal 2005 and 2004, $0.7 million and $1.4 million (from the discontinued operation), respectively,  were  recorded as an impairment  by  applying these principles.Deferred income and mining taxes
  temporary differences by applying current statutory tax rates applicable to future years to differences between financial statement amounts and the tax bases of certain assets and liabilities. Changes in deferred tax assets and liabilities include the impact of any tax rate changes enacted during the year.
  determinations are based on the projected realization of tax allowances and tax loss carry forwards. Assessing the recoverability of deferred tax assets requires management to make significant estimates related to expectations of future taxable income. If these tax assets are not more likely than not to be realized, an adjustment to the valuation allowance would be required, which would be charged to income in the period that the determination was made. If we determine that it is more likely than not that we would be able to realize the tax assets in the future, in excess of the recorded amount thereof, an adjustment to reduce the valuation allowance would be recorded. Management considers historical taxable positions in determining if a tax asset will be utilized, specifically with reference to the immediately preceding three fiscal years. As a result of these determinations,  increases in the  valuation allowance of $0.3 million, $10.1 million and $16.9 million were  recorded  during fiscal 2006, 2005 and 2004, respectively. The bulk of these related to  our continuing South African Operations. In addition, an increase in the valuation allowance relating to our discontinued operation, the North West Operations, amounting to $70.2 million was recorded in fiscal 2004.
  Reclamation and environmental costs
 Accounting
 for Asset Retirement Obligations,” or SFAS 143. SFAS 143 came into effect for fiscal years beginning after June 15, 2002 and we adopted it on July 1, 2002. SFAS 143 requires that the fair value of liabilities for asset retirement obligations be recognized in the period in which they are incurred. A corresponding increase to the carrying amount of the related asset, where one is identifiable, is recorded and is depreciated over the life of the asset. Prior to the adoption of SFAS 143, we accrued for the estimated reclamation and closure liability through annual charges to earnings over the estimated life of the mine.


97
   headgear and shaft infrastructure. Estimates of these costs are based on our knowledge at the time of creating the provision. Determining these costs is complex and requires management to make estimates and judgments because most of the removal obligations will be fulfilled in the future and contracts and regulations often have vague descriptions of what constitutes removal. These estimates are subject to changes in regulations and unexpected movements in inflation rates and are, therefore, subject to annual review to ensure that the asset and liability is a fair reflection of the expected reclamation and closure costs as at June 30 of every year. The actual liability for rehabilitation costs can vary significantly from our estimate, if our assessment of these costs changes. As we use the expected cash flow technique to determine our future liability, the liability is determined by discounting the estimated cash flows using a credit-adjusted risk-free rate. Thus, the effect of our credit standing is reflected in the discount rate rather than in the estimated cash flows. As at June 30, 2006, the discount rate was determined to be 7.26%.
  respectively, including movements related to the discontinued operation. Accretion expense of $2.4 million, $3.7 million and $1.5 million was recorded in fiscal 2006, 2005 and 2004, respectively, including the discontinued operation.
  estimated cost of rehabilitation during and at the end of the life of the relevant mine. Collectability of receivables
  period and amount of cash flows which will be received. In determining this expectation, operational and economic circumstances affecting the receivable are considered. These principles were applied in evaluating the collectability of the receivables owed by Crown and ERPM (prior to these operations becoming subsidiaries), as well as KBH and Mogale. Advances to the value of $1.9 million were provided for in fiscal 2004. No further advances were made during fiscal 2005 and 2006, however we provided for $0.6 million against the receivable owed by Mogale in fiscal 2005. In fiscal 2006 an agreement was signed with the IDC pursuant to which we acquired all of the IDC loans, including the rights securing payment of such loans, to Crown and ERPM for a purchase consideration of $4.5 million. As uncertainty over the repayment of the loans existed subsequent to their acquisition, an allowance of $4.5 million was raised. Post-retirement medical benefits
  remaining service lives of relevant employees. The Group has an obligation to provide medical benefits to certain of its pensioners and dependants of ex-employees. These  liabilities are provided in full, calculated on an actuarial basis. Periodic valuation of these obligations is carried out by independent actuaries using appropriate mortality tables, long-term estimates of increases in medical costs and appropriate discount rates. Actuarial gains and losses are included in determining net income or loss. At June 30, 2006 a provision of $2.3 million (June 30, 2005: $nil) for post-retirement medical benefits has been raised. During fiscal 2006, we expensed $0.5 million (2005: $nil; 2004: $nil) relating to these post-retirement medical benefits.
  retirement obligations as well as future expenses, which may  have an impact on earnings in the periods  where  the changes in the assumptions occur.


98
 Operating results Comparison of financial performance for the fiscal year ended June 30, 2006 with fiscal year ended June 30, 2005 Revenue
   of each segment to the total change on a consolidated basis for fiscal 2006 in comparison to fiscal 2005:
 
 Impact of change in volume
 
 
 
 $’000
 Total
 revenue
 2005     
  Acquisitions
 Internal
 decline
 Impact of
 change in
 price
 Net
 change
 Total
 revenue
 2006
         1
         1
        Total South African Operations
 68,370
 65,150
 (923)
 16,188
 80,415
 148,785
   -
             2
        Total Australasian Operations
 115,239
 2,440
 (37,607)
 16,444  (18,723)
 96,516
 Total
 183,609
 67,590
 (38,530)
 32,632
 61,692
 245,301
   ERPM and Emperor. The negative impact of production problems experienced, especially at Porgera and Tolukuma, were partially offset by an increase in the Dollar gold price received at all the operations. The average gold price received by us increased from $423 per ounce in fiscal 2005 to $531 per ounce in fiscal 2006.
 
 1
   2


99
 Production costs
  contribution of each segment to the total change on a consolidated basis for fiscal 2006 in comparison to fiscal 2005:
 
 Impact of change in volume
 
 
 
 
 $’000
 Total
 production
 costs
 2005    
  Acquisitions
 Internal
 decline
 Impact of
 change in
 costs
 Foreign
 exchange
 Net
 change
 Total
 production
 costs
 2006
          1
          1
          2
         Total South African Operations
 75,032
 55,339
 (996)
 6,679
 (2,417)
 58,605
 133,637
 
                3
         Total Australasian Operations
 61,488
 7,453
 (19,575)
 25,799
 2,757
 16,434
 77,922
 Total
 136,520
 62,792
 (20,571)
 32,478
 340
 75,039
 211,559
 
  
 Years ended June 30,
 Costs
 2006
 2005
                   
  production costs in that region. Production costs are linked directly to the level of production of a specific fiscal year. Production costs in fiscal 2006 increased by 55% to $211.6 million compared to production costs of $136.5 million in fiscal 2005. This increase was primarily attributable to production and trough-put problems at the Australasian Operations as well as the acquisition of Crown, ERPM and Emperor.
  volume from 161,878 ounces to 159,693 ounces produced, due to an increasing level of seismicity experienced in the high-grade No. 5 Shaft areas in the first half of the year. Consequent concerns for employee safety prompted the development of a volume-driven mine plan involving less mining from the affected high-grade No. 5 Shaft areas and more mining from the lower-grade No. 6 Shaft areas. While rock dump material declined both in volume and grade as forecast, the slimes dam retreatment project at Blyvoor showed improvement, both in terms of volume and grade, notwithstanding setbacks due to higher than average summer rainfall. At Crown and ERPM, production costs were $26.7 million and $28.6 million from December 1, 2005, producing 56,000 ounces and 61,278 ounces, respectively, during this time.
  
 1
   2
  3


100
  following the failure of the West Wall towards the end of fiscal 2005, led to reliance on low-grade material as the primary ore feed. This, together with damage to access infrastructure caused by heavy rainfall, power failures and a strike related to a change of management from Placer Dome to Barrick, had a negative impact on production. At Tolukuma production was adversely affected by a lack of available face in the first half of fiscal 2006 and the consequent treatment of low-grade underground stockpiles, as well as production disruptions caused by underground flooding, leading to an increase in production costs from $25.3 million in fiscal 2005 to $33.4 million in fiscal 2006. At Vatukoula, production costs from April 6, 2006, amounted to $7.5 million. Production costs at Vatukoula were adversely affected by an amalgam of factors including a lack of available face, shaft infrastructure problems, ageing underground equipment, inflows of hot water, high underground working temperatures and deteriorating ground conditions.
  Rehabilitation provision and amounts contributed to environmental trust funds
 As of June  30, 2006, we estimate our total rehabilitation provision, being the discounted estimate of future costs, to be
 $46.8 million, $36.5 million relating to the South African Operations and $10.3 million relating to the Australasian Operations, as compared to $22.6 million at June 30, 2005. Accretion of $2.4 million was recorded in fiscal 2006, and $2.7 million (relating to continuing operations only) was recorded in fiscal 2005.
 A total of $8.3 million was invested in our various environmental trust funds as at the end of fiscal 2006, as compared to
 $6.4 million for fiscal 2005. The increase is mostly attributable to the acquisition of Crown and ERPM. Additional contributions were also made during the year under review, due to under-funding of the liability at  certain South African Operations. The shortfall between the trust funds and the estimated provisions is expected to be financed by ongoing financial contributions over the remaining production life of the respective mining operations. Depreciation and amortization
 Depreciation and amortization charges relating to the continuing operations were $24.8 million for fiscal 2006 compared to
 $13.8 million for fiscal 2005. This increase is mainly due to the consolidation of Crown, ERPM and Emperor in fiscal 2006. Employment termination costs
 Employment termination costs decreased to $0.9 million in fiscal 2006 from $4.2 million for fiscal 2005. In fiscal 2006, these
 costs related to the retrenchment of four employees that had been seconded to the North West Operations, at a cost of $0.2 million, and the retrenchment of 120 employees, at a cost of $0.7 million, after the temporary shut down in April 2006 of Vatukoula for restructuring. Impairment of assets
 During fiscal 2006 an impairment of $nil was recorded compared to an impairment of $0.7 million in fiscal 2005.
 Management and consulting fees
 Management and consulting fees in fiscal 2006 decreased by $4.3 million to $2.4 million compared to $6.7 million in fiscal
 2005. These expenses mostly relate to the evaluation of possible acquisitions. Costs have decreased due to tighter cost controls being instituted. Profit/(loss) on derivative instruments
 Changes in the fair value of derivative instruments in fiscal 2006 resulted in a gain of $10.8 million, as compared with a gain
 DRD (Isle of Man), of $1.0 million, a gain
 on forward sale commodity contracts entered into by Emperor of $4.4 million, and the fair value adjustment on the derivative component of the senior convertible loan notes, a profit of $5.4 million (2005: $3.8 million)
  Selling, administration and general charges
 The selling, administration and general charges increased in fiscal 2006 to $19.0 million  as compared to $17.8 million in
 fiscal 2005, an increase of $1.2 million. The increase is mainly due to the consolidation of Crown, ERPM and Emperor in fiscal 2006.


101
 Interest and other income
 Interest and other income decreased from $2.4 million in fiscal 2005 to $1.7 million in fiscal 2006. In fiscal 2005, we earned
 more interest as a result of investing excess cash from borrowings and capital raising in high interest bearing accounts held at financial institutions. Unrealized foreign exchange (losses)/gains
 Our functional currency is the Rand for our South African Operations, the Kina for our Papua New Guinean Operations and
 the Fiji Dollar for our operation based in Fiji. The unrealized foreign exchange loss of $6.8 million for fiscal 2006, compared to a loss of $9.3 million for fiscal 2005, represents the effect of the translation of monetary items, primarily external debt, which is denominated in currencies other than our functional currencies. Profit on disposal of subsidiaries
 
  to the shareholders of Emperor. The transaction has been accounted for as a partial sale of DRD (Isle of Man) and a partial acquisition of Emperor. Accordingly a profit has been recognized on the portion of  DRD (Isle of Man) sold  to minority shareholders. This profit represents the excess of the portion of the fair value of DRD (Isle of Man) sold over that portion of its historical cost. In fiscal 2006, we also realized a profit on the sale of Stand 752 Parktown Extension (Pty) Limited  (a subsidiary which owned our corporate offices) of $0.1 million. Interest expense
 Our interest expense increased to $11.5 million for fiscal 2006 as compared to $11.4 million for fiscal 2005. This expense is
 consistent with the prior year despite an increase in our total long-term debt from $79.0 million in fiscal 2005 to $126.4 million in fiscal 2006. The increase in the long-term debt, however, mostly relates to borrowing facilities with the ANZ Banking Group Limited, held by Emperor and its subsidiaries. Emperor became our subsidiary in April 2006, therefore the interest expense relating to these facilities has not been included in the consolidated results for the entire year. Income and mining tax expense
 The net tax expense of $4.1 million for fiscal 2006 comprises a current taxation charge of $2.4 million mainly relating to
 Porgera and a deferred tax charge of $1.7 million relating to the Australasian Operations. This compares to a current tax charge of $12.6 million and a net deferred tax benefit of $6.8 million in fiscal 2005. The decrease in the current taxation charge is due to the decreased profitability of our Australasian Operations. The increase in the deferred tax charge was mainly as a result of the increase in the life of mine of Porgera.
  Equity in loss from associates
 A loss of $19.9 million was recorded during fiscal 2006 in relation to Emperor and Crown, which  were  previously our
 associates. Of this amount $15.4 million relates to the recognition of losses in Emperor after which the investment in Emperor was carried at nil value, until April 6, 2006, from which date Emperor has been consolidated as a subsidiary. Furthermore, during fiscal 2006, we acquired loans from the IDC, which the IDC previously held with Crown, our previous associate, and its subsidiary, ERPM. These loans were acquired as part of the restructuring of the South African Operations. As uncertainty over the repayment of the loans existed subsequent to their acquisition, an allowance of $4.5 million was raised. The investment in Crown was carried at nil value until December 1, 2005, the date that Crown became a subsidiary. Profit from discontinued operation, net of taxes
 In fiscal 2006 we recovered costs of $2.9 million from the liquidator relating to the liquidation of Buffelsfontein Gold Mines


102
 Comparison of financial performance for fiscal year ended June 30, 2005 with fiscal year ended June 30, 2004 Revenue
   of each segment to the total change on a consolidated basis for fiscal 2005 in comparison to fiscal 2004:
 $’000
 Total
 revenue
 2004
 Impact of
 change in
 volume due to
 internal
 growth/
 (decline)
 Impact of
 change in
 price
 Net change
 Total
 revenue
 2005
       Total South African Operations
 90,066
 (27,989)
 6,293
 (21,696)
 68,370
             Total Australasian Operations
 93,188
 15,138
 6,913
 22,051
 115,239
 Total
 183,254
 (12,851)
 13,206
 355
 183,609
   2004, as a result of revenue from the Australasian Operations, negating the effect of a significant decrease in production volumes at the continuing South African Operations, because of poor recoveries at the Slimes Dam Project, the restructuring completed in the second quarter of our financial year at Blyvoor and the yield at these operations decreasing in fiscal 2005. The decrease in production in fiscal 2005 was partially offset by a stronger Dollar gold price received during the year. The average gold price received by us was $423 per ounce in fiscal 2005, compared to $393 per ounce in fiscal 2004.  Production costs
 The following table illustrates the year-on-year change in production costs from continuing operations by evaluating the
   $’000
 Total
 production
 costs
 2004
 Impact of
 change in
 volume due to
 internal
 growth/
 (decline)
 Impact of
 change in
 costs
 Foreign
 exchange
 Net change
 Total
 production
 costs
 2005
         1
        Total South African Operations
 91,555
 (21,844)
 (3,635)
 8,956
 (16,523)
 75,032
                1
        Total Australasian Operations
 51,471
 11,815
 (3,808)
 2,010
 10,017
 61,488
 Total
 143,026
 (10,030)
 (7,443)
 10,966
 (6,506)
 136,520
 
 1


103
  The following table lists the components of production costs for each of the years set forth below:
 
 Years ended June 30,
 Costs
 2005
 2004
                As gold mining in South Africa is very labor intensive, labor costs and contractor services are the largest components of our
 production costs in that region. Production costs are linked directly to the level of production of a specific fiscal year. We incurred production costs of $136.5 million in fiscal 2005, compared to $143.0 million in fiscal 2004. The decrease of 5% is mostly as a result of a decrease in production volumes at the continuing South African Operations which have been partially offset by an increase in production at the Australasian Operations. The majority of our production costs are incurred in local currencies and foreign exchange movements on these costs also contributed to the increase in production costs. Rehabilitation provision
 As of June 30, 2005, we estimated our total rehabilitation provision being the discounted estimate of future costs, to  be
 $22.6 million ($nil of this balance relating to the discontinued North West Operations) as opposed to $39.1 million at June 30, 2004 ($18.5 million of this balance relating to the discontinued North West Operations). Accretion of $2.7 million was recorded in fiscal 2005 and $1.2 million was recorded in fiscal 2004, relating to the continuing operations. The total rehabilitation provision of $19.6 million on March 22, 2005, relating to the North West Operations, was transferred to the liquidators.
 A total of $6.4 million was invested in our various environmental trust funds at the end of fiscal 2005, as compared to
 $22.8 million for fiscal 2004. Growth in the environmental trust funds amounted to $0.8 million during fiscal 2005, with $16.9 million of the  fiscal 2004 balance having been transferred to the liquidators of Buffelsfontein Gold Mine Limited (the North West Operations). The shortfall relating to the continuing operations is expected to be financed by ongoing financial contributions to the Environmental Rehabilitation Trust Funds of the respective mining operations. Depreciation and amortization
 Depreciation and amortization charges were $13.8 million for fiscal 2005 as compared to $26.0 million for fiscal 2004. This
 decrease relates to a reduction in depreciation on mine development at Tolukuma, due to a decrease in the life of mine for underground operations and non-recurring amortization charges during fiscal 2004, which were associated with the restructuring of Tolukuma. Employment termination costs
 Employment termination costs increased to $4.2 million for fiscal 2005 as compared to $0.9 million for fiscal 2004. For fiscal
 2005, these costs mostly relate to a retrenchment process following a 60-day review at Blyvoor, where 1,619 employees were retrenched at a cost of $3.1 million, by October 5, 2004. In addition, retrenchments at our head office, to improve corporate efficiencies and minimize corporate expenditure, gave rise to an expense of $1.2 million in fiscal 2005. Impairment of assets
 During fiscal 2005, real estate located at the Durban Deep mine was written down by $0.7 million to $2.2 million, being the
 estimated fair value of these assets. We negotiated the sale of this real estate and the estimated fair value was determined during these negotiations. Management and consulting fees
 Management and consulting fees in fiscal 2005 increased by $4.3 million to $6.7 million compared to $2.4 million in fiscal
 2004. These expenses mostly related to consulting fees for the evaluation of possible acquisitions in fiscal 2005, preparatory work for complying with the Sarbanes-Oxley Act of 2002 and capital raisings.


104
 Profit/(loss) on derivative instruments
 The profit/(loss) on derivative instruments in fiscal 2005 was a gain of $3.6 million, as compared with a loss of $1.0 million
 in fiscal 2004. In fiscal 2004, 265,000 ounces were closed out on the Eskom gold for electricity contract, realizing a loss of $1.4 million compared to the remaining 50,000 ounces which were closed out in fiscal 2005, realizing a loss of $0.4 million. Due to higher interest rates in fiscal 2005, the fair value adjustment on the interest rate swap was a profit of $0.2 million compared to a loss of $1.6 million in fiscal 2004. The fair value adjustment on the derivative  portion of the senior convertible notes was a profit of $3.8 million in fiscal 2005 (2004: $2.0 million).
  Selling, administration and general charges
 In fiscal 2005, the selling, administration and general charges decreased by $4.8 million to $17.8 million from $22.6 million
 in fiscal 2004. In fiscal 2005, management instituted tighter cost controls together with retrenchments at corporate level, which contributed to the reduction of these expenses. Interest and other income
 Interest and other income increased by $1.2 million, or 100%, from $1.2 million during fiscal 2004 to $2.4 million during
 fiscal 2005. This was mainly as a result of investing excess cash from borrowings and capital raising, in high interest bearing accounts held at financial institutions. Unrealized foreign exchange gains
 Our functional currency is the Rand for our South African Operations and the Kina for the Papua New Guinea Operations.
 The unrealized foreign exchange loss of $9.3 million for fiscal 2005, compared to a gain of $10.7 million for fiscal 2004, represented the effect of the translation of monetary items, primarily external debt, which is denominated in currencies other than our functional currencies. Interest expense
 Our interest expense increased to $11.4 million for fiscal 2005 as compared to $7.8 million for fiscal 2004. The increase was
 primarily as a result of obtaining new borrowing facilities from Investec Bank Limited and Investec Bank (Mauritius) Limited during fiscal 2005. Income and mining tax expense
 The net tax expense for fiscal 2005 comprised a deferred tax benefit of $6.8 million and a current tax charge of $12.6 million.
 This compares to a deferred tax charge of $6.8 million and a current tax charge of $7.4 million in fiscal 2004. In fiscal 2005, the increase in the current tax charge mostly related to the inclusion of Porgera for a full year compared to nine months in fiscal 2004. In fiscal 2004, $5.5 million of the deferred tax charge related to the South African Operations and $1.3 million related to the Australasian Operations. Valuation allowances of $30.5 million were raised against the deferred tax assets of the South African Operations in fiscal 2005, compared to $96.4 million in fiscal 2004. The decrease is primarily as a result of the liquidation of the North West Operations in fiscal 2005. Equity in loss from associates
 A loss of $20.5 million was recorded during fiscal 2005 in relation to our associate, Emperor, $13.3 million relating to an
 impairment of the carrying amount of the investment and $7.2 million relating to losses recognized against our equity investment. No amount was recorded for Crown, as no further advances were made to this associate during fiscal 2005 and the investment is carried at nil value in fiscal 2005 (2004: $nil). An impairment of $8.8 million was recognized in fiscal 2004 relating to advances made during that fiscal year to Crown, which were seen by management to be irrecoverable.


105
 Loss from discontinued operation, net of taxes
 On March 22, 2005, application was made to the High Court of South Africa for the provisional liquidation of Buffelsfontein
 Gold Mines Limited, our subsidiary which owns the North West Operations, which order was granted on the same day. As a result of the liquidation, a profit of $18.1 million was recorded in fiscal 2005. Included in the calculation of this profit is expenditure of $7.3 relating to the liquidation. This expenditure includes additional wages of $4.5 million, $1.5 million set aside for a social plan, $0.8 million relating to essential services, such as pumping, and $0.5 million relating to legal and other costs.
  $130.0 million.
  This continued during fiscal 2005, with the production of 199,850 ounces of gold from 1.9 million tonnes of ore mined, resulting in a yield of 3.32 g/t.  During fiscal 2004, 341,861 ounces of gold were produced from 3.2 million tonnes of ore milled, with a yield of 3.37 g/t.
 On June 26, 2004, we entered into a further 60- day review period at Buffelsfontein designed to restore the operations to
 profitability. Proposals were received in a consultative forum in which both management and organized labor participated, and were distributed to the Department of Labor and the Department of Minerals and Energy, for their input. Agreement was reached with all the relevant parties early in August 2004 to close the No. 9 Shaft, but to keep the No. 10 and 12 Shafts in operation on condition that certain defined sustainability thresholds were met. This agreement resulted in the retrenchment of 120 employees at this mining operation during fiscal 2005 at a cost of R3.7 million ($0.6 million).
 At December 31, 2004, due to the poor operational results at the North West Operations, we evaluated the carrying amount of
 these mining assets and determined that the carrying value was not recoverable. The difference between the carrying amount and fair value of the North West Operations’ mining assets was recognized as an impairment loss of $39.5 million for the year ended June 30, 2005. The fair value was determined by calculating the present value of future cash flows of the North West Operations’ mining assets discounted at the credit adjusted rate.


106
 5B. LIQUIDITY AND CAPITAL RESOURCES
 Net cash utilized by operating activities
  of $23.8 million for fiscal 2005 and cash utilized by operating activities of $25.1 million for fiscal 2004. During fiscal 2006, the net working capital movement represented an outflow of cash of $6.4 million, compared to an inflow of $1.6 million in fiscal 2005. With the acquisition of Emperor, the  liability relating to the derivative instruments  has  increased resulting in  an increase in the cash outflow associated with these instruments in fiscal 2006. In fiscal 2006, $5.8 million was used to settle a portion of the forward gold contracts in Emperor. In fiscal 2005, $3.6 million was used to close out the remaining balance of the Eskom gold for electricity contract. The decrease in cash utilized by operating activities in fiscal 2006 compared with fiscal 2005 was primarily due to improved profitability from our South African Operations. Net cash utilized in investing activities
   Cash utilized in investing activities during fiscal 2006, included capital expenditure of $41.0 million net of cash acquired from
 the acquisitions of Crown, ERPM and Emperor of $7.1 million and cash received on the disposal of Stand 752 Parktown Extension (Pty) Limited of $0.6 million. In fiscal 2005, cash utilized in investing activities included $6.9 million with regards to taking up our share of the Emperor Rights offering, $1.7 million relating to costs of the Emperor share offer and capital expenditure of $21.4 million relating to our continuing operations and $3.5 million relating to our discontinued operation (North West Operations). Cash utilized  in investing activities in fiscal 2004 comprised funds advanced to Crown and ERPM of $8.8 million, our acquisition of a 20% interest in the Porgera Joint Venture for $59.2 million, net of cash acquired, our acquisition of a 50.25% interest in Net-Gold Services Limited for $0.6 million, net of cash acquired, and capital expenditure at our continuing operations of $21.4 million and $5.5 million at our discontinued operation.
          Initial phase of the upgrading of Philip Shaft infrastructure, the replacement of outdated underground equipment and the improved underground environmental control at Vatukoula at a cost of $ 5.2 million; and
   
  equipment and development, upgrading existing underground operations and upgrading metallurgical plants. Redundant capital equipment was sold during the year, the proceeds of which amounted to $2.2 million. Significant capital projects for fiscal 2005 included:
         
  Reserve development, building a slimes dam reclamation facility at the Blyvoor Section and the inclusion of our 20% share of the capital expenditure of Porgera. Redundant capital equipment was sold during the year, the proceeds of which amounted to $3.4 million. Significant capital projects for fiscal 2004 included:
          Capital expenditure of $8.7 million with respect to our 20% interest in Porgera, which includes the capitalization of deferred stripping costs of $4.1 million.


107
   We expect to incur $54.2 million of capital expenditure on mining equipment and development, upgrading existing underground operations and upgrading current metallurgical plants as follows:
            Vatukoula - $24.2 million (pending completion of a strategic review to optimize the value of Vatukoula and other Fijian land holdings, the mine has been placed on a care and maintenance program and this capital expenditure will be reviewed); and
     Net cash generated in financing activities
  $88.6 million in fiscal 2004.
  Investec raising $25.4 million in settlement of financing facilities and 629,009 shares to the share option scheme for a consideration of $0.5 million.  In addition we issued  4,451,219 shares to the IDC  for loans  we  acquired from  them  for $4.5 million,  which the IDC previously held with Crown  and  ERPM. Furthermore,  932,857 shares were issued as payment for  consulting  services rendered of $1.2 million.
  entered into a facility of $15.0 million with Investec (Mauritius), of which $10.0 million had been drawn down at June 30, 2005. Of the total shares issued in fiscal 2005, we issued 17,000,000 shares to Baker Steel by way of a specific issue raising $14.4 million, 15,804,116 shares through a claw-back rights offer raising $13.3 million and 23,348,465 shares to Investec raising $38.2 million, in settlement of financing facilities acquired in the fourth quarter of fiscal 2004 and the first and second quarters of fiscal 2005.
  already owned by us for a consideration of one of our shares for every five shares in Emperor held. On June 10, 2004, we announced a revised final offer of five of our shares for every twenty two shares in Emperor held. The revised offer represented a 14% increase over the previous offer. On July 30, 2004, our offer to Emperor’s shareholders closed with us having received acceptances from Emperor’s shareholders representing approximately 25.55% of Emperor’s issued capital, thereby increasing our shareholding in Emperor to 45.33%. Accordingly, we issued 6,612,676 shares in exchange for the 29,097,269 Emperor shares to the value of $16.6 million, based on the market value of our shares on the date issued, with share issue and transaction costs associated with the take over offer amounting to $1.7 million.  Borrowings and funding
  the following: Senior Convertible Notes
  2006, in a private placement to qualified institutional buyers and to non-US persons. We issued the notes at a purchase price of 100% of the principal amount thereof. If not converted or previously redeemed, the notes could be repaid at 102.5% of their principal amount plus accrued interest on the fifth business day following their maturity date in November 2006. The notes were convertible into our ordinary shares, or, under certain conditions, ADSs, at a conversion price of $3.75 per share or ADS, subject to adjustment in certain events. We were entitled to redeem the notes at their accreted value plus accrued interest, if any, subject to certain prescribed conditions being fulfilled, after November 12, 2005. As of June 30, 2006, the effective interest rate on the convertible notes was 16.08% per annum and the outstanding balance was $66.9 million. On November 15, 2006, we paid a total of $69.6 million to the holders of the notes from our available cash resources and borrowing facilities in full and final settlement of our obligations under the notes.


108
 Industrial Development Corporation Loan
  expenditures incurred by Blyvoor in completing the Blyvoor expansion project. The loan bears interest at 1% below the prime rate of First National Bank of Southern Africa Limited on overdraft. The loan is repayable in 48 monthly installments. Repayments were suspended in January 2005 until January 2006. The loan is secured by means of a general notarial bond over the Blyvoor metallurgical plant.
  ability to change the business of Blyvoor. Current restructuring changes have not impacted on the terms of the loan agreement.
  on this loan was 10.0%. At November 30, 2006, the outstanding balance was R11.9 million ($1.7 million) with an applicable interest rate of 10.5%. Investec Bank Limited and Investec Bank (Mauritius) Limited
 We have entered into funding facilities with Investec Bank Limited, or Investec, or its affiliates: On October 14, 2004, our subsidiary, DRD (Isle of Man) entered into a facility of $15.0 million with Investec Bank
 (Mauritius) Limited, or Investec (Mauritius). The facility bears interest at the three-month London Inter-bank Offered Rate, or LIBOR, plus 300 basis points. Funds advanced and interest on this facility must be repaid in cash in equal installments every three months from the date of the relevant advance so that the amount of the advance is paid in full to Investec (Mauritius) on or before November 12, 2007. The facility was secured by DRD (Isle of Man)’s shares in Emperor, DRD (Porgera) Limited and Tolukuma. The loan agreement prohibited us from disposing of or further encumbering the secured assets. The facility restricted the flow of payments from DRD (Isle of Man) to the Company through requiring that all net operating cash or cash distributions received by DRD (Isle of Man) in respect of the secured assets must be used to first service our interest and principal payment obligations under the facility by requiring that we hold, in a debt servicing account, sufficient cash to cover our quarterly principal payments. Any funds in excess of these repayment requirements could be transferred to the Company. Investec (Mauritius) had the option to require DRD (Isle of Man) to pay 50% of any payments, which are a distribution, by or on behalf of DRD (Isle of Man) to or for the account of the Company as a prepayment of the facility. The facility agreement contained a number of additional customary restrictive covenants. At June 30, 2005, $10.0 million had been drawn down under this facility. During fiscal 2006 this facility was fully repaid.
 On December 10, 2004, we entered into a facility of R100.0 million ($15.0 million) with Investec. The facility bears interest
 at the three-month Johannesburg Inter-bank Acceptance Rate, or  JIBAR, plus 300 basis points.  During fiscal 2005, we had drawn down R60.0 million ($9.0 million) under this  facility. and settled this amount by issuing 8,060,647 ordinary shares to the value of R60.0 million  ($9.6 million), based on the market value at the date of issue. In fiscal 2006 we drew down a further R40.0 million ($6.2 million) under this facility and  repaid this amount  by issuing  4,129,915 ordinary shares to the value of R40.0 million ($6.2 million). This facility is not renewable.
 On March 3, 2005, an additional acquisition facility of $35.0 million was entered into with Investec (Mauritius). The
 acquisition facility of $35.0 million was on similar terms as the $15.0 million facility entered into on October 14, 2004, and had similar restrictions on the flow of funds and could be settled through the issue of shares. As at June 30, 2005, this facility had not been utilized. During fiscal 2006, we had drawn down $14.4 million under this facility, which was fully repaid by March 16, 2006, by the issue of 8,498,250 of our ordinary shares to the value of $14.4 million (including interest). On September 13, 2006, the $35.0 million acquisition facility was amended. The terms are similar to the previous agreement except for the facility now being secured over our shareholding in Emperor. The facility is renewable. At November 30, 2006 we had drawn down $33.0 million under this facility.
  Baker Steel Capital Managers LLP
 On April 5, 2005, we entered into a subscription agreement and an underwriting agreement pursuant to which we raised, in
    a specific issue of 17 million new shares at a cash price of R5.50 each to Baker Steel Capital Managers LLP, or BSCM, clients to raise R93.5 million ($14.4 million); and
  a claw-back offer of 15,804,116 shares at an issue price of R5.50 each to our shareholders to raise R86.9 million ($13.3 million) in accordance with the terms of a separate offering circular to our shareholders. The funds from the claw-back offer were received on April 12, 2005.


109
   per share, which was equivalent to the volume weighted average price of our shares on the JSE for the ten trading days immediately prior to April 5, 2005. The specific issue shares  rank pari passu with our shares already in issue. At a general meeting of our shareholders held on May 20, 2005, a specific resolution was passed to authorize our directors to allot and issue these shares. The funds from the specific issue were received on June 1, 2005. ANZ Banking Group Limited
         (2)  a first registered mortgage over all freehold and leasehold land; (3)  a first registered mortgage over Special Site Rights 6, 7, 8 and Special Mining Leases 54, 55 and 56; and (4)  a first registered Bill of Sale over its motor vehicles.
 
  due on April 30, 2007 to the value of $1.9 million. Further biannual repayments are to be made of this amount beginning on October 31, 2007 with a final payment of $0.9 million due on October 31, 2009. The loan bears interest at LIBOR plus 2.5% per annum. The balance on this loan at June 30, 2006 was $9.8 million.
  $42.0 million. These facilities comprise a $35.0 million senior facility with a 59 month tenor and a $7.0 million revolving working capital facility. The security in relation to this facility was as follows:
 (1)  fixed and floating charges over the assets of Tolukuma in Papua New Guinea and Western Australia; (2)  fixed and floating charges over the assets of the Porgera Joint Venture, other than which require the consent of the
  (3)  mortgages over the shares of DRD (Porgera) Limited and Tolukuma Gold Mines Limited; (4)  tripartite agreements with key suppliers and contract counterparties; (5)  mortgage over the Tolukuma Tenements; and (6)  fixed and floating charge over the assets of DRD (Isle of Man) Limited.
 
  
  payments only for the first five years of the mortgage. A First Registered Mortgage by Emperor over the property situated at 45 Milman St, Clayfield, Queensland, Australia will be held by ANZ Bank as security for this loan. The loan bears interest at 6.79% per annum. The balance on this loan at June 30, 2006 was $1.1 million.
  months from April 6, 2006 and the loan bears interest at LIBOR plus 2.1% per annum. The original drawdown in relation to this facility was $4.0 million of which $2.0 million has been repaid. The settlement of this facility will coincide with closing out the call options for which the facility was implemented. The balance on this loan at June 30, 2006 was $2.0 million.
   (1)  Property, plant and equipment, $96.6 million (2)  Non-current inventories, $30.2 million (3)  Cash and cash equivalents, $12.3 million (4)  Receivables, $6.1 million (5)  Current inventories, $23.9 million (6)  Current derivative instruments, $2.9 million


110
 
   Finance lease
 Finance leases are effectively secured over vehicles with a carrying value of $1.7 million at June 30, 2006, as the rights of the
 leased assets revert to the lessor in the event of default.
 
  the outstanding balance was $0.6 million, with an applicable interest rate of 7.7%.  Compliance with Loan Covenants
 We have been in compliance with all material covenants contained in the above mentioned convertible notes indenture and
 loan agreements during the periods covered by our financial statements included in this Annual Report
  
 
 Anticipated funding requirements and sources
  (defined as current assets less current liabilities) of $46.2 million, compared to cash and cash equivalents of $36.1 million and positive working capital of $11.6 million at June 30, 2005 and cash and cash equivalents of $22.5 million and negative working capital of $25.0 million at June 30, 2004. At November 30, 2006, our cash and cash equivalents were $28.3 million.
  $145.0 million, which included capital expenditure of $54.2 million as discussed above, interest payments on and the settlement of our convertible notes of $69.6 million, the current portion of other long-term loans of $9.2 million and working capital of approximately $3.0 million. As at June 30, 2006, we expected to finance these commitments from cash resources of $67.3 million at that date, net cash generated by operations and undrawn borrowing facilities of $44.3 million.
  sufficient to meet our anticipated commitments for fiscal  2007  as described above. In making this statement, management has assumed that there will be an increase in production from our South African Operations and  a decrease in production  from our Australasian Operations. Management has assumed a current gold price and exchange rate.
  be adversely affected if:
    there is an adverse variation in the price of gold or foreign currency exchange rates in relation to the US Dollar, particularly with respect to the Rand;
  we default on our borrowing arrangements, including the Investec (Mauritius) facilities or the ANZ Bank facilities, and we are therefore required to accelerate the repayment of funds; or
  our operating results or financial condition are adversely affected by the uncertainties and variables facing our business discussed under Item 5A.: “Operating Results” or the risk factors described in Item 3D.: “Risk Factors.”
    which would have an adverse impact on our financial position and our ability to continue operating as a going concern. We would need to reassess our operations, consider further restructuring and/or obtain additional debt or equity funding. There can be no assurance that we will obtain this additional or any other funding on acceptable terms or at all.


111
 5C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
 
   5D. TREND INFORMATION
 
   211,425 ounces, respectively.
  build-up in seismicity and the intrusion of the Alpha Dyke into planned mining areas in fiscal 2006. Production is being concentrated in other areas of the mine and the volume ramp-up to 70,000 tonnes per month will be achieved in February 2007. This is following a production interruption at No. 6 Shaft, which required limited refurbishment. The  No. 6 Shaft  refurbishment was  completed in October 2006 and the shaft will be back to full production in January 2007.
  management team has been put in place to attempt to improve production, but the largest shortfall in production was at the Barrick-managed Porgera mine in Papua New Guinea. Emperor’s share of production fell to 128,239 ounces in fiscal 2006 compared with 195,394 ounces in fiscal 2005 due to the program to mitigate the failure of the  West  Wall of the open pit. The Company took operational control over Emperor’s Vatukoula mine in  Fiji in July 2005 and immediately implemented an investigative strategy to understand the value of the orebody and to combat the higher costs induced by higher  fuel prices. This culminated in the ACDTP which resulted in the temporary closure of the mine on April 13, 2006. This planned closure provided for a reduction in the workforce and necessary repairs to Philip Shaft that would result in the concentration on higher grade mining without jeopardizing the integrity of the orebody. The mine returned to production in June 2006 and the ramp-up to the planned levels of 10,000 ounces per month was on track.  On October 14, 2006, during the testing of the shaft conveyance, a skip-cage fell down the Philip Shaft causing damages to the surface winder mechanism. Repairs to the damaged shaft were completed on November 14, 2006 and production resumed. On December 5, 2006, after an extensive three-month review of Vatukoula, we determined that continued mining operations at Vatukoula were no longer economically viable and that the mine would therefore cease production. Pending completion of a strategic review to optimize the value of Vatukoula and other Fijian land holdings, the mine has been placed on a care and maintenance program.
  West Wall refurbishment at Porgera, of $15.8 million, while the installation of new mills at Crown’s Knights Plant in South Africa accounted for approximately $2.0 million. The remainder has been spent on ore reserve development and the upgrading of mine infrastructure. In the forthcoming year, we had planned to invest a further US$54.2 million in capital, approximately 45% of which would have been spent in Australasia to support the turnaround there, however pending completion of a strategic review to optimize the value of Vatukoula and other Fijian land holdings, the planned capital expenditure will be revised.
  growth at existing mines and acquisitions of gold mining operations that meet our strategic criteria. As discussed in Item 3D.: “Risk Factors” there are inherent risks involved in acquisitions. In addition, we would need to find financing for these acquisitions through additional borrowings or equity offerings  which may not be available on favorable terms, or at all. We could also seek to use our shares as consideration for acquisitions as we have done in the past, but this will be dependent on market conditions, our share price and our ability to satisfy listing requirements for any such share issues.
 5E. OFF-BALANCE SHEET ITEMS
 
  obligations, special purposes entities or unconsolidated affiliates.


112
 5F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
    
 Payments due by period
  Total
 Less than
 1 year
 Between
 1-3 years
 Between
 3-5 years
 More than
 5 years
  $’000
 $’000
 $’000
 $’000
 $’000
              1
        2
       Total contractual cash obligations
 3
  189,292
 92,263
 22,552
 20,117
 54,360
        5G.
 SAFE HARBOR
 
  
 1
  2
  operate. These regulations establish certain conditions on the conduct of our operations. Pursuant to environmental regulations, we are also obliged to close our operations and reclaim and rehabilitate the lands upon which we have conducted our mining and gold recovery operations. The gross estimated closure costs at existing operating mines and mines in various stages of closure are reflected in this table. For more information on environmental rehabilitation obligations, see Item 4D.:“Property, Plant and Equipment” and Note 18 “Provision for environmental rehabilitation, reclamation and closure costs” to our financial statements.
 3
  royalty payable to the National Government Department of Mining which then distributes it to the Enga Provincial Government, the Porgera District Authority and local landowners.


113
 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 6A. DIRECTORS AND SENIOR MANAGEMENT
 Directors and Executive Officers
  consisted of six directors, while as of June 30, 2005, our board consisted of seven directors.
  directors, on a rotating basis, are subject to re-election at each annual general shareholders’ meeting. Additionally, all directors are subject to election at the first annual general meeting following their appointment. Retiring directors normally make themselves available for re-election.
  Executive Directors
 
 Mark Michael Wellesley-Wood (55)
 Chairman in May 2000 and Chairman and Chief Executive Officer in November 2000. He resigned as Chief Executive Officer and was appointed Executive Chairman on December 19, 2003. In February 2005, when Dr. Paseka Ncholo was appointed as Non-Executive Chairman, he resumed his role as Chief Executive Officer (and has remained in this position since Geoffrey Campbell became Non-executive Chairman in October 2005). Mr. M.M. Wellesley-Wood holds a Bachelor of Science degree in Mining Engineering from the Royal School of Mines, Imperial College London and a Postgraduate Diploma in Business Studies from London Metropolitan University. He is a Chartered Engineer, a Member of the Institution of Mining and Metallurgy, a former Member of the London Stock Exchange, a Fellow of the Securities Institute and a Member of the Society of Investment Professionals. He resigned as a director of Emperor Mines Limited on June 26, 2006. On November 2, 2006, Mr. M.M. Wellesley-Wood announced his retirement from the Company. The effective date of Mr. M.M. Wellesley-Wood’s retirement will  be December 31, 2006. Furthermore, Mr. M.M. Wellesley-Wood was appointed Non-Executive Chairman of DRDGOLD SA with effect from January 1, 2007.
 
 
 John William Cornelius Sayers (60) .
 September 5, 2005. He has almost 40 years’ financial experience, most recently as Financial Director of Nampak Limited, from 1996 to 2004, and as Financial Director of Altron Limited, from 1989 to 1996, with a Bachelor of Science (Hons) degree in Econometrics and Statistics. Mr. J.W.C. Sayers qualified as a chartered accountant in both England and South Africa. Mr. J.W.C. Sayers is also a Non-Executive Director of Emperor Mines Limited and their acting Chief Financial Officer. On December 11, 2006, Mr. J.W.C. Sayers was appointed as Chief Executive Officer with effect from January 1, 2007. Non-Executive Directors
 
 Geoffrey Charles Campbell (45).
 Non-Executive Director in December 2003 and as Non-Executive Chairman in October 2005. A qualified geologist, he has worked on a gold mine in Canada. He then spent 15 years first as a stockbroker and afterwards as a fund manager, during which time he managed the Merrill Lynch Investment Manager’s Gold and General Fund, one of the largest gold mining investment funds. He was also Research Director for Merrill Lynch investment Managers. Mr. G.C. Campbell is Managing Director of Boatlaunch Limited and a director of Oxford Abstracts. On June 26, 2006, he was appointed Non-Executive Chairman of Emperor Mines Limited.
 Robert Peter Hume (66).
 in the auditing field of which the last eighteen years were spent as a partner in the East London (South Africa) office of KPMG. Since retirement in 1999, he has spent seven years as an investment manager at Sasfin Frankel Pollak in East London. Mr. R.P. Hume is also a director of King Consolidated Holdings Limited.
 Douglas John Meldrum Blackmur (62).
 October 2003. He holds a PhD in industrial relations from the University of Queensland and has a career which spans more than 35 years, primarily in the fields of management, corporate governance and research. He currently holds the position of Professor Extraordinary at the University of the Western Cape.


114
 
 James Turk (59).
 Network Limited (GoldMoney.com), the operator of a digital gold currency payment system.  Since graduating from George Washington University with a BA degree in International Economics in 1969, he has specialized in international banking, finance and investments. After starting his career with Chase Manhattan Bank (now J.P. Morgan Chase) he joined RTB, Inc., the private investment and trading company of a prominent precious metals trader in 1980. He moved to the United Arab Emirates in 1983 as Manager of the Commodity Department of the Abu Dhabi Investment Authority. Since resigning from this position in 1987, he has written extensively on money and banking. Senior Management - Corporate
 
  
 Jacob Hendrik Dissel (48
 as Group Financial Manager in October 1999 from AngloGold, where he was financial manager responsible for financial systems. He has 23 years’ experience in the mining industry.  Mr. J.H. Dissel was appointed as acting Chief Financial Officer with effect from January 1, 2007.
 Ilja David Graulich (34
 General Manager Investor Relations, was appointed Group Strategic Development Officer in January 2006. He is a former financial journalist and has 7 years’ experience across a number of media sectors. He has an MBA, is a director of Net-Gold Services Limited, G.M. Network Limited, Emperor Mines Limited and an alternate director of Rand Refinery Limited.
 
 
 Themba John Gwebu (42)
 magistrate prior to joining the Company in April 2004 as Assistant Legal Advisor. He was appointed to his current position of Company Secretary in April 2005.
 Amanda Roxanne Hoosen (28)
 position in October 2004.  She is a graduate in accounting and international business from Drexel University in the United States, and a Certified Public Accountant. She was previously employed in the United States by Cox Enterprises Incorporated and Ernst and Young, LLP.
 Andrew Norman Weir (42)
 in advanced labor law, and he has also completed a Management Development Program (MDP). He was appointed a director of DRDGOLD SA in January 2006. Mr. A.N. Weir has 18 years’ experience in the mining industry.
 Mark Craig Munroe (37)
 and was appointed General Manager at Blyvoor in September 2004. Prior to this he was Manager New Business and Growth Projects. A B.Comm graduate, Mr. M.C. Munroe holds a National Diploma and a National Higher Diploma in Metalliferous Mining. He obtained his Mine Manager’s Certificate of Competency in 1999. He has 20 years’ experience in the mining industry. He was appointed Chief Executive Officer of DRDGOLD Capital Limited in July 2006. Senior Management - South Africa
 
 Craig Clinton Barnes (36)
 Group Financial Accountant. A Chartered Accountant, he has a B.Comm degree from the University of the Witwatersrand, or Wits University, and a B.Com Honors degree from the University of South Africa, or Unisa. Prior to joining the Company, he was head of financial reporting for Liberty Group Limited and he has over eight years’ financial experience. He was appointed as Chief Financial Officer of DRDGOLD SA in July 2006. He is an alternate director of G.M. Network Limited and Net-Gold Services Limited.
 Manuel Da Silva (36)
 and obtained his Mine Manager’s Certificate in 1995. He joined the Company as Production Manager at  Blyvoor in 2002 and was appointed to his current position in August 2005. He has 14 years’ experience in the mining industry.
 Henry Gouws (37)
 Higher Diploma in Extraction Metallurgy in 1991. He completed an MDP in 2003 through Unisa School of Business Leadership. He was appointed Operations Manager of Crown in January 2006 and General Manager in July 2006. He has 18 years’ experience in the mining industry.
 Kevin Peter Kruger (38)
 a BSc degree in mechanical engineering from Wits University and joined the Company in 1994. Previously Engineering Manager at the Company’s North West Operations, he was appointed to his current position in April 2005.


115
  Louis Charles Lamsley (58)
 Metalliferous Mining and a Mine Manager’s Certificate of Competency, was appointed to his current position in January 2006. He has 33 years’ experience in the gold mining industry, 25 years of which have been spent in management.
 Hurwa Ben Nyirenda (43)
 Services Manager at Blyvoor in May 2004, transferring to the company’s North West Operations as Production Manager in October 2004. He has been the Head of New Business for DRDGOLD SA since January 2006. A graduate of the Camborne School of Mines, England, he holds a BSc (Hons) in Mining Engineering, an MSc in Mining Engineering from the University of the Witwatersrand and an MBA from the Wits Business School. A registered professional engineer with ECSA since 1998, he obtained his mine Manager’s certificate in 1995. He has 25 years’ experience in the mining industry, in both gold and diamond sectors. He has also worked in the field of financial management.
  
 Daniel Johannes Pretorius (39)
 holds a B.Proc, LLB degree was appointed Group Legal counsel for the Company in February 2003. He has 13 years’ of experience in the mining industry. He was appointed as Chief Executive Officer of DRDGOLD SA in July 2006 and is also a director of Rand Refinery Limited.
 Cornelius Russouw (48)
 He was previously Mine Manager at Harmony Gold Mining Company Limited’s Virginia Operations and has held various mining-related positions within Harmony and GenGold/Gold Fields. During a career spanning 25 years, he has a B Tech degree in mining engineering, a national diploma in Metalliferous Mining and a National higher diploma in Metalliferous Mining.
 Wayne Swanepoel (43)
 position on April 1, 2005. Previously, he was Human Resources Manager at Crown and Senior  Human Resources Manager at Rand Mines’ Duvha Opencast Colliery. He holds a BA degree from Rhodes University and has completed the Management Development Program and Development Program in Labor Relations, both at the University of South Africa’s School of Business Leadership, and an advanced diploma in Labor Law at the University of Johannesburg. He has 16 years’ experience in the mining industry.
 Charles Methley Symons (52)
 Manager Crown in 1997 and to his current position in January 2006.  He holds a Masters degree in Business Leadership and a B.Comm degree from Unisa, and he also has a National Diploma in Extractive Metallurgy.
 Phillip Watters (50)
 current position on August 1, 2005. He was previously General Manager ERPM. Mr. P. Watters, who obtained a Mine Manager’s certificate in May 2004, has a total of 30 years experience in mining, 23 years of which were spent with Gold Fields and four with Anglo American. His career includes both production and project management experience.
 David Edwin Whittaker (50)
 his current position in April 2005. He has a BSc Honors degree from Luton College of Higher Education, a diploma in mining engineering from the Camborne School of Mines and a graduate diploma in engineering from Wits University. He has 24 years’ experience in the mining industry. Senior Management - Australasia
    Patrick Bindon (36)
 Port Moresby office where his role as external affairs coordinator involved managing all media relations and providing high-level political and external affairs advice to management. He obtained a Bachelor’s degree in Applied Science in 1991.
 Frazer Bourchier (40)
 Master’s degrees in Applied Science. He has more than 16 years’ experience in the gold mining industry, most of which were spent with the Placer Dome Group in Canada, South Africa and Papua New Guinea. Prior to his appointment as General Manager of Emperor’s Vatukoula Gold Mine in Fiji in June 2006, he was Mining Manager and alternate General Manager at the Porgera Joint Venture in Papua New Guinea.
 Quinton Brand (33)
 November 1, 2005. He joined the Company in 2002 as an engineering manager at ERPM and was transferred to Emperor in Fiji in the same position in 2004. Prior to 2002, he worked for Impala Platinum Limited as an operations engineer. He has had 15 years’ experience in the gold, platinum and coal mining industries.


116
  Vanessa Chidrawi (35)
 was a director and profit-sharing partner in the firm WS van Vuuren Incorporated Attorneys for nearly 10 years, after which she established her own practice. Her experience includes overseeing the firm’s High Court litigation practice, international clientele, black economic empowerment consulting, and commercial consulting and drafting.
 Bradley Gordon (44)
 He has more than 10 years’ experience in senior management positions in the gold industry in Australia, Papua New Guinea and Fiji. He was most recently employed as Managing Director of Placer Dome Niugini Limited and prior to that as General Manager of Porgera. Apart from the Porgera operation, he was also responsible for the Misima operation in the country. His experience includes many years in Fiji, where he was employed by Emperor as operations Manager of the Vatukoula Gold Mine and General Manager of Tuvatu Gold Mining Company Limited, a wholly owned subsidiary of Emperor. Mr. B. Gordon has a Bachelor’s degree in Engineering and an MBA.
 Clyde Moore (48)
 Emperor in January 2006. He joined Emperor after working for the past eight years at the Australian and New Zealand Banking Group Limited (ANZ), most recently as global Head of Project and Structured Financing, based in Melbourne. Prior to 2004 he was Head of Natural Resources within ANZ’s Institutional Bank. He has 27 years’ experience in the finance industry, including senior roles in the Americas with Dresdner Kleinwort Benson, Bank of America and Continental Illinois. He obtained a Bachelor’s degree in Economics in 1980. Emperor announced the resignation of Mr. C. Moore as Executive Director and Chief Financial Officer effective November 20, 2006. Mr. C. Moore resigned for personal reasons, but will continue to work with Emperor on selected projects in the future. Mr. J.W.C. Sayers is the acting Chief Financial Officer of Emperor.
 Malcolm Norris (47)
 Manager Exploration on September 1, 2006 from Indophil Resources, where he was General Manager Exploration and Business Development. He previously held senior positions with WMC Resources. A member of the Australasian Institute of Mining and Metallurgy and of the Society of Economic Geologists, he holds BSc Honours (Geology) and MSc degrees.
 Bradley Sampson (40)
 2006, with principal responsibility for Tolukuma in Papua New Guinea and for overseeing Emperor’s 20% stake in the Porgera Joint Venture, also in Papua New Guinea. He was previously General Manger at Gold Fields Limited’s St Ives Mine in Western Australia and Kloof operation in South Africa, and has also held positions with Anglo American, Ross Mining NL and Comalco. A member of the Australian Institute of Company Directors and the Australian Institute of Mining and Metallurgy, he holds Bachelor of Engineering and Master of Business Administration degrees.
 John Wallace (58)
 industry, primarily in the South Pacific region with extended periods working in human resources at Misima, Ok Tedi and Lihir in Papua New Guinea; Kaltim Prima Coal in Indonesia; and Gold Ridge in the Solomon Islands. He has extensive knowledge of the working conditions and requirements in these regions. Changes in our Board of Directors and Executive Officers
   Appointments
 Title
 Date
  1
        Resignations
 Title
 Date
       
 
 1


117
 Directors' Terms of Service
  directors:
 Director
 Title
 Year first appointed
 Term of
 current
 office
                                 *  Reappointed in 2005; retired with effect from December 31, 2006 #  Resigned October 25, 2005 ##  Resigned November 30, 2005 ###  Appointed Chief Executive Officer with effect from January 1, 2007
  understandings between any of our directors or executive officers and any other person by which any of our directors or executive officers has been so elected or appointed.
 6B. COMPENSATION
   quorum of Non-Executive Directors. The total amount of directors' remuneration paid for the year ended June 30, 2006 was R17.9 million ($2.8 million). Non-Executive Directors receive a basic fee of $30,000 per annum, subcommittee fees of $2,000 per annum for each subcommittee of which they are a member and $4,000 per annum for each subcommittee of which they are chairperson.
   Directors
 Basic
 salary/fees
 ($'000)
 End of contract
 payment
 ($'000)
 Retirement fund
 contributions/
 bonus/restraint
 of
 trade/expenses
 ($'000)
 Total
 ($'000)
 Share option
 scheme gains
 ($'000)
 Executive
            I.L. Murray........................................................ JWC Sayers.......................................................
 271 263
     628 263
 - -
 Subtotal
 1,100
 498
 858
 2,456
 -
 Non-Executive
  
                      D.J.M. Blackmur............................................... J Turk.................................................................
 36 27
 - -
 16 27
 52 54
 - -
 Subtotal
 195
 -
 131
 326
 -
 Total
 1,295
 498
 989
 2,782
 -


118
 Compensation of senior management
 Our senior management comprises its executive directors and executive officers. Under the JSE Listing Rules we are not
 required to, and we do not otherwise, disclose compensation paid to individual senior managers other than Executive and Non-Executive Directors. However, the aggregate compensation paid to executive officers, excluding compensation paid to Executive Directors, in fiscal 2006 was $5.4 million (fiscal 2005: $1.8 million), representing 31 executive officers in fiscal 2006 and 12 executive officers in fiscal 2005.
  director meet all the targets set in terms of such predetermined key performance indicators, he will be entitled to a bonus of up to 50% of his remuneration package, depending on his particular agreement. Should an Executive Director not meet all the targets set in terms of the predetermined key performance indicators, he will be entitled to a lesser bonus as determined by the Remuneration and Nominations Committee. Service Agreements
  employment and are approved by our Remuneration and Nominations Committee.
  employment with us, DRDGOLD SA and DRD (Isle of Man) on December 1, 2005 and September 5, 2005, respectively. These agreements regulate the employment relationship with Messrs. M.M. Wellesley-Wood and J.W.C. Sayers. Separate agreements of employment were entered into with us and DRD (Isle of Man) to reflect the proportionate distribution of time and effort which they apply between our South African and Australasian operations. Mr. Wellesley-Wood’s DRD (Isle of Man) contract has been transferred to DRD (Offshore) with effect from July 1, 2006.
  inclusive remuneration package from DRD (Offshore) of $270,000 per annum (payable in pounds sterling). He is also eligible, under this agreement, to receive an incentive bonus of up to 50% of his annual remuneration package in respect of each of two bonus cycles of 6 months each, over the duration of his appointment, on condition that he achieves certain agreed key performance indicators. Mr. M.M. Wellesley-Wood’s agreements also provide that he will receive a total of up to 500,000 of our ordinary shares in two equal tranches at intervals of 6 months over the duration of his agreements of employment. In terms of a JSE listing requirement, these allotments were subject to approval by shareholders. We have since decided, and Mr. M.M. Wellesley-Wood has agreed, that we will not seek the consent of our shareholders and that he will not be issued these shares. An alternate means of achieving the objective of the retention incentive has been implemented through the payment of a bonus. Mr. M.M. Wellesley-Wood became entitled to an amount of R1.8 million ($0.3 million) on the expiry of his previous agreement on November 30, 2005, which was equal to half his remuneration package calculated on the basis of the remuneration package on the date of termination of employment.
 Mr. J.W.C. Sayers receives from us an all-inclusive remuneration package of R2.0 million ($0.3 million) per annum.
 Mr. J.W.C. Sayers is eligible under his employment agreement, for an incentive bonus of up to 50% of his annual remuneration package in respect of each of four bonus cycles of 6 months each over the duration of his appointment, on condition that he achieves certain key performance indicators.
    terminated by us, or DRD (Offshore) in the case of our executive officers, except where terminated as a result of certain action on the part of the director, or upon the director reaching a certain age, or by the director upon the occurrence of a change of control of us. A termination of a director's employment upon the occurrence of a change of control of us is referred to as an “eligible termination.” Upon an eligible termination, the director is entitled to receive a payment equal to at least one year's salary or fees, but not more than four years salary or fees, depending on the period of time that the director has been employed. Upon an eligible termination, all options held by the director under our share option scheme become exercisable by the director at any time prior to the closing of the transaction involving a change of control or, in certain circumstances in the case of executive directors, during the thirty day period following the closing of such a transaction. Additionally, upon an eligible termination, the executive directors become entitled to any of the shares granted to such executive director that have not yet vested, subject to shareholder approval. Moreover, the Board of Directors may, at its discretion, accelerate the issuance of shares granted to the executive directors that are scheduled to vest following the expiration of the agreement in the event that the agreement automatically terminates and is not extended or replaced by another agreement with the executive director. Non-Executive Directors receive an annual share allocation to the value of 60% of the fees the individual directors received during 12 months preceding the allocation.


119
   until October 31, 2007, September 30, 2006, October 31, 2007 and October 31, 2006, respectively. After their two year period, the agreements continue indefinitely until terminated by either party on not less than three months prior written notice.
 6C. BOARD PRACTICES
 Board of Directors
  J.W.C. Sayers) and four Non-Executive Directors (Messrs. G.C. Campbell, D.J.M. Blackmur, R.P. Hume and J. Turk). The Non-Executive Directors are independent under the Nasdaq requirements and the South African King II Report, with the exception of Mr. J. Turk, by virtue of his directorship of G.M. Network Limited (GoldMoney.com), the holding company of Net-Gold Services Limited in which we have a 50.25% interest.
 In accordance with the King II Report on corporate governance, as encompassed in the JSE Listings Requirements, and in
 accordance with the United Kingdom Combined Code, the responsibilities of Chairman and Chief Executive Officer are separate. Mr. G.C. Campbell is now the Non-Executive Chairman, Mr. M.M. Wellesley-Wood is now the Chief Executive Officer and Mr. J.W.C. Sayers the Chief Financial Officer. Professor D.J.M. Blackmur was appointed senior independent Non-Executive Director. In future, the evaluation of the Chairman’s performance will be considered by the Non-Executive Directors led by the senior independent Non-Executive Director. The board has established a nominations committee, and it is our policy for details of a prospective candidate to be distributed to all directors for formal consideration at a full meeting of the board. A prospective candidate would be invited to attend a meeting and be interviewed before any decision is taken. In compliance with the Nasdaq rules a majority of independent directors will select or recommend director nominees.
 The board’s main roles are to create value for shareholders, to provide leadership of the Company, to approve the Company’s
 strategic objectives and to ensure that the necessary financial and other resources are made available to management to enable them to meet those objectives. The board retains full and effective control over the Company, meeting on a quarterly basis with additional ad hoc meetings being arranged when necessary, to review strategy and planning and operational and financial performance.  The board further authorizes acquisitions and disposals, major capital expenditure, stakeholder communication and other material matters reserved for its consideration and decision under its terms of reference.  The board also approves the annual budgets for the various operational units.
 The board is responsible for monitoring the activities of executive management within the Company and ensuring that
 decisions on material matters are referred to the board.  The board approves all the terms of reference for the various subcommittees of the board, including special committees tasked to deal with specific issues. Only the executive directors are involved with the day-to-day management of the Company.
 To assist new directors, an induction program has been established by the Company, which includes background materials,
 meetings with senior management, presentations by the Company’s advisors and site visits. The directors are assessed annually, both individually and as a board, as part of  an evaluation process, which is driven by an independent consultant.  In addition, the Remuneration and Nominations Committee formally evaluates the executive directors and the alternate directors on an annual basis, based on objective criteria.
 All directors, in accordance with the Company’s Articles of Association, are subject to retirement by rotation and re-election
 by shareholders.  In addition, all directors are subject to election by shareholders at the first annual general meeting following their appointment by directors.  The appointment of new directors is approved by the board as a whole.  The names of the directors submitted for re-election are accompanied by sufficient biographical details in the notice of the forthcoming annual general meeting to enable shareholders to make an informed decision in respect of their re-election.
 All directors have access to the advice and services of the Company Secretary, who is responsible to the board for ensuring
 compliance with procedures and regulations of a statutory nature.  Directors are entitled to seek independent professional advice concerning the affairs of the Company at the Company’s expense, should they believe that course of action would be in the best interest of the Company.
 A majority of the  Non-Executive Directors have share options under the Company’s share option scheme, but we do not
 believe that this interferes with their independence.  Since December 2004, neither the Executive Directors, nor the Non-Executive Directors were issued new share options.  See Item 6A.: “Directors, Senior Management and Employees” and Item 6E.: “Share ownership”.


120
  meetings, which are scheduled over 2 or 3 days, allows adequate time for the Non-Executive Directors to interact without the presence of the executive directors. The board meetings include the meeting of the Risk Committee, Audit Committee and Remuneration and Nominations Committee which act as subcommittees to the  board. Each subcommittee is chaired by one of the Independent Non-Executive Directors who provide a formal report back to the  board, as part of the quarterly reporting process. Each subcommittee meets for approximately half a day. Certain senior members of staff are invited to attend the subcommittee meetings.
 The board sets the standards and values of the Company and much of this has been embodied in the Company’s Code of
 Ethics and Conduct, a copy of which is available on our website at www.drdgold.com. The Code of Ethics and Conduct applies to all directors, officers and employees, including the principal executive, financial and accounting officers, in accordance with Section 406 of the US Sarbanes-Oxley Act of 2002, the related US securities laws and the Nasdaq rules. The Code contains provisions under which employees can report violations of Company policy or any applicable law, rule or regulation, including US securities laws.
  Executive Committees
  Committee for the South African operations. As at November 30, 2006, the Australasian Executive Committees consisted of Mr. B. Gordon (Chairman), Mr. B. Sampson, Mr. F. Bourchier, Mr. M. Norris, and Mr. J. Wallace.  The South African operations Executive Committee consisted of Mr. D.J. Pretorius (Chairman), Mr. C.C. Barnes, Mr. J.H. Dissel, Mr. T.J. Gwebu, Mr. I.D. Graulich, Mr. N.B. Nyirenda, Mr. K.P. Kruger, Mr. L.C. Lamsley, Mr. J.W.C. Sayers, Mr. A.N. Weir, and Mr. M.M. Wellesley-Wood.
  for consideration by the  board of  directors, implement its directives and consider disclosure controls and procedures. Members of the Executive Committees, who are unable to attend the meetings in person, are able to participate via teleconference facilities, to allow participation in the discussion and conclusions reached.  Board Committees
  and to effectively fulfill its decision-making process. Each committee acts within written terms of reference which have been approved by the board and under which specific functions of the board are delegated. The terms of reference for all committees can be obtained by application to the Company Secretary at the Company’s registered office. Each committee has defined purposes, membership requirements, duties and reporting procedures. Minutes of the meetings of these committees are circulated to the members of the committees and made available to the board. Remuneration for Non-Executive Directors for their services on the committees concerned is determined by the board. Currently this is in the case of each committee: chairperson $4,000 per annum; members $2,000 per annum. The committees are subject to regular evaluation by the board with respect to their  performance and effectiveness.
 The following information reflects the composition and activities of these committees.
 Committees of the Board of Directors Remuneration and Nominations Committee
  R.P. Hume.
  board of directors. The committee meets quarterly, but may meet more often on an ad hoc basis if required. The Remuneration and Nominations Committee is governed by its terms of reference and is responsible for approving the remuneration policies of the Company, the terms and conditions of employment, and  the eligibility and performance measures of the DRDGOLD (1996) Share Option Scheme applicable to directors and senior management.


121
  executives of the highest caliber and encourage and reward superior performance. The committee also aims to ensure that criteria are in place to measure individual performance. The committee approves the performance-based bonuses of the executive directors based on such criteria. The General Manager Human Resources provides the committee with access to comparative industry surveys, which assist in formulating remuneration policies. As and when required the committee may also engage the services of independent consultants to evaluate and review remuneration policies and related issues and brief members on pertinent issues. The committee has in the past year engaged the services of such consultants to review the employment contracts of the executive directors.
 The remuneration policy, relating to the remuneration of directors and senior executives, is based on a reward system
 comprising of four principal elements:
        Long-term retention of key employees based on scarcity of skill and strategic value, using share options granted under the DRDGOLD (1996) Share Option Scheme or shares for the Executive Directors.
    Audit and Risk Committee
   The members meet and the business of each committee is handled in joint deliberations taking place on the issues raised. The Audit Committee part of the meeting is chaired by  Mr. R.P. Hume and  the Risk  Committee part of the meeting is  chaired by Professor D.J.M. Blackmur. The reason for the joint sittings is that there is a great deal of overlap between the financial risks discussed at Audit Committee level and at Risk Committee level. The joint sittings of the Committees bring about better disclosure and ensures that the Company conforms more closely with the process prescribed by the US Sarbanes-Oxley Act of 2002.
  Audit Committee
  Blackmur.
  responsibilities of the Audit Committee, as set out in the Audit Committee charter, is to assist the board in carrying out its duties relating to accounting policies, internal financial control, financial reporting practices and the preparation of accurate financial reporting and financial statements in compliance with all applicable legal requirements and accounting standards. A copy of the charter is available by application to the Company Secretary at the Company’s registered office.
    Financial Officer and the Internal Audit and Compliance Manager to review the audit plans of the internal auditors, to ascertain the extent to which the scope of the internal audits can be relied upon to detect weaknesses in the internal controls and to review the annual and interim financial statements prior to approval by the board.  The Audit Committee reviews our annual results, the effectiveness of our system of internal financial controls, internal audit procedures and legal and regulatory compliance. The committee also reviews the scope of work carried out by our internal auditors and holds regular discussions with the external auditors and internal auditors.
 The committee appoints, re-appoints and removes the external auditors and approves the remuneration and terms of
 engagement of the external auditors.  The committee is required to pre-approve, and has pre-approved, non-audit services provided by our external auditors. The Company’s external audit function is currently being undertaken by KPMG Inc.
 The Company’s internal and external auditors have unrestricted access to the chairman of the Audit Committee and, where
 necessary, to the Chairman of the board and Chief Executive Officer. All important findings arising from audit procedures are brought to the attention of the committee and, if necessary, to the board.


122
 Risk Committee
  Mr. J. Turk.
  board in its duties relating to risk management and control responsibilities, assurance issues, health, safety and environmental compliance, and the monitoring and reporting of all these matters. The Risk Committee facilitates communication between the board, the Audit Committee, internal auditors and other parties engaged in risk management activities. The terms of reference of the Risk Committee can be obtained by application to the Company Secretary at the Company’s registered office.
  
  
              the Company’s activities are carried out in such a way so as to ensure the safety and health of employees.
  required.  Certain members of executive management are invited to attend Risk Committee meetings on a regular basis, such as the Chief Financial Officer, Internal Audit and Compliance Manager, the Group  Risk Manager, the Group Financial Manager, the Operational Managers, the Group Legal Counsel, the manager responsible for safety, health and environment and the General Manager Assets and Commercial.
 Following the release of the King II Report, in South Africa, containing minimum practices to be adopted, we have
  The system to manage risk involves all significant business and operational risks which could undermine the achievement of
 business objectives and undermine the preservation of shareholders values. The significant risks facing the Group including those at operations have been identified and have been included in Item 3D.: “Risk factors.” Individuals have been appointed to address each risk and the results thereof are reviewed by senior management through regular risk meetings. The aim of the internal control systems is for management to provide reasonable assurance that the objectives will be met. In addition to the above initiatives the Group also employs third party consultants to benchmark our operations against other mining operations throughout South Africa and more than 300 different mining companies worldwide.
  disaster. We have embarked on a program to ensure that our major assets and potential business interruption and liability claims are covered by group insurance policies that encompass our operations world-wide.  The majority of the cover is through reputable insurance companies in London and Europe and the insurance programs are renewed on an annual basis. A cell captive has been established to enable further reduction in annual insurance premiums. An insurance company, Fortis Limited, has been established to provide workers compensation insurance to Tolukuma in Papua New Guinea.
 
 6D. EMPLOYEES
 Employees
   
 Year ended June 30
 
 2006
 2005
 
 2004


123
   employed by us and our wholly-owned Group companies. As of November 30, 2006, we had  10,067 employees. The increase in the number of employees in fiscal 2006 is due to the restructuring during fiscal 2006 which incorporated Crown, ERPM (December 2005) and Emperor (April 2006). The decrease in the number of employees in fiscal 2005 was due to the provisional liquidation of the North West Operations which included 7,614 employees in March 2005.
  and 2004 excludes Porgera, Emperor, Crown and ERPM):
 
 Year ended June 30,
 Category of Activity
 2006
 2005
 2004
                                                 Labor Relations
   in Australia. This excludes all employees from our 20% interest in the Porgera Joint Venture.  Approximately 70% of South African employees are members of trade unions or employee associations. There were no material incidents of industrial action or labor unrest at our operations during fiscal 2006.
  place in the country have reduced the impact of organized labor on political transformation. The  National Union of Mineworkers, or NUM, the main South African mining industry union, is influential in the tripartite alliance between the ruling African National Congress, the Congress of South African Trade Unions, or COSATU, and the South African Communist Party as it is the biggest affiliate of COSATU. The relationship between management and labor unions remains cordial. The DRDGOLD / National Union of Mineworkers coordinating forum meets regularly to discuss matters pertinent to both parties at a DRDGOLD SA level, while operations level forums continue to deal with local matters. The wage agreements for 2005 to 2007 provided for wage increases of 6% for the first year and 6.5% increase for the second year. This agreement took effect from July 1, 2005. Wage agreements were also signed with the other recognized unions and associations.
  operations, a severance package of not less than one week’s remuneration for every completed year of service. In the aforementioned agreements with organized labor we undertook, as in the past, to pay packages equal to two weeks basic pay for every completed year of service as part of a balancing compromise with the labor unions between the high additional costs of non-financial items and incentive payments (which are deemed part of remuneration), and an additional one week benefit based on basic pay.
  communities are maintained by way of worker consultative committees and a community forum lead by the Community Relations Manager.
  productivity and increased medical costs. The exact extent of infection in our workforce is not known at present, although it is roughly estimated by the industry that the prevalence of HIV, the virus that causes AIDS, in the South African industry is currently approximately 30% to 40%.  We have several AIDS awareness campaigns in place at our operations.


124
   treats AIDS related illnesses, provides counseling on healthy life styles and monitors the progression of the HIV virus.  Safety statistics
  following 2006 overall statistics for our managed mines (including Crown, ERPM and Emperor, but excluding Porgera) are reflected below (2005 statistics includes Crown and ERPM, but excludes Porgera and Emperor): (Per million man hours)
 Year ended June 30,
  2006
 2005
  1
     1
           6E. SHARE OWNERSHIP
 
  Directors
 Options at
 June 30,
 2005
 Options
 granted
 during the
 period
 Average
 Exercise
 price (R)
 Options
 exercised
 during the
 year
 Average
 Exercise
 Price (R)
 Options
 lapsed
 during the
 year
 Options at
 Nov 30,
 2006
 Expiration
 Dates
 2
 
          Executive
                   3
          Non-Executive
          4
                           
  
  or could potentially become aware of material price sensitive information, such as information relating to an acquisition, quarterly results etc., which is not in the public domain.  When these employees have access to this information an embargo is placed on share trading for those individuals concerned.  The embargo need not involve the entire Company in the case of an acquisition and may only apply to the board of directors, executive committee, and the financial and new business teams, but in the case of quarterly results the embargo is group-wide.
  ownership of individual executive officers in our share capital.  However, to the best of our knowledge, we believe that our ordinary shares held by executive officers, in aggregate, do not exceed one percent of the Company’s issued ordinary share capital. For details of share ownership of directors see Item 7A.: “Major Shareholders.”
 
 1
  2
   3
  4


125
 DRDGOLD (1996) Share Option Scheme, or the Scheme
  employees whose skills and experience are recognized as being essential to the Company’s performance. In terms of the Scheme rules, a maximum of 15% of the issued ordinary shares is reserved for issuance thereunder and no participant may hold options at any time, which if exercised in full, would exceed 2% of our issued share capital at that time. As at November 30, 2006,  the number of issued and exercisable share options is approximately  5% of the issued ordinary share capital, which is within the National Association of Pension Funds (United Kingdom) international accepted guideline of 3 to 5% for such schemes. In addition, the participants in the Scheme are fully taxed at their maximum marginal tax rate on any gains realized on the exercise of their options.
  ordinary share on the JSE, as confirmed by our directors, during the three months preceding the day on which the employee is granted the option. Each option remains in force for ten years after the date of grant, subject to the terms of the option plan. Options granted under the plan vest at the discretion of our directors, but primarily according to the following schedule over a maximum of a three year period:
 Percentage vested in each period
 Period after the original date of the option grant
         
  exercised. The previous bi-annual allocation of options was changed in April 2006 to an annual allocation.
  9,257,847 ordinary shares were currently exercisable. In fiscal 2006, a total of 102 employees participated in the Scheme including Executive Directors, Non-Executive Directors and other senior employees. Since December 2004, neither the Executive Directors, nor the Non-Executive Directors were issued new share options. The outstanding options are exercisable at purchase prices that range from R3.11 to R36.08 per share and expire ten years from the date of issue to the participants.


126
 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
  7A. MAJOR SHAREHOLDERS
 
        
  government and there are no arrangements, the operation of which may at a subsequent date result in a change in control of us.
    there were 5,335 record holders of our ordinary shares in South Africa, who held approximately  35,340,761 or approximately 10.7% of our ordinary shares;
  there was one record holder of our cumulative preference shares in South Africa, who held 5,000,000 or 100% of our cumulative preference shares;
    there were 3,252 record holders of our ADSs in the United States, who held 248,195,056 approximately or approximately 75.0% of our ordinary shares.
 
      any person whom the directors are aware of as at November 30, 2006 who is interested directly or indirectly in 5% or more of our ordinary shares.
  
 Shares Beneficially Owned
 Holder
 Number
 Percent
     *
   *
   *
   *
   *
   *
  Bank of New York ADRs 101 Barclay Street New York, NY 10011
   * Indicates share ownership of less than 1% of our outstanding ordinary shares.
  with respect to securities. Ordinary shares issuable pursuant to options, to the extent the options are currently exercisable or convertible within 60 days of  November 30, 2006, are treated as outstanding for computing the percentage of any other person. As of November 30, 2006, we are not aware of anyone owning 5% or more of our ordinary shares other than the Bank of New York which holds 75.0% of our issued ordinary shares through our ADR program. Unless otherwise noted, each person or group identified possesses sole voting and investment power with respect to the shares, subject to community property laws where applicable. Unless indicated otherwise, the business address of the beneficial owner is: DRDGOLD Limited, EBSCO House 4, 299 Pendoring Avenue, Blackheath, Randburg, South Africa.


127
 Cumulative Preference Shares
  Randgold's address is 28 Harrison Street, Johannesburg, South Africa.
  six months. The terms of issue of the cumulative preference shares are that they carry the right, in priority to the Company's ordinary shares, to receive a dividend equal to 3% of the gross future revenue generated by the exploitation or the disposal of the Argonaut mineral rights acquired from Randgold & Exploration Company Limited in September 1997. They will only obtain their potential voting rights once the Argonaut Project becomes an operational gold mine, and dividends accrue to them. Additionally, holders of cumulative preference shares may vote on resolutions which adversely affect their interests and on the disposal of all or substantially all of our assets or mineral rights. There is currently no active trading market for  our cumulative preference shares. No shareholder has voting rights which differ from the voting rights of any other shareholder. On May 1, 2005, the Argonaut mineral rights reverted to the South African State, in terms of the MPRD Act. On February 6, 2006, a prospecting right covering an area of 969 hectares over part of the Argonaut Project was obtained.
 7B.
 RELATED PARTY TRANSACTIONS
 Rand Refinery Agreement
  Africa. Under the agreement, RRL performs the final refining of our gold and casts it into troy ounce bars. RRL then sells the gold on the same day as delivery, at the London afternoon close price on the day the gold is sold. In exchange for this service, we pay RRL a variable refining fee plus fixed marketing, loan and administration fees. For fiscal 2006 this amounted to $0.3 million and $0.4 million and $0.9 million for fiscal 2005 and 2004, respectively. Mr. D.J. Pretorius, CEO of DRDGOLD South Africa (Pty) Limited, is also a director of RRL and is a member of their audit committee. Also, Mr. I.D. Graulich, our Group Strategic Officer, is an alternate director to Mr. D.J. Pretorius. With the provisional liquidation of Buffelsfontein Gold Mines Limited on March 22, 2005, our 10.6% interest in RRL decreased to our current ownership of 4.1%. RRL is jointly owned by South African gold mining companies.  C. Press Loan
  company, loaned an amount of $24,946 to Net-Gold. This loan is interest free, unsecured and has no fixed terms of repayment. The funds were used for short-term working capital advances.  As at November 30, 2006, the full balance was still outstanding. iProp Loan Note
  recorded as owing by Crown to us. At the time, Crown was an indirect wholly-owned subsidiary of CCGR. We sold 60% of our interest in Crown to KBH. This amount was originally owed by Crown to iProp Limited (previously known as RMP Properties SA Limited), or iProp, in terms of a secured loan note. In an arrangement in which JCI Gold Limited, or JCI, paid iProp R38.0 million ($3.7 million) in exchange for an issue by us to JCI of 8,000,000 ordinary shares, the loan note was ceded to us. The loan note has now been cancelled and restated in terms of the loan agreement entered into on June 12, 2002. The total amount outstanding on this loan as of November 30, 2006, is R54.6 million ($7.7 million). The loan bears interest at the prime rate of The Standard Bank of South Africa Limited. During fiscal 2006 we agreed to suspend the interest accrual with effect from November 30, 2005 indefinitely. As of June 30, 2006, the interest rate was 10.5% per annum and as of  November 30, 2006, the interest rate on this loan stood at 12.0%. The loan is repayable on demand within seven years. During fiscal 2005 we agreed to suspend our right to demand repayment indefinitely. The loan is unsecured. In terms of the loan agreement the principal amount will be repaid in equal annual installments. As at November 30, 2006, this balance was still owing to us, however, we have recognized an impairment against this loan and it is carried at a nil value.


128
 Crown Gold Recoveries (Pty) Limited
  loan agreement entered into on June 12, 2002. Prior to this, Crown was an indirect wholly-owned subsidiary of ours. The loan bears interest at the prime rate of The Standard Bank of South Africa Limited. The loan was fully repaid in November 2005.
  second being for R37.7 million ($3.6 million). The first loan is payable on demand within three years from such a demand having been made and interest is payable annually in arrears and the second loan is payable on demand within seven years from such a demand having been made and interest is payable annually in arrears. During fiscal 2005 we reached an agreement with Crown that we would suspend our right to demand repayment of this balance indefinitely, due to the loss making position of Crown. The total amount outstanding on these loans, as at October 31, 2006, is R55.1 million ($7.4 million), however, we have recognized an impairment against this loan and it is carried at a nil value. During fiscal 2006 we agreed to suspend the interest accrual with effect from November 30, 2005 indefinitely.
  CCGR and Crown. This shareholder agreement documents three previously interest free loans from CCGR to Crown totaling R190.0 million ($30.3 million). Under the terms of the share purchase agreement, 57% (R108.0 million ($17.2 million)) of the principal amount of these loans were sold to IDC and 3% (R5.7 million ($0.9 million)) to KBH. However, upon KBH exercising its option to purchase IDC's interest in Crown, IDC's portion of this loan was ceded to KBH. These balances are still outstanding as at November 30, 2006, however, we have recognized an impairment against this loan and it is carried at a nil value. During fiscal 2006 we agreed to suspend the interest accrual with effect from November 30, 2005 indefinitely.
  of our shares, representing a cost of R28.9 million ($4.3 million). These balances are still outstanding as at November 30, 2006.
  as of November 30, 2006, stood at 12.0%. It is the intention of the parties to amend the terms of the shareholders' loans. During fiscal 2006 we agreed to suspend the interest accrual with effect from November 30, 2005 indefinitely.
  issued to KBH were subject to a put and call option instrument between KBH and Investec, with the shares held as security.  The option was exercised and Investec took possession of the shares in three equal tranches in June, July and August 2004. East Rand Proprietary Mines Limited
  Schouten, Moltin Paseka Ncholo, Masechaba Palesa Moletsane Ncholo, Michelle Patience Baird, Derek Sean Webbstock, or collectively the Sellers, and Crown, entered into an agreement pursuant to which Crown agreed to purchase from the Sellers the entire issued share capital and shareholders' claims of ERPM. At the time Dr. M.P. Ncholo was one of our non-executive directors and we owned a 40% interest in Crown. The purchase price for the acquisition of the entire issued share capital and the value of shareholders’ claims was R100.0 million ($9.5 million). Crown loaned an amount of R60.0 million ($5.7 million) to the Sellers as an interest free loan, and Crown received from the Sellers, as security for the loan, a pledge of the entire issued share capital of ERPM and a cession of the Sellers' claims to Crown. The conditions of the sale were fulfilled and the amount was deemed to be paid to the Sellers on account of the purchase price.  An existing mortgage bond registered by ERPM in favor of Courthiel Holdings (Pty) Limited securing shareholder loans in the sum of R10.0 million ($1.9 million) was also ceded to Crown as security on October 11, 2002. The full amount is still owing under the bond.
  ($5.7 million) loan was deemed to be part payment of the purchase price. As to the balance of the purchase price of R40.0 million ($3.8 million), KBH, a 60% shareholder in Crown, agreed to use its best endeavors to obtain a loan of R40.0 million ($3.8 million) from IDC which was paid to the Sellers as final part payment of the purchase price of the ERPM acquisition. Crown procured the release of the Sellers from all statutory environmental obligations, including obligations to furnish guarantees and similar instruments to the DME and ERPM assumed the Sellers' responsibilities in this regard.  Crown acquired ERPM, without indemnification for any disclosed or undisclosed liabilities, which could require Crown to incur significant financial obligations to satisfy any liability.
  respectively, on the same terms. These amounts relate to ERPM acquisition costs and working capital requirements respectively. During fiscal 2006 we agreed to suspend the interest accrual with effect from November 30, 2005 indefinitely.


129
   of R10.0 million ($1.6 million) to ERPM. The loan bears interest at the prime rate charged by The Standard Bank of South Africa Limited on overdraft and as of October 31, 2006, the interest rate on the loan stood at 12.0%. The loan is secured by a pledge of certain movable assets of ERPM. During fiscal 2006 we agreed to suspend the interest accrual with effect from November 30, 2005 indefinitely.
  million ($5.1 million) and on September 1, 2003, by way of debentures of R16.0 million ($2.6 million).  These funds were utilized to fund infrastructure upgrades and the purchase of mining equipment.  The loan facility is repayable in equal installments over the 5 years, and bears interest at prime less 0.5%.  The debentures are repayable in 78 months from issue date and bear interest at prime (rate charged by The Standard Bank of South Africa Limited) less 2.5%.  In addition the debentures receive a royalty of 0.267% of the gross revenue received from net smelter revenue.  During fiscal 2006 we agreed to suspend the interest accrual with effect from November 30, 2005 indefinitely.
  capital expansion and underground resource development plan at ERPM was abandoned. All project finance loans advanced to Crown and ERPM, and described above, totaling $8.8 million were included in investment in our associate in fiscals 2004, and 2005 against which losses recorded by the associate, were recognized against these advances in fiscals 2004 and 2005. In fiscal 2006, Crown and ERPM were consolidated from December 1, 2005 and no further advances were made. No repayment has been received on either the loan or the debentures and management has agreed to suspend repayments indefinitely.  Management Service Agreements
  service agreements entered into with each of them. These services include financial management, gold administration, technical and engineering services, mineral resource services and other management related services. We own an 85% interest in DRDGOLD SA. Blyvoor, Crown and ERPM are wholly-owned subsidiaries of DRDGOLD SA. These arrangements allow us to monitor and provide input on the management of these companies in which we have an investment.
  performed for fiscal 2006 at Blyvoor was R10.3 million ($1.6 million), Crown R10.3 million ($1.6 million) and ERPM R10.3 million ($1.6 million). Management fees recovered from DRD (Isle of Man) for fiscal 2006 were R30.9 million ($4.8 million). We are currently in the process of revising all management service agreements with subsidiaries. Assistance with regards to funeral expenses
  executive director of our Company, and executive director of KBH, with regards to funeral expenses relating to the death of a family member who was a temporary employee of ERPM. In terms of ERPM’s practice, the funds were advanced on compassionate grounds to assist the family with costs associated with the funeral. This amounted to R90,447 ($12,441). During fiscal 2006 the amount was written off.
 Black Economic Empowerment transaction with Khumo Bathong Holdings (Pty) Limited
  the Company’s South African operations.
  for a 15% indirect interest in our wholly-owned subsidiary, Blyvoor. This would result in KBH’s ownership of 15% of the total of our South African operations.
  KBH to cover all of our South African assets. The new structure resulted in Khumo Gold acquiring, as a first step, a 15% interest in a newly created vehicle, DRDGOLD SA, which holds a 100% interest in ERPM, Crown and Blyvoor. We retained an 85% interest in DRDGOLD SA.


130
   these preference shares were used by Khumo Gold to settle an existing loan to KBH of $1.2 million (R7.9 million) and subscribe for $0.6 million (R4.1 million) new preference shares in ERPM, $0.4 million (R2.7 million) new preference shares in Crown, $0.6 million (R3.9 million) new preference shares in Blyvoor and an initial 15% of the issued ordinary shares in DRDGOLD SA for $2.0 million (R13.2 million).  In accordance with the terms of the MOU, Khumo Gold has been granted an option, exercisable over three years, to acquire a further 11% interest in DRDGOLD SA for the payment consideration of $1.4 million (R9.3 million). This further equity tranche will include a 6% stake to be placed in a new, Employee Trust.
  the parties in October 2005. Khumo Gold acquired from  us a further 50,000 ordinary shares in DRDGOLD SA for $0.6 million (R4.3 million). After exercising the option, Khumo Gold's shareholding in DRDGOLD SA increased by 5% to 20%.  In addition, Khumo Gold, as promoter for an employee trust, exercised the option for an employee trust to acquire from us 60,000 ordinary shares in DRDGOLD SA for a consideration of $0.7 million (R5.1 million). After exercising the option, the trust's shareholding in DRDGOLD SA is 6%.  We will finance the transaction, on condition that the terms of the finance are determined by independent experts to be fair and reasonable to our shareholders. It is proposed that we will subscribe for preference shares in Khumo Gold and extend a loan to the trustees of the trust. Financing and operating assistance package for Emperor Mines Limited
  Emperor’s operations.
  Emperor as part of a re-financing package, which included an agreement with ANZ Bank to restructure Emperor’s existing debt servicing obligations.
  Stock Exchange has also granted a waiver of listing rules to permit Emperor to grant such security to us on the terms incorporated in the Convertible Loan Facility.
  Tuvatu Gold Prospect, or by December 31, 2007 whichever is earlier.  Emperor had previously announced a conditional sale agreement in relation to the Tuvatu Gold Prospect and expected to receive consideration of approximately A$10.0 million ($7.6 million) on completion of that transaction. On January 25, 2006, Emperor announced that it has not granted a further extension for the sale of the Tuvatu Gold Prospect and the agreement was terminated.
  equal to the lower of A$0.30 per Emperor share or the 45 day volume weighted average price of Emperor shares on the Australian Stock Exchange prior to the date of conversion.
 
   Sale and purchase agreement with Emperor
 
  mine in Fiji, pursuant to which, on April 6, 2006, Emperor acquired our wholly owned subsidiary, DRD (Isle of Man), which in turn holds our PNG assets, comprising of the 20% interest in the Porgera Joint Venture, the 100% interest in Tolukuma Gold Mines Limited and all of our exploration tenements in PNG. The purchase consideration of $237.3 million was subject to certain completion adjustments to reflect the change in the capital position of both Emperor and DRD (Isle of Man) between October 1, 2005, which was the effective date, and April 6, 2006, the date that the transaction was completed. The purchase consideration was settled by the issue of 751,879,699 new Emperor shares at $0.266 per share (valued at $200.0 million) to DRD (Offshore), a cash consideration of $32.3 million and a short term loan provided by DRD (Offshore) to the value of $5.0 million. The loan is repayable in two installments to DRD (Offshore) on March 30, 2007 and June 30, 2007. The loan attracts interest at LIBOR plus 2%  per annum  and has been entered into  on market related terms. Subsequent to June 30, 2006, the board of DRD (Offshore) has agreed to convert this loan to equity. After the issue of the new Emperor shares, we held 88.3% of Emperor. Subsequently, our shareholding was diluted to 78.7%, following a number of share issues in which we did not participate.
 
  advanced funds to Emperor under this facility of $2.0 million on October 5, 2006, $5.0 million on November 6, 2006 and $3.0 million on November 27, 2006. The loan bears interest at LIBOR plus 3% per annum and is repayable on December 31, 2007.


131
 Employment agreements with executive directors
  inclusive remuneration package, or remuneration agreement, from DRD Isle of Man of $270,000 per annum (payable in pounds sterling). He is also eligible, under the remuneration agreement, to receive an incentive bonus of up to 50% of his annual remuneration package in respect of each of two bonus cycles of 6 months each, over the duration of his appointment, on condition that he achieves certain agreed key performance indicators. Mr. M.M. Wellesley-Wood’s agreements also provide that he will receive a total of up to 500,000 of our ordinary shares in two equal tranches at intervals of 6 months over the duration of his agreements of employment. In terms of a JSE listing requirement, these allotments were subject to approval by shareholders. We have since decided, and Mr. M.M. Wellesley-Wood has agreed, that we will not seek the consent of our shareholders and that he will not be issued these shares. An alternate means of achieving the objective of the retention incentive has been implemented through the payment of a bonus. This agreement has been assigned to DRD Offshore with effect from July 1, 2006. Mr. M.M. Wellesley-Wood became entitled to an amount of R1.8 million ($0.3 million) on the expiry of his previous agreement on November 30, 2005 which was equal to half his remuneration package calculated on the basis of the remuneration package on the date of termination of employment. This amount was paid in fiscal 2006. On November 2, 2006,  Mr. M.M. Wellesley-Wood has announced his retirement from DRDGOLD.  The effective date of Mr. M.M. Wellesley-Wood’s retirement will be December 31, 2006.
  Mr. J.W.C. Sayers is eligible under his employment  agreement, for an incentive bonus of up to 50% of his annual remuneration package in respect of each of four bonus cycles of 6 months each over the duration of his appointment, on condition that he achieves certain key performance indicators.
  Officer of Emperor, to acquire 1,000,000 shares in Emperor.  The approval of the loan was subject to approval by shareholders  at Emperor’s Special General Meeting held in August 2006. The loan was approved by shareholders at this Special General Meeting. The loan is repayable over 5 years, with 25% of any gross bonus paid to Mr. B. Gordon being directed as a loan repayment until such time as the loan is repaid in full. The loan was entered into on an arm’s-length basis and on market related terms and bears interest at the ANZ Bank’s published bank bill rate plus 1% per annum. Corporate advisory services
  of which Mr. P.W. Judge is a director. Mr. P.W. Judge through the Richmond Trust has an indirect shareholding of 18.25% in Khumo Gold, which owns 20% of DRDGOLD SA. The agreement provides for a monthly retainer of R85,000 ($11,692), a success fee payable on the successful completion of the Topstar Dump transaction of R275,000 ($37,826) and a success fee payable upon signing of the 11% Khumo Gold option agreement of R475,000 ($65,336).
 7C.
 INTERESTS OF EXPERTS AND COUNSEL


ITEM 8. FINANCIAL INFORMATION 8A. CONSOLIDATED  STATEMENTS AND OTHER FINANCIAL INFORMATION
 
 1.    
  Please refer to Item 18.: "Financial Statements."
 
 2.    
  Please refer to Item 18.: "Financial Statements."
 
 3.    
  Please refer to Item 18.: "Financial Statements."
 
 4.    
  The last year of audited financial statements is not older than 15 months.
 
 5.    
  Not applicable.
 
 6.    
  Not applicable.
 
 7.    
  See under Item 4D.: "Property, plants and equipment—Legal Proceedings."
 
 8.    
  Please see Item 10B.: "Memorandum and Articles of Association."
 
 8B.
 SIGNIFICANT CHANGES
 
 For a discussion of significant changes that have occurred since June 30, 2006, the date of the last audited financial statements
 included in this Annual report, please see Note  27 “Subsequent Events” under Item 18.: "Financial Statements," which describes post balance sheet events.


ITEM 9. THE OFFER AND LISTING 9A. OFFER AND LISTING DETAILS
 
 
 The following tables set forth, for the periods indicated, the high and low market sales prices and average daily trading volumes
 of our ordinary shares on the JSE and ADSs on the Nasdaq Capital Market (formerly Nasdaq SmallCap Market).
 
 Price Per
 Ordinary Share
 R
 Price Per
 ADS
 $
 Average Daily
 Trading
 Volume
 Year Ended
 High
 
 Low
 High
 Low
 Ordinary
 Share
 ADSs
 
 
 
 
 
 
 
 June 30, 2002 .........................................................................................
 55.00
 6.50
 5.59
 0.79
 246,934
 2,085,179
 June 30, 2003 .........................................................................................
 49.20
 15.60
 4.72
 2.11
 245,634
 2,809,445
 June 30, 2004 .........................................................................................
 27.75
 15.00
 4.10
 2.20
 118,454
 4,084,794
 June 30, 2005 .........................................................................................
 15.80
 4.15
 2.66
 0.30
 136,947
 2,440,765
 June 30, 2006 .........................................................................................
 12.10
 5.60
 2.02
 0.85
 431,319
 3,700,024
 
 
 Price Per
 Ordinary Share
 R
 Price Per
 ADS
 $
 Average Daily
 Trading
 Volume
 Quarter
 High
 Low
 High
 Low
 Ordinary
 Share
 ADSs
 Q1 July – September 2004.....................................................................
 15.80
 10.30
 2.64
 1.63
 200,498
 2,850,962
 Q2 October – December 2004...............................................................
 14.76
 8.00
 2.25
 1.44
 167,305
 3,348,309
 Q3 January – March 2005 .....................................................................
 9.10
 4.50
 1.57
 0.78
 265,678
 3,966,378
 Q4 April – June 2005.............................................................................
 8.09
 4.15
 1.18
 0.30
 118,670
 2,238,541
 
 
 
 
 
 
 
 Q1 July – September 2005.....................................................................
 10.25
 5.60
 1.66
 0.85
 190,510
 2,518,369
 Q2 October – December 2005...............................................................
 10.80
 7.00
 1.55
 1.21
 395,803
 3,098,341
 Q3 January – March 2006 .....................................................................
 12.10
 7.80
 2.02
 1.24
 674,570
 4,310,914
 Q4 April – June 2006.............................................................................
 11.70
 7.71
 1.98
 1.11
 471,111
 4,900,925
 
 
 
 
 
 
 
 Q1 July – September 2006.....................................................................
 11.50
 8.82
 1.63
 1.25
 504,267
 2,329,311
 
 
 Price Per
 Ordinary Share
 R
 Price Per ADS
 $
 Average Daily
 Trading Volume
 Month Ended
 High
 Low
 High
 Low
 Ordinary
 Share
 ADSs
 May 31, 2006 .........................................................................................
 11.70
 8.70
 1.98
 1.48
 641,977
 7,123,018
 June 30, 2006 .........................................................................................
 10.80
 7.71
 1.62
 1.11
 312,371
 3,069,153
 July 31, 2006..........................................................................................
 11.50
 9.00
 1.57
 1.25
 484,448
 2,481,562
 August 31, 2006.....................................................................................
 10.19
 8.82
 1.48
 1.26
 379,153
 1,914,723
 September 30, 2006 ...............................................................................
 10.46
 10.02
 1.42
 1.34
 666,453
 2,653,836
 October 31, 2006....................................................................................
 10.85
 9.40
 1.42
 1.19
 481,049
 1,979,598
 November 30, 2006................................................................................
 10.08
 8.20
 1.38
 1.07
 642,555
 3,116,185
 
 The cumulative preference shares are not traded on any exchange.
 
 There have been no significant trading suspensions with respect to our ordinary shares on the JSE during the past three years
 ended June 30, 2006, nor have there been any significant trading suspensions with respect to our ADRs on the Nasdaq Capital Market since our listing on that market.


134
 9B. PLAN OF DISTRIBUTION
 
   9C. MARKETS
 Nature of Trading Markets
  Nasdaq SmallCap Market) in the form of ADRs under the symbol “DROOY.” Our ordinary shares trade on the JSE under the symbol “DUR.” Our ordinary shares also trade on the LSE (symbol: DBNR), the Marche Libre on the Paris Bourse (symbol: DUR) and Brussels Bourse (symbol: DUR) in the form of International Depository Receipts. The ordinary shares also trade on the over the counter markets in Berlin, Stuttgart and the Regulated Unofficial Market on the Frankfurt Stock Exchange. The ADRs are issued by The Bank of New York, as depositary. Each ADR represents one ADS. Each ADS represents one of our ordinary shares. Prior to February 2001, our ADSs traded on the Nasdaq National Market.
  Emperor was consolidated from April 6, 2006 (see Item 4A.: “Property, Plant and Equipment” for a description of our significant subsidiaries, properties and mining operations). Effective July 28, 2006, as a consequence of the transfer of our assets into Emperor, which was already listed on the Australian Stock Exchange, or ASX, we delisted from the ASX. We also delisted from the Port Moresby Stock Exchange on July 28, 2006.Nasdaq Exemption
 Exemption from the shareholder approval requirements
 
  investorsresulting in the issuance of ordinary shares, and securities convertible into ordinary shares, totaling 46,843,902, or 25.43% of the total shares outstanding on a pre-issuance basis.  Included within those issuances, on December 12, 2003, the Company entered into an agreement granting Investec the option to acquire 10.2 million ordinary shares. The Company requested an exemption from Nasdaq Marketplace Rule 4350(i)(1)(D) in reliance upon Nasdaq Marketplace Rule 4350(a).  Rule 4350(i)(1)(D) provides that shareholder approval is required upon issuing 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the stock. Nasdaq granted this exemption on the basis that the shareholder approval requirements of Rule 4350(i)(1)(D) are contrary to generally accepted business practices of companies located in South Africa.
 
   of any shares or rights to shares, which approval can be provided by specific authority or a general authority granted by means of a resolution passed by shareholders in a general meeting.  JSE Listing Requirements require 75% shareholder approval for any issuance of shares for cash.  JSE Listing Requirements do, however, permit an issuer to issue shares for cash under a general authority granted by its shareholders, but not in excess of 15% of the company’s total issued share capital during any financial year under that authority, or the general authority. In terms of the specific issuances for which the Company received the exemption from Nasdaq described above, there was no JSE requirement that would mandate specific shareholder approval for these transactions. The JSE Listing Requirements accept a general authority by our shareholders under certain circumstances. The shareholders had approved a general authority which covered the relevant transactions by resolutions passed at the Company's annual general meetings in November 2003. In addition, included in the shares issued for cash were approximately 24.4 million shares to the value of R435.5 million ($63.1 million) which were used for the acquisition of the Porgera Joint Venture. Approval was obtained from the JSE to deem these shares to be a vendor placing.
 Exemption from the quorum requirements
 
 
  in Rule 4350(f) that the minimum quorum for any meeting of holders of the company’s common stock must be no less than 33 1/3 % of the issuer’s outstanding shares. Consistent with the practice of companies incorporated in South Africa, our articles of association only require a quorum of three members. As a result, and in connection with the listing of our ADSs on the Nasdaq National Market in July 1996, we requested, and Nasdaq granted us in October 1996, an exemption from compliance with the Rule 4350(f) quorum requirement.


135
 9D. SELLING SHAREHOLDERS
 
  
 9E. DILUTION
 
   9F. EXPENSES OF THE ISSUE


136
 ITEM 10. ADDITIONAL INFORMATION
  10A. SHARE CAPITAL
 
   10B. MEMORANDUM AND ARTICLES OF ASSOCIATION
 Description of Our Memorandum and Articles of Association and Ordinary Shares
  value, authorized for issuance. On that date, we had issued 320,035,078 ordinary shares and 5,000,000 cumulative preference shares.
  par value, authorized for issuance. On that date, we had issued 330,789,532 ordinary shares and 5,000,000 cumulative preference shares.
  Companies Act, 1973 (as amended), or the Companies Act, and the requirements of the JSE, all as in effect on November 30, 2006. The summary does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the Articles, the Companies Act, and the requirements of the JSE.
  Memorandum of Association, our purpose is to explore and exploit mineral rights and establish and own mining enterprises.  Borrowing Powers
  see fit. For so long as we are a listed company, the directors shall so restrict our borrowings and exercise all voting and other rights or powers of control exercisable by us in relation to our subsidiary companies so that the aggregate principal amount outstanding in respect of us and any of our subsidiary companies, as the case may be, exclusive of inter-company borrowings, shall not, except with the consent of our shareholders at a general meeting, exceed R30.0 million or the aggregate from time to time of our issued and paid up capital, together with the aggregate of the amounts standing to the credit of  all distributable and non-distributable reserves, any of our share premium accounts and our subsidiaries' share premium accounts certified by our auditors and which form part of our and our subsidiaries' financial statements, whichever is higher.  Share Ownership Requirements
  Voting by Directors
  appointed by him is present. Any director so authorized shall, in addition to his own vote, have a vote for each director by whom he is authorized.
  be not less than two.
  discussion, depending on the nature of the interest, he shall not be allowed to vote and shall not be counted, for the purpose of any resolution regarding his interest, in the quorum present at the meeting.
  guidelines to promote the highest standards of corporate governance among South African companies. The board of directors believes that our business should be conducted according to the highest legal and ethical standards. In accordance with  the board  practice, all remuneration of directors is approved by the Remuneration and Nominations Committee.


137
 Age Restrictions
  Election of Directors
  but he shall only hold office until the next annual general meeting when the relevant director shall be eligible for election. One third of our directors, on a rotating basis, are subject to re-election at each annual general shareholder’s meeting. Retiring directors usually make themselves available for re-election.  General Meetings
  right of voting at general meetings, we shall within 14 days of the lodging of a request by such shareholders issue a notice to shareholders convening a general meeting for a date not less than 21 days and not more than 35 days from the date of the notice. Directors may convene general meetings at any time.
  giving 21 days advance written notice of that meeting. For any other general meeting of our shareholders, 14 days advance written notice is required.
  after the time selected for the meeting, such meeting shall be dissolved. The necessary quorum is three members present in person or represented by proxy.  Voting Rights
  person and on a poll have one for every share held. The holders of our cumulative preference shares are not entitled to vote at a general meeting unless any preference dividend is in arrears for more than six months at the date on which the notice convening the general meeting is posted to the shareholders. However, they will obtain voting rights once the Argonaut Project becomes an operational gold mine. Additionally, holders of cumulative preference shares may vote on resolutions which adversely affect their interests and on resolutions regarding the disposal of all or substantially all of our assets or mineral rights. When entitled to vote, holders of our cumulative preference shares are entitled to one vote per person on a show of hands and that portion of the total votes which the aggregate amount of the nominal value of the shares held by the relevant shareholder bears to the aggregate amount of the nominal value of all shares issued by us.  Dividends
  proportion to the number of shares they each hold. No dividend shall be declared except out of our profits. Dividends may be declared either free or subject to the deduction of income tax or duty in respect of which we may be charged. Holders of ordinary shares are entitled to receive dividends as and when declared by the directors. Holders of cumulative preference shares are entitled to receive cumulative preferential dividends in priority to the holders of our ordinary shares equal to the prescribed portion of 3% of our future revenue generated by the exploitation or other application of the mineral rights represented by the Argonaut Project. On May 1, 2005, the Argonaut mineral rights reverted to the South African State, in terms of the MPRD Act. On February 6, 2006, a prospecting right covering an area of 969 hectares over part of the Argonaut Project was obtained. All unclaimed dividends are forfeited back to us after a period of twelve years. Ownership Limitations
  ordinary shares or securities convertible into our ordinary shares.


138
 Winding-up
  shall be applied to repay to the shareholders the amount paid up on our issued capital and thereafter the balance shall be distributed to the shareholders in proportion to their respective shareholdings. On a winding up, our cumulative preference shares rank, in regard to all arrears of preference dividends, prior to the holders of ordinary shares. As of November 30, 2006, no such dividends have been declared. Except for the preference dividend and as described in this paragraph our cumulative preference shares are not entitled to any other participation in the distribution of our surplus assets on winding-up.  Reduction of Capital
  share capital including, without limitation, any stated capital, capital redemption reserve fund and share premium account by making distributions and buying back our shares.  Amendment of the Articles of Association
  holding at least 25% of the total votes of all the members entitled to vote are present or represented by proxy at a meeting and, if the resolution was passed on a show of hands, at least 75% of those shareholders voted in favor of the resolution and, if a poll was demanded, at least 75% of the total votes to which those shareholders are entitled were cast in favor of the resolution.  Consent of the Holders of Cumulative Preference Shares
  shares ranking, regarding rights to dividends or on winding up, in priority to or equal with our cumulative preference shares, or dispose of all or part of the Argonaut mineral rights without the consent in writing of the registered holders of our cumulative preference shares or the prior sanction of a resolution passed at a separate class meeting of the holders of our cumulative preference shares.  Distributions
  shareholders in accordance with the provisions of the Companies Act and other consents required by law from time to time. We may, for example, in a general meeting, upon recommendation of our directors, resolve that any surplus funds representing capital profits arising from the sale of any capital assets and not required for the payment of any fixed preferential dividend, be distributed among our ordinary shareholders. However, no such profit shall be distributed unless we have sufficient other assets to satisfy our liabilities and to cover our paid up share capital.
 10C. MATERIAL CONTRACTS
 Facility B Loan Agreement between Investec Bank (Mauritius) Limited and DRD (Isle of Man)
  Limited, dated March 3, 2005.
  million). Subsequent to June 30, 2005, this facility was drawn down in the amount of $19.0 million.  The agreement provides for the repayment of the loan under the loan facility with our ordinary shares. In this regard, we allotted and issued 13,686,030 of our ordinary shares, to the value of $19.3 million to Investec Bank (Mauritius) Limited to repay the drawn down amount.
 Underwriting Agreement between DRDGOLD Limited, the Baker Steel Capital Managers LLP, or BSCM, and certain underwriters, dated April 5, 2005.
  shares at a subscription price of $0.84 (R5.50) per share on the basis that the shares will be provisionally allotted to them, but that we will also offer the same shares to our existing shareholders in proportion to their shareholdings in terms of a claw-back offer, together with the right to renounce this offer in favor of third parties, and that the number of shares not allotted and issued pursuant to the claw-back offer will finally be allotted and issued to the underwriters. A commission of 6% was payable to each underwriter in proportion to the extent of shares subscribed to. We raised $13.3 million (R86.9 million) from the claw-back offer.


139
 Subscription Agreement between DRDGOLD Limited and Baker Steel Capital Managers LLP, or BSCM, dated April 7, 2005.
  our ordinary shares which added up to an aggregate of 17,000,000 shares at a premium of $0.82 (R5.00) per share and BSCM paid the sum of $14.4 million (R93.5 million) being the subscription price due for the shares.
 Memorandum of Understanding between DRDGOLD Limited and Khumo Bathong Holdings (Pty) Limited, dated July 6, 2005.
  subsidiary, namely DRDGOLD SA. Furthermore  Khumo Gold  will subscribe for an initial 15% stake in DRDGOLD SA and subsequently a KBH-led broad based black economic empowerment consortium will subscribe for a further 11% in DRDGOLD SA.
 Convertible Loan Facility Agreement between DRDGOLD Limited and Emperor Mines Limited, dated July 8, 2005.
  assistance to Emperor. The term of this facility will be 2.5 years with a fixed interest of 9% per annum. The facility is secured by a first ranking charge over Emperor’s 100% interest in the Tuvatu Gold Prospect in Fiji. The facility is repayable upon either the receipt of proceeds expected from the sale of Emperor’s interest in the Tuvatu Gold Prospect or by December 31, 2007. This facility is also convertible at our election into ordinary fully paid shares of Emperor. On January 25, 2006, Emperor announced that it has not granted a further extension for the sale of the Tuvatu Gold Prospect and the agreement was terminated.
 Cession Agreement entered into among The Industrial Development Corporation of South Africa Limited, or IDC, DRDGOLD Limited, Business Ventures Investment No. 750 (Pty) Limited and Business Ventures Investment No. 751 (Pty) Limited, or the BVI Companies, dated July 13, 2005.
  ERPM to us in return for the payment of the purchase price of 4,451,219 of our ordinary shares to the value of approximately $4.3 million (R29.0 million), which have already been allotted and issued to the IDC.
 Share Sale Agreement entered into among The Industrial Development Corporation of South Africa Limited, DRDGOLD Limited, Business Ventures Investment No. 750 (Pty) Limited, or BVI 1, and Business Ventures Investment No. 751 (Pty) Limited, or BVI 2, dated July 13, 2005.
  of BVI 1, and 60 ordinary shares in BVI 2, representing 60% of the total issued share capital of BVI 2, for the purchase price of approximately $18.30 (R120.00). Option Agreement entered into by and between DRDGOLD Limited and M5 Developments (Pty) Limited, dated July 21, 2005.
  (R0.5 million) per month, until exercise of the option, to acquire Durban Deep’s mine village for $2.2 million (R15.0 million). The option period initially expired on September 19, 2005, but was extended to November 19, 2005. If the option was exercised the option fee would be deemed part payment of the purchase consideration. If not, the option fee was to be forfeited to us.
  occurring, we were notified by Rand Leases Properties  Limited  (formerly JCI Properties  Limited), or Rand Leases Properties, of an alleged pre-emptive right in respect of the property pursuant to an agreement dated December 1996, and demanding that the property be sold to them on similar terms. We have since repudiated the agreement of sale with M5 and have also notified Rand Leases Properties that we do not intend offering the property to them. Both parties have indicated that they intend to institute legal proceedings for the sale and transfer of the property and we await service of legal process.


140
 Agreement of Employment between DRDGOLD Limited and Mr. J.W.C. Sayers, dated August 10, 2005.
  inclusive remuneration package of $0.3 million (R2.0 million) per annum. Mr. J.W.C. Sayers is eligible under his employment agreement, for an incentive bonus of up to 50% of his annual remuneration package in respect of each of four bonus cycles of 6 months each over the duration of his appointment, on condition that he achieves certain key performance indicators.
 Memorandum of Agreement between DRDGOLD Limited, Simmer & Jack Mines Limited and Simmer & Jack Investments (Proprietary) Limited, or S&J Companies, dated August 31, 2005.
  provisional liquidation) to the S&J Companies for $0.0015 (R0.01) per share as part of  a scheme of arrangement between the S&J Companies and Buffelsfontein’s creditors in terms of Section 311 of the South African Companies Act, 1973. This agreement is conditional upon the S&J Companies assuming all existing and future obligations relating to the pumping and management of underground water in the Klerksdorp/Orkney/Stilfontein/Hartebeesfontein area and providing us with indemnity against all liability arising in this regard. Deed of Loan, Cession, Payment and Set-off entered between DRDGOLD Limited, East Rand Proprietary Mines Limited, Crown Gold Recoveries (Pty) Limited and Blyvooruitzicht Gold Mining Company Limited, dated November 7, 2005.
  KBH on its behalf in respect of an agreement between KBH and ERPM in terms of which ERPM acquired from KBH, shareholders claims against Crown. Share Sale Agreement between Business Venture Investments 750 (Pty) Limited, or BVI 750, and DRDGOLD South African Operations (Pty) Limited, dated November 8, 2005.
  DRDGOLD SA paid the purchase price of R1.00 ($0.15) in cash for the sale shares.  Share Sale Agreement between Business Venture Investments 751 (Pty) Limited, or BVI 751, and DRGOLD South African Operations (Pty) Limited, dated November 8, 2005.
  BVI 751 held in ERPM. DRDGOLD SA paid the purchase price of R1.00 ($0.15) in cash for the sale shares. Subscription  Agreement between DRDGOLD  Limited  and DRDGOLD South African Operations (Pty)  Limited, dated November 9 2005.
  total subscription price of R130.0 million ($19.3 million). As consideration for the subscription shares, we transferred approximately 50 million ordinary shares in Blyvoor, all of which were held by us, to DRDGOLD SA in full and final discharge of the subscription price of R130.0 million ($19.3 million).
 Share  Sale  Agreement between Crown Consolidated Gold Recoveries  Limited and DRDGOLD South African Operations (Pty) Limited, dated November 14, 2005.
  through the exercise of rights held under a deed of pledge. The purchase price for the 40 ordinary shares was R1.00 ($0.15) payable in cash.


141
 Subscription  Agreement between DRDGOLD South African Operations (Pty)  Limited and Khumo Gold SPV (Pty)  Limited, dated November 18, 2005.
 
  each against a payment of approximately R13.2 million ($2.0 million). Subscription Agreement between DRDGOLD Limited and Khumo Gold SPV (Pty) Limited, dated November 18, 2005.
  preference shares in the share capital of Khumo Gold with a par value of R1.00 ($0.15) and a premium of R999.00 ($149.85) each. We discharged our obligation to subscribe for the Khumo Gold Class A preference shares by paying the issue price of R31.8 million ($4.8 million). Cession Agreement between DRDGOLD Limited and Khumo Gold SPV (Pty)  Limited and Khumo Bathong Holdings (Pty) Limited, dated November 18, 2005.
  agreement is fair and reasonable to our shareholders and upon receipt of the purchase consideration, all claims we had against KBH arising from and in respect of the loan owed by KBH to us resulting from a loan agreement dated June 12, 2002. Pursuant to the terms of this loan agreement, as of November 9, 2005, KBH was indebted to us in an amount of R7.9 million ($1.2 million). Khumo Gold was obliged to pay the purchase consideration of R7.9 million ($1.2 million) to us by no later than November 18, 2005 or upon fulfillment of the suspensive condition, by procuring the transfer from the proceeds of the issuance of the Khumo Gold Preference shares an amount equal to the purchase consideration, to us. Cession Agreement between DRDGOLD Limited and The Industrial Development Corporation of South Africa Limited and Business Venture Investment No 750 (Pty) Limited and Business Venture Investment No 751 (Pty) Limited, dated November 18, 2005.
  indemnities and the debenture, and waive in pledge of the shareholders loan by KBH to Crown in favor of us. Option Agreement between DRDGOLD Limited and Khumo Gold SPV (Pty) Limited and DRDGOLD South African Operations (Pty) Limited, dated November 18, 2005.
  DRDGOLD SA.  In addition, we granted Khumo Gold, acting as promoter of an Employee Trust, for no consideration, an option to purchase 60,000 ordinary shares in DRDGOLD SA. The option expires on November 18, 2008. The parties agreed that Khumo Gold shall pay R4.3 million ($0.6 million) for the purchase of the 50,000 ordinary shares and approximately R5.0 million ($0.8 million) for the purchase of the 60,000 ordinary shares. Offer of Class A Preference share between Khumo Gold SPV (Pty)  Limited and East Rand Proprietary Mines Limited, dated November 18, 2005.
  ERPM at the subscription price of approximately R4.1 million ($0.6 million). Offer of Class A Preference between Khumo Gold SPV (Pty)  Limited and Blyvooruitzicht Gold Mining Company Limited, dated November 18, 2005.
  Blyvoor at the subscription price of approximately R3.9 million ($0.6 million).


142
 Offer of Class A Preference between Khumo Gold SPV (Pty)  Limited and Crown Gold Recoveries (Pty) Limited, dated November 18, 2005.
  Crown at the subscription price of approximately R2.7 million ($0.4 million). Shareholders Agreement between DRDGOLD Limited and Khumo Gold SPV (Pty) Limited and DRDGOLD South African Operation (Pty) Limited, dated November 24, 2005
  share capital of DRDGOLD SA. This agreement was entered into in order to establish the manner in which DRDGOLD SA is to be managed and it sets out the terms governing their relationship as shareholders in DRDGOLD SA. Sale and Subscription Agreement between DRDGOLD Limited and DRD (Offshore) Limited, dated January 4, 2006.
  us of three ordinary shares of British Pound 1.00 each on the share capital of DRD (Offshore). The consideration for the sale of the sale shares in DRD (Isle of Man) was $230.0 million (R1.5 billion) and DRD (Offshore) issued share certificates in favor of us which became the 100% holding company of DRD (Offshore). Share Sale Agreement between DRD (Isle of Man) Limited and DRD (Offshore) Limited, dated February 22, 2006.
  entire shareholding in the issued share capital of Emperor. The consideration for the shares was the US Dollar amount equal to the value of the shares, calculated by using the closing market price of Emperor shares on the Australian Stock Exchange and the Australian Dollar/US Dollar exchange rate as at the close on the date of completion. The date of completion was the fifth business day after shareholders’ approval and Investec’s approval on this share sale agreement. The parties agreed that DRD (Isle of Man) shall lend the consideration referred to above to DRD (Offshore). The consideration was deemed to have been advanced to DRD (Offshore) on January 1, 2006 and used by DRD (Offshore) to pay DRD (Isle of Man) for the shares. It was agreed that the loan shall be interest free. Restructure Deed between DRD (Offshore) Limited and DRD (Isle of Man) Limited and Emperor Mines Limited and Emperor Gold Mining Company Limited, or EGM, and Australia and New Zealand Banking Group Limited, or ANZ, dated February 24, 2006.
  (Offshore) to DRD (Isle of Man) in a form agreed between those two parties, DRD (Isle of Man) must novate to DRD (Offshore) all of DRD (Isle of Man)’s right, title and interest in the loan agreement, or the loan interest, entered into among EGM, DRD (Isle of Man) and Emperor on July 8, 2005.  Property in, title to and risk associated with DRD (Isle of Man)’s right, title and interest in the said loan agreement will accrue to DRD (Offshore) as if the restructure of that loan interest had occurred on January 1, 2006. Facility  Agreement between DRD (Porgera) Limited and Tolukuma Gold Mines Limited and Australia and New Zealand  Banking Group Limited, dated March 20, 2006.
  Working Capital Facility of up to $7.0 million. Settlement of Loans Agreement between DRD (Isle of Man) Limited and DRD (Offshore) Limited, dated March 23, 2006.
  and/or debts between the parties arising prior to or as a result of the DRD (Isle of Man) re-organization would be settled, so that subsequent to the DRD (Isle of Man) re-organization there shall be no amount due or payable as between the parties. The DRD (Isle of Man) re-organization included the transfer of assets out of DRD (Isle of Man), assignment of some material contracts by DRD (Isle of Man) to DRD (Offshore), termination of some material contracts, repayment or capitalization of inter-company loans, repayment and termination or variation of the Investec Facility Agreement to remove any recourse to DRD (Offshore) or us and remain as an undrawn facility available for DRD (Isle of Man) after completion.


143
 10D. EXCHANGE CONTROLS
 
  available documents. The following summary is not a comprehensive description of all the exchange control regulations. The discussion in this section is based on the current law and positions of the South African Government. Changes in the law may alter the exchange control provisions that apply, possibly on a retroactive basis.
  Introduction
  exchange control matters in South Africa are regulated by the South African exchange control regulations, or the Regulations. The Regulations form part of the general monetary policy of South Africa. The Regulations are issued under Section 9 of the Currency and Exchanges Act, 1933 (as amended). In terms of the Regulations, the control over South African capital and revenue reserves, as well as the accruals and spending thereof, is vested in the Treasury (Ministry of Finance), or the Treasury.
  Reserve Bank, or SARB, which is responsible for the day to day administration and functioning of exchange controls. SARB has a wide discretion. Certain banks authorized by the Treasury to co-administer certain of the exchange controls, are authorized by the Treasury to deal in foreign exchange. Such dealings in foreign exchange by authorized dealers are undertaken in accordance with the provisions and requirements of  the exchange control rulings, or Rulings, and contain certain administrative measures, as well as conditions and limits applicable to transactions in foreign exchange, which may be undertaken by authorized dealers. Non-residents have been granted general approval, in terms of the Rulings, to deal in South African assets, to invest and disinvest in South Africa.
  Namibia, and the Kingdoms of Lesotho and Swaziland. Transactions between residents of the Common Monetary Area are not subject to these exchange control regulations.
  in the application of monetary policy, detrimental effects on inward foreign investment and administrative costs associated therewith. The South African Finance Minister has indicated that all remaining exchange controls are likely to be dismantled as soon as circumstances permit. Since 1998, there has been a gradual relaxation of exchange controls. The gradual approach to the abolition of exchange controls adopted by the Government of South Africa is designed to allow the economy to adjust more smoothly to the removal of controls that have been in place for a considerable period of time. The stated objective of the authorities is equality of treatment between residents and non-residents with respect to inflows and outflows of capital. The focus of regulation, subsequent to the abolition of exchange controls, is expected to favor the positive aspects of prudential financial supervision.
  are not permitted to maintain foreign bank accounts without SARB approval and, without the approval of SARB, are generally not permitted to export capital from South Africa or hold foreign currency. In addition, South African companies are required to obtain the approval of SARB prior to raising foreign funding on the strength of their South African balance sheets, which would permit recourse to South Africa in the event of defaults. Where 75% or more of a South African company's capital, voting power, power of control or earnings is directly or indirectly controlled by non-residents, such a corporation is designated an “affected person” by SARB, and certain restrictions are placed on its ability to obtain local financial assistance. We are not, and have never been, designated an “affected person” by SARB.
  SARB, South African companies are generally required to repatriate to South Africa profits of foreign operations and are limited in their ability to utilize profits of one foreign business to finance operations of a different foreign business. South African companies establishing subsidiaries, branches, offices or joint ventures abroad are generally required to submit financial statements on these operations as well as progress reports to SARB on an annual basis. As a result, a South African Company's ability to raise and deploy capital outside the Common Monetary Area is restricted.


144
   this stage. Some of the more salient changes to the South African exchange control provisions over the  past few years have been as follows:
  corporations wishing to invest in countries outside the Common Monetary Area, in addition to what is set out below, apply for permission to enter into corporate asset/share swap and share placement transactions to acquire foreign investments. The latter mechanism entails the placement of the locally quoted corporation's shares with long-term overseas holders who, in payment for the shares, provide the foreign currency abroad which the corporation then uses to acquire the target investment;
  corporations wishing to establish new overseas ventures are permitted to transfer offshore up to R1.0 billion ($137.5 million) to finance approved investments abroad and up to R2.0 billion ($275.1 million) to finance approved new investments in African countries. However, the approval of SARB is required in advance. On application to SARB, corporations are also allowed to use part of their local cash holdings to finance up to 10% of approved new foreign investments where the cost of these investments exceeds the current limits;
  as a general rule, SARB requires that more than 50% of equity of the acquired off-shore venture is acquired within a predetermined period of time, as a prerequisite to allowing the expatriation of funds. If these requirements are not met, SARB may instruct that the equity be disposed of. In our experience SARB has taken a commercial view on this, and has on occasion extended the period of time for compliance; and
  remittance of directors' fees payable to persons permanently resident outside the Common Monetary Area may be approved by authorized dealers, in terms of the Rulings.
 
  South African residents in respect of fixed and ascertained foreign exchange commitments covering the movement of goods.
  allowance. The balance of the emigrant's funds will be blocked and held under the control of an authorized dealer. These blocked funds may only be invested in:
    securities quoted on the JSE and financial instruments listed on the Bond Exchange of South Africa which are deposited with an authorized dealer and not released except temporarily for switching purposes, without the approval of SARB. Authorized dealers must at all times be able to demonstrate that listed or quoted securities or financial instruments which are dematerialized or immobilized in a central securities depository are being held subject to the control of the authorized dealer concerned; or
   
  out of capital gains or out of income earned prior to emigration remain subject to the blocking procedure. It is not possible to predict when existing exchange controls will be abolished or whether they will be continued or modified by the South African Government in the future.  Sale of Shares
  Common Monetary Area between non-residents of the Common Monetary Area. In addition, the proceeds from the sale of ordinary shares on the JSE on behalf of shareholders who are not residents of the Common Monetary Area are freely remittable to such shareholders. Share certificates held by non-residents will be endorsed with the words “non-resident,” unless dematerialized.  Dividends
  remittable.
  receive any dividends payable in respect of the shares underlying the ADSs, subject to the terms of the deposit agreement entered on August 12, 1996, and as amended and restated, between the Company and The Bank of New York, as the depository. Subject to exceptions provided in the deposit agreement, cash dividends paid in Rand will be converted by the depositary to Dollars and paid by the depositary to holders of ADSs, net of conversion expenses of the depositary, in accordance with the deposit agreement. The depositary will charge holders of ADSs, to the extent applicable, taxes and other governmental charges and specifies fees and other expenses.


145
 Voting rights
  or vote our ordinary shares.
 10E. TAXATION
 Material Income Tax Consequences
  No representation with respect to the consequences to any particular purchaser of our securities is made hereby. Prospective purchasers are urged to consult their own tax advisers with respect to their particular circumstances and the effect of US national, state or local tax laws to which they may be subject. South Africa
  tax in South Africa except in the following circumstances:  Income Tax
  South Africa. Interest earned by a non-resident on a debt instrument issued by a South African company will be regarded as being derived from a South African source but will be regarded as exempt from taxation in terms of Section 10(1)(hA) of the South African Income Tax Act, 1962 (as amended), or the Income Tax Act. This exemption does not apply if:
     the non-resident was a resident of the Common Monetary Area, in other words, Lesotho, Namibia and Swaziland, and in such an event the non-resident shall be deemed to be a resident of South Africa;
      the recipient of the interest is a natural person, unless they were absent from South Africa for at least 183 days in aggregate during the year of assessment in which the interest was received or accrued.
 
  
  except in respect of foreign dividends received by or accrued to residents of South Africa. Accordingly, there is no withholding tax on dividends received by or accrued to non-resident shareholders of companies listed in South Africa and non-residents will receive the same dividend as South African resident shareholders. Prior to payment of the dividend, the Company pays Secondary Tax on Companies at a rate of 12.5% of the excess of dividends declared over dividends received in a dividend cycle but the full amount of the dividend declared is paid to shareholders.  Capital Gains Tax
  arising from the disposal of capital assets if the assets disposed of consist of:
  immovable property owned by the non-residents situated in South Africa, or any interest or right in or to immovable property. A non-resident will have an interest in immovable property if it has a direct or indirect shareholding of at least 20% in a company, where 80% or more of the net assets of that company (determined on a market value basis) are attributable directly or indirectly to immovable property; or


146
 Taxation of dividends
  form of dividends, and, at present, the STC tax rate is equal to 12.5%.
  higher tax rate would apply for both mining and non-mining income. In fiscal 2006 the tax rates for taxable mining and non-mining income, for companies that elected the STC exemption were 45% (2005 and 2004: 46%) and 37% (2005 and 2004: 38%), respectively. During those same years the tax rates for companies that did not elect the STC exemption were 35% (2005 and 2004: 37%) and 29% (2005 and 2004: 30%), respectively. In 1993, the Company elected not to be exempt from STC, as this would have meant that the Company would have been liable for normal taxation at the higher rates of 45% for mining income and 37% for non-mining income. The Company, having chosen not to be subject to the STC exemption, is subject to 35% tax on mining income and 29% for non-mining income. However, with the exception of Blyvoor and ERPM, all of the Company’s South African subsidiaries elected the STC exemption.
 South Africa does not impose any withholding tax or any other form of tax on dividends paid to US holders with respect to
 shares. Should South Africa decide in the future to impose a withholding tax on dividends paid to a US holder with respect to shares, the tax treaty between the United States and South Africa would limit the rate of this tax to 5 percent of the gross amount of the dividends if a US holder holds directly at least 10 percent of our voting stock and 15 percent of the gross amount of the dividends in all other cases. The above provisions shall not apply if the beneficial owner of the dividends is resident in the US, carries on business in South Africa through a permanent establishment situated in South Africa, or performs in South Africa independent personal services from a fixed base situated in South Africa, and the dividends are attributable to such permanent establishment or fixed base. United States Material United States Federal Income Tax Consequences
  ownership and disposition of ordinary shares or ADSs. It deals only with US holders who hold ordinary shares or ADSs as capital assets for US federal income tax purposes. This discussion is based upon the provisions of the Internal Revenue Code of 1986, as amended, or the Code, published rulings, judicial decisions and the Treasury regulations, all as currently in effect and all of which are subject to change, possibly on a retroactive basis. This discussion has no binding effect or official status of any kind; we cannot assure holders that the conclusions reached below would be sustained by a court if challenged by the Internal Revenue Service.
  particular circumstances and does not address special classes of US holders subject to special treatment (such as dealers in securities or currencies, partnerships or other pass-through entities, financial institutions, life insurance companies, banks, tax-exempt organizations, certain expatriates or former long-term residents of the United States, persons holding ordinary shares or ADSs as part of a “hedge,” “conversion transaction,” “synthetic security,” “straddle,” “constructive sale” or other integrated investment, persons whose functional currency in not the US dollar, or persons that actually or constructively own ten percent or more of our voting stock). This discussion addresses only US federal income tax consequences and does not address the effect of any state, local, or foreign tax laws that may apply, or the alternative minimum tax.
          a trust, if a court within the US is able to exercise primary supervision over the administration of the trust and one or more US persons have the authority to control all substantial decisions of the trust or if the trust has made a valid election to be treated as a US person.


147
   partner and on the activities of the partnership. Partners of partnerships holding any notes, ordinary shares or ADSs are urged to consult their tax advisors.
 Because individual circumstances may differ, US holders of ordinary shares or ADSs are urged to consult their own tax
 advisors concerning the US federal income tax consequences applicable to their particular situations as well as any consequences to them arising under the tax laws of any foreign, state or local taxing jurisdiction. Ownership of Ordinary Shares or ADSs
  shares represented by those ADSs. Exchanges of ordinary shares for ADSs and ADSs for ordinary shares generally will not be subject to US federal income tax.
  liquidation and distributions in redemption of stock that are treated as exchanges, will be taxed to US holders as ordinary dividend income to the extent that the distributions do not exceed our current and accumulated earnings and profits. For US federal income tax purposes, the amount of any distribution received by a US holder will equal the Dollar value of the sum of the South African Rand payments made (including the amount of South African income taxes, if any, withheld with respect to such payments), determined at the “spot rate” on the date the dividend distribution is includable in such US holder's income, regardless of whether the payment is in fact converted into Dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date a US holder includes the dividend payment in income to the date such holder converts the payment into Dollars will be treated as ordinary income or loss. Distributions, if any, in excess of our current and accumulated earnings and profits will constitute a non-taxable return of capital and will be applied against and reduce the holder's basis in the ordinary shares or ADSs. To the extent that these distributions exceed the US holder's tax basis in the ordinary shares or ADSs, as applicable, the excess generally will be treated as capital gain, subject to the discussion below under the heading “Passive Foreign Investment Company.” We do not intend to calculate our earnings or profits for US federal income tax purposes.
  dividends paid to individuals through 2008 is reduced to 15%. This reduced rate generally would apply to dividends paid by us if, at the time such dividends are paid, either (i) we are eligible for benefits under a qualifying income tax treaty with the US or (ii) our ordinary shares or ADSs with respect to which such dividends were paid are readily tradable on an established securities market in the US. However, this reduced rate is subject to certain important requirements and exceptions, including, without limitation, certain holding period requirements and an exception applicable if we are treated as a passive foreign investment company as discussed under the heading “Passive Foreign Investment Company.” US holders are urged to consult their own tax advisors regarding the US federal income tax rate that will be applicable to their receipt of any dividends paid with respect to the ordinary shares and ADSs.
  public for currency under a “spot contract” in a free market and involving representative amounts. A “spot contract” is a contract to buy or sell a currency on or before two business days following the date of the execution of the contract. If such a spot rate cannot be demonstrated, the US Internal Revenue Service has the authority to determine the spot rate.
  limitation on the use of passive activity losses and, therefore, generally may not be offset by passive activity losses, and as “investment income” for purposes of the limitation on the deduction of investment interest expense. Such dividends will not be eligible for the dividends received deduction generally allowed to a US corporation under Section 243 of the Code. Dividend income will be treated as foreign source income for foreign tax credit and other purposes. In computing the separate foreign tax credit limitations, dividend income should generally constitute “passive income,” or in the case of certain US holders, “financial services income.”


148
   distributions with respect to the ordinary shares or ADSs. Should South Africa decide in the future to impose a withholding tax on such distributions, the tax treaty between the United States and South Africa would limit the rate of this tax to 5 percent of the gross amount of the distributions if  a US holder holds directly at least 10 percent of our voting stock and to 15 percent of the gross amount of the distributions in all other cases. In addition, if South Africa decided in the future to impose a withholding tax on distributions with respect to the ordinary shares or ADSs, a determination would need to be made at such time as to whether any South African income taxes withheld would be treated as foreign income taxes eligible for credit against such US holder's US federal income tax liability, subject to limitations and conditions generally applicable under the Code. Any such taxes may be eligible at the election of such US holder, for deduction in computing such US holder's taxable income. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. The calculation of foreign tax credits and, in the case of a US holder that elects to deduct foreign taxes, the availability of deductions is complex and involves the application of rules that depend on a US holder's particular circumstances. US holders are urged to consult their own tax advisors regarding the availability to them of foreign tax credits or deductions in respect of South African income taxes, if any, withheld.  Disposition of Ordinary Shares or ADSs
  amount equal to the difference between the US dollar value of the amount realized on the sale or exchange and such holder's adjusted tax basis in the ordinary shares or ADSs. Subject to the application of the “passive foreign investment company” rules discussed below, such gain or loss generally will be capital gain or loss and will be long-term capital gain or loss if the US holder has held the ordinary shares or ADSs for more than one year. The deductibility of capital losses is subject to limitations. Gain or loss recognized by a US holder on the taxable disposition of ordinary shares or ADSs generally will be treated as US-source gain or loss for US foreign tax credit purposes.
  the amount realized will be based on the spot rate  as determined on the settlement date of such exchange. A US holder who receives payment in Rand and converts Rand into US Dollars at a conversion rate other than the rate in effect on the settlement date may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss.
  ordinary shares or ADSs, provided that the election is applied consistently from year to year. Such election may not be changed without the consent of the Internal Revenue Service. In the event that an accrual basis holder does not elect to be treated as a cash basis taxpayer, such US holder may have a foreign currency gain or loss for US federal income tax purposes because of the differences between the US dollar value of the currency received prevailing on the trade date and the settlement date. Any such currency gain or loss will be treated as ordinary income or loss and would be in addition to gain or loss, if any, recognized by such US holder on the disposition of such ordinary shares or ADSs.  Passive Foreign Investment Company
  company, or PFIC. We would be a PFIC for US federal income tax purposes if for any taxable year either (i) 75% or more of our gross income, including our pro rata share of the gross income of any company in which we are considered to own 25% or more of the shares by value, were passive income or (ii) 50% or more of our average total assets (by value), including our pro rata share of the assets of any company in which we are considered to own 25% or more of the shares by value, were assets that produced or were held for the production of passive income. If we were a PFIC, US holders of the ordinary shares or ADSs would be subject to special rules with respect to (i) any gain recognized upon the disposition of the ordinary shares or ADSs and (ii)  any receipt of an excess distribution (generally, any distributions to a US holder during a single taxable year that is greater than 125% of the average amount of distributions received by such US holder during the three preceding taxable years in respect of the ordinary shares or ADSs or, if shorter, such US holder's holding period for the ordinary shares or ADSs). Under these rules:
  the gain or excess distribution will be allocated ratably over a US holder's holding period for the ordinary shares or ADSs, as applicable;
  the amount allocated to the taxable year in which a US holder realizes the gain or excess distribution will be taxed as ordinary income;
    the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such year.


149
   period, if we cease to satisfy the requirements for PFIC classification, the US holder may avoid PFIC classification for subsequent years if such holder elects to recognize gain based on the unrealized appreciation in the ordinary shares or ADSs through the close of the tax year in which we cease to be a PFIC. Additionally, if we are a PFIC, a US holder who acquires ordinary shares or ADSs from a decedent would be denied the normally available step-up in tax basis for such notes, ordinary shares or ADSs to fair market value at the date of death and instead would have a tax basis equal to the lower of the fair market value or the decedent's tax basis.
  Investment Company or Qualified Electing Fund) with the Internal Revenue Service for each tax year such holder holds stock in a PFIC. This form describes any distributions received with respect to such stock and any gain realized upon the disposition of such stock.
  imposition of the special tax and interest charge described above by making a mark-to-market election. Pursuant to this election, the US holder would include in ordinary income or loss for each taxable year an amount equal to the difference as of the close of the taxable year between the fair market value of the ordinary shares or ADSs and the US holder's adjusted tax basis in such ordinary shares or ADSs. Losses would be allowed only to the extent of net mark-to-market gain previously included by the US holder under the election for prior taxable years. If a mark-to-market election with respect to ordinary shares or ADSs is in effect on the date of a US holder's death, the tax basis of the ordinary shares or ADSs in the hands of a US holder who acquired them from a decedent will be the lesser of the decedent's tax basis or the fair market value of the ordinary shares or ADSs. US holders desiring to make the mark-to-market election are urged to consult their tax advisors with respect to the application and effect of making the election for the ordinary shares or ADSs.
  and interest charge described above will not apply if such holder makes an election to treat us as a “qualified electing fund” in the first taxable year in which such holder owns the ordinary shares or ADSs and if we comply with certain reporting requirements. However, we do not intend to supply US holders with the information needed to report income and gain pursuant to a “qualified electing fund” election in the event that we are classified as a PFIC.
  we would be a PFIC for any taxable year are applied annually and it is difficult to make accurate predictions of future income and assets, which are relevant to this determination. In addition, certain factors in the PFIC determination, such as reductions in the market value of our capital stock, are not within our control and can cause us to become a PFIC. Accordingly, there can be no assurance that we will not become a PFIC.  Rules relating to a PFIC are very complex. US holders are urged to consult their own tax advisors regarding the application of PFIC rules to their investments in our ordinary shares or ADSs. Information Reporting and Backup Withholding
  sale or other disposition of our ordinary shares or ADSs may be subject to information reporting and US federal backup withholding if the recipient of such payment is not an “exempt recipient” and fails to supply certain identifying information, such as an accurate taxpayer identification number, in the required manner. Generally, individuals are not exempt recipients, whereas corporations and certain other entities generally are exempt recipients. The backup withholding tax rate is currently 28%. For payments made after 2010, the backup withholding rate will be increased to 31%. Payments made with respect to our ordinary shares or ADSs to a US holder must be reported to the Internal Revenue Service, unless the US holder is an exempt recipient or establishes an exemption. Any amount withheld from a payment to a US holder under the backup withholding rules is refundable or allowable as a credit against the holder's US federal income tax, provided that the required information is furnished to the Internal Revenue Service.  US Gift and Estate Tax
  ADSs in the same manner and to the same extent as with respect to other types of personal property.
 10F. DIVIDENDS AND PAYING AGENTS


150
 10G. STATEMENT BY EXPERTS
 
   10H. DOCUMENTS ON DISPLAY
 
   DRDGOLD Limited, P.O. Box 390, Maraisburg, Johannesburg, South Africa 1700. Attn: Group Company Secretary. Tel No. +27-11-219-8700. A copy of each report submitted in accordance with applicable United States law is available for public review at our principal executive offices.
  our principal executive offices at DRDGOLD Limited, 299 Pendoring Avenue, Blackheath, Randburg, South Africa 2195.
 10I. SUBSIDIARY INFORMATION


151
 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 General
 
  credit risks. We enter into transactions which make use of derivative instruments to economically hedge certain exposures. These instruments include interest rate swaps, forward sale commodity contracts and option contracts. The decision to use these types of transactions is based on our hedging policy. Although most of these instruments are used as economic hedges, none of them qualify for hedge accounting and, consequently, are marked-to-market through the statements of operations in accordance with our accounting policies. We do not hold or issue derivative financial instruments for speculative purposes, nor do we normally hedge forward gold sales. Commodity price risk
 
  dividends and undertake capital expenditures, and the market price of our ordinary shares or ADSs. Historically, gold prices have fluctuated widely and are affected by numerous industry factors over which we have no control. The aggregate effect of these factors on the gold price is impossible for us to predict. The price of gold may not remain at a level allowing us to economically exploit our reserves. It is not our policy to hedge this commodity price risk.
  total gold production committed under our hedging program as of July 1, 2001, was 802,625 ounces over a three-year period. Consequently, our shareholders were exposed to opportunity loss as a result of an increase in the price of gold. During fiscal 2002, our management reached the conclusion that our hedge book structure would make it difficult for us to accomplish our strategy of providing our investors with exposure to increases in the price of gold, as gains would be offset against potential losses on the forward contracts. As a result, our policy is  normally  not to hedge forward gold sales, however we do hedge specified projects, acquisitions and capital expenditure. With the acquisition of Emperor, during fiscal 2006, their existing gold forward contracts have been brought to book. These gold forward contracts require delivery of 145,695 ounces between fiscal 2007 and fiscal 2009. Forward sale commodity contracts
   These financial instruments do not qualify for hedge accounting.
 
 The total ounces to be delivered under the gold forward contracts for the Group is 145,695 ounces and the delivery into these
 derivative instruments will be in accordance with the maturity schedule agreed with ANZ, as follows:
  
 Year ended
 Strike price
 June 30, 2007
 June 30, 2008  June 30, 2009
      The total fair value of the financial instrument is a liability of A$34.7 million ($25.3 million) as of June 30, 2006. The fair
 value liability of the derivative financial instrument that is expected to mature within fiscal 2007 is  A$9.9 million  ($7.2 million), relating to 41,526 ounces. The remaining fair value liability of A$24.8 million ($18.1 million) will be settled thereafter.


152
 Option contracts
 
 During January 2006,
  entered into European Style gold call options, with strike prices ranging from
 $634.00 to $652.50 per ounce. Expiry dates of the options range from September 2006 to December 2008. These call options provide us with the right, but not the obligation, to buy a total of up to 46,426 ounces (reducing throughout the period) of gold at the various strike prices. These gold call options were taken up to mitigate the deterioration in the gold forward contracts discussed above.
 
  
 Year ended
 Strike price
 June 30, 2007
 June 30, 2008  June 30, 2009
                 
 The fair value of the European Style gold call options at June 30, 2006, is an asset of $2.9 million.
  
 
 Eskom gold for electricity contract
  for the supply of electricity. Under the terms of our agreement, we paid Eskom standard electricity tariff for all energy we consume, including the 75 GWh per month specified in the contract. In addition, every 12 month-period starting in October we adjusted the amounts paid in that period in accordance with an established formula based on the gold price. This contract expired in September 2005.
  between the contracted gold price, which was the price that was agreed on the date of the transaction for a determined period, and the arithmetic average of London PM close for each business day in the calculation period.
  not have to be carried on our balance sheet at fair value; (2) the embedded gold for electricity forward contract possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract; and (3) a separate, stand-alone instrument with the same terms would qualify as a derivative instrument. Accordingly, the embedded derivative was separated from the host contract and carried at fair value.
 The last 50,000 ounces of the gold for electricity contract was closed out on April 28, 2005, at a cost of $3.6 million.
 Concentration of credit risk
 
  financial institutions located in South Africa and Australia, after evaluating the credit ratings of the representative financial institutions. Furthermore, our accounts receivable and loans are regularly monitored and assessed for recoverability. Where it is appropriate to raise a provision, an adequate level of provision is maintained.
  sells the gold, on our behalf, on the bullion market. The gold is sold by RRL on the same day as it is delivered and settlement is made within two days. Once the gold has been assayed by RRL, the risks and rewards of ownership have passed.
  of credit risk in PNG is mitigated by the reputable nature of the customer and the settlement of the proceeds within a week.
  Limited, or BankWest, at a price negotiated by us. The concentration of credit risk in PNG is mitigated by the reputable nature of the customer and the settlement of the proceeds within two days.
  proceeds are received within a week of delivery. The concentration of credit risk in Fiji is mitigated by the reputable nature of the sales agent and their customers and the settlement of the proceeds within six days.


153
 Foreign currency risk
  New Guinea Kina and for Vatukoula is the Fiji Dollar.
  African Reserve Bank regulations. We are thus exposed to fluctuations in the Dollar/Rand exchange rate. We conduct our operations in South Africa, Papua New Guinea and Fiji predominantly in Rand, Kina and  Fiji  Dollar, respectively. Currently, foreign exchange fluctuations affect the cash flow that we will realize from our operations as gold is sold in Dollars while production costs are incurred primarily in Rands, Papua New Guinean Kina, Fiji Dollars and Australian Dollars. Our results are positively affected when the Dollar strengthens against these foreign currencies and adversely affected when the Dollar weakens against these foreign currencies. Our cash and cash equivalent balances are held in Dollars, Rands, Papua New Guinean Kina, Fiji Dollars and Australian Dollars; holdings denominated in other currencies are relatively insignificant. Certain of our financial liabilities are denominated in a currency other than the Rand. We are thus mostly exposed to fluctuations in the Rand and Australian exchange rate with the relevant currency.
  following approximate impacts on revenues and net profit/(loss) after tax:
  Exchange rate
 Impact on revenue
 Impact on net profit/(loss) after tax
          
  Interest rate risk Interest rate swap agreement
  
  payable on our $66,000,000 of 6% Senior Convertible Notes due November 2006 (refer to Note 19 of the financial statements). The fixed coupon rate (in Dollars) of 6% per annum was swapped for a floating South African interest rate, calculated at the forward JIBAR plus 200 basis points per annum. An amount of 60% of the coupon rate is subject to this swap agreement, based on the requirements of the South African Reserve Bank, as this represents the amount of the funds raised utilized in South Africa. The maturity date of this agreement was November 2006, however during fiscal 2006 this contract was closed out. Included in profit/(loss) on derivative instruments is $nil for fiscal 2006.
  $0.6 million and $2.0 million as at June 30, 2005 and June 30, 2004, respectively.
  Limited, or ANZ. In order to minimize fluctuation in interest rates, 64% of the loan has been covered by entering into interest swap contracts under which we are obliged to receive interest at variable rates and pay interest at a fixed rate of 4.34% until October 2008. As discussed in Note 17 to our financial statements, t he fair value of the interest rate swap agreement at June 30, 2006, is an asset of
 $0.1 million.
 
 Based on our fiscal 2006 financial results the interest rate swap agreement would result in a decrease of our interest expense
 by 0.2 million.


154
 Long-term debt
  currency.
 
 Dollar
 denominated
 loans
 Australian
 dollar
 denominated
 loans
 Rand
 denominated
 loans
 Total
 
 $'000
 $’000
 $'000
 $'000
      Interest rate
         59,444
 
    n/a
     66,925
 
    n/a
  66,925
 56,779
 2,665
 126,369
 Repayment period
    
     76,117
     10,639
     6,435
  -
 
 -
 6,936
  -
 
 -
 4,568
  -
 
 -
 21,674
  66,925
 56,779
 2,665
 126,369
 
  our interest expense by $7.5 million.
 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES


155
 PART II
 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
 
  material defaults with respect to any indebtedness of ours.
 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
 
   ITEM 15. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  procedures (as this term is defined under the rules of the SEC) as of June 30, 2006. Based on this evaluation, the Company’s Chief  Executive Officer and Chief Financial Officer concluded that, as of June 30, 2006, our disclosure controls and procedures were not effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company  in the reports that it files or submits under the US Securities Exchange Act of 1934.


They based this conclusion on our failure to obtain in
a timely fashion and include in this report the financial statements with
respect to Emperor Mines Limited and Crown Gold Recoveries (Pty) Limited required by Item 3-09 of Regulation S-X as
further disclosed in this Annual Report above under the caption: "Explanatory
Note Regarding the Omission from this Annual Report of Certain Financial
Statements Required by Rule 3-09 of Regulation S-X."Changes in Internal Control over Financial Reporting


156
 ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
    International Financial Reporting Standards, or IFRS, and financial statements and the ability to assess the general application of IFRS.  However, we do not have an audit committee financial expert (as defined in Item 16A of the Form 20-F) as no member of the Audit Committee currently has the required US GAAP experience.
      ITEM 16B. CODE OF ETHICS
   the Chief Executive Officer, Chief Financial Officer and the Group Financial Manager and Financial Manager at each mining operation as well as all other employees. The Code of Ethics and Conduct can be accessed on the Company’s website at
 www.drdgold.com
   ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
          Auditors' remuneration
 Year ended June 30,
  2006
 2005
  $’000
 $’000
                 Audit Fees
   provide, include the company audit; statutory audits; comfort letters and consents; attest services; and assistance with and  review of documents filed with the SEC. Audit-Related Fees
  on our  Section 404  Sarbanes-Oxley Act  of 2002  readiness project of approximately R1.0 million ($0.2 million). This project includes assistance relating to the documentation of internal control procedures.
  Tax Fees
 
     All Other Fees
 
        terms of engagement of the external auditors.  The committee pre-approves, and has pre-approved, all non-audit services provided by the external auditors. The Audit Committee considered all of the fees mentioned above and determined that such fees are compatible with maintaining KPMG Inc.’s independence.


ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
 
 
 Not applicable.
 
 ITEM 16E. PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
 
 
 Not applicable.


158
 PART III
 
 ITEM 17. FINANCIAL STATEMENT
 
   ITEM 18. FINANCIAL STATEMENTS
 
   
 
 
 Page


F-1
 Report of the Independent Registered Public Accounting Firm to the Board of Directors and Stockholders of DRDGOLD LimitedWe have audited the accompanying consolidated balance sheets of DRDGOLD Limited and its subsidiaries as of June 30, 2006 and 2005, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the years in the three-year period ended June 30, 2006. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.  We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.  In our opinion, based on our audits, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of DRDGOLD Limited and its subsidiaries at June 30, 2006 and 2005, and the results of their operations and  their cash flows for each of the years  in the three-year period  ended June 30, 2006,  in conformity with  US generally accepted accounting principles. As discussed in Note  3 to the consolidated financial statements, DRDGOLD Limited changed its method of accounting for share-based payments effective July 1, 2005. /s/ KPMG Inc.   KPMG Inc. Registered Accountants and Auditors Johannesburg, Republic of South Africa December 19, 2006


F-2
 DRDGOLD Limited
     Consolidated Statements of Operations for the years ended June 30
      
 2006
 2005
 2004
  Notes
 $'000
 $'000
 $'000
 REVENUES
          COSTS AND EXPENSES
  
   
           OTHER OPERATING EXPENSES
                                   SELLING, ADMINISTRATION AND GENERAL CHARGES
     (including stock based compensation costs of $2.0 million (2005: $1.0 million and 2004: $2.3 million))
     NET OPERATING (LOSS)/INCOME
     
                         FINANCE COSTS
          LOSS FROM CONTINUING OPERATIONS BEFORE TAX AND OTHER ITEMS
               LOSS FROM CONTINUING OPERATIONS AFTER TAX
          NET LOSS FROM CONTINUING OPERATIONS APPLICABLE TO COMMON STOCKHOLDERS
          NET LOSS APPLICABLE TO COMMON STOCKHOLDERS
     BASIC LOSS PER SHARE FROM CONTINUING OPERATIONS (CENTS)
     PROFIT/(LOSS) FROM DISCONTINUED OPERATION (CENTS)
     BASIC LOSS PER SHARE (CENTS)
     DILUTED LOSS SHARE (CENTS)
     PROFIT/(LOSS) FROM DISCONTINUED OPERATION (CENTS)
     DILUTED LOSS PER SHARE (CENTS)


F-3
 DRDGOLD Limited
    Consolidated Balance Sheets at June 30
     
 2006
 2005
  Notes
 $'000
 $'000
 ASSETS
    Current assets
                                        Mining assets
            Other assets
                Total Assets
    LIABILITIES AND STOCKHOLDERS’ EQUITY
    Current liabilities
                        Non-current liabilities
                        
    Total Liabilities
    Minority interest
    Stockholders’ equity
    Authorized
    600,000,000 (2005: 600,000,000) ordinary no par value shares and 5,000,000 (2005: 5,000,0000) cumulative preference shares
    Issued
    320,035,078 (2005: 296,206,048) ordinary no par value shares and 5,000,000 (2005: 5,000,000) cumulative preference shares
                                Total Liabilities and Stockholders’ Equity


F-4
 DRDGOLD Limited Consolidated Statements of Stockholders’ Equity For the years ended June 30
 
 
 
 
 Cumulative
 Stated capital
 Additional
 Unearned
 
 Other
 Total
 
 
 
 
 Number of  Number of
 preference
 and share
 paid-in
 stock  Accumulated  comprehensive
 stockholders’  Comprehensive
 
 
 
 common
 preferred
 shares
 premium
 capital
 compensation
 deficit
 loss
 equity
 (loss)/ income
 
 
 
 shares
 shares
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 BALANCE – JUNE 30, 2003
 184,222,073
 5,000,000
 107
 360,351
 37,705
 -
 (337,819)
 (50,154)
 10,190
 12,534
 Exercise of employee stock options
 978,053
 
 
 1,298
 
 
 
 
 1,298
 
 Issue of shares for cash
 41,463,639
 
 
 107,367
 
 
 
 
 107,367
 
 Share issue expenses
 
 
 
 (992)
 
 
 
 
 (992)
 
 Shares issued for acquisition of joint venture
 6,643,902
 
 
 16,748
 
 
 
 
 16,748
 
 Net loss for the year
 
 
 
 
 
 
 (58,898)
 
 (58,898)
 (58,898)
 Unearned stock compensation
 
 
 
 
 1,642
 (1,642)
 
 
 -
 
 Amortization of unearned stock compensation
 
 
 
 
 
 2,310
 
 
 2,310
 
 Other comprehensive income, net of tax of nil
 
 
 
 
 
 
 
 
 
 
 Foreign currency translation adjustments
 
 
 
 
 
 (1,639)
 
 5,228
 3,589
 5,228
 BALANCE – JUNE 30, 2004
 233,307,667
 5,000,000
 107
 484,772
 39,347
 (971)
 (396,717)
 (44,926)
 81,612
 (53,670)
 Exercise of employee stock options
 55,000
 
 
 60
 
 
 
 
 60
 
 Issue of shares for cash
 56,230,705
 
 
 65,914
 
 
 
 
 65,914
 
 Share issue expenses
 
 
 
 (4,305)
 
 
 
 
 (4,305)
 
 Shares issued for acquisition of associate
 6,612,676
 
 
 16,604
 
 
 
 
 16,604
 
 Net loss for the year
 
 
 
 
 
 
 (81,789)
 
 (81,789)
 (81,789)
 Unearned stock compensation
 
 
 
 
 385
 (385)
 
 
 -
 
 Amortization of unearned stock compensation
 
 
 
 
 
 1,002
 
 
 1,002
 
 Other comprehensive income, net of tax of nil
 
 
 
 
 
 
 
 
 
 
 Decrease in mark-to-market on listed investments
 
 
 
 
 
 
 
 (45)
 (45)
 (45)
 Foreign currency translation adjustments
 
 
 
 
 
 16
 
 (16)
 -
 (16)
 BALANCE – JUNE 30, 2005
 296,206,048
 5,000,000
 107
 563,045
 39,732
 (338)
 (478,506)
 (44,987)
 79,053
 (81,850)
 Exercise of employee stock options
 629,009
 
 
 539
 
 
 
 
 539
 
 Issue of shares for cash
 17,815,945
 
 
 25,359
 
 
 
 
 31,092
 
 Share issue expenses
 
 
 
 (1,080)
 
 
 
 
 (1,080)
 
 Shares issued for acquisition of loans
 4,451,219
 
 
 4,501
 
 
 
 
 
 
 Shares issued in exchange for services rendered
 932,857
 
 
 1,232
 
 
 
 
 
 
 Net loss for the year
 
 
 
 
 
 
 (23,831)
 
 (23,831)
 (23,831)
 Unearned stock compensation adjustment upon adoption
 of FAS 123(R)
 
 
 
 
 (338)
 338
 
 
 -
 
 Stock-based compensation expense
 
 
 
 
 2,038
 
 
 
 2,038
 
 Gain arising from issuance by subsidiary of its own stock
 
 
 
 
 13,745
 
 
 
 13,745
 
 Other comprehensive income, net of tax of nil
 
 
 
 
 
 
 
 
 
 
 Increase in mark-to-market on listed investments
 
 
 
 
 
 
 
 117
 117
 117
 Foreign currency translation adjustments
 
 
 
 
 
 
 
 1,341
 1,341
 1,341
 BALANCE – JUNE 30, 2006
 320,035,078
 5,000,000
 107
 593,596
 55,177
 -
 (502,337)
 (43,529)
 103,014
 (22,373)
 Analysis of accumulated other comprehensive loss:
 2004
 2005
 2006
 
  
     Mark-to-market on listed investments
 45
 -
 117
 
       Foreign currency translation adjustments
 (44,971)
 (44,987)
 (43,646)
 
       
 
 
 (44,926)
 (44,987)
 (43,529)
 
       
 The accompanying notes are an integral part of these Consolidated Financial Statements.


F-5
 DRDGOLD Limited
    Consolidated Statements of Cash Flows
    For the years ended June 30
      2006
 2005
 2004
  Notes
 $’000
 $’000
 $’000
 Net cash utilized by operating activities
 
 (2,422)
 (23,788)
 (25,092)
                                                                                                                                                  Net cash utilized in investing activities
 
 (30,345)
 (31,640)
 (94,074)
                                    Net cash generated in financing activities
 
 52,644
 67,441
 88,626
                                    Net increase/(decrease) in cash and cash equivalents
 
 19,877
 12,013
 (30,540)
 Effect of exchange rate changes on cash
 
 (1,050)
 1,619
 8,570
 Cash and cash equivalents at beginning of year
 
 36,085
 22,453
 44,423
 Cash and cash equivalents at end of year
 
 54,912
 36,085
 22,453
           The accompanying notes are an integral part of these Consolidated Financial Statements.


F-6
 1. NATURE OF OPERATIONS
 DRDGOLD Limited (“the Company”) was formed in 1895 and is a gold mining company engaged in underground and surface gold mining including exploration, extraction, processing and smelting. The Group (being the Company and its subsidiaries and joint venture) focuses its operations on the West Witwatersrand basin in South Africa, in Papua New Guinea and Fiji.  As at June 30, 2006, the South African operations consist of an 85% interest in each of Blyvooruitzicht Gold Mining Company Limited, or Blyvoor,  Crown Gold Recoveries (Pty) Limited, or  Crown, and East Rand  Proprietary Mines Limited, or ERPM.  The Australasian operations consist of a 78.72% interest in Emperor Mines Limited, or Emperor, which owns Vatukoula in Fiji, Tolukuma in Papua New Guinea  and a 20% interest in the Porgera Joint Venture  in Papua New Guinea.  The Company also has exploration projects in South Africa, Papua New Guinea, Fiji and Australia.
 2. RESTATEMENT OF FINANCIAL STATEMENTS
 On July 30, 2004, the Company’s offer to the shareholders of  Emperor  closed with the Company having received acceptances from Emperor’s shareholders representing approximately 25.55% of Emperor’s issued share capital, thereby increasing the Company’s shareholding in Emperor from 19.78% to 45.33%. Accordingly, the Company issued 6,612,676 shares in exchange for the 29,097,269 Emperor shares to the value of $16.6 million, based on the market value of the Company’s shares on the date issued. Share issue and transaction costs associated with the offer amounted to $1.7 million. Due to its cumulative ownership of 45.33% at June 30, 2005, the Company accounted for its investment in Emperor under the equity method of accounting. Accounting Principles Board Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock”, or APB Opinion No. 18, required the use of the equity method of accounting if the investment gave the Company the ability to exercise significant influence over operating and financial policies,  but not control, over an investee. As a result of the additional equity ownership and change in relationship with Emperor, including representation on Emperor’s board of directors, the Company had the ability to exercise significant influence over the operations of Emperor. Accordingly, the Company restated the prior year’s financial statements, as if the equity method had been utilized from December 2002, the date of the initial acquisition of the investment in Emperor. As required by APB Opinion No. 18, the change to the equity method in accounting for the Emperor investment required restatement of prior period financial statements. Beginning in August 2004, the Company recognized 45.33% of the loss of Emperor, adjusted for amortization of the excess purchase price. The amount included for the year ended June 30, 2004, represented 19.78% of Emperor’s losses, adjusted for the amortization of the excess purchase price. The following is a summary of the effects of the restatement, for the change to the equity method in accounting for the investment in Emperor, on the consolidated statements of operations for the year ended June 30, 2004.
 Effect on consolidated statement of operations
 Year ended June 30, 2004
 
 As previously
 reported
 Adjustments
 As restated
  $’000
 $’000
 $’000


F-7
 3. SIGNIFICANT ACCOUNTING POLICIES
 The following are accounting policies used by the Group which have been consistently applied as indicated below: Basis of presentationThe accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The Company presents its consolidated financial statements in United States Dollars. Use of estimatesThe preparation of the financial statements in conformity with generally accepted accounting principles in the United States requires the Group’s management to make assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. These estimates include the collectability of related party receivables, the valuation of deferred tax assets, the impairment of mining assets, and the estimation of  environmental rehabilitation, reclamation and closure costs, among others. Actual results could differ from those estimates. ConsolidationThe consolidated financial information includes the financial statements of the Company, its subsidiaries and investments in associates and joint venture. A company which is more than 50% owned by the Group, which the Group controls directly or indirectly, through other subsidiary interests, is classified as a subsidiary. The results of any subsidiary, associate or joint venture acquired or disposed of during the year, are consolidated from the effective date of acquisition and up to the effective date of disposal. Intra-company transactions and balances are eliminated on consolidation. Investment in joint ventureInvestments in unincorporated mining joint ventures in which the Group has joint control, under a contractual agreement, are reported using the proportionate consolidation method. Investment in associatesInvestments in associates are accounted for by the equity method of accounting. These are entities over which the Group has the ability to exercise significant influence, but which it does not control. The ability to exercise significant influence is presumed where the Group owns more than 20%, but less than 50%, of the voting stock of an investee. The Group’s investments in associates are carried in the balance sheet at an amount that reflects its share of the net assets of the associates. The recoverable amount of the associate, that is the Group’s proportionate share of the fair value of the associate, is compared to the carrying value of the associate. If an impairment exists on this basis, a reduction in the carrying value of the associate is recorded to the extent that the carrying value exceeds the fair value.  Equity accounting involves recognizing, in the statement of operations, the Group’s share of the associates’ profit or loss for the year after tax to the extent of the Group’s investment in and advances to its associates. Goodwill on the acquisition of associates is included in the carrying value of the investment in associates. GoodwillWhere the excess purchase price of a business acquisition cannot be attributed to assets acquired, including acquired properties and mineral rights, it is included in goodwill and reviewed for impairment in accordance with the provisions of  Statement of Financial Accounting Standards, or SFAS No. 142, “Goodwill and Other Intangible Assets.” Goodwill is stated at cost less impairment. Goodwill is tested for impairment at the reporting unit level on an annual basis, or more frequently if the Group believes indicators of impairment exist.  The performance of the test involves a two step process. The first step of the impairment test involves comparing the fair value of the reporting unit with the reporting unit’s carrying amount, including goodwill. The fair value of the reporting unit is determined based on estimated future discounted cash flows. If the carrying amount of the reporting unit exceeds the reporting unit’s fair value, the second step of the goodwill impairment test is performed to determine the amount of the impairment loss. The second step of the goodwill impairment test involves comparing the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. The impairment which is recognized in the statement of operations is measured as the amount by which the carrying amount exceeds the implied fair value of the reporting unit’s goodwill.


F-8
 3. SIGNIFICANT ACCOUNTING POLICIES(continued)
 Foreign currencyThe Group’s functional currency for the South African operations is the South African Rand, for the Papua New Guinean operations is the Papua New Guinean Kina and for the Fiji operation is the Fiji Dollar. Transactions denominated in currencies other than the functional currency are recorded at the rate of exchange ruling at the transaction date. Monetary assets and liabilities denominated in such currencies are translated at the rates applicable at the balance sheet date and profits and losses arising as a result of translating those assets and liabilities to the functional currency are recorded in the statement of operations. For foreign subsidiaries, whose functional currency is a currency other than the Rand, assets and liabilities are translated using the closing rates at year end, and the statement of operations is translated at average rates. Differences arising on translation are included as a component of other comprehensive loss.  The financial statements are translated by the Company into US Dollars, for the purpose of reporting, in accordance with SFAS No. 52, “Foreign Currency Translation,” whereby assets and liabilities are translated using the closing rates at year end, the statement of operations is translated at average rates and equity at historical rates. The translation differences arising as a result of converting to US Dollars, using the current exchange rate method, are included as a separate component of stockholders’ equity – other comprehensive loss. ReceivablesReceivables consist of amounts owing by external and related parties and include amounts of a long- and short-term nature. Provisions for uncollectible amounts are included in determining net income or loss where a decline in the value of the receivable has occurred. Interest on balances owed to the Group accrues on a daily basis. Interest accrued on impaired balances owed to the Group is not recorded as it is not considered to be recoverable. Cash and cash equivalentsCash and cash equivalents consist of all cash balances and highly liquid investments with an original maturity of three months or less. Due to the short maturity of the investments, the carrying amounts approximate their fair value. Non-current unlisted investmentsNon-current unlisted investments, in which the Group does not have significant influence  or a controlling interest, are carried at acquisition cost. Realized gains and losses are included in determining net income or loss. Impairment losses are included in determining net income or loss where an other than temporary decline in the value of the investment has occurred. Non-current listed investmentsNon-current listed investments, are treated as ‘available for sale’, and are accounted for at fair value with unrealized gains and losses excluded from earnings and reported as a separate component of stockholders’ equity.  Realized gains and losses are included in determining net income or loss. InventoriesInventories, comprising gold in process (being gold at the stage of production immediately prior to smelting) and supplies, are stated at the lower of cost and market value. Costs are assigned to inventory on an average cost basis. Costs relating to gold in process comprise all costs incurred to the stage immediately prior to smelting, including costs of extraction, depletion and processing, based on the relevant stage of production. Selling, refining and general administration costs are excluded from inventory valuation. Non-current inventory comprises ore  in  stockpiles. These in-process inventories are measured on the absorption cost method and valued at the lower of average production cost and net realizable value, after a reasonable allowance for further processing costs. Costs relating to ore in stockpiles comprise all costs incurred to the stage immediately prior to stockpiling, including costs of extraction and crushing, as well as processing costs associated with ore stockpiles, based on the relevant stage of production. Exploration costsMining exploration costs, including property acquisitions and mineral and surface rights relating to exploration stage  properties are expensed as incurred. Development costsDevelopment costs relating to major programs at existing mines are capitalized. Development costs consist primarily of expenditures to initially establish a mine and to expand the  capacity of operating mines. Ordinary development costs to maintain production are expensed as incurred.


F-9
 3. SIGNIFICANT ACCOUNTING POLICIES(continued)
 Mining assetsLand is recorded at cost and not depreciated. Buildings and other non-mining fixed assets are recorded at cost less accumulated depreciation. Actual expenditures incurred for mineral property interests, mine development costs, mine plant facilities and equipment are capitalized to the specific mine to which the cost relates. Amortization is calculated on a mine-by-mine basis (i.e. the cost pools are the individual mines) using the units of production method. Under the units of production method, the Group estimates the amortization rate based on actual production over total proven and probable ore reserves of the particular mine. This rate is then applied to actual costs incurred to arrive at the amortization expense for the period. Proven and probable ore reserves of a particular mine reflect estimated quantities of economically recoverable  reserves that can be recovered in the future from known mineral deposits that are presently accessible.  Impairment of mining assetsThe impairment of long-lived assets is accounted for in terms of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be recoverable. Recoverability of an asset or asset group is assessed by comparing the carrying amount of an asset or group of assets to the estimated future undiscounted net cash flows of the asset or group of assets.  Estimates of future cash flows include estimates of future gold prices and foreign exchange rates. It is therefore reasonably possible that changes could occur which may affect the recoverability of the Group’s mining assets.  If an asset or asset group is considered to be impaired, the impairment which is recognized is measured as the amount by which the carrying amount of the asset or group of assets exceeds the discounted future cash flows expected to be derived from that asset or group of assets. The asset, or asset group, is the lowest level for which there are identifiable cash flows that are largely independent of other cash flows. The lowest level for which there are identifiable cash flows that are largely independent of other cash flows is on a mine-by-mine basis. Therefore the Company makes the analysis on a mine-by-mine basis. Leased assetsAssets subject to finance leases are capitalized at the lower of fair value or present value of minimum lease payments with the related lease obligation recognized at the same amount. Capitalized leased assets are depreciated over the  shorter of their estimated useful lives and the lease term. Finance lease payments are allocated using the effective interest rate method, between the lease finance cost, which is included in finance costs, and the capital repayment, which reduces the liability to the lessor. Operating lease rentals are charged against operating profits in a systematic manner related to the period the assets concerned will be used. Deferred stripping costsStripping costs incurred in open-pit operations during the production phase to remove additional waste are charged to operating costs on the basis of the average life of mine stripping ratio and the average life of mine costs per ton.  The average stripping ratio is calculated as the number of tons of waste material expected to be removed during the life of mine per ton of ore mined.  The average life of mine cost per ton is calculated as the total expected costs to be incurred to mine the ore body divided by the number of tons expected to be mined. The average life of mine stripping ratio and the average life of mine cost per ton are recalculated annually in light of additional knowledge and changes in estimates. The cost of the “excess stripping” is capitalized as mine development costs when the actual mining costs exceed the sum of the adjusted  ore tons mined, being the actual ore tons plus the product of the actual ore tones multiplied by the average life of mine stripping ratio, multiplied by the life of mine cost per ton. When the actual mining costs are below the sum of the adjusted ore tons mined, being the actual ore tons plus the product of the actual ore tons multiplied by the average life of mine stripping ratio, multiplied by the life of mine cost per ton, previously capitalized costs are expensed to increase the cost up to the average.  Thus, the cost of stripping in any period will be reflective of the average stripping rates for the  ore body as a whole. Deferred stripping costs of $23.6 million (2005:  $12.5 million), at Porgera, are  classified as mining assets and the amounts amortized  are included in the depreciation and amortization charge for all periods presented. During fiscal 2006, $12.9 million (2005: $11.1 million) of deferred stripping costs were capitalized to mining assets. The deferred stripping costs are included in the carrying values of mining assets used in the impairment tests performed in accordance with the provisions of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”


F-10
 3. SIGNIFICANT ACCOUNTING POLICIES(continued)
 Borrowing costsInterest on borrowings utilized to finance qualifying capital projects under construction is capitalized during the construction phase as part of the cost of the project. Other borrowing costs are expensed as incurred. No borrowing costs were capitalized during the years ended June 30, 2006, 2005 or 2004. Environmental rehabilitation, reclamation and closure costsThe Group accounts for its obligations associated with the retirement of tangible long-term assets and the associated asset retirement costs in accordance with SFAS No. 143, “Accounting for Asset Retirement Obligations,” or SFAS No. 143. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and normal use of the asset.  SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, the Group will recognize a gain or loss on settlement. Under SFAS No. 143, accounting for environmental rehabilitation and reclamation obligations requires management to make estimates for each mining operation of the future costs the Group will incur to complete final reclamation work required to comply with existing laws and regulations. Actual costs incurred in future periods could differ from amounts estimated. Additionally, future changes to environmental laws and regulations could increase the extent of reclamation and remediation work required to be performed by the Group. Any such increases in future costs could materially impact the amounts charged to operations for reclamation and remediation. In South Africa, annual contributions are made to dedicated rehabilitation trust funds to fund the estimated cost of rehabilitation during and at the end of the life of the relevant mine. The funds contributed to the trusts, including income earned thereon, are included under non-current assets. RevenueRevenue consists of sales of gold bullion and is recognized when the product is delivered to the relevant refinery, Rand Refinery Limited in South Africa, AGR Matthey in Papua New Guinea (for Tolukuma and Porgera) and AGR Matthey in Fiji (for Vatukoula), at which stage title, including all risks and rewards of ownership, passes from the Group to the buyer. Once the gold bars reach the refinery, they are assayed to determine the gold content of each bar before being sent for refining where it is purified to 99.9% purity and cast into troy ounce bars of varying weights. The bullion is then sold by the refinery on the same day as the delivery, and the proceeds are remitted to the Group within two to six days. Derivative instrumentsUnder SFAS No. 133,  “Accounting for Derivative Instruments and Hedging Activities,” as amended, all derivative instruments are recognized on the balance sheet at their fair value, unless they meet the criteria for the normal purchase normal sale exception. On the date a derivative contract is entered into, the derivative can be designated as (1) a hedge of the fair value of a recognized asset or liability (fair value hedge), (2) a hedge of a forecasted transaction (cash flow hedge), or (3) a hedge of a net investment in a foreign entity. The Group’s derivative transactions, while designed to provide effective economic hedges under the Group’s risk management policies, do not qualify for hedge accounting. Therefore, any changes in the fair value of derivative instruments are recognized in the statement of operations for each reporting period. Derivative instruments are not entered into for trading purposes.


F-11
 3. SIGNIFICANT ACCOUNTING POLICIES(continued)
 Pension plans and other employee benefitsPension plans, which are multi-employer plans, in the nature of defined contribution plans, are funded through annual contributions, which are expensed as incurred.
 
 In addition, the Group makes long-service awards to certain eligible employees, based on both the employee’s skill level and years of service with qualified gold mining companies. The obligation is accrued over the service life of the employees and is calculated using a projected credit unit method.
 
 The Group contributes to a defined contribution multi-employer medical fund for current employees and certain retirees on an annually determined contribution basis. No contributions are made for employees retiring after December 31, 1996.  The contributions are expensed as incurred.
 
 The Group has an obligation to provide medical benefits to certain of its pensioners and dependants of ex-employees. Post-retirement medical benefits in respect of qualifying employees are recognized as an expense over the expected remaining service lives of relevant employees. These liabilities are provided in full, calculated on an actuarial basis. Periodic valuation of these obligations is carried out by independent actuaries using appropriate mortality tables, long-term estimates of increases in medical costs and appropriate discount rates. Actuarial gains and losses are included in determining net income or loss. Premium and debt costsDiscounts and underwriting, legal and other direct costs incurred in connection with the issuance of debt are deferred and are amortized, over the period of the debt, to interest expense using the effective interest method. TaxationDeferred income and mining taxesThe Group follows the liability method of accounting for deferred income and mining tax whereby the Group recognizes the tax consequences of temporary differences by applying current enacted statutory tax rates applicable to future years to differences between financial statement amounts and the tax bases of certain assets and liabilities. Changes in deferred tax assets and liabilities include the impact of any tax rate changes enacted during the year. A valuation allowance is raised against deferred tax assets which are not considered more likely than not to be realizable. Secondary Taxation on Companies (STC)STC is a tax levied by the South African Revenue Services on dividends declared and becomes payable on declaration of a dividend. STC is expensed when the related dividend is declared. (Loss)/profit per share(Loss)/profit per share is calculated based on the net result divided by the weighted average number of shares in issue during the year. Fully diluted (loss)/profit per share is based upon the inclusion of potential dilutive shares with a dilutive effect on (loss)/profit per share. In fiscal 2006, the shares underlying the convertible notes and the shares underlying the staff options allocated in terms of the Employee Share Option Scheme, or ESOS, along with their respective impact on the net (loss)/profit applicable to common stockholders, of $5.9 million and $nil, were considered in determining the diluted (loss)/profit per share. In fiscal 2005 the shares underlying the convertible notes and the shares underlying the staff options allocated in terms of ESOS, along with their respective impact on the net (loss)/profit applicable to common stockholders, of $7.8 million and $nil, were considered in determining the diluted loss per share. In fiscal 2004 the shares underlying the options allocated in terms of ESOS, and their respective impact on the  net (loss)/profit applicable to common stockholders, of $3.6 million and $nil, were considered in determining the diluted loss per share. In fiscal 2006, 2005 and 2004,  losses applicable to common stockholders of  $23.8 million,  $81.8 million and  $58.9 million, respectively, were recorded. As a result of the losses recorded in fiscal 2006, 2005 and 2004, the adjustments were anti-dilutive.


F-12
 3. SIGNIFICANT ACCOUNTING POLICIES(continued)
 Stock-based compensation plansAt June 30, 2006, the Company has in place an Employee Share Option Scheme, which is described more fully in Note 22. Effective July 1, 2005, the Company adopted SFAS No. 123 (revised 2004), “Share Based Payment,” or SFAS No. 123(R). SFAS No. 123(R) requires that the cost resulting from all share-based payment transactions be recognized in the financial statements over the employee requisite service period (generally the vesting period of the equity grant) and determined on a fair value based measurement method. The fair values for stock option awards issued to employees are estimated at the date of grant using the Black-Scholes option pricing model. The Company adopted SFAS No. 123(R) using the modified prospective method. Under this method, compensation cost is recognized (a) based on the requirements of SFAS No. 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of SFAS No. 123 for all awards granted to employees prior to the effective date of SFAS No. 123(R) that remained unvested on the effective date. Previously, the Company accounted for stock option awards using the intrinsic value method in accordance with APB Opinion No. 25, “Accounting for Stock Issued to Employees”and related interpretations and disclosure provisions of SFAS No. 123, “Accounting for Stock-Based Compensation.” The difference between the option strike price and the prevailing market value of the share at grant date was recorded as compensation expense over the vesting period. The following table illustrates the effect on net (loss)/profit applicable to common stockholders if the Company had applied the fair value recognition provisions of SFAS No. 123 to its employee based compensation plan  in 2005 and 2004  (thousands except for earnings per share information):
  
 Year
 ended
 Year
 ended
  
 June 30,
 2005
 June 30,
 2004
                                           Discontinued operationThe results of operations of discontinued Group components and gains or losses from their disposal are each presented separately net of tax in the notes to the consolidated financial statements for all periods presented. A Group component is considered a discontinued operation if its operations and cash flows have been or will be eliminated from the ongoing activities of the Group as a result of a disposal transaction, the Group will not have any significant subsequent continuing involvement with the component, and the component can be clearly distinguished, operationally and for financial reporting purposes. If not disposed of by the balance sheet date, to qualify as discontinued operation, a component must also meet the conditions to be classified as held for sale. Net assets of a discontinued Group component classified as held for sale are measured at the lower of its carrying amount or fair value less cost to sell. Gains from the sale of a discontinued Group component are recognized in the period realized and reported separately. ComparativesCertain comparatives have been reclassified, where necessary to conform to the current year’s presentation.


F-13
 3. SIGNIFICANT ACCOUNTING POLICIES(continued)
 Recent pronouncementsEITF Issue 04-06, “Accounting For Stripping Costs Incurred During Production in the Mining Industry”In March 2005, the EITF reached a consensus (ratified by the FASB) that stripping costs incurred during the production phase of a mine are variable production costs that should be included in the costs of inventory produced during the period that the stripping costs are incurred.
  The EITF consensus is effective for the first reporting period in years beginning after December 15, 2005, with early adoption permitted. The Company is reviewing the guidance issued in Issue 04-06 and has not yet determined the impact of this on its consolidated financial statements.
  FASB Staff Position, or FSP, No. FIN 46(R)-6, “Determining the variability to be considered in applying FASB Interpretation No. 46(R) (FSP FIN 46(R)-6)” In April 2006, the FASB issued FSP FIN 46(R)-6 to address how to determine the variability to be considered in applying FASB Interpretation No. 46 (revised December 2003),  “Consolidation of Variable  Interest Entities,” or FIN 46(R).The variability to be considered in applying FIN 46(R)is based on an analysis of the design of the entity considering the nature of the risks in the entity, determining the purpose for which the entity was created and determining the variability the entity is designed to create and pass along to its interest holders.
  FSP FIN 46(R)-6 is effective the first day of the first reporting period beginning after June 15, 2006.  The Group is evaluating the impact of this statement and believes that it will not have a material impact on our results of operations, financial position or liquidity
  FASB Interpretation No. 48, or FIN 48, “Accounting for uncertainty in income taxes–an interpretation of FASB Statement No. 109”In July 2006, the FASB issued FIN 48 which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The evaluation of a tax position in accordance with this interpretation firstly requires the determination whether it is more likely than not that a tax position will be sustained upon examination, based on the technical merits of the position and secondly the position is measured to determine the amount of benefit to be recognized in the financial statements. The Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.
  FIN 48 is effective in fiscal years beginning after December 15, 2006. The provisions of FIN 48 are to be applied to all tax positions upon initial adoption, with the cumulative effect adjustment reported as an adjustment to the opening balance of retained earnings. The Group is in the process of evaluating the impact of this pronouncement and it is believed that it will not have a material impact on our results of operations, financial position or liquidity.
  FASB Staff Position No. FAS 115-1 and FAS 124-1, or FSP FAS 115-1 and FAS 124-1, “The meaning of other-than-temporary impairment and its application to certain investments”In November 2005, the FASB issued FSP FAS 115-1 and FAS 124-1 providing guidance for the determination as to when an investment is considered impaired, whether that impairment is other than temporary, and the measurement of an impairment loss. The guidance also includes accounting considerations subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments.
  FSP FAS 115-1 and FAS 124-1 is effective for reporting periods beginning after December 15, 2005 and will be adopted by the Group in the year ended June 30, 2007. The Group is in the process of evaluating the impact of this pronouncement and it is believed that it will not have a material impact on our results of operations, financial position or liquidity.


F-14
 4. ACQUISITION AND DISPOSAL OF BUSINESSES
 2006 acquisitions Emperor Mines LimitedOn November 16, 2005, the Company concluded a sale and purchase agreement with Emperor, who held a 100% stake in the Vatukoula mine in Fiji, pursuant to which, on April 6, 2006, Emperor acquired the Company’s wholly owned subsidiary, DRD (Isle of Man) Limited, or DRD (Isle of Man), which in turn holds the Company’s Papua New Guinea assets, comprising the 20% interest in the Porgera Joint Venture, the 100% interest in Tolukuma Gold Mines Limited and all of the Company’s exploration tenements in Papua New Guinea. The purchase consideration was subject to certain completion adjustments to reflect the change in the capital position of both Emperor and DRD (Isle of Man) between October 1, 2005, which was the effective date, and April 6, 2006, the date that the transaction was completed. The purchase consideration included 751,879,699 new Emperor shares issued to DRD (Offshore) Limited, or DRD (Offshore), and a cash consideration of $37.3 million  payable to  DRD (Offshore). After the issue of the new Emperor shares, the Company held 88.27% of Emperor. Subsequently, the Company’s shareholding was diluted to 78.72% by June 30, 2006, following a number of share issues in which the Company did not participate.  This transaction was accounted for as a reverse acquisition of Emperor by DRD (Isle of Man).  The transfer of  DRD (Isle of Man) to Emperor was negotiated in conjunction with the Company obtaining control of Emperor, therefore the sale and purchase transactions could not be separated and are accounted for as one transaction. The transaction has been accounted for by the Company as a partial sale of DRD (Isle of Man) and a partial acquisition of Emperor. Accordingly a profit has been recognized by the Company on the portion of DRD (Isle of Man) sold  to minority shareholders. The Company has revalued the assets and liabilities of Emperor to the extent acquired and has revalued the assets and liabilities of DRD (Isle of Man) to the extent that DRD (Isle of Man) was acquired by the minority shareholders at the date of acquisition. The purchase consideration has been determined based on the fair value of the assets transferred to Emperor and the fair value of the additional interest acquired in Emperor. The estimated fair value of the assets and liabilities acquired as part of this transaction were as follows:
  $’000


F-15
 4. ACQUISITION AND DISPOSAL OF BUSINESSES(continued)
 Crown Gold Recoveries (Pty) Limited and East Rand Proprietary Mines Limited In November 2005, the Company transferred its 100% interest in Blyvoor and its 40% interest in Crown and ERPM to a newly created subsidiary, DRDGOLD SA. DRDGOLD SA acquired the remaining 60% interest in Crown and ERPM from KBH. DRDGOLD SA then issued new shares to Khumo Gold, representing a 15% interest in DRDGOLD SA. The Company retained an 85% interest in DRDGOLD SA. The transaction was financed by the issuance of $4.8 million (R31.8 million) new  Khumo Gold  preference shares, to which  the Company subscribed.  The proceeds from these preference shares were used by Khumo Gold to settle an existing loan to KBH of  $1.2 million (R7.9 million), subscribe for $0.6 million (R4.1 million) new preference shares in ERPM, subscribe for $0.4 million (R2.7 million) new preference shares in Crown, subscribe for $0.6 million (R3.9 million) new preference shares in Blyvoor and subscribe for 15% of the issued ordinary shares in DRDGOLD SA for $2.0 million (R13.2 million). The net effect of these transactions was that the Group acquired 60% of Crown and ERPM.
 The estimated fair value of the assets and liabilities of Crown Gold Recoveries (Pty) Limitedacquired as part of this transaction were as follows:
  $’000
                                 The estimated fair value of the assets and liabilities of East Rand Proprietary Mines Limited acquired as part of this transaction were as follows:
  $’000


F-16
 4. ACQUISITION AND DISPOSAL OF BUSINESSES(continued)
 For information purposes only, the following unaudited pro forma financial data reflects the consolidated results of operations of the Company as if the above business combinations had taken place on July 1, 2005 and on July 1, 2004, respectively:
 Year ended  Year ended
  June 30,
 2006
 June 30,
 2005
  $’000
 $’000
  
 
                       
 The pro forma information is not indicative of the results of operations that would have occurred had these business combinations been consummated on  July 1, 2005 and on  July 1,  2004,  respectively. The information is not indicative of the group’s future results of operations. 2006 disposals Stand 752 Parktown Extension (Pty) LimitedIn September 2005, the Company sold Stand 752 Parktown Extension (Pty) Limited for R4.0 million ($0.6 million). The aggregate carrying value of the assets and liabilities disposed of as part of this transaction were as follows:
  $’000


F-17
 4. ACQUISITION AND DISPOSAL OF BUSINESSES(continued)
 2005 acquisitions Emperor Mines LimitedOn July 30, 2004, the Company’s offer to the shareholders of Emperor Mines Limited, or Emperor, closed with the Company having received acceptances from Emperor’s shareholders representing approximately 25.55% of Emperor’s issued share capital, thereby increasing the Company’s shareholding in Emperor from 19.78% to 45.33%. Accordingly, the Company issued 6,612,676 shares in exchange for the 29,097,269 Emperor shares to the value of $16.6 million, based on the market value of the Company’s shares on the date issued. Share issue and transaction costs associated with the offer amounted to $1.7 million. The estimated fair value of the assets and liabilities acquired as part of this transaction were as follows:
  $’000
                                           The fair value of the 6,612,676 no par value shares issued was $16.6 million, determined based on the prevailing market value of DRDGOLD Limited shares on June 10, 2004 (refer Note 20), in final settlement of the purchase price determined on July 30, 2004. The excess paid over the net asset value of Emperor relates to the fair value adjustment of the mining assets in Emperor.


F-18
 4. ACQUISITION AND DISPOSAL OF BUSINESSES(continued)
 2005 disposals North West OperationsOn March 3, 2005, the Company entered into a 60-day review period at the North West Operations due to continuing losses at these operations. The purpose of this 60-day review period was to assess whether these operations could be restored to break-even. On March 9, 2005, the North West Operations suffered the effects of an earthquake of 5.3 on the Richter scale. As a consequence of the extensive damage caused by the earthquake, the  No. 5 Shaft of the North West Operations was closed. There was continuing seismic activity in the area and on March 16, 2005, the Company closed the No. 2 Shaft because of concerns for the safety of the employees. On March 22, 2005, application was made to the High Court of South Africa for the provisional liquidation of Buffelsfontein Gold Mines Limited (which owns the North West Operations), which order was granted on the same day. The aggregate carrying value of the assets and liabilities disposed of as part of this transaction were as follows:
  $’000


F-19
 4. ACQUISITION AND DISPOSAL OF BUSINESSES(continued)
 2004 acquisitions Net-Gold Services LimitedWith effect from April 28, 2004, the closing date, the Group acquired 50.25% of the shares of Net-Gold Services Limited, a subsidiary of G.M. Network Limited. This entity brokers the payment of purchases made by subscribers, through settlement in gold. The results of Net-Gold Services Limited’s operations have been included in the consolidated financial statements since that date. Included in the acquisition is an option to exchange the Group’s shareholding in Net-Gold Services Limited for approximately 14.3% of the shares in G.M. Network Limited, a non-public company that focuses on the development of patents and other intellectual property specifically in connection with electronic trading on the Internet. This option is valid until December 31, 2007. The estimated fair value of the assets and liabilities acquired as part of this transaction were as follows:
  $’000
                             Porgera Joint VentureWith effect from October 14, 2003, the Group acquired the shares in Orogen Minerals (Porgera) Limited, or OMP, and Mineral Resources Porgera Limited, or MRP.  The transaction was affected through the amalgamation of  OMP, MRP and the Company’s wholly-owned subsidiary, Dome Resources (PNG) Limited.  OMP changed its name to DRD (Porgera) Limited. This resulted in the Company acquiring a 20% interest in the Porgera Joint Venture in Papua New Guinea. The Porgera mine’s main business focus is the extraction of gold.


F-20
 4. ACQUISITION AND DISPOSAL OF BUSINESSES(continued)
 Porgera Joint Venture(continued)The estimated fair value of the assets and liabilities acquired as part of this transaction were as follows:
  $’000
                                       The fair value of the 6,643,902 no par value shares issued was $16.7 million, determined based on the prevailing market value of DRDGOLD Limited shares on November 22, 2003 (refer Note 20), in final settlement of the purchase price determined on October 14, 2003. Fortis Limited With effect May 21, 2004, the Group acquired the shares in Fortis Limited, or Fortis, a company dealing with insurance and reinsurance activities, in Papua New Guinea. Fortis was acquired for a consideration of $712,000, the only asset of Fortis being cash and cash equivalents of $712,000. 2004 disposalsThe Group made no disposals during the year.


F-21
 5. RELATED PARTY TRANSACTIONS
 The Company has related party relationships with its affiliates and with its directors and senior management.  All contracts with related parties for the supply of goods and services are approved in accordance with the Company’s procurement policies. The contract terms are compared to similar suppliers of goods and services to benchmark that the contract is on market related terms.  Transactions with Directors Dr. M. P. Ncholo, chairman of Khumo Bathong Holdings (Pty) Limited, or KBH, was also a Non-Executive Director of the Company until October 25, 2005.  Dr. M. P. Ncholo  earned $52,851 in board and other fees from the Company during the year ended June 30, 2006 (2005: $49,439). During fiscal 2004, financial assistance was provided by ERPM, the Company’s then 40% associate company with KBH, to the family of  Dr. M. P. Ncholo, with regards to funeral expenses relating to the death of a family member who was a temporary employee of ERPM. In terms of ERPM’s practice, the funds were advanced on compassionate grounds to assist the family with costs associated with the funeral. This amounted to $12,441. In fiscal 2006, this amount was written off in the accounts of ERPM. On June 26, 2006, the Emperor board approved a loan of A$0.4 million ($0.3 million) to Mr. B. Gordon, the Chief Executive Officer of Emperor, to acquire 1,000,000 shares in Emperor. The approval of the loan was subject to approval by shareholders at Emperor’s Special General Meeting held in August 2006. The loan was approved by shareholders at this Special General Meeting. The loan is repayable over 5 years, with 25% of any gross bonus paid to Mr. B. Gordon being directed as a loan repayment until such time as the loan is repaid in full. The loan was entered into on an arm’s-length basis and on market related terms and bears interest at the ANZ Bank published bank bill rate plus 1% per annum. Transactions with affiliates During the year ended June 30, 2006, the Company earned $0.7 million (2005: $0.5 million and 2004: $1.0 million) in management fees from  Crown and $0.7 million (2005: $0.5 million and 2004: $2.0 million) in management fees from ERPM, $1.6 million (2005: $1.9 million and 2004: $2.1 million), up to December 1, 2005 after which Crown and ERPM were consolidated as subsidiaries. At June 30, 2006, KBH owed the  Company  $nil (2005:  $1.2 million). Interest amounting to $0.1 million (2005: $0.1 million) was payable to the Company on the loan to KBH for the year ended June 30, 2006. No interest income on the loan was recorded as it was not considered to be recoverable. No dividends were received from associates in fiscal 2006, fiscal 2005 or fiscal 2004. On July 11, 2005, Emperor  finalized an A$10.0 million  ($7.6 million) Convertible Loan facility with the Company.  The Company advanced these funds to Emperor in July 2005. The Convertible Loan facility carries an interest rate of 9% per annum and is repayable by December 31, 2007. The facility is convertible,  at any time,  at the Company’s election into fully paid shares of Emperor at conversion price equal to the lower of A$0.30 ($0.23) per share or the 45 day volume weighted average price of Emperor shares on ASX prior to the date of conversion. The outstanding balance on this loan at June 30, 2006 is eliminated on consolidation. Rand Refinery agreementOn October 12, 2001, the Group entered into an agreement with Rand Refinery Limited, or Rand Refinery, for the refining and sale of all of its gold produced in South Africa. Under the agreement, Rand Refinery performs the final refining of the Group’s gold and casts it into troy ounce bars. Then, Rand Refinery sells the gold on the same day as delivery, for the London afternoon fixed price on the day the gold is sold. In exchange for this service, the Group pays  Rand Refinery a variable refining fee plus fixed marketing, loan and administration fees. Mr. D.J. Pretorius, the Group Legal Counsel, is also a Director of Rand Refinery and is a member of their Audit Committee. Also, Mr. I.D. Graulich, the Group’s  Strategic Development Officer, is Alternate Director to Mr. D.J. Pretorius. The Group currently owns 4% (2005: 3%) of Rand Refinery (which is jointly owned by South African mining companies). During the year, all gold produced in South Africa was refined by Rand Refinery and as at year-end no balances owed by or to this entity. Mr. C. Press loanDuring fiscal 2003, Mr. C. Press, a director of Net-Gold Services (Pty) Limited, or Net-Gold, a consolidated subsidiary, loaned an amount of US$24,946 to Net-Gold. This loan is interest free, unsecured and has no fixed terms of repayment. The funds were used for short-term working capital advances. As at June 30, 2006, the full balance was still outstanding.


F-22
 5. RELATED PARTY TRANSACTIONS(continued)
 Western Areas LimitedWestern Areas Limited was also a related party because Mr. R.A.R Kebble, a director of Western Areas Limited, was also a director of the Company. On or about October 9, 2001, the Company concluded a contract of guarantee and cession as security for payment with Investec Bank Limited, or Investec. Under the terms of this agreement, the Company agreed to guarantee  Western Areas Limited’s, or WAL’s, obligations to Investec up to the value of the Sale Shares (being ordinary shares of Randgold, JCI and CAM acquired by the Company between December 14, 1999 and January 11, 2000). Also, the Company ceded the Sale Shares, as security, to and in favor of Investec allowing Investec to sell the Sale Shares in the event that WAL defaulted.  On or about September 26, 2001, the Sale Shares were ceded to Investec and WAL granted the Company a put option in respect of the Sale Shares at a total price of at least R116.4 million ($13.3 million). CAM and JCI undertook to apply all dividends received from WAL in respect of  their shareholdings to the reduction of all amounts owed by them to the Company. The parties agreed that the monthly option fee would be payable to exercise their rights under the call option for the duration of the Company’s guarantee and cession and agreed that if Investec exercised its rights under that guarantee, the rights of CAM and JCI under the call option would terminate.  The option fee payable to the Company by CAM and JCI for the period of November 2001 up to December 13, 2001 amounted to R21.6 million ($2.0 million) plus VAT in the amount of R3.0 million ($0.3 million) plus interest in the amount of R1.7 million ($0.2 million) at the prescribed rate of 15.5% per annum from January 25, 2001 to the date of payment.  On December 13, 2001, the Company invoiced JCI on behalf of JCI and CAM in these amounts. On December 14, 2001, the Company made a demand on CAM and JCI for the amount of R32.8 million ($3.0 million). On December 24, 2001, the Company’s attorney’s made demands on CAM and JCI for the same amount. The Company instituted legal proceedings against JCI and CAM for the recovery of these amounts. The matter was heard on August 30, 2004. At this date partial settlement of certain small claims related to the larger JCI and CAM claim, to the value of R2.4 million ($0.4 million), was awarded by the High Court of South Africa, however the Company had provided in full in the financial year ended June 30, 2002, for the balance outstanding by CAM against the probable bad debt. Refer Note 10. On October 21, 2004, the High Court of South Africa ordered JCI and CAM to pay the Company an amount of R35.7 million ($5.5 million), plus interest and costs, including the costs of two counsel. JCI’s and CAM’s counterclaim to recover the earlier part-payment was  also dismissed with costs. JCI and CAM made an application to the High Court of South Africa for leave to appeal, which was rejected. In March 2005, the Company received a payment of R37.3 million ($6.6 million) in settlement of all claims. Of this amount R31.5 million ($5.1 million) was recorded as a reversal of the doubtful debt allowance in the statement of operations and R5.8 million ($1.5 million) was recognized as interest income. Laverton Gold NL Laverton Gold NL was also a related party because Mr. J. Stratton, a director of CAM and Consolidated African Mines Jersey, or CAMJ, was a corporate advisor to the Company.  In May 2000, the Company’s board appointed a special committee to investigate irregular related party transactions involving Mr. J. Stratton from the Company’s office in Perth, Australia (which has now been closed). The related party transactions involved the issuance of approximately 8.2 million Company ordinary shares (the “Rawas Shares”) in exchange for assets of the Rawas group that owned the Rawas gold mine in Indonesia, pursuant to agreements between the Company and Laverton Gold NL, an Australian listed company. During July and October 1999, the Company allotted and issued the Rawas  Shares at the market value of $12.4 million  to several creditors of Laverton or its subsidiaries, including CAMJ, JCI and related companies, in anticipation of receiving shares of, and claims against, the companies in the Rawas Group and the rights to the Rawas mine. The allocation of the Rawas Shares was based on each creditor’s relative exposure. No proper valuation proceedings were conducted prior to the issuance.


F-23
 5. RELATED PARTY TRANSACTIONS (continued)
 According to the evidence gathered during the course of the investigation, the Company’s board determined that, faced with pressure from its creditors (i) Laverton arranged the issue by the Company of its ordinary shares to creditors in consideration for assets of no value, for the benefit of Laverton and its creditors and not for the Company; (ii) to avoid the  South African Companies Act requirement for a special resolution, the Company had issued the Rawas Shares at an inflated issue price unrelated to the true value of the consideration; (iii) as the special resolution was not obtained, the allotment and issue of ordinary shares for the Rawas transaction was unlawful and invalid. Upon discovery by the board of the unlawful transactions, the board decided to rescind the agreements with Laverton NL during fiscal 2001. At that time, the Company had received ownership of the claims against, but not the shares of, the companies in the Rawas Group. As a result of this rescission the shares of the Rawas Group were never delivered to the Company.  Because of subsequent splits and consolidations resulting  in validly issued ordinary shares being consolidated with invalid Rawas Shares, it was not possible to distinguish the Rawas Shares from the other issued ordinary shares of the Company. None of the Rawas Shares, and their holders at the time, could be identified and, therefore, none of the Rawas Shares could be removed from the Company’s members’ register. In July 2002 the High Court of South Africa validated the Rawas shares. The $12.4 million value of the Rawas shares was credited to stated capital in the financial statements. During fiscal 2000, the Company wrote off the attributed $12.4 million value of the shares in the statement of operations as aborted acquisition costs and loans made by the Company to members of the Rawas Group, amounting to $2.9 million, as no amounts have been recovered on these loans.  The Company has instituted various legal proceedings in South Africa and Australia in connection with these related party transactions and these proceedings are still ongoing. Due to the uncertainty of the outcome of the legal proceedings, the Company has not recorded any amounts in respect of this litigation. Issue of shares to Khumo Bathong Holdings (Pty) LimitedKBH subscribed for 4,794,889 of the Company’s ordinary shares for a cash subscription price of $6.8 million during the year ended June 30, 2003. These shares were sold by KBH in fiscal 2005.
 6. EMPLOYMENT TERMINATION COSTS
   Year
 ended
 Year
 ended
 Year
 ended
   June 30,
 2006
 June 30,
 2005
 June 30,
 2004
   $’000
 $’000
 $’000
                     (a)  Vatukoula temporarily shut down in April 2006 for restructure and all employees except the essential service workers were stood
 down. On April 24, 2006, employees were called back in lots of 150 to 200 and were put through the restructure induction. This was completed at the end of June 2006, when all employees, except for 120 employees that were retrenched at a cost of $0.7 million, had been recalled. No balance was outstanding with regards to these payments as at June 30, 2006.
 
 profitability. The 60-day review was extended to September 13, 2004. On October 5, 2004, 1,619 employees were retrenched at a cost of $3.1 million. No balance was outstanding with regards to these payments as at June 30, 2005. During fiscal 2004, voluntary retrenchments were offered to employees and approximately 220 employees accepted the offer. This gave rise to an expense of $0.9 million for the year ended June 30, 2004. No balance was outstanding with regards to these payments as at June 30, 2004.
 
 million. No balance was outstanding with regards to these payments as at June 30, 2006. In an effort to reduce corporate costs, retrenchments were made at the Company’s corporate head office during fiscal 2005. Retrenchment costs for 20 employees amounted to $1.2 million. No balance was outstanding with regards to these payments as at June 30, 2005.


F-24
 7. IMPAIRMENT OF ASSETS
 
 
 
 
 
       Year
 ended
 Year
 ended
 Year
 ended
   June 30,
 2006
 June 30,
 2005
 June 30,
 2004
   $’000
 $’000
 $’000
                                 
 
 
 (a)  Consistent with the Group’s black economic empowerment strategy, the West Wits Operations’ assets were sold during fiscal
 2003 to a black economic empowerment partner, Bophelo Trading (Pty) Limited, subsequently renamed Mogale Gold (Pty) Limited, or Mogale. During fiscal 2004, Mogale was placed under judicial management and the balance of the purchase price owed of $1.2 million was therefore seen to be irrecoverable. Also during fiscal 2004, funds advanced to Khumo Bathong Holdings (Pty) Limited  of $0.8 million  were  determined to be impaired as the most significant asset owned by this entity was its 60% interest in Crown and ERPM, which were experiencing liquidity problems in fiscal 2004.
 
 estimated fair value of these assets.  The Company  had negotiated the sale of  this real estate and the fair value was determined during those negotiations.


F-25
 8. DEFERRED INCOME AND MINING TAX
    Year
 ended
 Year
 ended
 Year
 ended
   June 30,
 2006
 June 30,
 2005
 June 30,
 2004
   $’000
 $’000
 $’000
                               (a) Income and mining tax (expense)/benefit
                                                       Mining tax on mining income in South Africa is determined based on a formula which takes into account the profit and revenue from mining operations during the year. Non-mining income, which consists primarily of interest, is taxed at a standard rate. The tax rates applicable to the mining and non-mining income of a gold mining company depends on whether the company has elected to be exempt from the Secondary Tax on Companies, or STC. STC is a tax on dividends declared, which is payable by the company declaring the dividend, and, at present, the STC tax rate is equal to 12.5%. In 1993, all existing gold mining companies had the option to elect to be exempt from STC. If the election was made, a higher tax rate would apply for both mining and non-mining income. In fiscal 2006 the tax rates for taxable mining and non-mining income, for companies that elected the STC exemption were 45% (2005 and 2004: 46%) and 37% (2005 and 2004: 38%), respectively. During those same years the tax rates for companies that did not elect the STC exemption were 35% (2005 and 2004: 37%)  and  29% (2005 and 2004: 30%), respectively. In 1993, the Company elected not to be exempt from STC, as this would have meant that the Company would have been liable for normal taxation at the higher rates of 45% for mining income and 37% for non-mining income. The Company, having chosen not to be subject to the STC exemption, is subject to 35% tax on mining income and 29% for non-mining income. However, with the exception of Blyvoor and ERPM, all of the Company’s South African subsidiaries elected the STC exemption.
The tax rate for all the Australasian operations is 30%.


F-26
 8. DEFERRED INCOME AND MINING TAX(continued)
 South African deferred taxation has been provided at the effective mining rate applicable in terms of the mining tax formula to the relevant operations at either 35% or 45% (2005 and 2004: 37% or 46%), while the Australasian deferred tax has been provided at the statutory tax rate of 30% (2005 and 2004: 30%). Material items causing the Group’s income tax provision from continuing operations to differ from the estimated effective mining tax rates were as follows:
   Year
 ended
 Year
 ended
 Year
 ended
   June 30,
 2006
 June 30,
 2005
 June 30,
 2004
   $’000
 $’000
 $’000
                                                    (b) Deferred income and mining tax liabilities and assets:
  June 30,
 2006
 June 30,
 2005
   $’000
 $’000
 South Africa


F-27
 8. DEFERRED INCOME AND MINING TAX(continued)
  
  June 30,
 2006
 June 30,
 2005
   $’000
 $’000
 Australasia
                                                                                Total
                                                                                The classification of deferred income and mining tax assets and liabilities is based on the related asset or liability creating the deferred tax. Valuation allowances have been provided on deferred tax assets arising out of assessed losses and unredeemed capital expenditure because it is more likely than not that these losses and unredeemed capital expenditures will not be utilized in the foreseeable future. The valuation allowance was $82.2 million as of July 1, 2003. During the years ending June 30, 2006, 2005 and 2004, the valuation allowance  increased by $67.6 million, decreased by $65.9 million and  increased by $14.2 million, respectively. These movements include foreign exchange differences.


F-28
 8. DEFERRED INCOME AND MINING TAX(continued)
 As at June 30, 2006 and June 30, 2005 the Group had estimated tax losses carried forward consisting of:
    
 Unredeemed
    
 capital
   Tax losses
 expenditure
   2006
 2005
 2006
 2005
   $’m
 $’m
 $’m
 $’m
                         The estimated tax losses of the Company and its subsidiaries have no expiry date. Should a subsidiary cease to trade, the estimated tax losses would be forfeited. Unremitted earnings of foreign subsidiaries and foreign joint venturesNo provision has been made for South African income tax or foreign tax that may result from future remittances of undistributed earnings of foreign subsidiaries or the joint venture because it is expected that such earnings will be permanently reinvested in these foreign entities. The distribution of these undistributed earnings of $8.9 million at June 30, 2006, by DRD (Isle of Man), in Isle of Man, Porgera and Tolukuma in Papua New Guinea and Vatukoula in Fiji, and other foreign entities would result in income and foreign withholding taxes of approximately $2.7 million.
 9. PROFIT/(LOSS) FROM DISCONTINUED OPERATION
 The results of Buffelsfontein Gold Mines Limited from July 1, 2004 to March 22, 2005 and the gain on disposal are reported as a discontinued operation. The Group’s consolidated statement of operations for the year ending June 30, 2004  has been adjusted to reflect this presentation (refer to Note 4 for a more detailed discussion on the discontinued operation). The operating results for the discontinued operation are as follows:
  Year ended
 Year ended
 Year ended
  June 30, 2006
 June 30, 2005
 June 30, 2004
  $’000
 $’000
 $’000


F-29
 10. RECEIVABLES
 
 
 
 
      June 30,
 2006
 June 30,
 2005
   $’000
 $’000
                                     Current receivables
 
   Non-current receivables
 
               Total receivables
                       June 30,
 2006
 June 30,
 2005
 June 30,
 2004
 Reconciliation of allowances for doubtful debts – related parties
 $’000
 $’000
 $’000
                             June 30,
 2006
 June 30,
 2005
 June 30,
 2004
 Reconciliation of allowances for doubtful debts – trade accounts receivable
 $’000
 $’000
 $’000
                     (a)  Amounts owing by related parties comprise amounts due from CAM for the option over the Sale Shares, which  were  fully
 provided for in fiscal 2004. In March 2005, the Company received a payment of R37.3 million ($6.6 million) as settlement of all claims.
 (b)  Amounts owing by KBH arising from the sale of 60% of Crown. These loans had been fully provided for in fiscal 2005.


F-30
 11. INVENTORIES
 
 
 
   June 30,
 2006
 June 30,
 2005
   $’000
 $’000
                             
 12. MINING ASSETS
   June 30,
 2006
 June 30,
 2005
   $’000
 $’000
 Mining properties, mine development costs and mine plant facilities and equipment
                                                                                            Certain assets, with a net book value of $99.8 million, have been pledged as security for long-term borrowings. Refer to Note 19. Included in mining assets are deferred stripping costs as follows:
  June 30,
 2006
 June 30,
 2005
  $’000
 $’000
 Deferred stripping costs


F-31
 13. NON-CURRENT ASSETS
 
 
 
   June 30,
 2006
 June 30,
 2005
   $’000
 $’000
         
    
    
        
    
    
            (a)  These investments are classified as available for sale, and are accounted for at fair value with unrealized gains and losses related
 to these investments included in accumulated other comprehensive loss as summarized below for the year ended June 30:
   June 30,
 2006
 June 30,
 2005
   $’000
 $’000
   
 
       -
 -
 Realized gains of  $0.1 million,  $0.5  million and  $0.1  million were recorded in fiscal 2006, fiscal 2005 and fiscal 2004, respectively.
 
 market quotations. The directors of the Company perform valuations of the investments on an annual basis to ensure that an other than temporary decline in the value of the investments has not occurred.
 
 in interest bearing debt securities and equity-limited unit trusts and may be used only for environmental rehabilitation purposes.
 14. JOINT VENTURE
 The unincorporated mining joint venture for which the statement of operations and balance sheet has been proportionately consolidated is as follows:
 
  2006
 2005
 
  percentage held
 percentage held
     Together with Barrick Gold Corporation and Mineral Resources Enga, DRD (Porgera) Limited, is a participant in the Porgera Joint Venture. Each joint venture partner has an undivided holding in the mineral tenements forming part of the mine, and in a proportionate share of the mine’s production and costs, through a joint venture agreement. Each joint venture partner is responsible for the sale of their proportionate share of production.


F-32
 14. JOINT VENTURE (continued)
 The summarized financial statements of DRD (Porgera) Limited reflect the revenue received for their 20% share of production at the mine, as well as administrative costs, including depreciation and amortization, and taxation incurred by DRD (Porgera) Limited, in addition to their proportionate share of the costs incurred by the joint venture.  The Group acquired its 20% interest in the Porgera Joint Venture in Papua New Guinea on October 14, 2003. Summarized financial statements of DRD (Porgera) Limited, including the joint venture which has been proportionately consolidated, are as follows:
  June 30,
 2006
 June 30,
 2005
 Statement of operations
 $’000
 $’000
 Revenues
   Costs and expenses
               Other operating expenses
         Net operating income
         Profit before tax
      Net profit
      Balance sheet
   Current assets
               Mining assets
   Other assets
         Total assets
   
   Current liabilities
            Non-current liabilities
          
  
   Net assets


F-33
 15. INVESTMENTS IN ASSOCIATES
   
 
 June 30,
 2005
  Country of incorporation
 
 percentage
 held
            June 30,
 2006
 June 30,  June  30,
 2005  2004
   $’000
 $’000  $’000
            
    
                       
    
   
 
 On July 30, 2004, the Company’s shareholding in Emperor increased from 19.78% to 45.33% (refer to Note 4). The Company restated the prior year’s financial statements as if the equity method had been utilized from December 2002, the date of the initial acquisition of the investment in Emperor (refer to Note 2). The amounts included for the years ended June 30, 2005 and June 30, 2004 represent 45.33%, from August 2004, and 19.78% of Emperor’s losses or profits respectively, adjusted for the amortization of the excess purchase price.  As a result of losses incurred by Emperor, the investment in Emperor was impaired,  by $13.3 million, to fair value during fiscal 2005. At June 30, 2005 the proportionate share of the Company’s investment in the net assets of Emperor, as well as the unamortized excess purchase price of Emperor, was as follows:
   
 June 30,
 2005
 $’000
             Market value of the Company’s investment in Emperor (based on the quoted market price at June 30, 2005)
    On April 6, 2006 a transaction was concluded between Emperor and the Company, whereby the Company’s offshore assets were sold to Emperor, resulting in the Company’s shareholding in Emperor increasing to 88.27% with effect from the above date (refer Note 4). As a result, Emperor became a subsidiary with effect from that date and its results are accordingly now consolidated. From July 1, 2002, the Company’s 40% interest in Crown has been treated as an investment in an associate and equity accounted. As at June 30, 2005, the investment in Crown was carried at $nil. In November 2005, the Group acquired an additional 60% of the shares of Crown from Khumo Bathong Holdings (Pty) Limited (refer Note 4). As a result, Crown became a subsidiary with effect from that date and its results are accordingly now consolidated. On July 1, 2005, an agreement was entered into between the Company and the Industrial Development Corporation of South Africa, or IDC, in terms of which the Company acquired all the IDC loans, including the rights securing payment of such loans,  payable by Crown and ERPM  to the IDC  for a purchase consideration of $4.5 million. As uncertainty over the repayment of the loans existed subsequent to their acquisition, an allowance of $4.5 million was raised.


15. INVESTMENTS IN ASSOCIATES (continued)
 Aggregated summarized financial information in respect of our associates is as follows:
 
 
 
 June 30,   June 30,
 2005   2004
 $’000$’000
Revenues


144,686141,437
Net operating loss


(17,666)(23,509)
Net loss applicable to common stockholders


(26,593)(30,934)




Current assets


20,981
Non-current assets


60,294
Total Assets


81,275




Current liabilities


54,178
Non-current liabilities


102,158
Total Liabilities


156,336

16. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES









June 30,
2006
June 30,
2005


$’000
$’000
Trade accounts payable

42,118
22,130
Accrual for leave pay provisions

8,862
4,354
Payroll and other compensation payable

346
6,833
Withholding taxes

1,343
-


52,669
33,317

17. DERIVATIVE INSTRUMENTS









June 30,
2006
June 30,
2005


$'000
$'000
Interest rate swap agreements (a)

104
(550)
Forward sale commodity contract (b)

(25,326)
-
Option contract (c)

2,857
-


(22,365)
(550)




Disclosed under non-current liabilities

-
(550)
Disclosed under current liabilities

(25,222)
-
Disclosed under current assets

2,857
-


(22,365)
(550)


17. DERIVATIVE INSTRUMENTS (continued)
 Unrealized and realized profits/(losses) related to derivative instruments that are included in the statement of operations are as follows:
 
 June 30,
 2006
 June 30,
 2005
 June 30,
 2004
 
 $’000
 $’000
 $’000
 
 
 
 
 Interest rate swap agreements (a)
 (5)
 187
 (1,730)
 Forward sale commodity contract (b)
 4,412
 -
 -
 Option contract (c)
 967
 -
 -
 Change in fair value of derivative portion of Senior Convertible Notes (refer to Note 19)
 5,382
 3,817
 2,064
 Eskom gold for electricity contract
 11
 (388)
 (1,376)
 
 10,767
 3,616
 (1,042)
 
 Unrealized profits/(losses) on derivative instruments
 10,761
 4,004
 (1,042)
 Realized profits/(losses) on derivative instruments
 6
 (388)
 -
 
 10,767
 3,616
 (1,042)
 (a)  
  The amount in fiscal 2006 reflects the fair value of the interest rate swap contracts that were entered into to manage the interest rate
 risk on the interest payments of the Vatukoula loan facility with ANZ Bank, which currently bears interest at an average variable rate of 7.76% per annum. The fair value of the interest rate swap contracts at the date of acquisition of Emperor was $0.1 million. In order to minimize fluctuations in interest rates, 64% of the loan has been covered by entering into interest rate swap contracts, under which the Group is obliged to receive interest at variable rates and pay interest at fixed rates until October 2008. The fixed interest rate payable was 4.34% per annum.  In fiscal 2005, this amount reflects the fair value of the interest rate swap agreement that was entered into to manage the interest rate and currency risk on the bi-annual interest payments of the Senior Convertible Notes which were issued in fiscal 2003. The fair value represents the difference between the fixed coupon rate of 6% per annum and the forward Johannesburg Inter-bank Acceptance Rate, or JIBAR, plus 200 interest basis points together with the spot and forward US$ exchange rate with reference to the coupon amount payable bi-annually. At June 30, 2005, the six month JIBAR rate was 6.929% per annum. On November 12, 2005 this contract was closed out. The interest rate swap agreements have not been accounted for as hedges. Changes in fair value have been recorded as profit/(loss) on derivative instruments in the statement of operations. During  fiscals 2006,  2005 and 2004, the realized and unrealized gain/(loss) included in  (loss)/profit  on the interest rate swap amounted to  a gain of $nil,  a gain of $0.2 million and  a  loss of  $1.7 million, respectively.
 (b)  This liability represents gold forward contracts with ANZ Banking Group Limited and Emperor, which was consolidated from   April 6, 2006.  The fair value  of the  gold forward contracts  at the date of acquisition of Emperor was $34.5 million.  These gold  forward contracts have not been accounted for as hedges. The total ounces to be delivered under the gold forward contracts for the  Group is 145,695 ounces and the delivery into these derivative instruments will be in accordance with the maturity schedule agreed with  the corresponding bank as follows:
 
 Year ended
 Strike price
 June 30, 2007
 June 30, 2008
 June 30, 2009
 $452.70
 41,526 oz
 82,992 oz
 21,177 oz
 The fair value of the derivative financial instruments that is expected to mature within the coming year is $7.2 million (A$9.9 million) relating to 41,526 ounces. The remaining fair value of $18.1 million (A$24.8 million) is to be settled after June 30, 2007. Changes in fair value have been recorded as profit/(loss) on derivative instruments in the statement of operations. During fiscal 2006, the unrealized gain/(loss) included in (loss)/profit on gold forward contracts amounted to a gain of $4.4 million.


F-36
 17. DERIVATIVE INSTRUMENTS(continued)
 (c)  This amount represents the positive mark-to-market on gold call options in DRD (Isle of Man). European Style call options were
 purchased in January 2006 with strike prices ranging from $634 to $653 per ounce. Expiry dates of the options range from September 2006 to December 2008. The call options provide  the group with the right but not the obligation to buy in total up to 46,426 ounces (reducing throughout the period) of gold at the various strike prices. The gold call options were taken up by the Company to mitigate the deterioration in the forward sale commodity contracts referred to above. The settlement schedule for the gold call options is as follows:
 
 Year ended
 Strike price
 June 30, 2007
 June 30, 2008
 June 30, 2009
                 Changes in fair value have been recorded as profit/(loss) on derivative instruments in the statement of operations. During fiscal 2006, the unrealized gain included in profit on derivative instruments was $1.0 million.
  18. PROVISION FOR ENVIRONMENTAL REHABILITATION, RECLAMATION AND CLOSURE COSTS
 While the ultimate amount of rehabilitation costs to be incurred in the future is uncertain, the Group has estimated that the total future costs for the mines, in current monetary terms, will be $82.0 million at June 30, 2006 (2005:  $25.8 million). The estimates are prepared on an annual basis by the Group's Environmental Manager in accordance with the Company's rehabilitation plans. The relevant rehabilitation plan is submitted to local authorities for approval and the provision is adjusted accordingly to reflect changes therein. Amounts have been contributed to irrevocable trusts (refer Note 13) under the Group's control. The monies in the trusts are invested primarily in interest bearing debt securities and may be used only for environmental rehabilitation purposes. The Group intends to finance the ultimate rehabilitation costs from the money invested with the trust funds, as well as, at the time of mine closure, the proceeds on sale of remaining assets and gold from plant clean-up.
   June 30,
 2006
 June 30,
 2005
 
  $'000
 $'000
 
              
                      Included in the net book value of the mining asset balance are asset retirement obligation costs, relating to the following mines:
   June 30,
 2006
 June 30,
 2005
   $'000
 $'000


F-37
 19. LONG-TERM LOANS
    June 30,
 2006
 June 30,
 2005
   $'000
 $'000
   
 
   
 
 Secured
  
 
                     Unsecured
                    The above loans include accrued interest. The terms and conditions, including interest rates, attaching to the above loans are given in the narrative below:  (a)  
  On July 18, 2002, Blyvooruitzicht Gold Mining Company Limited, or Blyvoor, entered into a loan agreement with the Industrial
 Development Corporation, or IDC, for R65.0 million ($10.4 million) specifically for financing capital expenditures incurred by Blyvoor in completing the Blyvoor expansion project. The loan bears interest at 1% below the prime rate of First National Bank of Southern Africa Limited on overdraft. As of June 30, 2006, the interest rate on this loan was 10.0% per annum. The loan is due in July 2007. The loan  is secured over the Blyvoor metallurgical plant, with a net book value of $3.1 million at June 30, 2006.  The  loan agreement prohibits the Company from disposing of or further encumbering the assets covered by the special notarial bond and places restrictions over its ability to change the business of Blyvoor.
 
 (Mauritius), of which $10.0 million had been drawn down at June 30, 2005. The facility could be used to finance future acquisitions or rights offers by companies in which the Company wishes to acquire shares, or with prior written consent of Investec (Mauritius), it could be used for any other purpose. The facility bore interest at the three-month London Inter-bank Offered Rate, or LIBOR, plus 300 basis points. Funds advanced and interest on this facility had to be repaid in cash in equal installments every three months from the date of the relevant advance so that the amount of the advance was paid in full to Investec (Mauritius) on or before November 12, 2007. The facility was secured by DRD (Isle of Man)’s shares in Emperor Mines Limited, DRD (Porgera) Limited and Tolukuma Gold Mines Limited. This loan was repaid on March 16, 2006.


19. LONG-TERM LOANS (continued)
 
 (c)  There are four loan facilities from the ANZ Banking Group Limited, or ANZ Bank, to Emperor and they comprise the Vatukoula loan   facility, project loan facilities, a property loan and a gold call option facility.  The Vatukoula loan facility is secured by Emperor Gold Mining Company Limited (Fiji) as follows:
 (1)  a first  registered deed of charge over all present and future assets and undertakings of Emperor other than excluded
 assets (Certain Special Prospecting Leases and all the shares in Tuvatu Gold Mining Company Limited);
 (2)  a first registered mortgage over all freehold and leasehold land; (3)  a first registered mortgage over Special Site Rights 6, 7, 8 and Special Mining Leases 54, 55 and 56; and (4)  a first registered Bill of Sale over its motor vehicles.
 Agreement was reached with ANZ Bank prior to June 30, 2006 to restructure this loan facility with the first loan repayment due on April  30,  2007 to the value of $1.9 million. Further biannual repayments are  to be made of this amount  beginning on October 31, 2007  with a final payment of $0.9 million due on October 31, 2009. The loan bears interest at LIBOR plus 2.5% per annum. The balance on this loan at June 30, 2006 is $9.8 million. On  March  21,  2006 Emperor announced the signing  of documentation with ANZ Bank for project loan facilities totaling  $42.0 million. These facilities comprise a $35.0 million senior facility with a 59 month tenor and a $7.0 million revolving working capital facility. The security in relation to this facility is as follows:
 (1)  fixed and floating charges over the assets of Tolukuma in Papua New Guinea and Western Australia; (2)  fixed and floating charges over the assets of the  Porgera Joint Venture, other than which require the  consent of the
 Porgera Joint Venture partners, in Papua New Guinea and Western Australia;
 (3)  mortgages over the shares of DRD (Porgera) Limited and Tolukuma Gold Mines Limited; (4)  tripartite agreements with key suppliers and contract counterparties; (5)  mortgage over the Tolukuma Tenements; and (6)  fixed and floating charge over the assets of DRD (Isle of Man) Limited.
 The loan bears interest at LIBOR plus 2% per annum. The balance on this loan at June 30, 2006 is $43.1 million. The property loan represents a mortgage over a property purchased in Brisbane during May 2006. The loan attracts interest payments only for the first five years of the mortgage. A First Registered Mortgage by Emperor over the property situated at 45 Milman St, Clayfield, Queensland, Australia will be held by ANZ Bank as security for this loan. The loan bears interest at 6.79% per annum. The balance on this loan at June 30, 2006 is $1.1 million. The gold call option facility was implemented to purchase gold call options from ANZ Bank. The term of the facility is 12 months from April 6, 2006 and the loan bears interest at LIBOR plus 2.1% per annum. The original drawdown in relation to this facility was $4.0 million of which $2.0 million has been repaid. The settlement of this facility will coincide with closing out the call options for which the facility was implemented. The balance on this loan at June 30, 2006 is $2.0 million. The carrying amount of assets pledged as security for these facilities is as follows:
 (1)  Property, plant and equipment, $96.6 million (2)  Non-current inventories, $30.2 million (3)  Cash and cash equivalents, $12.3 million (4)  Receivables, $6.1 million (5)  Current inventories, $23.9 million (6)  Current derivative instruments, $2.9 million
 Cash and cash equivalents pledged as security  is recorded as restricted cash and cash equivalents in the accompanying balance sheet.
 (d)  Finance leases are effectively secured over vehicles with a  carrying value of $1.7 million at June 30, 2006, as the rights of the
 leased assets revert to the lessor in the event of default.


F-39
 19. LONG-TERM LOANS(continued)
 
 
 interest payments of 6% per annum are payable semi-annually on May 12 and November 12 of each year. The Company issued the notes at a purchase price of 100% of the principal amount thereof. If not converted, or previously redeemed, the notes will be repaid at 102.5% of their principal amount plus accrued interest on the fifth business day following their maturity date in November 2006.
 
 The notes are convertible at any time at the option of the holder into the Company's ordinary shares, or American Depositary Shares, or ADSs, at a conversion price of $3.75 per share or ADS, subject to adjustment in certain events if the cumulative adjustments amount to 1% or more of the conversion rate.
 
 The Company may redeem the notes, in whole or in part, at any time after November 12, 2005, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued original issue discount, plus accrued and unpaid interest, if any, to but excluding, the date of redemption on giving not less than 30 nor more than 60 days notice if (1) the closing price of its ADSs on the  NASDAQ SmallCap Market or substitute national securities exchange has exceeded 150% of the conversion price then in effect for at least 20 trading days within a period of 30 consecutive trading days ending on the trading day immediately before the date of mailing of the provisional redemption notice and (2) the shelf registration statement covering the resale of the notes and the ordinary shares and ordinary shares underlying the ADSs issuable upon conversion of the notes is effective and available for use and is expected to remain effective and available for use for 30 days following the provisional redemption date, unless registration in no longer required.
 
 If there is a change in control of the Company, holders of the notes have the right to require it to repurchase their notes, at 102.5% of the principal amount of the notes.
 
 In connection with the offering of the notes, the Company entered into a registration rights agreement with the initial purchaser of the notes.  This agreement obligated the Company to file with the SEC a shelf registration statement with respect to the offer and sale of the notes and the ordinary shares or the ordinary shares underlying the ADSs issuable upon conversion of the notes.  On September 30, 2003, the SEC declared effective the Company's registration statement of Form F-3 pertaining to the notes. The notes were redeemed, in full, on November 15, 2006.
 
    June 30,
 2006
 June 30,
 2005
   $'000
 $'000
     
    
                            
    
    
 
 SFAS No. 133. The option does not qualify for hedge accounting. The embedded derivative instrument is carried at fair value, such fair value being determined on the residual cash flow method, with changes in fair value included in the statement of operations in the period in which the change occurs and classified as loss/(profit) on derivative instruments.
 
 
  
 
  
 Included in unrealized foreign exchange gains is a loss of $6.2 million, a loss of $4.4 million and a gain of $10.6 million in fiscals 2006, 2005 and 2004, respectively, relating to foreign exchange movements on the Senior Convertible Notes.


F-40
 19. LONG-TERM LOANS(continued)
 Long-term loans are scheduled for repayment in the 12 months to:
   $'000
                
   June 30,
 2006
 June 30,
 2005
 Currencies in which long-term loans are denominated are as follows:
  $'000
 $'000
       
          The Group has undrawn committed borrowing facilities of $nil (June 30, 2005: $nil) from the Industrial Development Corporation and bank overdraft facilities of $0.3 million (June 30, 2005:  $1.4 million) of which $0.3 million (June 30, 2005:  $1.4 million) had been utilized at year-end.
 20. STOCKHOLDERS' EQUITY
 Ordinary shares: June 30, 2006 During the year ended June 30, 2006, the Company issued  18,444,954 no par value shares at market value to certain institutional investors and employees, in exchange for gross cash proceeds of $25.9 million. In addition, 4,451,291 no par value shares, with a value of $4.5 million, were issued for the acquisition of loans and 932,857 no par value shares, with a value of $1.2 million, were issued in exchange for services rendered.  June 30, 2005 During the year ended June 30, 2005, the Company issued 56,230,705 no par value shares at market value to certain institutional investors, in exchange for gross cash proceeds of $65.9 million. In addition,  6,612,676 no par value shares, with a value of $16.6 million, were issued in exchange for 29,097,269 Emperor Mines Limited shares (refer Note 4). June 30, 2004 During the year ended June 30, 2004, the Company issued 41,463,639 no par value shares at market value to certain institutional investors, in exchange for gross cash proceeds of $107.4 million. In addition, 6,643,902 no par value shares, with a value of $16.7 million, were issued to Oil Search Limited in final settlement of the Porgera Joint Venture acquisition price (refer Note 4). Cumulative preference shares: The terms of issue of the cumulative preference shares are that they carry the right, in priority to the Company's ordinary shares, to receive a dividend equal to 3% of the gross future revenue generated by the exploration or the disposal of the Argonaut mineral rights acquired from Randgold  & Exploration Company Limited in September 1997.  During fiscal 2005, the Argonaut mineral rights reverted to the South African Government  after no application for conversion was lodged within the stipulated period of  one year, under the provisions of the MPRD Act.  On February 6, 2006, a prospecting right covering an area of 969 hectares over part of the Argonaut Project was obtained. Durban Deep “C” options: The Company has authorized but not issued 10,000,000 Durban Deep “C” options on ordinary shares at an exercise price of R15 per ordinary share which are exercisable at any time during the period from the date on which the option is issued to a date not later than five years from the date of issue. These options are to be used as consideration for acquisitions by the Company.


F-41
 21. (LOSS)/PROFIT PER SHARE
 (Loss)/profit per share is calculated based on the (loss)/profit divided by the weighted average number of shares in issue during the year. Fully diluted (loss)/profit per share is based upon the inclusion of potential common shares with a dilutive effect on (loss)/profit per share.
  For the year ended June 30, 2006
  Loss
 
 Per-share
  $000
 Shares
 amount
  (Numerator)
 (Denominator)
 $ cents
  
 
 
 Basic and fully diluted loss per share
                                    There is no dilution in loss per share for the fiscal year ended June 30, 2006, as the effect of dilutive securities in issue would have been anti-dilutive as the Company recorded a loss for the year.
  For the year ended June 30, 2005
  Loss
 
 Per-share
  $000
 Shares
 amount
  (Numerator)
 (Denominator)
 $ cents
  
 
 
 Basic and fully diluted loss per share
                                    There is no dilution in loss per share for the fiscal year ended June 30, 2005, as the effect of dilutive securities in issue would have been anti-dilutive as the Company recorded a loss for the year.
  For the year ended June 30, 2004
  Loss
 
 Per-share
  $000
 Shares
 amount
  (Numerator)
 (Denominator)
 $ cents
     Basic and fully diluted loss per share
                                There is no dilution in loss per share for the fiscal year ended June 30, 2004, as the effect of dilutive securities in issue would have been anti-dilutive as the Company recorded a loss for the year.


F-42
 22. EMPLOYEE BENEFIT PLANS
 Pension and provident funds In South Africa, the Group participates in a number of multi-employer industry-based retirement plans. All plans are governed by the Pension Funds Act, 1956. The provident funds are funded on the “money accumulative basis” with the members' and Group's contributions having been fixed in the constitutions of the funds. In Papua New Guinea retirement fund contributions are regulated by the Superannuation Act.  According to the Act, the Group has to contribute 7% of the employee's earnings to a local superfund (NASFUND), whilst the employee contributes 5% of their gross salaries and wages.  Payments are made to the fund on a monthly basis. The majority of the Group's employees are covered by  one of the above-mentioned funds. Fund contributions by the Group for the year ended June 30, 2006 amounted to $4.3 million (2005: $7.4 million; 2004: $8.7 million). Post-retirement benefits other than pensions Prior to the Company's acquisition of Blyvoor, skilled workers (clerical workers and mine management) at that operation participated in multi-employer health plans, which paid certain medical costs. Employer contributions were determined on an annual basis by these health funds. Qualifying dependants received the same benefits as active employees. Blyvoor voluntarily accepted liability for post-retirement medical benefits of employees who were members of these multi-employer health plans prior to the acquisition. The fixed amount, which was determined based on negotiations between Blyvoor and the various medical schemes, was settled during fiscal 2004. Crown has an obligation to fund a portion of the medical aid contributions of certain of its employees after they have retired. At June 30, 2006 a provision of $2.3 million for post-retirement medical benefits has been raised. This provision is based on the latest calculations  using a projected unit credit method, of independent actuaries performed as at  June 30, 2006. Post-retirement medical benefits are actuarially valued every three years. The obligation is unfunded. During fiscal 2006, the Company expensed $0.5 million relating to the post-retirement medical benefits.
   June 30,
 2006
 June 30,
 2005
   $'000
 $'000
                             The assumptions used in calculating the above amounts are:
    
    
        Assumed health care cost trend June 30


F-43
 22. EMPLOYEE BENEFIT PLANS(continued)
 Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans. A one percentage-point change in assumed health care cost trend rates would have the following effect:
    One
 percentage
 point
 increase
 $'000
 One
 percentage
 point
 decrease
 $'000
   
 
         The Company expects to contribute $0.3 million to the post-retirement medical plan in fiscal 2007.
 Estimated future benefit payments
 $'000
 
 
             Long-service awards The Group participates in the Chamber of Mines of South Africa Long-Service Awards Scheme, or the Scheme. The Scheme does not confer on any employee or other persons any right of payment of any award. In terms of the Scheme, bonus payments may be made to certain employees, usually semi-skilled, upon reaching the age of 55, who have completed 15 years of continuous service in South African gold mining companies which are members of the Chamber of Mines of South Africa and The Employment Bureau of Africa, provided such service is not pensionable service. The Scheme lays down the rules under which an employee may be eligible for the award. The award is paid by the company for which the employee works upon becoming eligible for the award and electing to receive payment. All awards must be confirmed by the Chamber of Mines of South Africa before payment. The amount of the award is based on both the employee's skill level and years of service with qualified gold mining companies.  The  liability at  June 30, 2006 was $0.5 million (June 30, 2005: $nil). During fiscal 2006, the Company expensed  $0.6 million (2005: $0.3 million; 2004: $0.2 million) relating to the long-service awards.


F-44
 22. EMPLOYEE BENEFIT PLANS(continued)
 Share option plan The Company has an Employee Share Option Scheme, or ESOS, under which all employees may be granted options to purchase shares in the Company's authorized, but unissued  ordinary shares. Unissued shares that have been reserved for the ESOS may not exceed 15% of the number of issued ordinary and preferred ordinary shares. The number of issued and exercisable share options is approximately 4.6% of the issued ordinary share capital. The participants in the ESOS are fully taxed on any gains realized on the exercise of their options. On October 24, 1997, the terms of the ESOS were amended. The amended terms applied to options outstanding at the date of the amendment and options to be issued thereafter. The exercise price of options, which is determined at grant date, is the lowest seven day trailing average of the closing market prices of an ordinary share on the JSE Limited (South Africa), or JSE, as confirmed by the Company's directors, during the three months proceeding the day on which the employee is granted the option. Prior to the amendment, the exercise price was the closing JSE market price on the day preceding the grant date of the option. The vesting period for options is determined by the directors.  All options expire ten years after grant date.  During the fiscal years 1998 to 2006, the Company issued options, one quarter of which were exercisable six months after grant date, a further quarter of which are exercisable twelve months after grant date and a further quarter of which are exercisable annually thereafter. Share options activity in respect of these options was as follows:
   Outstanding
 Exercisable
   
 Average
 
 Average
   
 price per
 
 price per
   Number of
 share
 Number of
 share
   Shares
 (in Rand)
 Shares
 (in Rand)
 
                                                                                                 Average price per share is disclosed in South African Rand as the options are on ordinary shares and the option price is stated in South African Rand. As of June 30, 2006, the average price per share for outstanding options is $1.84 and average price per share for exercisable options is $2.15.


F-45
 22. EMPLOYEE BENEFIT PLANS(continued)
 The weighted average grant date fair value of the above options granted in fiscal 2006 was R3.86 (2005: R1.87 and 2004: R7.41). The grant date fair value of these options was determined using a Black-Scholes pricing option model, applying the following weighted average assumptions:
    June 30, 2006  June 30, 2005  June 30, 2004
                         During fiscal 2002, the Company issued certain options, 25% which were exercisable immediately and the remaining 75% in equal tranches after 6, 12, 24 and 36 months. Share options activity in respect of these options was as follows:
 
  Outstanding
 Exercisable
   
 Average
 
 Average
   
 price per
 
 price per
   Number of
 share
 Number of
 share
   Shares
 (in Rand)
 Shares
 (in Rand)
 
                                                             Average price per share is disclosed in South African Rand as the options are on ordinary shares and the option price is stated in South African Rand. As of June 30, 2006, the average price per share for outstanding options is $2.17 and average price per share for exercisable options is $2.17.
  The following tables summarize information relating to all employee stock options outstanding as June 30, 2006:
   Outstanding
 Exercisable
   
 Weighted
 
 
 
   
 average
 Weighted
 
 Weighted
   
 contractual
 average
 
 average
   Number of
 life (in
 exercise
 Number of
 exercise
   Shares
 years)
 price
 Shares
 price
   
 
 (in Rand)
 
 (in Rand)


F-46
 23. FAIR VALUE OF FINANCIAL INSTRUMENTS
 Cash and cash equivalents The carrying value of cash and cash equivalents approximates their fair value due to the short-term maturity of these deposits. The Group attempts to minimize its credit risk by placing cash and cash equivalents with major banks and financial institutions located in South Africa, Australia  Papua New Guinea and Fiji, after evaluating the credit ratings of the respective financial institutions. The Group believes that no concentration of credit risk exists in respect of cash and cash equivalents.  Derivative instruments In the normal course of its operations, the Group is exposed to market risks, including commodity price, foreign currency and interest rate risks. The Company  has  entered into transactions, which make use of derivative instruments, to economically hedge certain exposures. These instruments include interest rate swaps, gold forward contracts, gold call options and gold lease rate swaps. The decision to use these types of transactions is based on the Company's hedging policy, which precludes the forward selling of gold, however with the recent acquisition of Emperor the Company acquired the gold forward contracts held by Emperor. Although most of these instruments are used as economic hedges, none of them qualify for hedge accounting and, consequently, are marked-to-market through the statement of operations in accordance SFAS No. 133,“Accounting for Derivative Instruments and Hedging Activities.” Eskom gold for electricity contractIn October 2000, the Company entered into a contract to buy electricity from Eskom. Under the terms of the Company's agreement, the Company paid Eskom the standard electricity tariff for all energy it consumes, including the 75 GWh per month specified in the contract. In addition, every 12 month-period starting in October the Company adjusted the amounts paid in that period in accordance with an established formula based on the gold price. This contract expired in September 2005. The gold price adjustment  was based on the notional amount of 15,000 ounces of gold multiplied by the difference between the contracted gold price, which is the price that was agreed on the date of the transaction for a determined period, and the arithmetic average of London PM fix for each business day in the calculation period.  The Company concluded that (1) the contract in its entirety did not meet the definition of a derivative instrument and therefore it did not have to be carried on the balance sheet at fair value; (2) the embedded gold for electricity forward contract possessed economic characteristics that  were not clearly and closely related to the economic characteristics of the host contract; and (3) a separate, stand-alone instrument with the same terms would qualify as a derivative instrument. Accordingly, the embedded derivative was separated from the host contract and carried at fair value.  The contract was closed out on April 28, 2005, at a cost of $3.6 million. Gold forward contracts Gold forward contracts were entered into by Emperor with ANZ Banking Group Limited. A total of 145,695 ounces is to be delivered under these gold forward contracts. The fair value of the gold forward contracts that is expected to mature in fiscal 2007 is a liability of $7.2 million relating to 41,526 ounces. The remaining liability with a fair value of $18.1 million relates to the 104,169 ounces which are to be delivered after June 30, 2007. Gold call options European Style call options were purchased in January 2006 with strike prices ranging from $634 to $653 per ounce. Expiry dates of the options range from September 2006 to December 2008. The call options provide the Group with the right but not the obligation to buy in total up to 46,426 ounces (reducing throughout the period) of gold at the various strike prices. The gold call options were taken up by the Group to mitigate the deterioration in the gold forward contracts. The fair value of the gold call options at June 30, 2006 was an asset of $2.9 million.


F-47
 23. FAIR VALUE OF FINANCIAL INSTRUMENTS(continued)
 Other positionsThe Company had entered into a gold rate lease swap and call position transactions which had been accounted for in the financial statements on a mark-to-market basis in prior fiscal years, and which matured or were closed out in fiscal 2004. During fiscal 2004, a gold lease rate swap for 109,875 ounces, at a rate of 0.20% matured.  A gold lease rate swap is a contract whereby the Company and a counterparty select a notional amount of gold, and thereafter over the life of the contract one party pays a fixed lease rate based on that amount of gold and the other party pays a floating lease rate based on the same amount of gold. The Company had exposure to increases in the three-month lease rate up to June 2004. The volume the swap was based on decreases every quarter until it reached zero (by June 2004). Every quarter the Company received a fixed cash flow equal to 0.2% per annum of the volume at $280 per ounce, and paid the three-month floating lease rate converted at the then market spot rate.  During fiscal 2003, the Company bought call options as a risk management tool to protect the maximum exposure on the gold for electricity contract. Options covering a total of 272,110 ounces were purchased for $14.9 million. These contracts expired by September 2005. During fiscal 2004, the Company took advantage of the lower rand gold price and closed out 265,000 ounces of the Eskom gold for electricity contract in line with its policy of not hedging gold production. Accordingly the exposure for which the call options were bought as a risk management tool had been significantly reduced and the remaining call options were closed out during fiscal 2004, recording a gain of $0.1 million. Included in profit/(loss) on derivative instruments is $nil for fiscal 2006, $nil for fiscal 2005 and a loss of $3.2 million for fiscal 2004, relating to these instruments. Concentration of credit risk The Group's South African operations all deliver their gold to Rand Refinery Limited, or Rand Refinery, which refines the gold to saleable purity levels and then sells the gold, on behalf of the Group, on the bullion market. The gold is sold by Rand Refinery on the same day as it is delivered and settlement is made within two days. Once the gold has been delivered to Rand Refinery, the risks and rewards of ownership have passed.  The gold produced in Papua New Guinea by Tolukuma is sold directly to AGR Matthey and proceeds for gold sold are received within two days of sale. The selling price is determined by the London Bullion Market Association spot price and the Company is paid in US Dollars. We do not have an interest in AGR Matthey. The gold produced by Porgera in Papua New Guinea is sold directly to Australia and New Zealand Investment Bank, or ANZ Investment Bank. Proceeds for gold sold are received within two days from the swap confirmation report released by the refiners, AGR Matthey. The selling price is determined by the spot price at the time of sale and the Company is paid in US Dollars. The concentration of credit risk in Papua New Guinea is mitigated by the reputable nature of the customer and the settlement of the proceeds within two days.
 
 The gold produced by Vatukoula in Fiji is sold directly to AGR Matthey. Proceeds for gold sold are received within 6 days of sale. The selling price is determined by Reuters quoted “London Spot Bid Price” which means the London bid price as published by Reuters for two day settlement and the Company is paid in US Dollars.
 
 Foreign currency risk
 
 The Group's functional currency for the South African operations is the South African Rand, for the Papua New Guinea operations it is the Papua New Guinea Kina and for the Fiji operation is the Fiji Dollar.  Although gold is sold in US Dollars, the Company is obliged to convert these into Rands for its South African operations in terms of South African Reserve Bank, or SARB, regulations.  The Company is thus exposed to fluctuations in the Dollar / South African Rand exchange rate. The Company conducts its operations in South Africa, Papua New Guinea and Fiji. Currently, foreign exchange fluctuations affect the cash flow that it will realize from its operations as gold is sold in US Dollars while production costs are incurred primarily in Rands, Kina and Fiji Dollars.
 
 The Company's results are positively affected when the US Dollar strengthens against these foreign currencies and adversely affected when the US Dollar weakens against the foreign currencies. The Company's cash and cash equivalent balances are held in US Dollars, Rands and Australian Dollars; holdings denominated in other currencies are relatively insignificant.  Certain of the Company's financial liabilities are denominated in a currency other than the Rand (refer Note 19). The Company is thus exposed to fluctuations in the Rand with the relevant currency.  The Company has not entered into any foreign exchange hedging contracts to attempt to mitigate its foreign currency risk.


F-48
 23. FAIR VALUE OF FINANCIAL INSTRUMENTS(continued)
 Interest rate and liquidity riskFluctuations in interest rates impact the value of short-term cash investments and financing activities, giving rise to interest rate risks.  Interest rate swap agreements An interest rate swap agreement was entered into in November 2002 to manage the exposure to changes in interest rates with regard to the interest payable on the Senior Convertible Notes (refer Note 19). The fixed interest rate (in US Dollars) was swapped for a floating South African interest rate, calculated at the Johannesburg Inter Bank Acceptance Rate, or JIBAR, plus 200 basis points per annum. An amount of 60% of the coupon rate is subject to this swap agreement, based on the requirements of the SARB, as this represents the amount of the funds raised in South Africa. The maturity date of this agreement was November 2006. As discussed in Note 17, the interest rate swap agreement was closed out on November 12, 2005. Interest rate swap agreements were entered into by Emperor to manage the interest rate risk on the interest payments of the Vatukoula loan facility, which currently bears interest at an average variable rate of 7.76%. In order to minimize fluctuation in interest rates, 64% of the loan has been covered by entering into interest rate swap agreements under which the Group is obliged to receive interest at variable rates and pay interest at fixed rates until October 2008. The fixed interest rate payable was 4.34% per annum. Fair value of financial instruments The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.  The following table represents the carrying amounts and fair values of the Group's financial instruments outstanding:
 
 June 30,
 2006
 June 30,
 2006
 June 30,
 2005
 June 30,
 2005
 
 $'000
 $'000
 $'000
 $'000
 
 Carrying
 amount
 Fair value
 Carrying
 amount
 Fair value
 Financial assets
                                        Financial liabilities
                                   The carrying values of cash and cash equivalents, receivables, accounts payable and accrued liabilities and short-term loans approximates their fair values due to the short-term maturities of these assets and liabilities.  The fair value of listed investments has been determined by reference to the market value of the underlying investments. The investment in the environmental trusts is invested primarily in interest bearing securities and equity-limited unit trusts, the cost of which approximates their fair value.  The fair value of the fixed interest rate long-term debt instruments is subject to changes in market interest rates. The fair values are calculated based on a credit adjusted US Treasury rate, with comparable terms of maturity.


F-49
 24. COMMITMENTS AND CONTINGENT LIABILITIES
 
 
 June 30,
 2006
 June 30,
 2005
 
 
 $'000
 $'000
 Capital expenditure commitments:
 
               LitigationThe Group is subject to litigation in the normal course of business. The Group believes that any adverse outcome from litigation would not have a material effect on its financial position, results of operations or liquidity. Securities class actionOn June 13, 2005, a securities class action was filed in the United States District Court for the Southern District of New York against the Company and two of its officers. Since then, four nearly identical securities class action complaints have been filed against the Company and the same officers. The cases have been consolidated and a consolidated amended complaint has been filed. To date, neither the Company, nor the individual defendants have been formally served with any complaint regarding these matters.
  from October 23, 2003 to February 25, 2005. The complaints allege generally that the Company and the individual defendants made false and misleading public statements regarding, among other things:
         vigorously defend ourselves and the Company’s officers named in the complaints. The Company’s attorneys have filed an application to dismiss the plaintiffs’ case. The Company is currently awaiting direction from court on a date to present argument on the application, if the judge decides to hear oral argument, or for a ruling on the application, should he decide not to hear argument.


F-50
 25. GEOGRAPHIC AND SEGMENT INFORMATION
 Based on risks and returns, the Directors consider that the primary reporting format is by business segment. The Group operates in one industry segment, being the extraction and production of gold and related by-products. Therefore the disclosures for the primary segment have already been given in these financial statements. The chief operating decision-maker is the Board of Directors, who evaluate the business based on the following geographical operational segments, based on revenue generated from the location of the seller:
 
 Year ended June 30, 2006
 
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 
 Blyvoor  Mine
 ERPM  Mine
 Crown  Mine
 Other
 Total South  African    operations
 Porgera  Mine
 Tolukuma  Mine
 Vatukoula  Mine
 Other
 Total
  Australasian  operations
 Total
  operations
  
 
 
 
 
 
 
 
 
 
 
 Revenues
            
            Depreciation and amortization
            
            Production costs
                        Results
                                                Balance sheet
                                                            Other information


F-51
 25. GEOGRAPHIC AND SEGMENT INFORMATION (continued)
  
 Year ended June 30, 2005
 
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 
 Blyvoor  Mine
 North
  West Mine
 West Wits  Mine
 Other
 Total South
 African
 operations
 Porgera  Mine
 Tolukuma  Mine
 Other
 Total
 Australasian
 operations
 Total
  operations
 Discontinued  operation
 Total
 continuing
 operations
  
 
 
 
 
 
 
 
 
 
 
 
 Revenues
             
             Depreciation and amortization
             
             Production costs
                          Results
                                                    Balance sheet
                                                                 Other information


F-52
 25. GEOGRAPHIC AND SEGMENT INFORMATION (continued)
  
 Year ended June 30, 2004
 
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 
 Blyvoor  Mine
 North
  West Mine
 West Wits  Mine
 Other
 Total South
 African
 operations
 Porgera  Mine
 Tolukuma  Mine
 Other
 Total
 Australasian
 operations
 Total
  operations
 Discontinued
 operation
 Total
 continuing
 operations
  
 
 
 
 
 
 
 
 
 
 
 
 Revenues
             
             Depreciation and amortization
             
             Production costs
                          Results
                                                    Balance sheet
                                                                 Other information


F-53
 26.
  VARIABLE INTEREST ENTITY
 In fiscal 2006, as a result of the transactions entered into by the Company as part of the restructuring of its South African Operations, the Company identified Khumo Gold as a Variable Interest Entity, or VIE, due to certain capital and debt structures. Khumo Gold was established as an investment  holding company to provide previously disadvantaged persons in South Africa access to investment opportunities within the mining industry. Khumo Gold has a 15% interest in DRDGOLD SA at June 30, 2006 and holds investments in preference shares issued by Crown, ERPM and Blyvoor. These investments were funded by the Company through the Company acquiring preference shares issued by Khumo Gold of $4.8 million (R31.8 million). The Company does not hold any of the ordinary shares in Khumo Gold.  Accordingly the Company began to consolidate the VIE from December 1, 2005, in accordance with the requirements of FIN 46(R). On consolidation, the investments held by Khumo Gold in DRDGOLD SA and the preference shares in Crown, ERPM and Blyvoor were eliminated against the preference shares issued by Khumo Gold to the Company. Khumo Gold has no other assets and liabilities at June 30, 2006 nor did it earn any income or incur any expenses during the period to June 30, 2006.
 27. SUBSEQUENT EVENTS
 Purchase of Top Star Dump On August 28, 2006, the Company concluded an agreement with AngloGold Ashanti Limited to purchase the remaining extent of Erf 1 Park Central Township, better known as “The Top Star dump” in central Johannesburg for an amount of $1.1 million (R8.0 million).  In addition, a further $1.7 million (R12.0 million)  is expected to be spent on  infrastructure that will enable the Company to process the dump. In November 2006, the Provincial Heritage Resources Authority of Gauteng initiated a protection order against the removal of the dump. The Company is currently contesting the protection order. 6% Senior Convertible Notes repaid in full On November 15, 2006, the Company repaid, in full, its outstanding 6% Senior Convertible Notes which matured on November 12, 2006. The Company paid a total of $69.6 million to the holders of the Senior Convertible Notes, which included the aggregate principal amount of the  Senior Convertible Notes  of $66.0 million, plus all accrued original issue discount and interest.  The repayment  was funded  from  available  cash  resources and borrowing facilities.  The Company’s obligations under the  Senior Convertible Notes have now been satisfied and discharged. Funding from Investec (Mauritius) On September 13, 2006, the Company arranged a $35.0 million loan facility with  Investec (Mauritius) to fund a portion of the repayment of the Senior Convertible Notes on November 15, 2006. As at November 30, 2006, $33.0 million had been drawn and $2.0 million is available under this facility. Funding of Emperor In October 2006, the Company  committed to a $10.0 million working capital facility for Emperor. The Company has advanced funds to Emperor under this facility of $2.0 million on October 5, 2006, $5.0 million on November 6, 2006 and $3.0 million on November 27, 2006. The loan bears interest at LIBOR plus 3%  per annum  and  is repayable on December 31, 2007. A commitment fee of $0.2 million has also been charged to Emperor under the terms of this facility. Subsequent to the end of the financial year, the board of DRD (Offshore) has agreed to convert the purchase price adjustment loan of $5.0 million (refer to Note 4) into shares in Emperor, representing approximately a 3.4% interest in Emperor. Shares issued by DRDGOLD South African Operations (Pty) Limited, or DRDGOLD SA On December 11, 2006, Khumo Gold SPV (Pty) Limited, or Khumo Gold, exercised the option granted by the Company in terms of the option agreement concluded between the parties in October 2005.  Khumo  Gold acquired from  the Company a further 50,000 ordinary shares in DRDGOLD SA for $0.6 million (R4.3 million). After exercising the option, Khumo Gold's shareholding in DRDGOLD SA increased by 5% to 20%. In addition, Khumo Gold,  as promoter for an employee trust,  exercised the option for an employee trust to acquire from  the Company 60,000 ordinary shares in DRDGOLD SA for a consideration of  $0.7 million (R5.1 million).  After exercising the option, the trust's shareholding in DRDGOLD SA is 6%.  The Company will finance the transaction, on condition that the terms of the finance are determined by independent experts to be fair and reasonable to the shareholders of the Company. It is proposed that the Company will subscribe for preference shares in Khumo Gold and extend a loan to the trustees of the trust.


F-54
 27. SUBSEQUENT EVENTS(continued)
 Vatukoula placed on care and maintenance On December 5, 2006, after an extensive three-month review of Vatukoula,  the Company determined that continued mining operations  at Vatukoula  were no longer economically viable and  that the mine would  therefore  cease production.  Pending completion of a strategic review to optimize the value of Vatukoula and other Fijian land holdings, the mine will be placed on a care and maintenance program. This will result in an impairment of Vatukoula’s mining assets in the second quarter of fiscal 2007. Vatukoula’s mining assets had a carrying value of $101.8 million at June 30, 2006. The amount of the impairment will be determined on completion of the strategic review of Vatukoula in January 2007.


159
 ITEM 19. EXHIBITS
 
                   Registration Rights Agreement between DRDGOLD Limited and CIBC World Markets Corp., dated November 12, 2002.
  DRDGOLD Limited 6% Senior Convertible Note Due 2006 in the amount of $61,500,000 issued pursuant to Rule 144A of the Securities Act of 1933, as amended.
  DRDGOLD Limited 6% Senior Convertible Note Due 2006 in the amount of $4,500,000 issued pursuant to Regulation S under the Securities Act of 1933, as amended.
      Agreement, dated September 28, 1995, among First Wesgold Mining (Proprietary) Limited, DRDGOLD Limited and Rand Leases in respect of purchase of assets of First Wesgold by Rand Leases.
  Pumping Assistance, dated October 14, 1997, for the 1997/1998 fiscal year from the Minister of Mineral and Energy Affairs – Republic of South Africa to DRDGOLD Limited.
  Deposit Agreement among DRDGOLD Limited, The Bank of New York as Depositary, and owners and holders of American Depositary Receipts, dated as of August 12, 1996, as amended and restated as of October 2, 1996, as further amended and restated as of August 11, 1998.
  Security Agreement, dated November 5, 1998, between The Chase Manhattan Bank, DRDGOLD Limited, Blyvoor, Buffels and West Wits.
  Loan Agreement, dated June 8, 1999, between Industrial Development Corporation of South Africa Limited, Crown and DRDGOLD Limited.
  Lender Substitution Deed, dated August 18, 1999, between DRDGOLD Limited, DRD Australasia, NM Rothschild & Sons (Singapore) Limited, NM Rothschild & Sons (Australia) Limited, as agent in its own capacity, and Rothschild Nominees (Pty) Limited.
  A $10m Facility Agreement, dated September 10, 1999, between DRDGOLD Limited, DRD Australasia and NM Rothschild & Sons (Australia) Limited.
  Facility Agreement, dated August 9, 1996, between PT Barisan Tropical Mining, Rothschild Australia Limited and the Participants.
  Deposit Agreement, dated September 30, 1999, between Buffels and BOE Merchant Bank, a division of BOE Bank Limited.
  Undertaking and Security Agreement, dated November 17, 1999, between BOE Bank Limited, through its division BOE Merchant Bank, and Buffels.
  Guarantee and Indemnity Agreement, dated November 17, 1999, between DRDGOLD Limited, Blyvoor, Argonaut Financial Services (Proprietary) Limited, West Wits, Crown and BOE Bank Limited, through its division BOE Merchant Bank.
  Loan Security Agreement, dated November 17, 1999, between FBCF Equipment Finance (Proprietary) Limited and Buffels.
  Sale of Business Agreement in respect of Harties, dated August 16, 1999, between Avgold Limited, Buffels and DRDGOLD Limited.
    Sale of Shares Agreement, dated September 29, 1997, between RMP Properties Limited, Randgold, Crown, City Deep Limited, Consolidated Main Reef Mines and Estate Limited, Crown Mines Limited, RMP Properties SA Limited and Industrial Zone Limited.
      Share Sale Option Agreement, dated March 12, 1993, between Newmont Proprietary Limited, Ballimore No. 56 Proprietary Limited, Clayfield Proprietary Limited and Dome Resources N.L.


160
  Convertible Loan Agreement, dated November 19, 1997, between Tolukuma Gold Mines Proprietary Limited, Dome Resources N.L. and Mineral Resources Development Company Proprietary Limited.
  First Deed of Variation of Loan Agreement, between Mineral Resources Development Company Pty Limited, Dome Resources N.L. and Tolukuma Gold Mines Pty Limited.
    Independent Auditor’s Report from PricewaterhouseCoopers to the Board of Directors and Shareholders of Crown Consolidated Gold Recoveries Limited, dated August 28, 2000.
  Shareholders’ Agreement, dated September 29, 2000, between DRDGOLD Limited, Fraser Alexander Tailings (Proprietary) Limited and Mine Waste Solutions (Proprietary) Limited.
  First Addendum to the Agreement, dated November 15, 2000, between DRDGOLD Limited and Western Areas Limited.
  Second Addendum to the Agreement, dated December 21, 2000, between DRDGOLD Limited and Western Areas Limited.
  Agreement between DRDGOLD Limited, Western Areas, Limited, Consolidated African Mines Limited and JCI Gold Limited, dated April 25, 2001.
  Addendum to the Agreement between DRDGOLD Limited, Western Areas Limited, Consolidated African Mines Limited and JCI Gold Limited, dated August 31, 2001.
  Addendum to the Agreement between DRDGOLD Limited, Western Areas Limited, Consolidated African Mines Limited and JCI Gold Limited, dated September 26, 2001.
  Guarantee and Cession in Securitatem Debiti Agreement between DRDGOLD Limited and Investec Bank Limited, dated October 9, 2001.
  Second Deed of Variation of Loan Agreement between Tolukuma Gold Mines Limited, Dome Resources NL and Mineral Resources Development Company Limited, dated June 28, 2001.
  Principal Terms and Conditions for Waiving Right to Declare Default and Enforce Security Deed under 1993 Purchase Agreement between Newmont Second Capital Corporation, Tolukuma Gold Mines (Pty.) Limited, Dome Resources (PNG) Pty. Limited, Dome Resources NL and DRDGOLD Limited, dated July 16, 2001.
    Master Finance Lease between Volvo Truck Finance Australia (Pty) Ltd and Dome Resources N.L., dated November 1, 2000.
    Share Purchase Agreement between Crown Consolidated Gold Recoveries Ltd, The Industrial Development Corporation of South Africa Ltd, Khumo Bathong Holdings (Pty) Ltd and DRDGOLD Limited, dated June 12, 2002.
  Shareholder’s Agreement between The Industrial Development Corporation of South Africa Limited, Khumo Bathong Holdings (Pty) Ltd, Crown Consolidated Gold Recoveries Ltd, Crown Gold Recoveries (Pty) Ltd. And DRDGOLD Limited, dated June 12, 2002.
  Addendum to Shareholder’s Agreement between The Industrial Development Corporation of South Africa Limited, Khumo Bathong Holdings (Pty) Ltd, Crown Consolidated Gold Recoveries Ltd, Crown Gold Recoveries (Pty) Ltd. And DRDGOLD Limited, dated June 14, 2002.
  Subscription Agreement between Khumo Bathong Holdings (Pty) Limited and DRDGOLD Limited, dated June 12, 2002.
    Memorandum of Loan Agreement No. 1 between Durban Roodepoort Deep and Crown Gold Recoveries (Pty) Ltd, dated June 12, 2002.
  Memorandum of Loan Agreement No. 2 between DRDGOLD Limited and Crown Gold Recoveries (Pty) Ltd, dated June 12, 2002.
  Memorandum of Loan Agreement No. 3 between Crown Consolidated Gold Recoveries Ltd and Crown Gold Recoveries (Pty) Ltd, dated June 12, 2002.
  Loan Agreement between Industrial Development Corporation of South Africa Ltd. And Blyvooruitzicht Gold Mining Company Ltd, dated July 18, 2002.
  Agreement of Loan and Pledge between DRDGOLD Limited and East Rand Proprietary Mines Limited, dated September 12, 2002.
  Management Services Agreement between DRDGOLD Limited, Khumo Bathong Holdings (Pty) Ltd and Crown Gold Recoveries (Pty) Ltd, dated October 1, 2002.
  Agreement amongst DRDGOLD Limited, West Witwatersrand Gold Mines Limited and Bophelo Trading (Pty) Ltd, dated June 12, 2002.
  Letter Agreement between DRDGOLD Limited and The Standard Bank of South Africa, represented by its Standard Corporate and Merchant Bank Division, dated October 7, 2002.


161
  Memorandum of Agreement between Daun Et Cie A.G., Courthiel Holdings (Pty) Ltd, Khumo Bathong Holdings (Pty) Ltd, Claas Edmond Daun, Paul Cornelis Thomas Schouten, Moltin Paseka Ncholo, Michelle Patience Baird, Derek Sean Webbstock, as sellers, and Crown Gold Recoveries (Pty) Ltd, as purchaser, dated October 10, 2002.
  Memorandum of Loan Agreement between DRDGOLD Limited and Crown Gold Recoveries (Pty) Ltd, dated October 10, 2002.
    Management Services Agreement between DRDGOLD Limited and East Rand Proprietary Mines Ltd, dated October 10, 2002.
  Agreement for sale of shares in Emperor Mines Limited, between DRD (Isle of Man) Limited and Kola Ventures Limited, dated December 13, 2002.
    Amendment to Confirmation, dated September 4, 2003, between DRDGOLD Limited and Investec Bank (Mauritius) Limited.
  Deed of Amalgamation for the Corporate Restructuring of Orogen Minerals (Porgera) Limited, Mineral Resources Porgera Limited and Dome Resources (PNG) Limited, dated October 14, 2003.
    Loan Assignment Agreement between Orogen Minerals Limited, DRD (Isle of Man) Limited and Orogen Minerals (Porgera) Limited, dated October 14, 2003.
    Loan Assignment Agreement, between Dome Resources (PNG) Limited, Dome Resources Pty Limited, DRD (Isle of Man) Limited and Tolukuma Gold Mines Limited, dated November 21, 2003.
  Memorandum of Agreement made and entered into between DRDGOLD Limited, West Witwatersrand Gold Mines Limited, Mogale Gold (Proprietary) Limited and Luipaards Vlei Estates (Proprietary) Limited dated June 6, 2003.
  Porgera Joint Venture Operating Agreement between Placer (P.N.G.) Pty Limited and Highlands Gold Properties Pty. Limited and PGC (Papua New Guinea) Pty Limited, dated November 2, 1988.
    Banking facilities Agreement made and entered between DRDGOLD Limited and Standard Bank of South Africa, Limited, dated November 14, 2003.
  Agreement of Employment between DRDGOLD Limited and Mr. M.M. Wellesley-Wood, dated as of December 1, 2003.
  Service Agreement between DRD (Isle of Man) Limited and Mr. M.M. Wellesley-Wood, dated as of December 1, 2003.
      Subscription and Option Agreement made and entered between DRD (Isle of Man) Limited, Net-Gold Services Limited and G.M. Network Limited, dated January 26, 2004.
  Forward Bullion Transaction Agreements made and entered between DRDGOLD Limited and Investec Bank Limited, dated February 4, 2004, February 6, 2004, February 10, 2004, February 11, 2004 and February 12, 2004.
    Termination Agreement made and entered between DRDGOLD Limited, Eskom Holdings Limited and Investec Bank Limited, dated June 24, 2004.
  Novation Agreement made and entered between J Aron & Company, Eskom Holdings Limited and Investec Bank Limited, dated June 24, 2004.
  Memorandum of Understanding made and entered between Buffelsfontein Gold Mines Limited, Buffelsfontein Division and The National Union of Mineworkers, The United Association of South Africa, The Mine Workers Union (Solidarity) and The South African Electrical Workers Association regarding retrenchments associated with No. 9, 10 and 12 Shafts of Buffelsfontein Division, dated August 6, 2004.
  CCMA Settlement Agreement made and entered between Blyvooruitzicht Gold Mining Company Limited and The United Association of South Africa, South African Equity Workers’ Association, Solidarity and The National Union of Mineworkers regarding the retrenchment of up to 2,000 employees of the Blyvooruitzicht Gold Mining Company, dated September 2, 2004.
  Loan Agreement made and entered between DRDGOLD Limited and Investec Bank Limited, dated September 15, 2004.
  Subscription Agreement made and entered between DRD (Isle of Man) Limited and DRDGOLD Limited, dated September 21, 2004.
  Common Terms Agreement of Loan made and entered between DRD (Isle of Man) Limited and Investec Bank (Mauritius) Limited, dated October 14, 2004.


162
  Facility A Loan Agreement made and entered between DRD (Isle of Man) Limited and Investec Bank (Mauritius) Limited, dated October 14, 2004.
  Loan Agreement made and entered between DRDGOLD Limited and Investec Bank Limited, dated December 10, 2004.
  Subscription Agreement between DRDGOLD Limited and Baker Steel Capital Managers LLP (BSCM), dated April 7, 2005.
  Underwriting Agreement between DRDGOLD Limited, the Baker Steel Capital Managers LLP (BSCM) and certain underwriters, dated April 5, 2005.
  Memorandum of Agreement between DRDGOLD Limited, Simmer & Jack Mines Limited and Simmer & Jack Investments (Proprietary) Limited (S&J Companies), dated August 31, 2005.
  Cession Agreement entered into among The Industrial Development Corporation of South Africa Limited (IDC), DRDGOLD Limited, Business Ventures Investment No. 750 (Pty) Ltd and Business Ventures Investment No. 751 (Pty) Ltd (the BVI Companies), dated July 13, 2005.
  Share Sale Agreement entered into among The Industrial Development Corporation of South Africa Limited (IDC), DRDGOLD Limited, Business Ventures Investment No. 750 (Pty) Ltd (BVI 1) and Business Ventures Investment No. 751 (Pty) Ltd (BVI 2), dated July 13, 2005.
  Term Sheet concluded between DRDGOLD Limited and Khumo Bathong Holdings (Pty) Ltd (KBH), dated July 6, 2005.
  Facility B Loan Agreement between Investec Bank (Mauritius) Limited and DRD (Isle of Man) Limited (DRDIOM), dated March 3, 2005.
  Convertible Loan Facility Agreement between DRDGOLD Limited and Emperor Mines Limited (Emperor), dated July 8, 2005.
    Option Agreement entered into by and between DRDGOLD Limited and M5 Developments (Pty) Limited, dated July 21, 2005.
  Share Sale Agreement between DRD (Offshore) Limited, DRDGOLD Limited and Emperor Mines Limited, dated November 16, 2005.
  Deed of loan, cession, payment and set-off entered between DRDGOLD Limited, East Rand Proprietary Mine Limited, Crown Gold Recoveries (Pty) Limited  and Blyvooruitzicht Gold Mining Company, dated November 7, 2005.
  Share sale agreement between Business Venture Investments 750 (Pty) Ltd (“BVI 750”) and DRDGOLD South African Operations (Pty) Limited, dated November 8, 2005.
  Subscription agreement between DRDGOLD Limited and DRDGOLD South African Operations (Pty) Limited, dated November 9, 2005.
  Share sale agreement between Crown Consolidated Gold Recoveries Limited and DRDGOLD South African Operations (Pty) Limited, dated November 14, 2005.
  Subscription agreement between DRDGOLD South African Operations (Pty) Limited and Khumo Gold SPV (Pty) Limited, dated November 18, 2005.
  Subscription agreement between DRDGOLD Limited and Khumo Gold SPV (Pty) Limited, dated November 18, 2005.
  Cession agreement between DRDGOLD Limited and Khumo Gold SPV (Pty) Limited and Khumo Bathong Holdings (Pty) Limited, dated November 18, 2005.
  Cession Agreement between DRDGOLD Limited and The Industrial Development Corporation of South Africa Limited and Business Venture Investment No 750 (Pty) Limited and Business Venture Investment No 751 (Pty) Limited, dated November 18, 2005.
  Option agreement between DRDGOLD Limited and Khumo Gold SPV (Pty) Limited and DRDGOLD South African Operations (Pty) Limited, dated November 18, 2005.
  Offer of Class A Preference share between Khumo Gold SPV (Pty) Limited and East Rand Proprietary Mines Limited, dated November 18, 2005.
  Offer of Class A Preference between Khumo Gold SPV (Pty) Limited and Blyvooruitzicht Gold Mining Company Limited, dated November 18, 2005.
  Offer of Class A Preference between Khumo Gold SPV (Pty) Limited and Crown Gold Recoveries (Pty) Limited, dated November 18, 2005.
  Shareholders agreement between DRDGOLD Limited and Khumo Gold SPV (Pty) Limited and DRDGOLD South African Operation (Pty) Limited, dated November 24, 2005.


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  Restructure deed between DRD (Offshore) Limited and DRD (Isle of Man) Limited and Emperor Mines Limited and Emperor Gold Mining Company Limited and Australia and New Zealand Banking Group Limited, dated February 24, 2006.
  Facility agreement between DRD (Porgera) Limited and Tolukuma Gold Mines Limited and Australia and New Zealand Group Limited, dated March 20, 2006.
  Settlement of loans agreement between DRD (Isle of Man) Limited and DRD (Offshore) Limited, dated March 23, 2006.
                    __________ *
        *****  Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended June 30, 2000.  
        Incorporated by reference to Amendment No. 4 of our Annual Report on Form 20-F for the fiscal year ended June 30, 2002.       Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended June 30, 2003.  #


164
 SIGNATURES
 
  authorized the undersigned to sign this annual report on its behalf.
         
 M.M. Wellesley-Wood Chief Executive Officer
  
 J.W.C. Sayers Chief Financial Officer